FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 333-86356
PROSPECTUS SUPPLEMENT
(To Prospectus Dated August 27, 2002)
$300,000,000
[ANADARKO PETROLEUM CORPORATION LOGO]
5% NOTES DUE 2012
This is an offering of $300,000,000 of 5% notes due 2012 to be issued by
Anadarko Petroleum Corporation. The notes will be our unsecured senior
obligations and will rank equally with all of our other senior unsecured
indebtedness that is not specifically subordinated to the notes. The notes will
bear interest at the rate of 5% per year and will mature on October 1, 2012. We
will pay interest on the notes on April 1 and October 1, of each year, beginning
on April 1, 2003. We may redeem the notes at any time at their principal amount,
plus the applicable premium and accrued interest. The notes do not provide for a
sinking fund.
We do not intend to list the notes on any securities exchange.
---------------------
INVESTING IN THE NOTES INVOLVES RISKS. WE URGE YOU TO CONSIDER CAREFULLY
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 8 OF THE ACCOMPANYING PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the notes or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
PER NOTE TOTAL
-------- ------------
Public Offering Price................................ 99.112% $297,336,000
Underwriting Discount(1)............................. .650% $ 1,950,000
Proceeds to Anadarko (before expenses)............... 98.462% $295,386,000
---------------
(1) Before reimbursement of certain expenses. See "Underwriting."
Interest on the notes will accrue from and including the settlement date,
which is expected to be September 20, 2002.
The notes will be ready for delivery in book-entry form only through the
facilities of The Depository Trust Company on or about September 20, 2002.
---------------------
DEUTSCHE BANK SECURITIES
Sole Book-Running Lead Manager
---------------------
CREDIT SUISSE FIRST BOSTON
JPMORGAN
SALOMON SMITH BARNEY
---------------------
ABN AMRO INCORPORATED
BMO NESBITT BURNS
FLEET SECURITIES, INC.
THE ROYAL BANK OF SCOTLAND
SUNTRUST ROBINSON HUMPHREY
September 17, 2002
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT, AND THE UNDERWRITERS HAVE NOT, AUTHORIZED ANY OTHER PERSON TO PROVIDE YOU
WITH DIFFERENT INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
INCONSISTENT INFORMATION, YOU SHOULD NOT RELY ON IT. WE ARE NOT, AND THE
UNDERWRITERS ARE NOT, MAKING AN OFFER TO SELL THESE SECURITIES IN ANY
JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED. YOU SHOULD NOT ASSUME
THAT THE INFORMATION APPEARING IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT COVER OF THIS PROSPECTUS SUPPLEMENT OR THAT THE INFORMATION WE PREVIOUSLY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND INCORPORATED BY REFERENCE
IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE OF THE DOCUMENT INCORPORATED BY
REFERENCE. OUR BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND
PROSPECTS MAY CHANGE AFTER THAT DATE.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Summary..................................................... S-1
Use of Proceeds............................................. S-3
Capitalization.............................................. S-3
Ratio of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends............... S-4
Description of Notes........................................ S-5
Underwriting................................................ S-9
Legal Matters............................................... S-10
Experts..................................................... S-10
Forward-Looking Statements.................................. S-11
PROSPECTUS
About This Prospectus....................................... 3
Anadarko Petroleum Corporation.............................. 3
Anadarko Finance Company.................................... 3
The Trusts.................................................. 4
Accounting Treatment........................................ 5
Ratio of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends............... 5
New Accounting Principle -- Goodwill........................ 6
Where You Can Find More Information About Anadarko.......... 7
Risk Factors................................................ 8
Use of Proceeds............................................. 8
Description of Debt Securities.............................. 9
Description of Preferred Stock.............................. 18
Description of Depositary Shares............................ 20
Description of Common Stock................................. 23
Description of Securities Warrants.......................... 24
Description of Purchase Contracts and Purchase Units........ 25
Description of Trust Preferred Securities................... 25
Description of Guarantees of Trust Preferred Securities..... 26
Relationship Among the Trust Preferred Securities, the Debt
Securities and the Guarantees............................. 29
Plan of Distribution........................................ 31
Legal Matters............................................... 32
Experts..................................................... 32
i
SUMMARY
This summary highlights information from this prospectus supplement and the
accompanying prospectus, but does not contain all information that is important
to you. This prospectus supplement and the accompanying prospectus include
specific terms of the offering of the notes and information about our business
and our financial data. We encourage you to read this prospectus supplement and
the accompanying prospectus in their entirety before making an investment
decision.
