Subject to Completion
Preliminary Prospectus Supplement dated November 16, 2001
The information in this preliminary prospectus supplement and accompanying prospectus is not complete and may change. A registration statement relating to these securities has been filed with the Securities and Exchange Commission and declared effective. We may not sell these securities unless we deliver a final prospectus supplement and accompanying prospectus. This preliminary prospectus supplement and the accompanying prospectus are not an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer to sell is not permitted.
As Filed Pursuant to Rule 424(b)(3)
under the Securities Act of 1933
Registration No. 333-69516
(To Prospectus dated October 11, 2001)
Cascade Natural Gas Corporation
% Notes Due November 15, 2031
The notes will mature on November 15, 2031 and bear interest at a rate of % per year. However, we can redeem the notes at our option on or after November 15, 2006, in whole or in part, at 100% of the principal amount being redeemed plus any accrued and unpaid interest to the redemption date.
Interest on the notes is payable quarterly on February 15, May 15, August 15 and November 15, beginning on February 15, 2002, and at maturity or earlier redemption.
We will be required to redeem the notes, subject to individual and aggregate annual principal amount limitations, at the option of the representative of any deceased beneficial owner of notes at 100% of the principal amount being redeemed plus any accrued and unpaid interest to the payment date.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery in book-entry form only through The Depository Trust Company on or about November , 2001.
Edward D. Jones & Co., L.P.
The date of this prospectus supplement is November , 2001.
|Use of Proceeds
|Description of the Notes
|Appendix AForm of Redemption Request
About this Prospectus and Prospectus Supplements
|Cascade Natural Gas Corporation
|Where You Can Find More Information
|Use of Proceeds
|Ratio of Earnings to Fixed Charges and to Combined Fixed Charges and Preferred Dividend Requirements
|Description of Debt Securities
|Description of Preferred Stock
|Description of Common Stock
|Plan of Distribution
You should rely only on the information contained or incorporated by reference in this prospectus supplement or the accompanying prospectus. No one has been authorized to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. We are not, and the underwriter is not, making an offer to sell the notes in any jurisdiction where the offer to sell the notes is not permitted. You should assume that the information appearing in this prospectus supplement and the accompanying prospectus, as well as information we previously filed with the SEC that is incorporated in this prospectus supplement and the accompanying prospectus by reference, is accurate as of the date on the front cover of those documents only. Our business, financial condition, results of operations and prospects may have changed since those dates.
The following summary is qualified in its entirety by reference to the detailed information appearing elsewhere, or incorporated by reference, in this prospectus supplement and in the accompanying prospectus. You should carefully read the entire prospectus supplement and the accompanying prospectus, including the documents incorporated by reference into these documents.
|Cascade Natural Gas Corporation was incorporated in the state of Washington in 1953. We distribute natural gas to customers in the states of Washington and Oregon. Our executive offices are located at 222 Fairview Avenue North, Seattle, Washington 98109. Our telephone number is (206) 624-3900.
We are offering $40,000,000 aggregate principal amount of notes, bearing interest at a rate of % per year.
Interest Payment Dates
We will pay interest on the notes quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on February 15, 2002.
We will make interest payments to the holders of notes who hold those notes as of the close of business on the first calendar day of the month in which each interest payment date falls as well as upon presentation and surrender at maturity or earlier redemption.
Date of Maturity
The notes will mature on November 15, 2031, unless redeemed or otherwise repaid prior to that date.
Optional Redemption by Us
We will have the option to redeem the notes, in whole or in part, from time to time, on or after November 15, 2006. The optional redemption price for the notes will be 100% of the principal amount being redeemed plus unpaid interest accrued to the redemption date.
Redemption Option of a Deceased
Beneficial Owner's Representative
We will be required to redeem the notes at the option of the representative of any deceased beneficial owner of notes at 100% of the principal amount being redeemed plus unpaid interest accrued to the payment date; provided, however, that the maximum principal amount we will be required to redeem during the initial period from the date of original issuance of the notes through and including November 15, 2002, and during each twelve-month period thereafter is $25,000 principal amount of notes per deceased beneficial owner and an aggregate of $1,200,000 for all deceased beneficial owners of notes.
The notes will be our unsecured obligations and will rank equally and ratably with all of our other unsecured and unsubordinated debt.
The following summary financial information for the years ended September 30, 1999, 2000 and 2001, and as of September 30, 2001, has been derived from our audited financial statements, which are incorporated in this prospectus supplement and the accompanying prospectus by reference to our Current Report on Form 8-K dated November 16, 2001. You should read the summary financial information in conjunction with, and it is qualified in its entirety by reference to, the financial statements from which it has been derived and the accompanying notes incorporated by reference in this prospectus supplement and the accompanying prospectus from our Current Report on Form 8-K dated November 16, 2001.
|Year ended September 30,
|Statement of Income Data:
At September 30, 2001
|Balance Sheet Data:
|Common shareholders' equity
Year ended September 30,
|Ratio of Earnings to Fixed Charges(2)
We estimate that the net proceeds from the sale of the notes will be approximately $38.7 million, after deducting underwriting discounts and estimated offering expenses payable by us. We intend to use these proceeds to repay short-term debt. During the past year, we have used short-term debt proceeds to purchase natural gas supply and for construction of pipeline facilities. As of September 30, 2001, our short-term debt accrued interest at an average annual interest rate of 5.52%.
Set forth below is a description of the specific terms of the notes. This description supplements, and should be read together with, the description of the general terms and provisions of the debt securities set forth in the accompanying prospectus under the caption "Description of Debt Securities". The following description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the description in the accompanying prospectus and the indenture, dated as of August 1, 1992, between The Bank of New York, as trustee, and us, and the officers' certificate under the indenture pursuant to which the notes will be issued. We will file a copy of the officers' certificate as an exhibit to a Current Report on Form 8-K at or around the date of issuance of the notes.
Principal Amount, Maturity And Denominations
The notes will be issued in the initial aggregate principal amount of $40,000,000. The entire principal amount of the notes, unless previously redeemed or otherwise repaid, will mature and become due and payable, together with any unpaid interest accrued to the maturity date, on November 15, 2031. In the event that the stated maturity date or any redemption date is not a business day, then payment of principal and any interest will be made on the next business day (and without any interest or other payment in respect of any such delay). The notes are available for purchase in denominations of $1,000 and integral multiples of $1,000.
Each note will bear interest at % per year from the date of original issuance, payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year to the person in whose name such note is registered as of the close of business on the first calendar day of the month in which the applicable interest payment date falls and at maturity or earlier redemption, as the case may be. The initial interest payment date is February 15, 2002. The amount of interest payable will be computed on the basis of a 360-day year of twelve 30-day months. In the event that any interest payment date is not a business day, then payment of the interest will be made on the next business day (and without any interest or other payment in respect of any such delay).
Book-Entry Only IssuanceDTC
The notes will be represented by a global certificate without coupons registered in the name of a nominee of DTC. As long as the notes are registered in the name of DTC or its nominee, we will pay principal and interest due on the notes to DTC. DTC will then make payments to its participants for disbursement to beneficial owners of the notes. For more information, please refer to the information under the caption "Description of Debt Securities-Global Securities-The Depository Trust Company" in the accompanying prospectus.
We will have the option to redeem the notes, in whole or in part, without premium, from time to time, on or after November 15, 2006, upon not less than 30 nor more than 60 days' prior written
notice, at a redemption price equal to 100% of the principal amount being redeemed plus any unpaid interest accrued to the redemption date.
From the redemption date, the notes to be redeemed will cease to bear interest, unless we default in the payment of the redemption price. In the event of such default, the principal of the notes to be redeemed will, until paid, continue to bear interest at the rate indicated on the cover of this prospectus supplement.
