AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 6, 2004
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NORTHWEST NATURAL GAS COMPANY
(Exact name of registrant as specified in its charter)
OREGON 93-0256722
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Pacific Square, 220 N.W. Second Avenue
Portland, Oregon 97209
503-226-4211
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
-------------------
MARK S. DODSON
President and Chief Executive Officer
One Pacific Square, 220 N.W. Second Avenue
Portland, Oregon 97209
503-226-4211
BRUCE R. DeBOLT JOHN T. HOOD, Esq.
Senior Vice President, Finance, Thelen Reid & Priest LLP
and Chief Financial Officer 875 Third Avenue
One Pacific Square, 220 N.W. Second Avenue New York, New York 10022
Portland, Oregon 97209 212-603-2000
503-226-4211
(Names, addresses, including zip codes, and telephone numbers, including
area codes, of agents for service)
-------------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
=============================================================================================
Proposed maximum Amount of
Title of each class of securities aggregate offering registration fee
to be registered price (1)(2) (3)
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Debt Securities...................................
Preferred Stock...................................
Common Stock, $3 1/6 par value....................
Common Share Purchase Rights......................
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Total $200,000,000 $19,820
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(1) Includes an indeterminate number or amount of debt securities, shares of
preferred stock and common stock (with common share purchase rights) as may from
time to time be issued at indeterminate prices provided that in no event will
the aggregate initial price of all debt securities, preferred stock and common
stock with common share purchase rights sold under this registration statement
exceed $200,000,000. If any such securities are issued at an original issue
discount, then the aggregate initial offering price as so discounted shall not
exceed $200,000,000, notwithstanding that the stated principal amount of such
securities may exceed such amount. Since no separate consideration will be paid
for the common share purchase rights, the registration fee for such securities
is included in the fee for the common stock. The value attributable to the
common share purchase rights, if any, is reflected in the market price of the
common stock.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Prior to the filing of this registration statement, $60,000,000 aggregate
principal amount of the registrant's securities remained registered and unsold
under Registration Statement No. 333-100326 filed with the SEC on October 4,
2002. The registration fee of $5,520 associated with the unsold securities has
been offset from the registration fee of $25,340 associated with the securities
to be registered, and such unsold securities are hereby deemed deregistered.
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 SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
SUBJECT TO COMPLETION, DATED ___________, 200_
PROSPECTUS
$200,000,000
[GRAPHIC OMITTED][LOGO] [GRAPHIC OMITTED]
NORTHWEST NATURAL GAS COMPANY
DEBT SECURITIES
PREFERRED STOCK
and
COMMON STOCK
Northwest Natural Gas Company (NW Natural) may offer from time to time up
to an aggregate of $200,000,000 of its securities. NW Natural will provide
specific terms of its securities, including their offering prices, in
supplements to this prospectus. The supplements may also add, update or change
information contained in this prospectus. You should read this prospectus and
any supplements carefully before you invest.
NW Natural's common stock is listed on the New York Stock Exchange and
trades under the symbol "NWN."
NW Natural may offer these securities directly or through underwriters,
agents or dealers. The supplements to this prospectus will describe the terms of
any particular plan of distribution, including any underwriting arrangements.
The "Plan of Distribution" section on page ___ of this prospectus also provides
more information on this topic.
NW Natural's principal executive offices are located at One Pacific
Square, 220 N.W. Second Avenue, Portland, Oregon 97209, and its telephone number
is (503) 226-4211.
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.
_________, 200_
--------------------------------------------------------------------------------
The information in this prospectus is not complete and may be changed.
Northwest Natural Gas Company may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted.
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION..........................................3
FORWARD-LOOKING STATEMENTS...................................................3
NW NATURAL...................................................................4
USE OF PROCEEDS..............................................................4
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERENCE DIVIDENDS....................................4
DESCRIPTION OF DEBT SECURITIES...............................................5
DESCRIPTION OF THE BONDS.....................................................5
DESCRIPTION OF THE UNSECURED DEBT SECURITIES.................................9
DESCRIPTION OF PREFERRED STOCK..............................................13
DESCRIPTION OF COMMON STOCK.................................................15
PLAN OF DISTRIBUTION........................................................17
EXPERTS.....................................................................18
LEGALITY....................................................................18
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WHERE YOU CAN FIND MORE INFORMATION
NW Natural files annual, quarterly and other reports and other information
with the Securities and Exchange Commission (SEC). Reports, proxy statements and
other information filed by NW Natural can be read and copied at the public
reference room of the SEC, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. You can obtain additional information about the Public Reference
Room by calling the SEC at 1-800-SEC-0330.
In addition, the SEC maintains a Web site (http://www.sec.gov) that
contains reports, proxy statements and other information filed electronically by
NW Natural. NW Natural also maintains a Web site (http://www.nwnatural.com).
Information contained on NW Natural's Web site does not constitute part of this
prospectus.
NW Natural's common stock is listed on the New York Stock Exchange under
the symbol "NWN", and information concerning NW Natural can also be inspected at
the office of that exchange located at 20 Broad Street, New York, New York
10005.
The SEC allows NW Natural to "incorporate by reference" the information
that NW Natural files with the SEC, which means that NW Natural may, in this
prospectus, disclose important information to you by referring you to those
documents. The information incorporated by reference is an important part of
this prospectus. NW Natural is incorporating by reference the documents listed
below and any future filings NW Natural makes with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended (Exchange
Act), until NW Natural sells all of the securities described in this prospectus.
In addition, any filings which NW Natural makes with the SEC after the initial
filing date of the registration statement of which this prospectus is a part and
prior to the effective date of such registration statement will also be
incorporated by reference in the prospectus. However, any information furnished
under Items 9 or 12 of any Current Report on Form 8-K shall not be deemed
incorporated by reference herein. Information that NW Natural files in the
future with the SEC will automatically update and supersede this information.
o NW Natural's Annual Report on Form 10-K for the year ended December
31, 2002.
o NW Natural's Quarterly Reports on Form 10-Q for the quarters ended
March 31, June 30 and September 30, 2003.
o NW Natural's Current Reports on Form 8-K filed February 5, 2003, May
1, 2003 (with respect to the information set forth under Item 5 of
such report), August 28, 2003 and January 29, 2004 (with respect to
the information set forth under Item 5 of such report).
You may request a copy of these documents, at no cost to you, by writing
or calling Shareholder Services, Northwest Natural Gas Company, One Pacific
Square, 220 N.W. Second Avenue, Portland, Oregon 97209, telephone 503-226-4211.
You should rely only on the information contained in, or incorporated by
reference in, this prospectus and any prospectus supplement. NW Natural has not,
and any underwriters, agents or dealers have not, authorized anyone else to
provide you with different information. NW Natural is not, and any underwriters,
agents or dealers are not, making an offer of these securities or soliciting
offers to buy these securities in any state where the offer or solicitation is
not permitted. You should not assume that the information contained in this
prospectus and any prospectus supplement is accurate as of any date other than
the date on the front of such document or that the information incorporated by
reference in this prospectus is accurate as of any date other than the date of
the document incorporated by reference.
FORWARD-LOOKING STATEMENTS
This document does, and the documents incorporated herein by reference
may, contain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (Securities Act), and Section 21E of the
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Exchange Act. Although NW Natural believes these statements are based on
reasonable assumptions, no assurance can be given that actual results will not
differ from those in the forward-looking statements contained herein and in the
incorporated documents. The forward-looking statements contained herein and in
the incorporated documents may be affected by various uncertainties. For a
discussion of factors which may affect forward-looking statements contained
herein and in the incorporated documents, see NW Natural's most recent Annual
Report on Form 10-K and its most recent Quarterly Report on Form 10-Q.