In this prospectus supplement, the terms "Anadarko," "we," "us" and "our"
generally mean Anadarko Petroleum Corporation, a Delaware corporation, and its
subsidiaries.
ANADARKO
Anadarko Petroleum Corporation is among the largest independent oil and gas
exploration and production companies in the world, with 2.3 billion barrels of
oil equivalent of proved reserves as of December 31, 2001. Our major areas of
operations are located in the United States, primarily in Texas, Louisiana, the
mid-continent region and the western states, Alaska and in the shallow and deep
waters of the Gulf of Mexico, as well as in Canada and Algeria. We are also
active in Venezuela, Qatar, Oman, Egypt, Australia, Tunisia, Congo and Gabon. We
also actively market natural gas, oil and natural gas liquids production and own
and operate gas gathering systems in our core producing areas. In addition, we
engage in the hard minerals business through non-operated joint venture and
royalty arrangements in several coal, trona (natural soda ash) and industrial
mineral mines located on lands within and adjacent to our Land Grant holdings
primarily in Wyoming, Colorado and Utah.
Our principal executive offices are located at 1201 Lake Robbins Drive, The
Woodlands, Texas 77380-1046. Our telephone number is (832) 636-1000.
THE OFFERING
Issuer........................ Anadarko Petroleum Corporation.
Securities Offered............ $300 million aggregate principal amount of 5%
notes due 2012.
Maturity Date................. October 1, 2012.
Interest Payment Dates........ April 1 and October 1 of each year, commencing
April 1, 2003.
Optional Redemption........... We may redeem the notes prior to maturity, in
whole or in part, at a redemption price equal
to the sum of (a) an amount equal to 100% of
the principal amount of the notes being
redeemed and (b) the make-whole premium,
together with accrued and unpaid interest to
the date of redemption. Please read
"Description of Notes -- Redemption" in this
prospectus supplement.
Sinking Fund.................. None.
Ranking....................... The notes:
- are unsecured;
- rank equally with all of our existing and
future unsecured senior indebtedness;
- are senior to any future subordinated
indebtedness; and
- are effectively junior to future secured
indebtedness, if any, and to all existing and
future indebtedness and other
S-1
liabilities of our subsidiaries, which together
as of June 30, 2002 totaled approximately
$3.2 billion.
Covenants..................... We will issue the notes under an indenture
containing covenants for your benefit. These
covenants restrict our ability to take certain
actions, including, but not limited to, the
creation of liens securing indebtedness. Please
read "Description of Debt Securities -- Senior
Debt Securities Limitations on Liens" in the
accompanying prospectus.
Use of Proceeds............... We intend to use the net proceeds from this
offering to pay down floating-rate debt. As of
September 17, 2002, the average interest rate
on total floating-rate debt, with current
maturities ranging from overnight to 48 days,
was 2.29% per year.
Absence of Public Markets for
the Notes..................... There is no existing market for the notes. We
cannot provide any assurance about:
- the liquidity of any markets that may develop
for the notes;
- your ability to sell your notes; or
- the prices at which you will be able to sell
your notes.
Future trading prices of the notes will depend
on many factors, including:
- prevailing interest rates;
- our operating results;
- ratings of the notes; and
- the market for similar securities.
The underwriters have advised us that they
currently intend to make a market in the notes
after completion of the offering. They do not,
however, have any obligation to do so, and they
may discontinue any market-making activities at
any time without any notice. We do not intend
to apply for listing of the notes on any
securities exchange or for quotation of the
notes in any automated dealer quotation system.
Risk Factors.................. We urge you to carefully read the "Risk
Factors" section beginning on page 8 of the
accompanying prospectus before you make any
investment decisions.
S-2
USE OF PROCEEDS
We intend to use the approximately $295 million of net proceeds from this
offering to pay down floating-rate debt. As of September 17, 2002, the average
interest rate on total floating-rate debt, with current maturities ranging from
overnight to 48 days, was 2.29% per year.
CAPITALIZATION
The following table sets forth a summary of the capitalization of Anadarko
at June 30, 2002 and as adjusted to give effect to the issuance of the 5% notes
offered under this prospectus supplement and our application of the net proceeds
of approximately $295 million, as described in "Use of Proceeds", after
deducting underwriting discounts, commissions and offering expenses.
This table should be read in conjunction with our financial statements and
related notes contained in our 2001 Annual Report on Form 10-K and our Quarterly
Report on Form 10-Q for the second quarter of 2002 incorporated by reference in
the accompanying prospectus.