Subject to the foregoing and to applicable law (including, without limitation, United States federal securities laws), we may, at any time and from time to time, purchase outstanding notes by tender, in the open market or by private agreement. However, we may not use any purchased notes as a credit against any redemption obligation.
Redemption by Us Upon Death of a Beneficial Owner
Unless the notes have been declared due and payable prior to their maturity by reason of an event of default under the indenture, or have been previously redeemed or otherwise repaid, the personal representative or other person authorized to represent the deceased beneficial owner (that is, one who has the right to sell, transfer or otherwise dispose of an interest in a note and the right to receive the proceeds therefrom, as well as the interest and principal payable to the holder of that note) has the right to request redemption prior to stated maturity of all or part of his or her interest in the notes, and we will be obligated to redeem the same; however, during the period from the original issue date through and including November 15, 2002 (the "Initial Period"), and during any twelve-month period which ends on and includes each November 15 thereafter (each such twelve-month period being hereinafter referred to as a "Subsequent Period"), we will not be obligated to redeem (1) on behalf of a deceased beneficial owner, any interest in the notes that exceeds $25,000 principal amount, or (2) ownership interests in the notes exceeding $1,200,000 in aggregate principal amount for all representatives so requesting redemption.
A representative of a deceased beneficial owner may initiate a request for redemption at any time and in any principal amount, provided that such principal amount is in integral multiples of $1,000.
We may, at our option, redeem interests of any deceased beneficial owner in the notes in the Initial Period or any Subsequent Period in excess of the $25,000 limitation. Any such redemption, to the extent that it exceeds the $25,000 limitation for any deceased beneficial owner, shall not be included in the computation of the $1,200,000 aggregate limitation for such Initial Period or such Subsequent Period, as the case may be, or for any succeeding Subsequent Period. We may, at our option, redeem interests of deceased beneficial owners in the notes in the Initial Period or any Subsequent Period in an aggregate principal amount exceeding the aggregate limitation. Any such redemption, to the extent it exceeds the aggregate limitation, shall not reduce the aggregate limitation for any Subsequent Period. On any determination by us to redeem notes in excess of the $25,000 limitation or the aggregate limitation, notes so redeemed shall be redeemed in the order of the receipt of redemption requests by the trustee.
The representative of a deceased beneficial owner may initiate the request for redemption of an interest in the notes. The representative shall deliver a request to the participant (that is, an institution that has an account with DTC, the initial depositary for the notes) through whom the deceased beneficial owner owned such interest, in form satisfactory to the participant, together with evidence of the death of the beneficial owner, evidence of the authority of the representative satisfactory to the participant, such waivers, notices or certificates as may be required under applicable state or federal law and such other evidence of the right to such redemption as the participant shall require. The request shall specify the principal amount of the interest in the notes to be redeemed, provided that this principal amount shall be in integral multiples of $1,000. The participant shall thereupon deliver to the depositary, who in this case initially will be DTC, a request for redemption substantially in the form
attached as Appendix A hereto. The depositary will, on receipt of a redemption request, forward the same to the trustee. The trustee shall maintain records with respect to redemption requests received by it including date of receipt, the name of the participant filing the redemption request and the status of each such redemption request with respect to the $25,000 limitation and the aggregate limitation. The trustee will immediately file each redemption request it receives, together with the information regarding the eligibility thereof with respect to the $25,000 limitation and the aggregate limitation, with us. We, the depositary and the trustee may conclusively assume, without independent investigation, that the statements contained in each redemption request are true and correct and shall have no responsibility for reviewing any documents submitted to the participant by the representative or for determining whether the applicable decedent is in fact the beneficial owner of the interest in the notes to be redeemed or is in fact deceased and whether the representative is duly authorized to request redemption on behalf of the applicable beneficial owner.
Subject to the $25,000 limitation and the aggregate limitation, we will, after the death of any beneficial owner, redeem the interest of such beneficial owner in the notes within 60 days following receipt by us of a redemption request from the trustee. If redemption requests exceed the aggregate principal amount of interests in notes required to be redeemed during the Initial Period or during any Subsequent Period, then such excess redemption requests will be applied in the order received by the trustee to successive Subsequent Periods, regardless of the number of Subsequent Periods required to redeem such interests. We may at any time notify the trustee that we will redeem, on a date not less than 30 nor more than 60 days thereafter, all or any such lesser amount of notes for which redemption requests have been received but which are not then eligible for redemption by reason of the $25,000 limitation or the aggregate limitation. Any notes so redeemed shall be redeemed in the order of receipt of redemption requests by the trustee.
The price we will pay for the notes we redeem pursuant to a redemption request of a representative of a deceased beneficial owner will be 100% of the principal amount thereof plus accrued but unpaid interest to the date of payment. Subject to arrangements with the depositary, payment for interests in the notes that are to be redeemed shall be made to the depositary upon presentation of notes to the trustee for redemption in the aggregate principal amount specified in the redemption requests submitted to the trustee by the depositary that are to be fulfilled in connection with such payment. The principal amount of any notes acquired or redeemed by us other than by redemption at the option of any representative of a deceased beneficial owner pursuant to this section shall not be included in the computation of either the $25,000 limitation or the aggregate limitation for the Initial Period or for any Subsequent Period.
For purposes of this section, an interest in a note held in tenancy by the entirety, joint tenancy or by tenants in common will be deemed to be held by a single beneficial owner and the death of a tenant by the entirety, joint tenant or tenant in common will be deemed the death of a beneficial owner. The death of a person who, during his or her lifetime, was entitled to substantially all of the rights of a beneficial owner of an interest in the notes will be deemed the death of the beneficial owner, regardless of the recordation of such interest on the records of the participant, if such rights can be established to the satisfaction of the participant. Such interests shall be deemed to exist in typical cases of nominee ownership, ownership under the Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, community property or other similar joint ownership arrangements, including individual retirement accounts or Keogh [H.R. 10] plans maintained solely by or for the decedent or by or for the decedent and any spouse, and trust and certain other arrangements where one person has substantially all of the rights of a beneficial owner during such person's lifetime.
Any redemption request may be withdrawn by the persons presenting the same upon delivery of a written request for such withdrawal given by the participant on behalf of such person to the depositary and by the depositary to the trustee not less than 30 days prior to payment thereof by us.
We may, at our option, purchase any notes for which redemption requests have been received in lieu of redeeming such notes. Any notes we purchase shall either be reoffered for sale and sold within 180 days after the date of purchase or presented to the trustee for redemption and cancellation.
During such time or times as the notes are not represented by a global security and are issued in definitive form, all references in this section to participants and the depositary, including the depositary's governing rules, regulations and procedures shall be deemed deleted, all determinations which under this section the participants are required to make shall be made by us (including, without limitation, determining whether the applicable decedent is in fact the beneficial owner of the interest in the notes to be redeemed or is in fact deceased and whether the representative is duly authorized to request redemption on behalf of the applicable beneficial owner), all redemption requests, to be effective, shall be delivered by the representative to the trustee, with a copy to us, and shall be in the form of a redemption request (with appropriate changes to reflect the fact that such redemption request is being executed by a representative) and, in addition to all documents that are otherwise required to accompany a redemption request, shall be accompanied by the note that is the subject of such request.
Subject to the terms and conditions of the underwriting agreement dated the date of this prospectus supplement, we have agreed to sell to Edward D. Jones & Co., L.P., as underwriter, and the underwriter has agreed to purchase from us, the entire principal amount of the notes at % of that principal amount. Under the terms of the underwriting agreement, the underwriter has agreed to take and pay for all the notes, if any are taken.
The underwriter has advised us that it proposes to offer the notes to the public initially at the public offering price set forth on the cover of this prospectus supplement and to certain dealers at that price, less a concession of % of the principal amount of the notes. After the initial public offering of the notes, the public offering price and concession may be changed.