NW NATURAL
NW Natural is principally engaged in the distribution of natural gas to
customers in western Oregon and southwestern Washington, including the Portland
metropolitan area. NW Natural and its predecessors have supplied gas service to
the public since 1859. NW Natural's executive offices are located at One Pacific
Square, 220 N.W. Second Avenue, Portland, Oregon 97209. Its telephone number is
503-226-4211.
USE OF PROCEEDS
The net proceeds to be received by NW Natural from the sale of these
securities will be added to the general funds of NW Natural and used for
corporate purposes, primarily to fund, in part, NW Natural's ongoing utility
construction program.
NW Natural expects its utility construction expenditures in 2004 to
aggregate $165 million, and in the five-year period, 2004-2008, to aggregate
between $500 million and $600 million.
It is estimated that 60% of the funds required for corporate purposes
during the 2004-2008 period will be internally generated and that the balance,
as well as substantially all of the funds required for the refinancing of
maturing debt, will be raised through the sale of equity and debt securities in
such amounts and at such times as NW Natural's cash requirements and market
conditions shall determine.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERENCE DIVIDENDS
The ratios of earnings to fixed charges and ratios of earnings to combined
fixed charges and preference dividends, calculated according to the rules set
forth under the Securities Act, for the following periods were:
RATIO OF EARNINGS
RATIO OF TO COMBINED FIXED
PERIOD EARNINGS TO CHARGES AND PREFERENCE
FIXED CHARGES DIVIDENDS
------------------------------------------------------------------------------------
Nine Months Ended September 30, 2003* 2.29 2.27
Year Ended December 31, 2002 2.85 2.74
Year Ended December 31, 2001 3.14 3.01
Year Ended December 31, 2000 3.14 3.00
Year Ended December 31, 1999 3.12 2.97
Year Ended December 31, 1998 2.20 2.12
Earnings consist of net income to which has been added taxes on income and
fixed charges. Fixed charges consist of interest on all indebtedness,
amortization of debt expense and discount or premium, and the estimated interest
portion of rentals charged to income. Preference dividends are the amounts of
pre-tax earnings that are required to pay dividends on outstanding preference
securities (which may include any NW Natural preferred and/or preference stock
outstanding for the period).
-------
* A significant part of the businesses of NW Natural is seasonal in nature;
therefore, the ratio of earnings to fixed charges and the ratio of earnings to
combined fixed charges and preference dividends for the interim period are not
necessarily indicative of the results for a full year.
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DESCRIPTION OF DEBT SECURITIES
GENERAL
The following sections set forth certain general terms and provisions of
NW Natural's secured and unsecured debt securities, consisting of first mortgage
bonds and debentures, notes or other debt, that NW Natural may offer by this
prospectus. NW Natural will describe the particular terms of the debt
securities, and provisions that vary from those described below, in one or more
prospectus supplements.
DESCRIPTION OF THE BONDS
GENERAL
NW Natural will issue its first mortgage bonds, in one or more series,
under the Mortgage and Deed of Trust, dated as of July 1, 1946, to Deutsche Bank
Trust Company Americas (formerly known as Bankers Trust Company)(the Corporate
Trustee) and Stanley Burg (successor to R.G. Page and J.C. Kennedy), as trustees
(together, Mortgage Trustees), which has been amended and supplemented in the
past and which may be supplemented again by one or more supplemental indentures
relating to these securities. This Mortgage and Deed of Trust, as amended and
supplemented, is referred to in this prospectus as the "Mortgage." These first
mortgage bonds offered by this prospectus are referred to in this prospectus as
the "Bonds." All first mortgage bonds issued or to be issued under the Mortgage,
including the Bonds, are referred to herein as "First Mortgage Bonds."
This section briefly summarizes some of the provisions of the Bonds and
some of the provisions of the Mortgage and uses some terms that are not defined
in this prospectus but that are defined in the Mortgage. This summary is not
complete. The Mortgage is on file with the SEC and is incorporated by reference
in this prospectus. You should read the Mortgage for a complete understanding of
the provisions that may be important to you and for the definitions of some
terms used in this summary.
Each series of Bonds may have different terms. NW Natural will include
some or all of the following information about a specific series of Bonds in the
prospectus supplement relating to those Bonds:
o the designation of the series and the aggregate principal amount of those
Bonds,
o the interest rate(s) for those Bonds,
o the currency or currencies in which payment of the principal of and
interest on those Bonds may be made,
o the date(s) on which those Bonds will mature,
o the dates on which NW Natural will pay the interest on those Bonds and the
date from which interest will accrue,
o the place(s) where the principal of and interest on those Bonds will be
payable,
o whether all or any portion of those Bonds will be issued to a designated
depositary,
o the additional place(s) for the payment of principal or interest or for the
registration or transfer of those Bonds,
o any terms or obligations of NW Natural relating to creation of a sinking
fund with respect to those Bonds or permitting conversion of those Bonds
into capital stock of the Company or another entity,
o any terms permitting bondholders to exchange those Bonds for other
securities,
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o any terms pursuant to which NW Natural may redeem any of those Bonds, and
o any other terms or provisions relating to those Bonds that are not
inconsistent with the provisions of the Mortgage.
FORM, EXCHANGE AND PAYMENT
Unless otherwise specified in the prospectus supplement relating to the
Bonds, the Bonds will be (1) issued in fully registered form in denominations of
$1,000 or any amount in excess thereof that is an integral multiple of $1,000
and (2) exchangeable at the office of Deutsche Bank Trust Company Americas in
New York City, without charge other than taxes or other governmental charges
incident thereto, and principal, premium, if any, and interest will be payable
at such office.
PROVISIONS FOR MAINTENANCE OF PROPERTY
While the Mortgage contains provisions for the maintenance of the
Mortgaged and Pledged Property, the Mortgage does not permit redemption of Bonds
pursuant to these provisions.
SECURITY
First Mortgage Bonds issued or to be issued under the Mortgage are or will
be secured by the Mortgage, which constitutes a first mortgage lien on certain
gas utility properties owned from time to time by NW Natural (except as stated
below), subject to Excepted Encumbrances, including minor defects and
irregularities customarily found in properties of similar size and character.
There are excepted from the lien:
(1) cash and securities,
(2) certain equipment, apparatus, materials or supplies,
(3) aircraft, automobiles and other vehicles,
(4) receivables, contracts, leases and operating agreements,
(5) timber, minerals, mineral rights and royalties, and
(6) all Natural Gas and Oil Production Property.
The Mortgage contains provisions that impose the lien of the Mortgage on
property acquired by NW Natural after the date of the Mortgage, other than the
excepted property described above and subject to pre-existing liens. However, if
NW Natural consolidates, merges or sells substantially all of its assets to
another corporation, the lien created by the Mortgage will generally not cover
the property of the successor corporation, other than the property it acquires
from NW Natural and improvements, extensions, additions, renewals and
replacements of that property. (See Mortgage, Article XVI.)
The Mortgage provides that the Mortgage Trustees shall have a lien upon
the mortgaged property, prior to that of the First Mortgage Bonds, for the
payment of their reasonable compensation and expenses and for indemnity against
certain liabilities. This lien takes priority over the lien securing the First
Mortgage Bonds. (See Mortgage, Section 96.)
ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS
First Mortgage Bonds may be issued from time to time on the basis of:
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(1) 60% of property additions, after adjustments to offset retirements
(See "Modification of the Mortgage -- Issuance of Additional First
Mortgage Bonds" below),
(2) the retirement of First Mortgage Bonds or qualified lien bonds, or
(3) the deposit of cash.