AS OF JUNE 30, 2002
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN MILLIONS)
Cash and cash equivalents................................... $ 45 $ 45
======= =======
Total Debt.................................................. $ 5,541 $ 5,543
------- -------
Stockholders' equity:
Preferred stock, par value $1.00 per share (2.0 million
shares authorized, 0.1 million shares issued).......... 101 101
Common stock, par value $0.10 per share (450.0 million
shares authorized; 254.4 million shares issued)........ 25 25
Treasury stock (3.2 million shares)....................... (166) (166)
Paid-in capital........................................... 5,333 5,333
Retained earning (as of June 30, 2002, retained earnings
were not restricted as to payment of dividends)........ 1,567 1,567
Deferred compensation and ESOP (0.7 million shares)....... (75) (75)
Executives and Directors Benefits Trust, at market value
(2.0 million shares)................................... (98) (98)
Accumulated other comprehensive income.................... 3 3
------- -------
Total stockholders' equity.................................. 6,690 6,690
------- -------
Total capitalization........................................ $12,231 $12,233
======= =======
S-3
RATIO OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth our consolidated ratios of earnings to fixed
charges and earnings to combined fixed charges and preferred stock dividends for
the periods shown:
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED
-------------------------------- JUNE 30,
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----------
Earnings/Fixed Charges........................ 3.04 0.05 1.77 7.35 -- 3.12
Earnings/Combined Fixed Charges and Preferred
Stock Dividends............................. 3.04 0.05 1.53 6.80 -- 3.04
We issued preferred stock in May 1998. No shares of preferred stock were
outstanding during any of the periods prior to May 1998.
In 2001, our earnings did not cover fixed charges by $599 million and did
not cover combined fixed charges and preferred stock dividends by $610 million.
In 1998, our earnings did not cover fixed charges by $90 million and did not
cover combined fixed charges and preferred stock dividends by $101 million.
The ratios were computed by dividing earnings by either fixed charges or
combined fixed charges and preferred stock dividends. For this purpose, earnings
include income before income taxes and fixed charges. Fixed charges include
interest and amortization of debt expenses and the estimated interest component
of rentals. Preferred stock dividends are adjusted to reflect the amount of
pre-tax earnings required for payment.
S-4
DESCRIPTION OF NOTES
The following description of the notes supplements, and to the extent
inconsistent, replaces, the description of the general terms and provisions of
the senior debt securities set forth in the accompanying prospectus. The notes
are to be issued as a separate series of senior debt securities under an
indenture dated as of March 9, 2001, between Anadarko and The Bank of New York,
as Trustee, which is more fully described in the accompanying prospectus. We
will issue the notes pursuant to a resolution of the Board of Directors and an
officers' certificate setting forth specific terms applicable to the notes. The
statements under this caption relating to the notes, the senior indenture and
the board resolution are brief summaries only, are not complete and are subject
to, and are qualified in their entirety by reference to, all of the provisions
of the indenture and the notes, forms of which are available from us.
Capitalized terms used herein have the meaning set forth in the accompanying
prospectus or the indenture.
GENERAL
The notes initially will be limited to $300,000,000 in aggregate principal
amount and will mature on October 1, 2012. The notes will bear interest from and
including September 20, 2002, at 5% per year. Interest will be payable
semiannually on April 1 and October 1 of each year, commencing April 1, 2003, to
the holders of record of the notes at the close of business on the preceding
March 15 or September 15, whether or not such day is a business day. All
payments of interest and principal will be payable in United States dollars. The
notes will be issued only in book-entry form. Please read "Description of Debt
Securities -- Global Securities" in the accompanying prospectus.
The notes will be senior unsecured obligations and will rank equally in
right of payment to all our other senior unsecured indebtedness. The notes will
rank senior to any future subordinated indebtedness and will be effectively
junior to future secured indebtedness, if any, and to all existing and future
indebtedness and other liabilities of our subsidiaries. As of June 30, 2002, our
subsidiaries had approximately $3.2 billion of indebtedness. As of June 30,
2002, as adjusted to give effect to the issuance of the notes offered under this
prospectus supplement and the anticipated use of proceeds therefrom, we would
have had an aggregate of $5.54 billion of consolidated indebtedness.
REDEMPTION
The notes will be redeemable, at our option, at any time in whole or from
time to time in part, upon not less than 15 and not more than 60 days' notice as
provided in the indenture, on any date prior to maturity at a price equal to
100% of the principal amount of the notes being redeemed plus accrued interest
to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on an interest payment date that is
on or prior to the redemption date), plus a make-whole premium, if any is
required to be paid. The redemption price will never be less than 100% of the
principal amount of such series of notes plus accrued interest to the redemption
date.