Prior to this offering, there has been no public market for the notes. The underwriter has advised us that it intends to make a market in the notes. The underwriter will have no obligation to make a market in the notes, however, and may cease market-making activities, if commenced, at any time. The notes will not be listed on any securities exchange.
We have agreed to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriter may be required to make in respect of those liabilities.
In connection with this offering, the underwriter is permitted to engage in certain transactions that stabilize the price of the notes. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the notes. If the underwriter creates a short position in the notes in connection with the offering, i.e., if it sells a greater aggregate principal amount of notes than is set forth on the cover of this prospectus supplement, the underwriter may reduce that short position by purchasing notes in the open market. In general, purchases of a security for the purpose of stabilization or to reduce a short position could cause the price of the security to be higher than it might be in the absence of such purchases.
Neither we nor the underwriter makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the notes. In addition, neither we nor the underwriter makes any representation that the underwriter will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice.
We estimate that we will incur offering expenses of approximately $70,000.
The underwriter has engaged, and in the future may engage, in investment banking transactions with, and the provision of services to, us in the ordinary course of business.
The validity of the notes will be passed upon for us by Hillis Clark Martin & Peterson, P.S., Seattle, Washington, and for the underwriter by Pillsbury Winthrop LLP, New York, New York.
The consolidated financial statements and the related financial statement schedule as of September 30, 2001 and 2000, and for each of the three years in the period ended September 30, 2001, incorporated in this prospectus supplement and the accompanying prospectus by reference from our Current Report on Form 8-K dated November 16, 2001, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated in this prospectus supplement and the accompanying prospectus by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.
The undersigned, (the "Participant"), pursuant to the provisions of that certain Indenture dated as of August 1, 1992 (as supplemented, the "Indenture") made by Cascade Natural Gas Corporation (the "Company") and The Bank of New York, as trustee (the "Trustee"), does hereby certify to The Depository Trust Company (the "Depositary"), the Company and the Trustee that:
1. [Name of deceased Beneficial Owner] is deceased.
2. [Name of deceased Beneficial Owner] had a $ interest in the above-referenced Notes.
3. [Name of Representative] is [Beneficial Owner's personal representative/other person authorized to represent the estate of the Beneficial Owner/surviving joint tenant/surviving tenant by the entirety/trustee of a trust] of [Name of deceased Beneficial Owner] and has delivered to the undersigned a request for redemption in form satisfactory to the undersigned, requesting that $ principal amount of the Notes be redeemed pursuant to the Indenture. The documents accompanying such request, all of which are in proper form, are in all respects satisfactory to the undersigned and the [Name of Representative] is entitled to have the Notes to which this redemption request relates redeemed.
4. The Participant holds the interest in the Notes with respect to which this redemption request is being made on behalf of [Name of deceased Beneficial Owner].
5. The Participant hereby certifies that it will indemnify and hold harmless the Depositary, the Trustee and the Company (including their respective officers, directors, agents, attorneys and employees), against all damages, loss, cost, expense (including reasonable attorneys' and accountants' fees), obligations, claims or liability incurred by the indemnified party or parties as a result of or in connection with the redemption of the Notes to which this redemption request relates. The Participant will, at the request of the Company, forward to the Company a copy of the documents submitted by [Name of Representative] in support of the request for redemption.
IN WITNESS WHEREOF, the undersigned has executed this redemption request as of .
CASCADE NATURAL GAS CORPORATION
Cascade Natural Gas Corporation may offer and sell from time to time, in one or more offerings:
The total offering price of these securities, in the aggregate, will not exceed $150,000,000. Our common stock is listed on the New York Stock Exchange under the symbol "CGC."
Our executive offices are located at 222 Fairview Avenue North, Seattle, Washington 98109. Our telephone number is (206) 624-3900.
We will provide the specific terms of these securities in one or more supplements to this prospectus. This prospectus may not be used to offer or sell securities unless accompanied by a prospectus supplement. You should read this prospectus and any prospectus supplement carefully before you invest.
We may offer and sell our securities directly or through underwriters, agents or dealers. The supplements to this prospectus will describe the terms of any particular plan of distribution, including the names of any underwriters, dealers or agents and any underwriting arrangements. The "Plan of Distribution" section of this prospectus also provides more information on this topic.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is October 11, 2001.
This prospectus is part of a registration statement that we filed with the SEC using a "shelf registration" process. Under that process, we may from time to time sell any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $150,000,000.
This prospectus provides you with a general description of the securities we may offer and sell. Each time we offer and sell securities, we will provide a prospectus supplement that will contain specific information about the terms of the offering and the securities being offered. The prospectus supplement may also add, update, or change information contained in this prospectus. If so, the prospectus supplement should be read as superseding this prospectus as to any inconsistent statement. You should read both this prospectus and any prospectus supplement together with additional information described under the heading "Where You Can Find More Information."
As permitted by the rules and regulations of the SEC, this prospectus does not contain all of the information set forth in the registration statement on Form S-3 that we have filed with the SEC. For more details about us and the securities being offered, you should refer to the registration statement and the exhibits filed with the registration statement.
Our discussion in this prospectus, any prospectus supplement or any information incorporated by reference may contain forward-looking statements concerning, among other things, plans, objectives, proposed capital expenditures and future events or performance. These forward-looking statements are not guarantees of future performance. We intend such forward-looking statements, all of which are qualified by this statement, to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of complying with these safe harbor provisions. These statements reflect our current expectations and projections about future events and involve a number of risks and uncertainties that could cause actual results to differ, including:
All of these factors are difficult to predict and many are beyond our control. In light of these risks and uncertainties, the forward-looking events discussed or incorporated by reference in this prospectus or any prospectus supplement might not occur. When used in our documents or oral presentations, the words "anticipate," "believe," "estimate," "expect," "objective," "projection," "forecast," "goal" or similar words are intended to identify forward-looking statements. Except for our ongoing obligations to disclose material information under the federal securities laws, we are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Cascade Natural Gas Corporation was incorporated in the state of Washington in 1953. We distribute natural gas to customers in the states of Washington and Oregon. As of June 30, 2001, we served approximately 191,000 customers in those states. Customers in Washington account for approximately 75% of our gas distribution revenues.
As of June 30, 2001, we served approximately 163,000 residential customers, 27,700 commercial customers, and 757 industrial and other customers. Residential, commercial and most small industrial customers are generally core customers, who take traditional bundled natural gas service, including supply, peaking service, and upstream interstate pipeline transportation. Non-core customers are generally large industrial and institutional customers who have chosen unbundled service, meaning that they select from among several supply and upstream pipeline transportation options, independent of our distribution service.
Our executive offices are located at 222 Fairview Avenue North, Seattle, Washington 98109. Our telephone number is (206) 624-3900.
We are subject to the informational requirements of the Securities Exchange Act of 1934 and, therefore, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our filings are available at the SEC's website at http://www.sec.gov. You may read and copy these materials at prescribed rates at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for more information about the SEC's public reference room.
Our common stock and preferred stock purchase rights are listed and traded on the New York Stock Exchange (symbol: CGC). Accordingly, our SEC filings and other information about us can be inspected and copied at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The SEC allows us to "incorporate by reference" certain information that we file with them separately. This means that we can disclose important information to you by referring you to those other documents. The information incorporated by reference is an important part of this prospectus. Any information that we file with the SEC after the date of this prospectus as part of an incorporated document will automatically update and supersede the information contained in this prospectus.
We incorporate by reference the following previously-filed documents, which contain important information about us and our financial condition:
We also incorporate by reference any additional documents that we may file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus but prior to the termination of this offering.