With certain exceptions in the case of (2) above, the issuance of First Mortgage
Bonds must meet an earnings test. The adjusted net earnings before income taxes
for 12 consecutive months out of the preceding 15 months must be at least twice
the annual interest requirements on all First Mortgage Bonds at the time
outstanding, including the additional issue, and all indebtedness of prior rank.
Property additions generally include gas, electric, steam or hot water
property or gas by-product property acquired after March 31, 1946, but may not
include securities, airplanes, automobiles or other vehicles, or natural gas
transmission lines or Natural Gas and Oil Production Property. As of September
30, 2003, approximately $457 million of property additions were available for
use as the basis for the issuance of First Mortgage Bonds. As of September 30,
2003, approximately $193 million of retired First Mortgage Bonds were available
for use as the basis for the issuance of First Mortgage Bonds.
The Mortgage contains certain restrictions upon the issuance of First
Mortgage Bonds against property subject to liens.
The Bonds will be issued against property additions and/or retired First
Mortgage Bonds.
(See Mortgage, Sections 4-7, 20-30 and 46, and Third Supplemental
Indenture, Sections 3 and 4.)
RELEASE AND SUBSTITUTION OF PROPERTY
Property may be released on the basis of:
(1) the deposit of cash or, to a limited extent, purchase money
mortgages,
(2) property additions, or
(3) the waiver of the right to issue First Mortgage Bonds on the basis
of retired First Mortgage Bonds,
in each case without applying any earnings test.
Cash so deposited as the basis for a release and cash deposited as the basis for
the issuance of additional First Mortgage Bonds may be withdrawn upon the bases
stated in (2) and (3) above without applying an earnings test. When property
released is not funded property, property additions used to effect the release
may again, in certain cases, become available as credits under the Mortgage, and
the waiver of the right to issue First Mortgage Bonds to effect the release may,
in certain cases, cease to be effective as such a waiver. Similar provisions are
in effect as to cash proceeds of such property. The Mortgage contains special
provisions with respect to qualified lien bonds pledged and the disposition of
moneys received on pledged prior lien bonds. (See Mortgage, Sections 5, 31, 32,
37, 46 to 50, 59 to 61, 100 and 118.)
SATISFACTION AND DISCHARGE OF MORTGAGE
The lien of the Mortgage may be canceled and discharged whenever all
indebtedness secured by the Mortgage has been paid. First Mortgage Bonds, or any
portion of the principal amount thereof, will, prior to the maturity thereof, be
deemed to have been paid for purposes of satisfying the lien of the Mortgage and
shall not be deemed to be outstanding for any other purpose of the Mortgage if
there shall have been deposited with the Corporate Trustee either:
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(1) moneys in the necessary amount, or
(2) (a) direct obligations of the government of the United States
of America, or
(b) obligations guaranteed by the government of the United States
of America, or
(c) securities that are backed by obligations of the government of
the United States of America as collateral under an
arrangement by which the interest and principal payments on
the collateral generally flow immediately through to the
holder of the security,
which in any case are not subject to redemption prior to maturity by
anyone other than the holders, and the principal of and the interest
on which when due, and without any regard to reinvestment thereof,
shall be sufficient to pay when due the principal of, premium, if
any, and interest due and to become due on said First Mortgage Bonds
or portions thereof on the redemption date or maturity date thereof,
as the case may be. (See Mortgage, Section 106 and Thirteenth
Supplemental Indenture, Section 3.02.)
DEFAULTS AND NOTICE THEREOF
Defaults are:
(1) default in payment of principal,
(2) default for 60 days in payment of interest or of installments of funds
for the retirement of First Mortgage Bonds,
(3) certain defaults with respect to qualified lien bonds,
(4) certain events in bankruptcy, insolvency or reorganization, and
(5) default for 90 days after notice in the case of a breach of certain
other covenants.
The Mortgage Trustees may withhold notice of default (except in payment of
principal, interest or any fund for the retirement of First Mortgage Bonds) if
they think it is in the interest of the bondholders. (See Mortgage, Sections 65
and 66.)
Holders of 25% of the First Mortgage Bonds may declare the principal and
the interest due on default, but a majority may annul such declaration if such
default has been cured. No holder of First Mortgage Bonds may enforce the lien
of the Mortgage without giving the Mortgage Trustees written notice of a default
and unless holders of 25% of the First Mortgage Bonds have requested the
Mortgage Trustees to act and offered them reasonable opportunity to act and the
Mortgage Trustees have failed to act. The Mortgage Trustees are not required to
risk their funds or incur personal liability if there is reasonable ground for
believing that the repayment is not reasonably assured. Holders of a majority of
the First Mortgage Bonds may direct the time, method and place of conducting any
proceedings for any remedy available to the Mortgage Trustees, or exercising any
trust or power conferred upon the Mortgage Trustees, but the Mortgage Trustees
are not required to follow such direction if not sufficiently indemnified for
expenditures. (See Mortgage, Sections 67, 71, 80 and 94.)
EVIDENCE TO BE FURNISHED TO THE MORTGAGE TRUSTEES
Compliance with Mortgage provisions is evidenced by written statements of
NW Natural's officers or persons selected by NW Natural. In certain major
matters the accountant, engineer, appraiser or other expert must be independent.
Various certificates and other papers, including an annual certificate with
reference to compliance with the terms of the Mortgage and absence of defaults,
are required to be filed annually and upon the occurrence of certain events.
(See Mortgage, Sections 38 and 41-46.)
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MODIFICATION OF THE MORTGAGE
The rights of the bondholders may be modified with the consent of holders
of 70% of the First Mortgage Bonds and, if less than all series of First
Mortgage Bonds are affected, the consent also of holders of 70% of First
Mortgage Bonds of each series affected. NW Natural has the right, without any
consent or other action by holders of any outstanding series of First Mortgage
Bonds, to substitute 66 2/3% for 70%. In general, no modification of the terms
of payment of principal and interest, affecting the lien of the Mortgage or
reducing the percentage required for modification (except as provided above)
will be effective against any bondholder without his consent. (See Mortgage,
Article XIX and Ninth Supplemental Indenture, Section 6.)
NW Natural has the right to amend the Mortgage, without any consent or
other action by holders of any outstanding series of First Mortgage Bonds in the
following respects:
Release and Substitution of Property
To permit the release of property at the lesser of its cost or its fair
value at the time that such property became funded property, rather than at its
fair value at the time of its release; and to facilitate the release of unfunded
property. (See Mortgage, Sections 3, 59 and 60 and Eighteenth Supplemental
Indenture, Section 2.03.)
Issuance of Additional First Mortgage Bonds
To clarify that:
(1) for purposes of determining annual interest requirements, interest
on First Mortgage Bonds or other indebtedness bearing interest at a
variable interest rate shall be computed at the average of the
interest rates borne by such First Mortgage Bonds or other
indebtedness during the period of calculation or, if such First
Mortgage Bonds or other indebtedness shall have been issued after
such period or shall be the subject of pending applications,
interest shall be computed at the initial rate borne upon issuance,
and
(2) no extraordinary items shall be included in operating
expenses or deducted from revenues or other income in
calculating adjusted net earnings (see Mortgage, Section
7); and to revise the basis for the issuance of
additional First Mortgage Bonds from 60% of property
additions, after adjustments to offset retirements, to
70%.
(See Mortgage, Sections 25, 26, 59 and 61 and Eighteenth
Supplemental Indenture, Sections 2.01 and 2.02.)
THE CORPORATE TRUSTEE
Deutsche Bank Trust Company Americas also serves as the Indenture Trustee
under the Indenture under which the Indenture Securities, as defined below, are
issued.