The amount of the make-whole premium with respect to any note (or portion
of a note) to be redeemed will be equal to the excess, if any, of:
(i) the sum of the present values, calculated as of the redemption date,
of:
(A) each interest payment that, but for the redemption, would have
been payable on the note (or portion of a note) being redeemed on
each interest payment date occurring after the redemption date
(excluding any accrued interest for the period before the
redemption date); and
(B) the principal amount that, but for the redemption, would have been
payable at the final maturity of the note (or portion of a note)
being redeemed;
over
(ii) the principal amount of the note (or portion of a note) being
redeemed.
S-5
The present values of interest and principal payments referred to in clause
(i) above will be determined in accordance with generally accepted principles of
financial analysis. Those present values will be calculated by discounting the
amount of each payment of interest or principal from the date that each payment
would have been payable, but for the redemption, to the redemption date at a
discount rate equal to the Treasury Yield (as defined below) plus 20 basis
points.
The make-whole premium will be calculated by an independent investment
banking institution of national standing appointed by us, provided that if we
fail to make such appointment at least 15 business days prior to the redemption
date, or if the institution so appointed is unwilling or unable to make the
calculation, such calculation will be made by Deutsche Bank Securities or, if
that firm is unwilling or unable to make the calculation, by an independent
investment banking institution of national standing appointed by the Trustee.
For purposes of determining the make-whole premium, "Treasury Yield" means
a rate of interest per annum equal to the weekly average yield to maturity of
United States Treasury Notes that have a constant maturity that corresponds to
the remaining term to maturity of the notes, calculated to the nearest 1/12 of a
year. The Treasury Yield will be determined as of the third business day
immediately before the applicable redemption date.
The weekly average yields of United States Treasury Notes will be
determined by referring to the most recent statistical release published by the
Federal Reserve Bank of New York and designated "H.15 (519) Selected Interest
Rates" or any successor release. If the H.15 Statistical Release contains a
weekly average yield for United States Treasury Notes having a constant maturity
that is the same as the remaining term, then the Treasury Yield will be equal to
that weekly average yield. In all other cases, the Treasury Yield will be
calculated by interpolation, on a straight-line basis, between the weekly
average yields on the United States Treasury Notes that have a constant maturity
closest to and greater than the remaining term and the United States Treasury
Notes that have a constant maturity closest to and less than the remaining term
(in each case as set forth in the H.15 Statistical Release). Any weekly average
yields as calculated by interpolation will be rounded to the nearest 1/100th of
1% with any figure of 1/200 or above being rounded upward. If weekly average
yields for United States Treasury Notes are not available in the H.15
Statistical Release or otherwise, then the Treasury Yield will be calculated by
interpolation of comparable rates selected by the independent investment banking
institution.
If less than all of the notes are to be redeemed, the Trustee will select
the notes to be redeemed by a method that the Trustee deems fair and
appropriate. The Trustee may select for redemption notes and portions of notes
in amounts of whole multiples of $1,000.
The notes are not subject to a sinking fund.
ADDITIONAL NOTES
We may, without the consent of the holders of the notes, create and issue
additional notes of any series ranking equally with these notes in all respects,
including having the same CUSIP number, so that such additional notes shall be
consolidated and form a single series with these notes and shall have the same
terms as to status, redemption or otherwise as these notes. No additional notes
may be issued if an event of default under the indenture has occurred and is
continuing with respect to the notes.
BOOK-ENTRY SYSTEMS
The notes will be issued in fully registered form initially in the name of
Cede & Co., as nominee of The Depository Trust Company ("DTC"). One or more
fully registered certificates will be issued as global notes for the notes in
the aggregate principal amount of the notes. These global notes will be
deposited with DTC and may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any nominee of DTC to a successor of DTC or a nominee of such successor.
S-6
DTC has advised us and the underwriters of the following matters. The
information in this section concerning DTC and DTC's book-entry system has been
obtained from sources that we believe to be reliable (including DTC), but we
take no responsibility for the accuracy thereof.
DTC is:
- a limited-purpose trust company organized under the New York Banking Law;
- a "banking organization" under the New York Banking Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934, as amended.
DTC holds securities that its participants deposit with DTC. DTC also
facilitates the clearance and settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities, through
electronic computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations, and certain other organizations. DTC is owned by a number
of its 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 participant, either directly or indirectly, as an indirect
participant. The rules applicable to DTC and its participants are on file with
the Securities and Exchange Commission.