You may request a copy of any document incorporated by reference, excluding exhibits (unless the exhibit is specifically incorporated by reference into the document), at no cost, by writing or telephoning J.D. Wessling, Senior Vice PresidentFinance and Chief Financial Officer, Cascade
Natural Gas Corporation, 222 Fairview Avenue North, Seattle, Washington 98109 (telephone 206-624-3900).
You should only rely on the information contained in this prospectus or any prospectus supplement or any document incorporated by reference. We have not authorized anyone to provide you with any different information.
We are not making an offer of these securities in any state where the offer is not permitted. You should assume that the information in this prospectus and any prospectus supplement, or incorporated by reference, is accurate only as of the dates of those documents. Our business, financial condition, results of operations and prospects may have changed since those dates.
We intend to use the net proceeds from the sale of the securities offered by us pursuant to this prospectus for general corporate purposes, which may include the refinancing of short-term debt. The prospectus supplement relating to a particular offering of securities by us will identify the use of proceeds for that offering.
The following table sets forth our consolidated ratios of earnings to fixed charges, and to combined fixed charges and preferred dividend requirements, for the twelve-month period ended June 30, 2001, and for each of our fiscal years in the five-year period ended September 30, 2000:
|Year ended September 30,
|Twelve months ended
June 30, 2001
|Ratio of Earnings to Fixed Charges
|Ratio of Earnings to Combined Fixed Charges and Preferred Dividend Requirements
For purposes of computing the consolidated ratios, "earnings" represent our net income from continuing operations plus applicable income taxes and fixed charges, and "fixed charges" represent interest expense, amortization of debt discount, premium and expense, and a portion of lease payments considered to represent an interest factor. For purposes of computing the ratio of earnings to combined fixed charges and preferred dividend requirements, "earnings" represent net income available for common shareholders, and pre-tax preferred stock dividend requirements are added to "fixed charges". As of June 30, 2001, we did not have any preferred stock outstanding and consequently the ratio of earnings to combined fixed charges and preferred dividend requirements is identical to the ratio of earnings to fixed charges for that date.
We may offer and sell debt securities from time to time in one or more distinct series consisting of debentures, notes or other unsecured debt. This section summarizes the material terms of the debt securities that we anticipate will be common to all series. Most of the financial and other terms of any series of debt securities that we offer and any differences from the common terms described in this prospectus will be described in the prospectus supplement. The prospectus supplement will describe the terms relating to any series of debt securities to be offered in greater detail, and may provide information that is different from this prospectus. If the information in the prospectus supplement with respect to the particular series of debt securities being offered differs from this prospectus, you should rely on the information in the prospectus supplement.
As required by U.S. federal law for all bonds and notes of companies that are publicly offered, a document called an "indenture" will govern any debt securities that we issue. An indenture is a contract between us and a financial institution acting as trustee on your behalf. We have entered into an indenture relating to any debt securities that we issue with The Bank of New York, who will act as trustee. The indenture will be subject to the Trust Indenture Act of 1939. The trustee has the following two main roles:
Because this section is a summary of the material terms of the indenture, it does not describe every aspect of the debt securities. We urge you to read the indenture because it, and not this description, will define your rights as a holder of debt securities. We have filed or will file the indenture and any supplements to it as exhibits to the registration statement or periodic reports that we have filed or will file with the SEC. See "Where You Can Find More Information" for information on how to obtain copies of the indenture and any supplements and other related documents for more complete information with respect to the debt securities of any series.
The debt securities may be issued under the indenture from time to time in one or more series. We may issue additional series of debt securities under the indenture with terms different from those of other series of debt securities already issued under the indenture. Without the consent of the holders of outstanding debt securities, we may reopen a previous issue of a series of debt securities and issue additional debt securities of that series unless the series was otherwise limited in aggregate principal amount when created. Although the aggregate principal amount of debt securities offered by this prospectus will be limited to $150,000,000, the indenture does not contain any limitations on the aggregate principal amount of debt securities that may be issued under it at any time.
The debt securities will be our unsecured obligations and will rank equally and ratably with all of our other unsecured and unsubordinated debt, including any securities outstanding under the indenture. As of June 30, 2001, we had $125,000,000 of securities outstanding under the indenture, consisting solely of our Medium Term Notes, which have been issued in different tranches and, therefore, have varying interest rates and maturities.
You should read the prospectus supplement for the terms of the series of debt securities offered by that prospectus supplement, including, among other things, the terms described below. Our board of directors will establish the following terms of a series of debt securities before issuance of the series pursuant to a board resolution or other authorized means under the indenture:
There is no requirement that we issue future debt securities under the indenture, and we may use other indentures or documentation containing different provisions in connection with future issuances of our debt.
We may issue one or more series of debt securities under the indenture with credit enhancement. We will describe any credit enhancement applicable to a series of debt securities, including its terms and conditions and the party or parties providing it, in the prospectus supplement relating to that issue of debt securities.
We may issue the debt securities as "original issue discount securities," which are debt securities, including any zero-coupon debt securities, that are issued and sold at a substantial discount from their
stated principal amount. Original issue discount securities provide that, upon acceleration of their maturity, an amount less than their principal amount will become due and payable. We will describe the United States federal income tax consequences and other considerations applicable to any original issue discount securities in the prospectus supplement relating to that issue of debt securities.
Unless otherwise indicated in the prospectus supplement, the covenants contained in the indenture and the debt securities would not necessarily afford holders protection in the event of a highly leveraged or other transaction involving us that may adversely affect holders.
Global SecuritiesThe Depository Trust Company
We will issue each debt security under the indenture in book-entry form only, unless we specify otherwise in the applicable prospectus supplement. Each debt security issued in book-entry only form will be represented by a global security that we deposit with and register in the name of a financial institution or its nominee that we select to act as depository. Unless we specify otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York (DTC) will be the depository for all debt securities issued in book-entry only form.
So long as the depository, or its nominee, is the registered owner of a global security, such depository or such nominee, as the case may be, will be considered the owner of such global security for all purposes under the indenture, including any notices and voting. Except in the circumstances described below, the owners of beneficial interests in a global security will not be entitled to have debt securities registered in their names, will not receive or be entitled to receive physical delivery of any such debt securities and will not be considered the registered holder thereof under the indenture. Accordingly, each person holding a beneficial interest in a global security must rely on the procedures of the depository and, if such person is not a direct participant, on procedures of the direct participant through which such person holds its interest, to exercise any of the rights of a registered owner of such debt security.
Global securities may be exchanged in whole for certificated securities only if:
In any such case, we have agreed to notify the trustee in writing that, upon surrender by the direct participants and indirect participants of their interest in such global securities, certificated securities representing debt securities will be issued to each person that such direct participants and indirect participants and the depository identify as being the beneficial owner of such debt securities.
Debt securities not issued in global form will be issued only in fully registered form, without interest coupons, and, unless we indicate otherwise in the prospectus supplement, in denominations of $1,000 and amounts that are multiples of $1,000. Holders may exchange their debt securities that are not in global form for debt securities of the same series in different authorized denominations, as long as the total aggregate principal amount is not changed.
The following is based solely on information furnished by DTC:
DTC will act as depository for the global securities. The global securities will be issued as fully-registered securities registered in the name of Cede & Co., DTC's partnership nominee. One fully-
registered global security certificate will be issued for each issue of the global securities, each in the aggregate principal amount of such issue and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing corporation" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its direct participants deposit with DTC. DTC also facilitates the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in direct participants' accounts, thereby eliminating the need for physical movement of securities certificates.
Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a direct participant, either directly or indirectly, which are referred to as indirect participants and, together with the direct participants, the participants. The rules applicable to DTC and its participants are on file with the SEC.