DESCRIPTION OF THE UNSECURED DEBT SECURITIES
GENERAL
NW Natural will issue its unsecured debt securities, in one or more
series, under an Indenture, dated as of June 1, 1991, between NW Natural and
Deutsche Bank Trust Company Americas, as trustee (Indenture Trustee). This
Indenture, as it may be amended and supplemented from time to time, is referred
to in this prospectus as the "Indenture." These unsecured debt securities
offered by this prospectus are referred to in this prospectus as the "Unsecured
Debt Securities."
The Indenture provides for the issuance of debentures, notes or other debt
by NW Natural in an unlimited amount from time to time. The Unsecured Debt
Securities and all other debentures, notes or other debt of NW Natural issued or
9
to be issued under the Indenture are collectively referred to in this prospectus
as the "Indenture Securities."
The Indenture does not limit the amount of debt, secured or unsecured,
which may be issued by NW Natural.
Indenture Securities will rank equally with all other unsecured and
unsubordinated indebtedness of NW Natural. Substantially all of the gas plants,
distribution systems and certain other materially important physical properties
of NW Natural are subject to the lien of the Mortgage securing the First
Mortgage Bonds. (See "Description of the Bonds--Security" and "-- Issuance of
Additional First Mortgage Bonds", above.)
This section briefly summarizes some of the provisions of the Unsecured
Debt Securities and some of the provisions of the Indenture and uses some terms
that are not defined in this prospectus but that are defined in the Indenture.
This summary is not complete. The Indenture is on file with the SEC and is
incorporated by reference in this prospectus. You should read the Indenture for
a complete understanding of the provisions that may be important to you and for
the definitions of some terms used in this summary.
Each series of Unsecured Debt Securities may have different terms. NW
Natural will include some or all of the following information about a specific
series of Unsecured Debt Securities in the prospectus supplement(s) relating to
those Unsecured Debt Securities:
o the title of those Unsecured Debt Securities,
o any limit upon the aggregate principal amount of those Unsecured Debt
Securities,
o whether those Unsecured Debt Securities will be offered on a periodic
basis, with the specific terms of such Unsecured Debt Securities to be
determined upon their issuance.
o the date(s) on which, and the manner in which, NW Natural will pay the
principal of those Unsecured Debt Securities,
o the rate(s) of interest on those Unsecured Debt Securities, or how the
rate(s) of interest will be determined, the date(s) from which interest
will accrue, the dates on which NW Natural will pay interest, the record
date for any interest payable on any interest payment date, the manner in
which such interest shall be payable, and the basis of computation of
interest,
o the place(s) at which or methods by which the registered owners of those
Unsecured Debt Securities may transfer or exchange those Unsecured Debt
Securities and serve notices and demands to or upon NW Natural,
o any date(s) on which, the price(s) at which and the terms and conditions
upon which those Unsecured Debt Securities may be redeemed, in whole or in
part, at the option of NW Natural,
o any obligation of NW Natural, and the terms and conditions thereof, to
redeem or repurchase those Unsecured Debt Securities, pursuant to any
sinking fund or other provisions that would obligate NW Natural to
repurchase or redeem those Unsecured Debt Securities,
o the denominations in which NW Natural may issue those Unsecured Debt
Securities, if other than denominations of $1,000 and any integral multiple
of $1,000,
o whether the amount of payments of principal of, or premium, if any, or
interest on those Unsecured Debt Securities, may be determined with
reference to an index, and, if so the manner in which such amounts shall be
determined,
10
o the portion of the principal amount of those Unsecured Debt Securities that
NW Natural will pay upon declaration of acceleration of the maturity of
those Unsecured Debt Securities, if other than the entire principal amount
of those Unsecured Debt Securities,
o any events of default with respect to those Unsecured Debt Securities and
any covenants of NW Natural for the benefit of the registered owners of
those Unsecured Debt Securities, other than those specified in this
prospectus,
o the terms, if any, pursuant to which those Unsecured Debt Securities may be
converted into or exchanged for shares of capital stock or other securities
of NW Natural or any other entity,
o the person to whom NW Natural will pay interest on those Unsecured Debt
Securities on any interest payment date, if other than the person in whose
name those Unsecured Debt Securities are registered at the close of
business on the record date for that interest payment,
o the amount and terms of a service charge, if any, for the registration of
transfer or exchange of those Unsecured Debt Securities,
o any exceptions to the definition of Legal Holiday or variation in the
definition of Business Day under the Indenture with respect to those
Unsecured Debt Securities,
o the terms, if any, required to permit those Unsecured Debt Securities to be
registered pursuant to a non-certificated system of registration, and
o any other terms of those Unsecured Debt Securities that are not
inconsistent with the provisions of the Indenture.
FORM, EXCHANGE AND PAYMENT
Unless otherwise specified in the prospectus supplement relating to the
Unsecured Debt Securities, the Unsecured Debt Securities will be (1) issued in
fully registered form in denominations of $1,000 or any amount in excess thereof
that is an integral multiple of $1,000 and (2) exchangeable at the office of
Deutsche Bank Trust Company Americas in New York City, without charge other than
taxes or other governmental charges incident thereto, and principal, premium, if
any, and interest will be payable at such office.
DEFEASANCE
The principal amount of the Unsecured Debt Securities of any series issued
under the Indenture will be deemed to have been paid for purposes of the
Indenture and the entire indebtedness of NW Natural in respect thereof will be
deemed to have been satisfied and discharged, if there shall have been
irrevocably deposited with the Indenture Trustee, in trust:
(1) money in an amount which will be sufficient, or
(2) in the case of a deposit made prior to the maturity of those
Unsecured Debt Securities, Government Obligations (as defined
below), which do not contain provisions permitting the redemption or
other prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any regard
to reinvestment thereof, will provide moneys which, together with
the money, if any, deposited with or held by the Indenture Trustee,
will be sufficient, or
(3) a combination of (1) and (2) which will be sufficient,
to pay when due the principal of and premium, if any, and interest, if any, due
and to become due on the Unsecured Debt Securities of that series that are
outstanding. For this purpose, Government Obligations include direct obligations
of, or obligations unconditionally guaranteed by, the United States of America
entitled to the benefit of the full faith and credit thereof and certificates,
11
depositary receipts or other instruments which evidence a direct ownership
interest in such obligations or in any specific interest or principal payments
due in respect thereof. (See Indenture, Sections 101, 701.)
If NW Natural deposits any money and/or Government Obligations with
respect to the Unsecured Debt Securities of any series, or any portion of the
principal amount thereof, prior to the maturity or redemption of such Unsecured
Debt Securities or such portion of the principal amount thereof, for the
satisfaction or discharge of the indebtedness of NW Natural in respect to such
Unsecured Debt Securities or such portion thereof as described in Section 701 of
the Indenture, NW Natural shall deliver to the Indenture Trustee either:
(1) an instrument wherein NW Natural, notwithstanding such satisfaction
and discharge, shall assume the obligation to irrevocably deposit
with the Indenture Trustee such additional sums of money, if any, or
additional Government Obligations, if any, or any combination
thereof, at such time or times, as shall be necessary, together with
the money and/or Government Obligations previously deposited, to pay
when due the principal of and premium, if any, and interest due and
to become due on such Unsecured Debt Securities or such portions
thereof, all in accordance with and subject to the provisions of
said Section 701; provided, however, that such instrument may state
that the obligation of NW Natural to make additional deposits as
described above shall be subject to the delivery to NW Natural by
the Indenture Trustee of a notice asserting the amount of such
deficiency accompanied by an opinion of an independent public
accountant of nationally recognized standing, selected by the
Indenture Trustee, showing the calculation thereof, or
(2) an opinion of counsel to the effect that the holders of such
Unsecured Debt Securities, or such portions of the principal amount
thereof, will not recognize income, gain or loss for United States
federal income tax purposes as a result of such satisfaction and
discharge and will be subject to United States federal income tax on
the same amounts, at the same times and in the same manner as if
such satisfaction and discharge had not been effected.