Purchases of global securities under the DTC system must be made by or through direct participants, who will receive a credit for such purchases of global securities on DTC's records. The ownership interest of each actual purchaser of each global security, or beneficial owner, is in turn to be recorded on the direct and indirect participants' records. Beneficial owners will not receive written confirmations from DTC of their purchase, but beneficial owners are expected to receive written confirmation providing details of the transaction, as well as periodic statements of their holdings, from the direct or indirect participant through which the beneficial owner entered into the transaction. Transfers of ownership interests in the global securities are to be accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in the global securities, except in the event that use of the book-entry system for the global securities is discontinued.
To facilitate subsequent transfers, all global securities deposited by participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of global securities with DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the global securities; DTC's records reflect only the identity of the direct participants to whose accounts such global securities are credited, who may or may not be the beneficial owners. The participants will remain responsible for keeping accounts of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct participants and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
If the global securities are redeemable, redemption notices shall be sent to Cede & Co. If less than all of the global securities are being redeemed, DTC's practice is to determine by lot the amount of the interest of each direct participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the global securities. Under its usual procedures, DTC mails an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights to those direct participants to whose accounts the global securities are credited on the record date, identified in a listing attached to the omnibus proxy.
Principal, interest and premium payments on the global securities will be made to DTC in immediately available funds. DTC's practice is to credit direct participants' accounts on the date on which interest is payable in accordance with the respective holdings shown on DTC's records, unless DTC has reason to believe that it will not receive payment on such date. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such participant and not of DTC, the trustee, or us, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, interest and premium (if any) on debt securities represented by global securities to DTC is the responsibility of the trustee and us. Disbursement of such payments to direct participants shall be the responsibility of DTC, and disbursement of such payments to the beneficial owners shall be the responsibility of the participants.
The information in this section concerning DTC and DTC's book-entry system has been obtained from DTC. We believe that the information is reliable, but we take no responsibility for its accuracy.
The underwriters, dealers or agents of any debt securities may be direct participants of DTC.
Neither we, the trustee nor any agent for payment on or registration of transfer or exchange of any global security will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in that global security or for maintaining, supervising or reviewing any records relating to those beneficial interests.
Exchange, Registration and Transfer
Debt securities may be registered, or exchanged for other debt securities with similar terms and principal amount, at the office of the trustee or at any agency we maintain for such purpose. We have discretion to appoint or remove any transfer agent.
We will not be required to issue, exchange or register a transfer of (i) any debt securities of any series for a period of 15 days next preceding the mailing of the notice of any redemption of those debt securities, or (ii) any series selected, called or being called for redemption except, in the case of any series to be redeemed in part, the portion thereof not to be so redeemed.
Holders may exchange or transfer their debt securities at the office of the trustee. We will appoint the trustee to act as our agent for affecting these exchanges or transfers. We may at any time or from time to time appoint another entity to perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer or exchange their debt securities, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if our transfer agent is satisfied with the holder's proof of legal ownership.
If we have designated additional transfer agents for your debt security, they will be named in the prospectus supplement. We may at any time or from time to time appoint additional transfer agents or cancel the appointment of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.
If a debt security is issued as a global security, only the depository as the sole holder of the debt security will be entitled to transfer and exchange the debt security as described in this prospectus under "Global SecuritiesThe Depository Trust Company."
Payment and Paying Agents
The principal, premium (if any) and interest (if any) on debt securities of a particular series not represented by a global security will be payable at the office or agency of the paying agent or paying agents as we may designate from time to time, provided that, at our option, interest, other than interest
due at maturity, may be paid by check mailed to the holders entitled to payment at their last registered address. The trustee is initially designated as our sole paying agent and the principal corporate trust office of the trustee, in New York, New York, is initially designated as the office where the debt securities of any series may be presented for payment, for the registration of transfer and for exchange and where notices and demands to or upon us in respect of the debt securities or of the indenture may be served. Unless otherwise indicated in the applicable prospectus supplement, interest payments shall be made to the person in whose name any debt security of a particular series is registered at the close of business on the record date with respect to an interest payment date. All moneys paid by us to the trustee or a paying agent for the payment of principal, premium (if any) or interest (if any) on any debt security of any series which remain unclaimed at the end of two years after payment was due will be repaid to us, and the holder of such debt security will thereafter look only to us for payment.
Any terms for the optional or mandatory redemption of the debt securities of any particular series will be set forth in the applicable prospectus supplement. Except as otherwise provided in the applicable prospectus supplement, debt securities of any particular series will be redeemable only upon notice, by mail, not less than 30 nor more than 60 days prior to the date fixed for redemption. This notice of redemption shall state, among other things, the date and redemption price, the place at which the debt securities of that series can be surrendered for payment of the redemption price, and whether the redemption is for a sinking fund. If less than all of the debt securities of any series are to be redeemed, the trustee shall select the particular debt securities to be redeemed in such manner as it deems fair and appropriate.
Debt securities of any particular series selected for redemption will become due and payable at the redemption price on the redemption date as specified in the notice to holders. Upon surrender, a debt security selected for redemption will be paid at the redemption price, together with accrued interest (if any) to the redemption date, and if any payment is not made on surrender, the principal and premium (if any) will accrue interest from the redemption date until payment at the rate specified at the issuance of that debt security. Unless we default in the payment of the applicable redemption price, the debt securities of the series to be redeemed, or any portion thereof, will cease to bear interest on the applicable redemption date for that series.
Limitation on Liens
We will not create, assume, incur or permit to exist, any mortgage, lien, pledge or other charge or encumbrance of any kind upon any of our properties or assets, subject to certain exceptions, without making effective provisions to secure equally and ratably the debt securities then outstanding and other indebtedness entitled to be so secured, except that we may, without so securing the debt securities, create, assume, incur or permit to exist:
Consolidation, Merger or Sale
We will not consolidate with or merge into any other corporation or convey, transfer or lease all or substantially all of our assets to any person, firm or corporation unless
Defaults and Rights of Acceleration
The following are events of default under the indenture with respect to any series of debt securities:
An event of default with respect to a particular series of debt securities does not necessarily constitute an event of default with respect to the debt securities of any other series issued under the indenture.
The indenture provides that if an event of default described above with respect to a particular series of debt securities occurs and is continuing where the principal amount of all the debt securities of that series has not already become due and payable, either the trustee or the holders of at least 33%
in aggregate principal amount of the debt securities of that series, by written notice to us (and to the trustee if given by security holders), may declare the principal amount of that series of debt securities (or, with respect to original issue discount debt securities, such lesser amount as may be specified in the terms of such debt securities) to be due and payable immediately; provided, however, that if an event of default occurs and is continuing with respect to more than one series of debt securities, the trustee or the holders of at least 33% in aggregate principal amount of the outstanding debt securities of all those series, considered as one class, may make such declaration, and not the holders of any one series. There is no automatic acceleration, even in the event of our bankruptcy or insolvency.
The applicable prospectus supplement may provide, with respect to a series of debt securities to which credit enhancement is applicable, that the provider of the credit enhancement may, if a default has occurred and is continuing with respect to the series, have all or any part of the rights with respect to remedies that would otherwise have been exercisable by the holder of that series.
At any time after a declaration of acceleration with respect to the debt securities of a particular series, and before a judgment or decree for payment of the money due has been obtained, the event of default giving rise to the declaration of acceleration will, upon written notice to us and the trustee by the holders of a majority in aggregate principal amount of the debt securities of that series, be deemed to have been waived, and the declaration and its consequences will be deemed to have been rescinded and annulled, if
If an event of default has occurred and is continuing with respect to more than one series of debt securities, the trustee or the holders of a majority in aggregate principal amount of the outstanding debt securities of all those series, voting as one class, and not the holders of any one series of debt securities, may rescind and annul such declaration of acceleration. No recission will affect any subsequent default or impair any other rights under the indenture.
The indenture includes provisions as to the duties of the trustee in case an event of default occurs and is continuing. Consistent with these provisions, the trustee will be under no obligation to exercise any of its rights or powers at the request or direction of any of the holders unless those holders have offered to the trustee reasonable indemnity. Subject to these provisions for indemnification, the holders of a majority in principal amount of the outstanding debt securities of any series 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, with respect to debt securities of that series; provided, however, that if an event of default occurs and is continuing with respect to more than one series of debt securities, the holders of a majority in aggregate principal amount of the outstanding debt securities of all those series, voting as one class, shall have this right, and not the holders of any one series of debt securities.
No holder of debt securities of any series may institute any proceeding regarding the indenture, or for the appointment of a receiver or a trustee, or for any other remedy under the indenture unless
The preceding limitations do not apply, however, to a suit instituted by a holder of a debt security of any series for the enforcement of payment of the principal of or any premium or interest on the debt securities of that series on or after the applicable due date stated in the debt securities of that series.
Under the Trust Indenture Act of 1939, the trustee must give the holders of each series of debt securities notice of all uncured defaults with respect to their series within 90 days after occurrence; provided that, except in the case of default in the payment of principal, premium (if any) or interest on any of the debt securities of a particular series, the trustee may withhold notice if it determines in good faith that it is in the interests of the holders of the debt securities of that series.
We will be required to furnish to the trustee annually a statement as to our performance of certain of our obligations under the indenture and as to any default in such performance.
Modification of the Indenture; Waiver
The indenture contains provisions permitting us and the trustee, with the consent of the holders of a majority in aggregate principal amount outstanding of each series of debt securities to be affected, to enter into indentures supplemental to or modifying the indenture or the rights of the holders of that series of debt securities. We cannot, however, without the consent of each affected holder of debt securities, enter into any supplemental indenture that would
Without the consent of any holders of debt securities, we and the trustee may enter into one or more supplemental indentures for any of the following purposes:
The trustee is authorized by the indenture to execute any authorized supplemental indenture and to make any appropriate agreements and stipulations contained in any supplemental indenture. The trustee shall not be obligated to enter into any supplemental indenture that adversely affects the trustee's own rights, duties or immunities under the indenture or otherwise. No supplemental indenture shall be effective as against the trustee unless and until it has been duly executed and delivered by the trustee.
The holders of a majority in principal amount of the outstanding debt securities of any series may, on behalf of the holders of all the debt securities of that series, waive any past default under the indenture, except a default (1) in the payment of principal, premium (if any) or interest (if any) on any debt security of that series, or (2) in respect of a covenant or provision of the indenture which cannot be modified or amended under the indenture without the consent of the holder of each outstanding debt security of that series affected.
If a past default has occurred with respect to more than one series of debt securities, the trustee or the holders of a majority in aggregate principal amount of the outstanding debt securities of all those series, voting as one class, and not the holders of any one series of debt securities, may waive such past default.
Satisfaction and Discharge
Under the indenture, we will be discharged from any and all obligations in respect of the debt securities of any series (except in each case for certain obligations to register the transfer or exchange of debt securities, replace stolen, lost or mutilated debt securities, maintain paying agencies and hold moneys for payment in trust) if we deposit with the trustee, in trust, money, government obligations, or a combination thereof, in an amount sufficient to pay all the principal (including any mandatory sinking
fund payments) of, and premium (if any) and interest on, debt securities of such series on the dates such payments are due in accordance with the terms of those debt securities. This defeasance and discharge will become effective after we have, among other things, delivered to the trustee an opinion of counsel to the effect that the deposit and related defeasance would not cause the holders of the debt securities of such series to recognize income, gain or loss for United States federal income tax purposes, or a copy of a ruling or other formal statement or action to that effect received from or published by the United States Internal Revenue Service.
We must also pay or cause to be paid all other sums payable by us under the indenture with respect to the series, and then the indenture shall cease to be of further effect with respect to that series, and the trustee, on our demand and at our cost and expense, shall execute proper instruments acknowledging this satisfaction and discharge. We agree to reimburse the trustee for any of its costs or expenses reasonably and properly incurred in connection with the indenture or the debt securities of that series after the satisfaction and discharge.
Any notice or demand required or permitted to be given or served by the trustee or by the holders of debt securities to or on us may be given or served by postage prepaid first class mail addressed (until another address is filed by us with the trustee) as follows: Cascade Natural Gas Corporation, 222 Fairview Avenue N., Seattle, Washington 98109, Attention: J.D. Wessling, Vice PresidentFinance, Chief Financial Officer.
Any notice, direction, request or demand by any holder of the debt securities to or upon the trustee shall be deemed to have been sufficiently given or made, if given or made in writing at the principal corporate trust office of the trustee at its Corporate Trust Office, Attention: Corporate Trust Trustee Administration.
Any notice to be given to the holders of the debt securities shall be deemed to have been sufficiently given if in writing and sent by postage prepaid first class mail to the addresses of such holders as they appear in the debt security register.
Replacement of Debt Securities
In case any debt security shall become mutilated or be destroyed, lost or stolen, we, in the case of a mutilated debt security shall, and in the case of a lost, stolen or destroyed debt security may in our discretion, provide a new debt security of the same series. The applicant for a substituted debt security shall furnish to us and the trustee any security or indemnity required by them to save each of us harmless, as well as evidence of the destruction, loss or theft of such debt security and of their ownership. We may require the payment of a sum sufficient to cover any tax, governmental charge or other charges that may be imposed in relation to the issuance of a substituted debt security.
The indenture is and the debt securities will be governed by, and construed in accordance with, the laws of the State of New York.
Concerning the Trustee
Subject to the provisions of the indenture relating to its duties, the trustee will be under no obligation to expend or risk its own funds or to incur any personal financial liability in the performance of its duties under the indenture, or to exercise any of its rights or powers under the indenture, if there are reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured.
This section describes the general terms of our preferred stock to which any prospectus supplement may relate. Certain terms and any differences from the common terms described below of any series of our preferred stock offered by any prospectus supplement will be described in that prospectus supplement. The provisions of our preferred stock described below are not complete. You should refer to our Restated Articles of Incorporation and any certificate of amendment to our Restated Articles of Incorporation or certificate of designations that we file with the SEC in connection with any offering of our preferred stock.
Under our Restated Articles of Incorporation, our board of directors has the authority, without further shareholder action, to issue from time to time preferred stock in one or more series and for such consideration as may be fixed from time to time by our board of directors. Our board also has the authority to fix and determine, in the manner provided by law, the relative rights and preferences of the shares of any series so established, such as dividend and voting rights. Our Restated Articles of Incorporation authorize 1,000,000 shares of preferred stock, $1.00 par value, of which 110,000 shares of Series Z Junior Participating Preferred Stock are reserved for future issuance. See "Description of Common StockPreferred Stock Purchase Rights" below. As a result, we have 890,000 shares of our preferred stock authorized and available for issuance as of the date of this prospectus. Prior to the issuance of each new series of preferred stock, our board of directors will adopt resolutions creating and designating the series as a series of preferred stock.
Any new series of preferred stock will have the dividend, liquidation, redemption, voting and conversion rights set forth below unless otherwise specified in the applicable prospectus supplement. You should read the prospectus supplement relating to the particular series of preferred stock offered for specific terms, including:
No shares of our preferred stock are currently outstanding. Our preferred stock will, when issued, be fully paid and nonassessable and have no preemptive rights.
Preferred stock could be issued quickly with terms that could delay or prevent a change of control or make the removal of management more difficult. Additionally, the issuance of preferred stock may decrease the market price of our common stock and may adversely affect the voting and other rights of the holders of our common stock.