In the event that NW Natural shall elect to deliver to the Indenture
Trustee an instrument as described in clause (1) of the preceding paragraph in
connection with any such deposit of money and/or Government Obligations with the
Indenture Trustee, under current applicable United States federal income tax
regulations, the holders of such Indenture Securities, or such portions thereof,
will not recognize income, gain or loss for United States federal income tax
purposes as a result of such satisfaction and discharge and will be subject to
United States federal income tax on the same amounts, at the same times and in
the same manner as if such deposit had not been effected. There can be no
assurance that such United States federal income tax regulations will not change
such that, as a result of such deposit and delivery by NW Natural of such
instrument, holders of Unsecured Debt Securities may recognize income, gain or
loss for United States federal income tax purposes and may not be subject to
United States federal income tax on the same amounts, at the same times and in
the same manner as if such deposit had not been made.
EVENTS OF DEFAULT AND NOTICE THEREOF
Events of default are:
(1) default for three business days in payment of principal,
(2) default for 60 days in payment of interest,
(3) certain events in bankruptcy, insolvency or reorganization,
(4) default for 90 days after notice in the case of a breach of any other
covenant, and
(5) any other event of default specified with respect to the Indenture
Securities of a particular series.
12
No event of default with respect to a series of Indenture Securities
necessarily constitutes an event of default with respect to the Indenture
Securities of any other series.
The Indenture Trustee may withhold notice of default (except in payment of
principal, interest or any funds for the retirement of Indenture Securities) if
it, in good faith, determines that withholding of such notice is in the interest
of the holders of the Indenture Securities. (See Indenture, Sections 801 and
903.)
Either the Indenture Trustee or the holders of not less than 33% in
principal amount (or such lesser amount as may be provided in the case of
discount Indenture Securities) of the outstanding Indenture Securities of all
defaulted series, considered as one class, may declare the principal and
interest on such series due on default, but NW Natural may annul such default by
effecting its cure and paying overdue interest and principal. No holder of
Indenture Securities may enforce the Indenture without having given the
Indenture Trustee written notice of default, and unless the holders of a
majority of the Indenture Securities of all defaulted series, considered as one
class, shall have requested the Indenture Trustee to act and offered reasonable
indemnity, and for 60 days the Indenture Trustee shall have failed to act. But,
each holder has an absolute right to receive payment of principal and interest
when due and to institute suit for the enforcement of such payment. The
Indenture Trustee is not required to risk its funds or incur any financial
liability if it has reasonable grounds to believe that repayment is not
reasonably assured.
The holders of a majority of the Indenture Securities of all defaulted
series, considered as one class, may direct the time, method and place of
conducting any proceedings for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred on the Indenture Trustee, with respect
to the Indenture Securities of such series, but the Indenture Trustee is not
required to follow such direction if not sufficiently indemnified and the
Indenture Trustee may take any other action it deems proper which is not
inconsistent with such direction. (See Indenture, Sections 802, 807, 808, 812
and 902.)
EVIDENCE TO BE FURNISHED TO THE INDENTURE TRUSTEE
Compliance with Indenture provisions will be evidenced by written
statements of NW Natural's officers. An annual certificate with reference to
compliance with the covenants and conditions of the Indenture and the absence of
defaults is required to be filed with the Indenture Trustee. (See Indenture,
Section 1004.)
MODIFICATION OF THE INDENTURE
The rights of the holders of the Indenture Securities may be modified with
the consent of the holders of a majority of the Indenture Securities of all
series or Tranches, as defined below, affected, considered as one class.
However, certain specified rights of the holders of Indenture Securities may be
modified without the consent of the holders if such modification would not be
deemed to adversely affect their interests in any material respect.
In general, no modification of the terms of payment of principal and
interest, no reduction of the percentage in principal amount of the Indenture
Securities outstanding under such series required to consent to any supplemental
indenture or waiver under the Indenture, no reduction of such percentage
necessary for quorum and voting, and no modification of certain of the
provisions in the Indenture relating to supplemental indentures, waivers of
certain covenants and waivers of past defaults is effective against any holder
of Indenture Securities without the consent of such holder. "Tranche" means a
group of Indenture Securities which are of the same series and have identical
terms except as to principal amount and/or date of issuance. (See Indenture,
Article Twelve.)
THE INDENTURE TRUSTEE
Deutsche Bank Trust Company Americas also serves as the Corporate Trustee
under the Mortgage under which the First Mortgage Bonds are issued.
DESCRIPTION OF PREFERRED STOCK
The following is a summary of certain rights and privileges of NW
Natural's preferred stock. This summary description does not purport to be
complete. Reference is made to NW Natural's Restated Articles of Incorporation,
13
its Bylaws and any articles of amendment to the Restated Articles of
Incorporation establishing a particular series of preferred stock, which are
filed as exhibits to this registration statement, or in the case of any articles
of amendment relating to a future series of preferred stock, will be filed with
the SEC prior to the issuance of such series, and incorporated herein by
reference. The following statements are qualified in their entirety by such
references.
The Board of Directors is authorized under NW Natural's Restated Articles
of Incorporation to provide for the issuance from time to time of preferred
stock in one or more series, and as to each series to fix and determine the
relative rights and preferences, serial designation, dividend rate, redemption
prices, voluntary and involuntary liquidation prices, sinking fund provisions
for the redemption or purchase of shares, if any, and conversion provisions, if
any, applicable to shares of such series. NW Natural will include some or all of
this information about a specific series of preferred stock being offered in the
prospectus supplement(s) relating to such series. As used herein, the term
"preferred stock" includes all series.
DIVIDENDS
Each series of the preferred stock is entitled in preference to the common
stock and the preference stock (a separate class of capital stock subordinate to
the preferred stock, see Restated Articles of Incorporation, Article III, C. 10)
to dividends cumulative from the date of issue, at the rate fixed by the Board
of Directors, payable quarterly on February 15, May 15, August 15 and November
15.
VOTING RIGHTS
Generally, only NW Natural's common stock has voting rights. The common
stock has cumulative voting rights with respect to the election of directors.
The preferred stock has the special right to elect the smallest number of
directors which shall constitute at least one-fourth of the total number of
directors, or two directors, whichever shall be greater, if payments of four
full quarterly dividends or more per share on any share or shares of preferred
stock are in arrears.
OTHER PROVISIONS
NW Natural may not, without the written consent or affirmative vote of the
holders of two-thirds of the preferred stock then outstanding (1) create or
authorize any new stock ranking prior to the preferred stock as to dividends or
upon dissolution, liquidation or winding up, or (2) amend, alter or repeal any
of the express terms of the preferred stock then outstanding in a manner
substantially prejudicial to the holders thereof, except, that, if any such
proposed amendment, alteration or repeal would be substantially prejudicial to
less than all series of preferred stock, then only the consent of the holders of
two-thirds of the total number of shares of all series so affected is required.
In addition, NW Natural may not, without the written consent or
affirmative vote of the holders of a majority of the preferred stock then
outstanding, issue preferred stock or any other class of stock ranking prior to
or on a parity with the preferred stock as to dividends or upon dissolution,
liquidation or winding up unless (1) the net income of NW Natural available for
the payment of dividends for a period of twelve consecutive months within the
fifteen preceding months is at least equal to two times the annual dividend
requirements of the preferred stock, and all other classes of stock ranking
prior to or on a parity with the preferred stock, to be outstanding immediately
after the issuance of such stock, including the stock proposed to be issued, and
the gross income of NW Natural available for the payment of interest for a
period of twelve consecutive months within the fifteen preceding months is at
least equal to one and one-half times the aggregate of the annual interest
requirements on its indebtedness, and the annual dividend requirements of the
preferred stock and of all other classes of stock ranking prior to or on a
parity with the preferred stock as to dividends or upon dissolution, liquidation
or winding up, to be outstanding immediately after the issuance of such stock,
including the stock proposed to be issued and (2) the capital of NW Natural
applicable to the common stock and its surplus is not less than the amount
payable on the involuntary dissolution, liquidation or winding up of the
corporation on the preferred stock, and on all other classes of stock ranking
prior to or on a parity with the preferred stock as to the dividends or upon
dissolution, liquidation or winding up, to be outstanding immediately after the
issuance of such shares, including the shares proposed to be issued.
14
Certain terms relating to NW Natural's preferred stock and preference
stock in respect of dividends, liquidation rights, limitations on payment of
dividends and voting are discussed below in "Description of Common Stock--
Dividends and Liquidation Rights" and "-- Dividend Limitations".
DESCRIPTION OF COMMON STOCK
GENERAL
The following is a summary of certain rights and privileges of NW
Natural's common stock and the associated common share purchase rights. This
summary description does not purport to be complete. Reference is made to NW
Natural's Restated Articles of Incorporation and its Bylaws and the Rights
Agreement, dated as of February 27, 1996, as amended (Rights Agreement), between
NW Natural and ChaseMellon Shareholder Services which are filed as exhibits to
this registration statement, and incorporated herein by reference. The following
statements are qualified in their entirety by such references.
DIVIDENDS AND LIQUIDATION RIGHTS
Except as hereinafter stated, the common stock is entitled to receive such
dividends as are declared by the Board of Directors and to receive ratably on
liquidation any assets which remain after payment of liabilities. NW Natural has
two authorized classes of senior capital stock. They are preferred stock and
preference stock, none of which is currently outstanding. NW Natural's preferred
stock and preference stock are entitled in preference to the common stock (1) to
cumulative dividends at the annual rate fixed for each series by the Board of
Directors, and (2) in voluntary and involuntary liquidation, to the amounts
fixed for each series by the Board of Directors, plus in each case, unpaid
accumulated dividends.
DIVIDEND LIMITATIONS
Should dividends on either the preferred stock or the preference stock be
in arrears, no dividends on the common stock may be paid or declared. Except
with the consent of the holders of a majority of the preferred stock then
outstanding, no dividends on the common stock or the preference stock may be
paid or declared unless the preferred stock purchase and sinking fund
obligations have been met for that year. Future series of the preferred stock or
the preference stock could contain sinking fund, purchase or redemption
obligations under which no dividends on the common stock may be paid or declared
while such obligations are in default. Common stock dividends also may be
restricted by the provisions of future instruments pursuant to which NW Natural
may issue long-term debt.
VOTING RIGHTS
Except as provided by law or as described below, only the common stock has
voting rights. Cumulative voting is permitted by the Restated Articles of
Incorporation to holders of common stock at elections of directors. The
preferred stock has the special right to elect the smallest number of directors
which constitutes at least one-fourth of the total number of directors, or two
directors, whichever is greater, if payments of four quarterly dividends or more
on any share or shares of preferred stock should be in arrears.
CLASSIFICATION OF THE BOARD OF DIRECTORS
The Board of Directors of NW Natural may consist of not less than 9 nor
more than 13 persons, as determined by the Board, divided into three classes as
nearly equal in number as possible. The current number is 11. One class is
elected for a three-year term at each annual meeting of shareholders. Vacancies,
including those resulting from an increase in the size of the Board, may be
filled by a majority vote of the directors then in office, to serve until the
next annual meeting of shareholders. One or more of the directors may be
removed, with or without cause, by the affirmative vote of the holders of not
less than two-thirds of the shares entitled to vote thereon; provided, however,
that if fewer than all of the directors should be candidates for removal, no one
of them shall be removed if the votes cast against such director's removal would
be sufficient to elect such director if then cumulatively voted at an election
15
of the class of directors of which such director shall be a part. Except for
those persons nominated by the Board, no person shall be eligible for election
as a director unless a request from a shareholder entitled to vote in the
election of directors that such person be nominated and such person's consent
thereto shall be delivered to the Secretary of NW Natural within the time period
specified in advance of the meeting at which such election shall be held. The
foregoing provisions may not be amended or repealed except by the affirmative
vote of the holders of not less than two-thirds of the shares entitled to vote
at an election of directors. The foregoing provisions will not apply to
directors, if any, elected by the holders of the preferred stock.
TRANSACTIONS WITH RELATED PERSONS
NW Natural shall not enter into any business transaction with a related
person or in which a related person shall have an interest (except
proportionately as a shareholder of NW Natural) without first obtaining both (1)
the affirmative vote of the holders of not less than two-thirds of the
outstanding shares of the capital stock of NW Natural not held by such related
person, and (2) the determination of a majority of the continuing directors that
the cash or fair market value of the property, securities or other consideration
to be received per share by the holders, other than such related person, of the
shares of each class or series of the capital stock of NW Natural in such
business transaction shall not be less than the highest purchase price paid by
such related person in acquiring any of its holdings of shares of the same class
or series, unless the continuing directors by a majority vote shall either (a)
have expressly approved the acquisition of the shares of the capital stock of NW
Natural that caused such related person to become a related person, or (b) have
expressly approved such business transaction. As used in this paragraph: a
"business transaction" includes a merger, consolidation, reorganization or
recapitalization, a purchase, sale, lease, exchange or mortgage of all or a
substantial part (10% or more) of the property of NW Natural or a related
person, an issuance, sale or exchange of securities and a liquidation, spin-off
or dissolution; a "related person" includes a person, organization or group
thereof owning 10% or more of the capital stock of NW Natural; "continuing
directors" are those whose nominations for directorship shall have been approved
by a majority of the directors in office on April 9, 1984 or by a majority of
the then continuing directors. The foregoing provisions may not be amended or
repealed except by the affirmative vote of the holders of not less than
two-thirds of the shares of the capital stock of NW Natural (other than shares
held by related persons).
PREEMPTIVE RIGHTS
The holders of the common stock have no preemptive rights.
OTHER PROVISIONS
The issued and outstanding shares of NW Natural's common stock are, and
the common stock offered hereby will be, fully paid and nonassessable.
COMMON SHARE PURCHASE RIGHTS
The holders of the common stock have one common share purchase right for
each of their shares. Each right, initially evidenced by and traded with the
common stock, entitles the holder to purchase one-tenth of a share of common
stock at a purchase price of $6.67, subject to adjustment (Purchase Price). The
rights will be exercisable only if a person or group (Person) shall acquire
ownership of 15% or more of the common stock (such Person being hereinafter
referred to as an Acquiring Person) or shall announce a tender offer, the
consummation of which would result in such Person becoming an Acquiring Person.
If any Person shall have become an Acquiring Person, each right, other
than rights owned by the Acquiring Person (which shall be void), may be
exercised by its holder to purchase, at a 50% discount, shares of common stock
having a market value equal to 20 times the Purchase Price. If a Person shall
have become an Acquiring Person but shall not have acquired ownership of 50% or
more of the common stock, the Board of Directors may provide for the exchange of
all or a part of the rights (other than rights which shall be void as described
above) for common stock at a ratio of one share per right.