Any series of our preferred stock will, with respect to dividend rights and rights on liquidation, winding up or dissolution, rank:
The holders of our preferred stock will be entitled to receive, when, as and if declared by our board of directors, dividends at such rates and on such dates as will be specified in the applicable prospectus supplement. Such rates may be fixed or variable or both. If variable, the formula used for determining the dividend rate for each dividend period will be specified in the applicable prospectus supplement. Dividends will be payable to the holders of record as they appear on our stock records on such record dates as will be fixed by our board. Dividends may be paid in the form of cash, preferred stock (of the same or a different series) or our common stock, in each case as specified in the applicable prospectus supplement.
Dividends on any series of our preferred stock may be cumulative or noncumulative, as specified in the applicable prospectus supplement. If the dividends on a series of our preferred stock are noncumulative and our board of directors fails to declare a dividend payable on a dividend payment date, then the holders of such preferred stock will have no right to receive a dividend with respect to the dividend period relating to such dividend payment date, and we will not be obligated to pay the dividend accrued for such period, whether or not dividends on such preferred stock are declared or paid on any future dividend payment dates.
We will not declare or pay or set apart for payment any dividends on any series of our preferred stock that rank, as to dividends, on a parity with or junior to the outstanding preferred stock of any series unless (1) if such outstanding preferred stock has a cumulative dividend, full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on such preferred stock for all dividend periods terminating on or prior to the date of payment of any such dividends on such other series of the preferred stock or (2) if such outstanding preferred stock is noncumulative preferred stock, full dividends for the then-current dividend period on such preferred stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment.
Until full dividends are paid (or declared and payment is set aside) on our preferred stock ranking equal as to dividends, then:
dividends or distributions paid for with securities ranking junior to the preferred stock as to dividends and upon liquidation and cash in lieu of fractional shares in connection with such dividends); and
We will not owe any interest, or any money in lieu of interest, on any dividend payment on any series of the preferred stock that may be past due.
A series of our preferred stock may be redeemable, in whole or in part, at our option, and may be subject to mandatory redemption pursuant to a sinking fund or otherwise, in each case upon terms, at the times and at the redemption prices specified in the applicable prospectus supplement. Redeemed shares of our preferred stock will become authorized but unissued shares of preferred stock that we may issue in the future.
The prospectus supplement relating to a series of our preferred stock that is subject to mandatory redemption will specify the number of shares of such preferred stock that we will redeem each year and the redemption price per share. If shares of our preferred stock are redeemed, we will pay all accrued and unpaid dividends on such shares (which will not, if such preferred stock is noncumulative preferred stock, include any accumulation in respect of unpaid dividends for prior dividend periods) up to but excluding the date of redemption. The redemption price may be payable in cash or other property, as specified in the applicable prospectus supplement. If the redemption price for our preferred stock of any series is payable only from the net proceeds of the issuance of our capital stock, the terms of such preferred stock may provide that, if no such capital stock will have been issued or to the extent the net proceeds from any issuance are insufficient to pay in full the aggregate redemption price then due, such preferred stock will automatically and mandatorily be converted into shares of our applicable capital stock pursuant to conversion provisions specified in the applicable prospectus supplement.
If fewer than all the outstanding shares of our preferred stock of any series are to be redeemed, our board will determine the number of shares to be redeemed. We will redeem the shares pro rata from the holders of record of such shares in proportion to the number of shares held by such holders (with adjustments to avoid redemption of fractional shares) or by lot or by any other method as may be determined by our board.
Even though the terms of a series of cumulative preferred stock may permit redemption of that preferred stock in whole or in part, if any dividends, including accumulated dividends, on that series are past due:
The prohibition discussed in the preceding sentence will not prohibit us from purchasing or acquiring preferred stock of that series pursuant to a purchase or exchange offer if we make the offer on the same terms to all holders of that series.
The prospectus supplement relating to a series of convertible preferred stock will describe the terms, if any, on which shares of such series are convertible into our common stock.
Rights Upon Liquidation
Unless the applicable prospectus supplement states otherwise, if we voluntarily or involuntarily liquidate, dissolve or wind up our business, the holders of our preferred stock will be entitled to receive out of our assets available for distribution to shareholders, before any distribution of assets is made to holders of our common stock or any other class or series of shares ranking junior to such preferred stock upon liquidation, liquidating distributions in the amount of the liquidation preference of such preferred stock plus accrued and unpaid dividends (which will not, if such preferred stock is noncumulative preferred stock, include any accumulation in respect of unpaid dividends for prior dividend periods). If we voluntarily or involuntarily liquidate, dissolve or wind up our business and the amounts payable with respect to our preferred stock of any series and any of our other securities ranking equal as to any such distribution are not paid in full, the holders of such preferred stock and of such other shares will share ratably in any such distribution of our assets in proportion to the full respective preferential amounts to which they are entitled. After payment of the full amount of the liquidating distribution to which they are entitled, the holders of our preferred stock of any series will not be entitled to any further participation in any distribution of our assets.
Except as described in this section or in the applicable prospectus supplement, or except as expressly required by applicable law, the holders of our preferred stock will not be entitled to vote. If the holders of a series of our preferred stock are entitled to vote and the applicable prospectus supplement does not state otherwise, each such share will be entitled to one vote on matters on which holders of such series of preferred stock are entitled to vote. For any series of our preferred stock having one vote per share, the voting power of such series, on matters on which holders of such series and holders of other series of our preferred stock are entitled to vote as a single class, will depend on the number of shares in such series, not the aggregate stated value, liquidation preference or initial offering price of the shares of such series of preferred stock.
Unless we receive the consent of the holders of an outstanding series of preferred stock and the outstanding shares of all other series of preferred stock which (i) rank equal with such series either as to dividends or the distribution of assets upon liquidation, dissolution or winding up of our business and (ii) have voting rights that are exercisable and that are similar to those of such series, we will not:
This consent must be given by the holders of a majority of all such outstanding preferred stock described in the preceding sentence, voting together as a single class. We will not be required to obtain this consent with respect to the actions listed in the second bullet point above, however, if we only (1) increase the amount of the authorized preferred stock, (2) create and issue another series of preferred stock, or (3) increase the amount of authorized shares of any series of preferred stock, if such preferred stock in each case ranks equal with or junior to the preferred stock with respect to the payment of dividends and the distribution of assets upon liquidation, dissolution or winding up of our business.
The following statements summarize certain provisions of the Restated Articles of Incorporation. This summary does not purport to be complete and is qualified in its entirety by reference to the Restated Articles of Incorporation, which are filed as an exhibit to the registration statement of which this prospectus is a part.
Our Restated Articles of Incorporation authorize the issuance of 15,000,000 shares of common stock, with 11,045,095 shares issued and outstanding as of June 30, 2001. Our outstanding shares of common stock are listed on the New York Stock Exchange under the symbol "CGC." Any additional common stock we issue will also be listed on the NYSE.
After the payment of all preferential dividends on shares of any preferred stock, if any, holders of the common stock are entitled to dividends when and as declared by our board of directors. Our bank loan agreements contain provisions requiring maintenance of a minimum net worth. Under these provisions, approximately $23,253,000 was available for dividends on the common stock at June 30, 2001.
Except as described below and except as otherwise provided by law, holders of the common stock have exclusive voting power and are entitled to one vote for each share held of record. Approval of matters brought before the shareholders requires the affirmative vote of a plurality of the shares of common stock present and voting, except as otherwise required by law or by the Restated Articles of Incorporation in the case of certain business combinations. The holders of common stock are entitled to cumulate their votes in electing directors.
In the event we liquidate, dissolve or wind up our business, the holders of the common stock are entitled to receive pro rata all of our assets, if any, remaining after payment of all debt and payment to the holders of any outstanding preferred stock of the full preferential amounts fixed for such stock.