In the event that (i) NW Natural shall consolidate or merge with any other
Person, (ii) any Person shall consolidate or merge with NW Natural and NW
Natural shall be the surviving corporation and, in connection therewith, all or
16
part of the common stock shall be changed into or exchanged for stock or other
securities of any Person (including NW Natural) or cash or any other property,
or (iii) NW Natural shall sell or otherwise transfer, assets or earning power
aggregating 50% or more of the assets or earning power of NW Natural to any
other Person, each right, except rights owned by an Acquiring Person (which
shall be void), may be exercised by its holder to purchase, at a 50% discount,
shares of common stock of the other Person having a market value equal to 20
times the Purchase Price.
At any time prior to any Person becoming an Acquiring Person, the Board of
Directors may redeem the rights at a price of $.01 per right. The rights will
expire on March 15, 2006 unless they are exchanged or redeemed (as described
above) earlier than that date.
The issuance of common stock upon exercise of the rights will be subject
to any necessary regulatory approvals.
The rights have anti-takeover effects because they will cause substantial
dilution of the common stock if a Person attempts to acquire NW Natural on terms
not approved by the Board of Directors.
PLAN OF DISTRIBUTION
NW Natural may sell the securities offered pursuant to this prospectus and
one or more prospectus supplements (Offered Securities) in one or more series in
any of three ways: (1) through underwriters or dealers; (2) through agents; or
(3) directly to a limited number of purchasers or to a single purchaser.
THROUGH UNDERWRITERS OR DEALERS
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at the
initial public offering price or at varying prices determined at the time of the
sale. The Offered Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more managing underwriters. The underwriter or underwriters
with respect to the Offered Securities will be named in the prospectus
supplement relating to such offering and, if an underwriting syndicate is used,
the managing underwriter or underwriters will be set forth on the cover page of
such prospectus supplement. Unless otherwise set forth in such prospectus
supplement, the obligations of the underwriters to purchase the Offered
Securities offered by such prospectus supplement will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all of
such Offered Securities if any are purchased.
THROUGH AGENTS
The Offered Securities may be sold through agents designated by NW Natural
from time to time. A prospectus supplement will set forth the name of any agent
involved in the offer or sale of the Offered Securities in respect of which such
prospectus supplement is delivered as well as any commissions payable by NW
Natural to such agent. Unless otherwise indicated in such prospectus supplement,
any such agent will be acting on a reasonable best efforts basis for the period
of its appointment.
DIRECTLY TO ONE OR MORE PURCHASERS
NW Natural may sell the Offered Securities directly to one or more
purchasers. In this case, no underwriters or agents would be involved.
GENERAL INFORMATION
The prospectus supplement with respect to the Offered Securities will set
forth the terms of the offering of such Offered Securities, including:
17
o the name or names of any underwriters, dealers or agents;
o the purchase price of such Offered Securities and the proceeds
to NW Natural from such sale;
o any underwriting discounts, agents' commissions and other items
constituting underwriting compensation;
o any initial public offering price; and
o any discounts or concessions allowed or reallowed or paid to
dealers.
Any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers may be changed from time to time.
If so indicated in the prospectus supplement with respect to the Offered
Securities, NW Natural may authorize agents, underwriters or dealers to solicit
offers by certain specified institutions to purchase the Offered Securities from
NW Natural at the initial public offering price set forth in the prospectus
supplement pursuant to delayed delivery contracts providing for payment and
delivery on a specified date in the future. Such contracts will be subject to
those conditions set forth in such prospectus supplement, and such prospectus
supplement will set forth the commission payable for solicitation of such
contracts.
Agents, underwriters and dealers may be entitled under agreements entered
into with NW Natural to indemnification by NW Natural against certain civil
liabilities, including certain liabilities under the Securities Act or to
contribution by NW Natural with respect to payments which such agents,
underwriters and dealers may be required to make in respect thereof.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
NW Natural's Annual Report on Form 10-K for the year ended December 31, 2002
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
LEGALITY
The legality of the securities will be passed upon for NW Natural by Beth
A. Ugoretz, Esquire, General Counsel of NW Natural, and by Thelen Reid & Priest
LLP, New York, New York, and for the underwriters, dealers, or agents by Simpson
Thacher & Bartlett LLP, New York, New York. Ms. Ugoretz may rely upon the
opinion of Thelen Reid & Priest LLP as to certain legal matters arising under
New York law. Thelen Reid & Priest LLP and Simpson Thacher & Bartlett LLP may
rely upon the opinion of Ms. Ugoretz as to certain legal matters arising under
Oregon law, and Ms. Ugoretz, Thelen Reid & Priest LLP and Simpson Thacher &
Bartlett LLP may rely upon the opinion of Stoel Rives LLP, Portland, Oregon, as
to certain legal matters arising under Washington law. However, all matters
pertaining to titles, the lien and enforceability of the Mortgage and
franchises, will be passed upon only by Ms. Ugoretz, who may rely on the opinion
of Stoel Rives LLP as to certain legal matters arising under Washington law.
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (ESTIMATED, EXCEPT SEC
FILING FEE).
Filing Fee-Securities and Exchange
Commission................................... $19,820
Fees of Trustees, including counsel
and authentication fees...................... $20,000
Legal fees ..................................... $175,000
Accounting fees and expenses ................... $50,000
Rating Agencies' fees .......................... $105,000
Printing and engraving ......................... $25,000
Miscellaneous expense .......................... $10,180
--------
Total expenses ............................... $405,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Oregon Business Corporation Act (the "Act") provides, in general, that
a director or officer of a corporation who has been or is threatened to be made
a defendant in a legal proceeding because that person is or was a director or
officer of the corporation:
(1) shall be indemnified by the corporation for all expenses of such
litigation when the director or officer is wholly successful on the merits or
otherwise;
(2) may be indemnified by the corporation for the expenses, judgments,
fines and amounts paid in settlement of such litigation (other than a derivative
lawsuit) if he or she acted in good faith and in a manner reasonably believed to
be in, or at least not opposed to, the best interests of the corporation (and,
in the case of a criminal proceeding, had no reasonable cause to believe the
conduct was unlawful); and
(3) may be indemnified by the corporation for expenses of a derivative
lawsuit (a suit by a shareholder alleging a breach by a director or officer of a
duty owed to the corporation) if he or she acted in good faith and in a manner
reasonably believed to be in, or at least not opposed to, the best interests of
the corporation, provided the director or officer is not adjudged liable to the
corporation.
The Act also authorizes the advancement of litigation expenses to a
director or officer upon receipt of a written affirmation of the director's or
officer's good faith belief that the standard of conduct in Section (2) or (3)
above has been met and an undertaking by such director or officer to repay such
expenses if it is ultimately determined that he or she did not meet that
standard and, therefore, is not entitled to be indemnified. The Act also
provides that the indemnification provided thereunder shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any bylaw, agreement, vote of shareholders or disinterested directors or
otherwise.
NW Natural's Bylaws provide that NW Natural shall indemnify directors and
officers to the fullest extent permitted under the Act, thus making mandatory
the discretionary indemnification authorized by the Act.
NW Natural's Restated Articles of Incorporation provide that NW Natural
shall indemnify its officers and directors to the fullest extent permitted by
law, which may be broader than the indemnification authorized by the Act.
II-1
NW Natural's shareholders have approved and NW Natural has entered into
indemnity agreements with its directors and officers which provide for indemnity
to the fullest extent permitted by law and also alter or clarify the statutory
indemnity in the following respects:
(1) prompt advancement of litigation expenses is provided if the director
or officer makes the required affirmation and undertaking;
(2) the director or officer is permitted to enforce the indemnity
obligation in court and the burden is on NW Natural to prove that the director
or officer is not entitled to indemnification;
(3) indemnity is explicitly provided for judgments and settlements in
derivative actions;
(4) prompt indemnification is provided unless a determination is made that
the director or officer is not entitled to indemnification; and
(5) partial indemnification is permitted if the director or officer is not
entitled to full indemnification.
NW Natural maintains in effect a policy of insurance providing for
reimbursement to NW Natural of payments made to directors and officers as
indemnity for damages, judgments, settlements, costs and expenses incurred by
them which NW Natural may be required or permitted to make according to
applicable law, common or statutory, or under provisions of its Restated
Articles of Incorporation, Bylaws or agreements effective under such laws.
ITEM 16. LIST OF EXHIBITS.
Reference is made to the Exhibit Index on page II-6 hereof.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933 (the Securities Act);
(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 and 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;
provided, however, that paragraphs (a)(1)(i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Sections 13 or 15(d) of the Securities
Exchange Act of 1934 (the Exchange Act) that are incorporated by reference in
the registration statement;
II-2
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering; and
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Sections 13(a) or
15(d) of the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 15 above, 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 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 and will be governed by the final adjudication of such issue.
(j) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of section 310 of the Trust Indenture Act of 1939 (Trust
Indenture Act) in accordance with the rules and regulations prescribed by the
Commission under section 305(b)(2) of the Trust Indenture Act.
II-3
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
hereinafter hereby appoints Mark S. Dodson, Bruce R. DeBolt, Beth A. Ugoretz and
John T. Hood, the Agents for Service named in this registration statement, and
each of them severally, as his attorney-in-fact to sign in his name and behalf,
in any and all capacities stated below, and to file with the Securities and
Exchange Commission any and all amendments, including post-effective amendments,
to this registration statement, and the registrant hereby also appoints each
such Agent for Service as its attorney-in-fact with like authority to sign and
file any such amendments in its name and behalf.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Portland, and State of Oregon, on the 6th day of
February, 2004.
NORTHWEST NATURAL GAS COMPANY
By: /s/ Mark S. Dodson
------------------------------------
Mark S. Dodson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Mark S. Dodson Principal Executive February 6, 2004
------------------------ Officer, and Director
Mark S. Dodson,
President and Chief
Executive Officer
/s/ Bruce R. DeBolt Principal Financial February 6, 2004
------------------------ Officer
Bruce R. DeBolt
Senior Vice President,
Finance, and Chief
Financial Officer
/s/ Stephen P. Feltz Principal Accounting February 6, 2004
------------------------ Officer
Stephen P. Feltz,
Treasurer and Controller
/s/ Timothy P. Boyle Director ) February 6, 2004
------------------------ )
Timothy P. Boyle )
/s/ John D. Carter Director ) February 6, 2004
------------------------ )
John D. Carter )
/s/ C. Scott Gibson Director ) February 6, 2004
------------------------ )
C. Scott Gibson )
/s/ Tod R. Hamachek Director ) February 6, 2004
------------------------ )
Tod R. Hamachek )
/s/ Randall C. Pape Director ) February 6, 2004
------------------------ )
Randall C. Pape )
II-4
/s/ Richard G. Reiten Director ) February 6, 2004
------------------------------ )
Richard G. Reiten )
/s/ Robert L. Ridgley Director ) February 6, 2004
------------------------------ )
Robert L. Ridgley )
/s/ Melody C. Teppola Director ) February 6, 2004
------------------------------ )
Melody C. Teppola )
/s/ Russell F. Tromley Director ) February 6, 2004
------------------------------ )
Russell F. Tromley )
/s/ Richard L. Woolworth Director ) February 6, 2004
------------------------------ )
Richard L. Woolworth )
II-5
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION
-------- ----------------------------------------------------------------------
+1(a) Form of Underwriting Agreement relating to the debt securities.
+1(b) Form of Underwriting Agreement relating to the common stock.
+1(c) Form of Underwriting Agreement relating to the preferred stock.
*4(a) Restated Articles of Incorporation, as filed and effective June 24,
1988, as amended December 8, 1992, December 1, 1993 and May 27, 1994
(filed as Exhibit 3a. to Form 10-K for 1994).
4(b) Bylaws as amended December 18, 2003.
*4(c) Rights Agreement, dated as of February 27, 1996, between the Company
and Boatmen's Trust Company, ChaseMellon Shareholder Services as
successor, which includes as Exhibit A thereto the form of a Right
Certificate and as Exhibit B thereto the Summary of Rights to Purchase
Common Shares (filed as Exhibit 1 to Form 8-A, dated February 27,
1996), as amended by Amendment No. 1 thereto, dated October 5, 2001
(filed as Exhibit 4h. to Form 10-K for 2002).
+4(d) Form of Articles of Amendment to Restated Articles of Incorporation
establishing a series of Preferred Stock.
*4(e) Copy of Mortgage and Deed of Trust, dated as of July 1, 1946, to
Bankers Trust Company (now Deutsche Bank Trust Company Americas) and
R.G. Page (to whom Stanley Burg is now successor), Trustees (filed as
Exhibit 7(j) in File No. 2-6494), together with Indentures
supplemental thereto Nos. 1 through 14, dated, respectively, as of
June 1, 1949, March 1, 1954, April 1, 1956, February 1, 1959, July 1,
1961, January 1, 1964, March 1, 1966, December 1, 1969, April 1, 1971,
January 1, 1975, December 1, 1975, July 1, 1981, June 1, 1985, and
November 1, 1985 (filed as Exhibit 4(d) in File No. 33-1929); No. 15,
dated as of July 1, 1986 (filed as Exhibit (4)(c) in File No.
33-24168); Nos. 16, 17 and 18, dated, respectively, as of November 1,
1988, October 1, 1989 and July 1, 1990 (filed as Exhibit (4)(c) in
File No. 33-40482); No. 19, dated as of June 1, 1991 (filed as Exhibit
4(c) in File No. 33-64014; and No. 20, dated as of June 1, 1993 (filed
as Exhibit 4(c) in File No. 33-53795).
4(f) Form of Supplemental Indenture relating to First Mortgage Bonds.
4(g) Form of First Mortgage Bond.
*4(h) Copy of Indenture, dated as of June 1, 1991, to Bankers Trust Company
(now Deutsche Bank Trust Company Americas), Trustee, relating to the
Unsecured Debt Securities (filed as Exhibit 4(e) in File No.
33-64014).
*4(i) Copy of Officers' Certificate, dated as of June 18, 1993, establishing
series of unsecured medium term notes and Form of Instructions for
both secured and unsecured medium term notes (filed as Exhibit 4(f) to
Form 10-K for the year ended December 31, 1993).
4(j) Form of Officers' Certificate, together with form of fixed rate
unsecured note, establishing the issuance of one or more series of
Unsecured Debt Securities (including the form of Unsecured Debt
Security).
5(a) Opinion of Beth A. Ugoretz, Esquire, regarding the validity of the
securities.
5(b) Opinion of Thelen Reid & Priest LLP, regarding the validity of the
securities.
12 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Combined Fixed Charges and Preference Dividends.
23(a) Consent of PricewaterhouseCoopers LLP.
23(b) Consent of Stoel Rives LLP.
II-6
23(c) The consents of Beth A. Ugoretz, Esquire, and of Thelen Reid & Priest
LLP are included in their opinions filed, respectively, as Exhibits
5(a) and 5(b).
24 Power of attorney (see page II-4).
25(a) Statement of Eligibility of the Corporate Trustee on Form T-1.
25(b) Statement of Eligibility of Stanley Burg on Form T-2.
25(c) Statement of Eligibility of the Indenture Trustee on Form T-1.
-----------
* Incorporated by reference herein as indicated.
+ To be filed by amendment or pursuant to a report to be filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 if applicable.
II-7