Changes in Control and Business Combinations
The Restated Articles of Incorporation and Washington law contain certain provisions that may have the effect of delaying or discouraging a hostile takeover of our company. Article XII of the Restated Articles of Incorporation provides that certain business combinations involving us and any person who is or who has announced a plan to become the beneficial owner of 10% or more of the outstanding common stock (an "Interested Shareholder"), must be approved by the affirmative vote of the holders of at least 80% of the outstanding shares of our capital stock which are not owned by the Interested Shareholder or its affiliates. The 80% voting requirement does not apply in the case of a business combination which provides for conversion of common stock into cash, securities or property with a fair market value not less than the highest per share price paid by the Interested Shareholder or its affiliates for any of their shares of common stock or, under certain circumstances, if the business combination is approved by our board of directors.
In addition, Chapter 23B.19 of the Washington Business Corporation Act prohibits certain Washington corporations, including us, from engaging in certain significant business transactions, such as a merger, share exchange or consolidation, sale, exchange or mortgage of significant assets, or
termination of more than 5% of the employees of such a corporation, for a period of five years following an acquiring person's acquisition of beneficial ownership of 10% or more of the outstanding voting shares of such corporation, unless the significant business transaction or the purchase of such shares is approved in advance of the share acquisition by a majority of the members of the board of directors of such corporation.
Preferred Stock Purchase Rights
In May 1993, we distributed to holders of common stock rights to purchase shares of Series Z Preferred Stock on the basis of one right for each share of common stock. Each share of common stock offered will, upon issuance, be accompanied by one right. The rights may not be exercised and will be attached to and trade with shares of common stock until the Distribution Date, which will occur on the earlier of (i) the tenth day following a public announcement that there has been a "Share Acquisition," i.e., that a person or group (other than us and certain other persons) has acquired or obtained the right to acquire 20% or more of the outstanding common stock and (ii) the tenth business day following the commencement or announcement of certain offers to acquire beneficial ownership of 30% or more of the outstanding common stock. Subject to restrictions on exercisability while the rights are redeemable as discussed below, each right entitles the holder to buy from us one one-hundredth of a share of Series Z Preferred Stock at a price of $85, subject to adjustment. Upon the occurrence of a Share Acquisition, and provided that all necessary regulatory approvals have been obtained, each right will thereafter entitle the holder (other than the acquiring person or group and transferees) to buy from us for $85 shares of common stock having a market value of $170, subject to adjustment.
Until a right is exercised, the holder of a right will not by virtue of such right have any rights as a shareholder, including, without limitation, the right to vote or to receive dividends. There is no assurance that all regulatory approvals for the exercise of the rights or the issuance of the underlying securities could be obtained in a timely fashion or at all.
Furthermore, prior to the Distribution Date, we may, without the consent of holders of the rights, amend the rights in any manner, including amendments which result in the cancellation of the rights. Until the tenth day following a Share Acquisition, we may redeem all outstanding rights at a redemption price of $.01 per right, subject to adjustment. During the period that the rights are subject to redemption, they are not exercisable.
Accordingly, no purchaser of shares of common stock should buy such shares with the expectation that the rights will be of material benefit to the holders of common stock.
The rights have certain antitakeover effects. The rights will cause substantial dilution to a person or group that attempts to acquire us on terms not sanctioned by our board of directors, except pursuant to an offer conditioned on a substantial number of rights being acquired. The rights should not interfere with any merger or other business combination sanctioned by our board of directors at a time when the rights are redeemable.
This description of the rights is subject to and qualified by reference to the Rights Agreement dated as of March 19, 1993 (which was filed as Exhibit 2 to our registration statement on Form 8-A dated April 21, 1993), and the First Amendment to Rights Agreement dated as of June 15, 1993 (which was filed as Exhibit 4 to our quarterly report on Form 10-Q for the quarter ended June 30, 1993). A more complete description of the rights is set forth in Exhibit 99 to our Current Report on Form 8-K filed July 19, 1996, which description has been incorporated by reference in this prospectus.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is The Bank of New York, New York, New York.
All shares of common stock presently outstanding are fully paid and non-assessable and the shares of common stock offered by this prospectus, upon issuance and payment therefor, will be fully paid and non-assessable. Holders of common stock have no preemptive or similar rights to subscribe for our additional securities.
We may sell the securities offered by this prospectus in any of three ways:
The prospectus supplement for the securities we sell will describe that offering, including:
If we use underwriters in the sale, we will execute an underwriting agreement with those underwriters relating to the securities that we offer. Unless otherwise provided in the applicable prospectus supplement, the obligations of the underwriters to purchase these securities will be subject to conditions. The underwriters will be obligated to purchase all of these securities if any are purchased.
The securities subject to the underwriting agreement will be acquired by the underwriters for their own account and may be resold by them from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may be deemed to have received compensation from us in the form of underwriting discounts or commissions and may also receive commissions from the purchasers of these securities for whom they may act as agent. Underwriters may sell these securities to or through dealers. These dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters or commissions from the purchasers for whom they may act as agent. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
We also may sell the securities in connection with a remarketing upon their purchase, in connection with a redemption or repayment, by a remarketing firm acting as principal for its own account or as our agent. Remarketing firms may be deemed to be underwriters in connection with the securities that they remarket.
We may authorize underwriters to solicit offers by institutions to purchase the securities subject to the underwriting agreement from us at the public offering price stated in the prospectus supplement under delayed delivery contracts providing for payment and delivery on a specified date in the future. If we sell securities under these delayed delivery contracts, the prospectus supplement will state that as
well as the conditions to which these delayed delivery contracts will be subject and the commissions payable for that solicitation.
During and after an offering through underwriters, the underwriters may purchase and sell the securities in the open market. These transactions may include overallotment and stabilizing transactions and purchases to convey syndicate short positions created in connection with the offering. The underwriters may also impose a penalty bid, which means that selling concessions allowed to syndicate members or other broker-dealers for the offered securities sold for their account may be reclaimed by the syndicate if the offered securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the offered securities, which may be higher than the price that might otherwise prevail in the open market. If commenced, the underwriters may discontinue these activities at any time.
We may also sell any of the securities through agents designated by us from time to time. We will name any agent involved in the offer or sale of these securities and will list commissions payable by us to these agents in the prospectus supplement. These agents will be acting on a best efforts basis to solicit purchases for the period of their appointment, unless we state otherwise in the applicable prospectus supplement.
We may sell any of the securities directly to purchasers. In this case, we will not engage underwriters or agents in the offer and sale of these securities.
We may indemnify underwriters, dealers or agents who participate in the distribution of the securities against certain liabilities, including liabilities under the Securities Act of 1933, and agree to contribute to payments which these underwriters, dealers or agents may be required to make.
Except as indicated in the applicable prospectus supplement, the securities are not expected to be listed on any securities exchange, except for our common stock, which is listed on the New York Stock Exchange, and any underwriters or dealers will not be obligated to make a market in these securities. We cannot predict the activity or liquidity of any trading in these securities.
The validity of the securities offered by this prospectus and certain other legal matters will be passed upon for us by Hillis Clark Martin & Peterson, P.S., Seattle, Washington, and for any underwriters, dealers or agents by Pillsbury Winthrop LLP, New York, New York. Pillsbury Winthrop LLP represents us from time to time in connection with regulatory proceedings before the Federal Energy Regulatory Commission.
The consolidated financial statements and the related financial statement schedule incorporated in this prospectus by reference from our Annual Report on Form 10-K for the fiscal year ended September 30, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their reports which are incorporated in this prospectus by reference, and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
Cascade Natural Gas Corporation
% Notes Due November 15, 2031
Edward D. Jones & Co., L.P.
November , 2001