Purchases of notes under the DTC system must be made by or through
participants, which will receive a credit for the notes on DTC's records. The
ownership interest of each actual purchaser of notes ("Beneficial Owner") is in
turn to be recorded on the participants' and indirect participants' records.
Beneficial Owners will not receive written confirmations from DTC of their
purchase, but Beneficial Owners are expected to receive written confirmations
providing details of the transaction, as well as periodic statements of their
holdings, from the participants and indirect participants through which the
Beneficial Owner entered into the transaction. Transfers of ownership interests
in the notes are to be accomplished by entries made on the books of participants
acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in the notes, except in the
event that use of the book-entry system for the notes is discontinued.
To facilitate subsequent transfers, all notes deposited by participants
with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The
deposit of notes with DTC and their registration in the name of Cede & Co.
effect no change in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the notes; DTC's records reflect only the identity of the
participants to whose accounts such notes are credited, which may or may not be
the Beneficial Owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants, and by 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.
Redemption notices shall be sent to DTC. If less than all of the notes are
being redeemed, DTC's practice is to determine by lot the amount of the interest
of each participant in such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the global
notes. Under its usual procedures, DTC mails an omnibus proxy to the issuer as
soon as possible after the record date. The
S-7
omnibus proxy assigns Cede & Co.'s consenting or voting rights to those
participants to whose accounts the notes are credited on the record date
(identified in the listing attached to the omnibus proxy).
Principal and interest payments on the global notes will be made to Cede &
Co., as nominee of DTC. We expect that DTC, upon receipt of any payment of
principal, premium or interest in respect of a global note, will credit
participants' accounts immediately with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such global
note as shown on DTC's records. We also expect that payments by participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such participant and not of DTC, us or the Trustee, subject to any statutory or
regulatory requirements as may be in effect from time to time.
DTC may discontinue providing its service as securities depositary with
respect to the notes at any time by giving reasonable notice to us or the
Trustee. In addition, we may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor securities depositary). Under
such circumstances, if a successor securities depositary is not obtained,
certificates representing the notes in fully registered form are required to be
printed and delivered to Beneficial Owners.
Neither we, the Trustee nor the underwriters will have any responsibility
or obligation to participants, or the persons for whom they act as nominees,
with respect to the accuracy of the records of DTC, its nominee or any
participant with respect to any ownership interest in the notes, or payments to,
or the providing of notice to participants or Beneficial Owners.
The notes will trade in DTC's Same-Day Funds Settlement System and
secondary market trading activity in the notes will, therefore, settle in
immediately available funds. We will make all applicable payments of principal,
premium (if any) and interest on the notes issued as global notes in immediately
available funds.
For other terms of the notes, please read "Description of Debt Securities"
in the accompanying prospectus.
S-8
UNDERWRITING
Subject to the terms and conditions stated in the terms agreement dated the
date of this prospectus supplement, each underwriter named below has severally
agreed to purchase, and we have agreed to sell to each such underwriter, the
principal amount of notes set forth opposite the name of each such underwriter.
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
Deutsche Bank Securities Inc................................ $142,500,000
Credit Suisse First Boston Corporation...................... $ 22,500,000
J.P. Morgan Securities Inc.................................. $ 22,500,000
Salomon Smith Barney Inc.................................... $ 22,500,000
ABN AMRO Incorporated....................................... $ 18,000,000
BMO Nesbitt Burns Corp...................................... $ 18,000,000
Fleet Securities, Inc....................................... $ 18,000,000
The Royal Bank of Scotland plc.............................. $ 18,000,000
SunTrust Capital Markets, Inc............................... $ 18,000,000
------------
Total..................................................... $300,000,000
============
The terms agreement provides that the obligations of the underwriters to
purchase the notes included in this offering are subject to approval of legal
matters by counsel and to other conditions. The underwriters are obligated to
purchase all the notes if they purchase any of the notes.
The underwriters propose to offer some of the notes to the public at the
public offering price set forth on the cover page of this prospectus supplement
and some of the notes to dealers at the public offering price less a concession
not to exceed .40% of the principal amount of the notes. The underwriters may
allow, and dealers may reallow, a concession not to exceed .25% of the principal
amount of the notes on sales to other dealers. After the initial offering of the
notes to the public, the underwriters may change the public offering price and
the concessions.
The following table shows the underwriting discount and commission that we
are to pay to the underwriters in connection with this offering (expressed as a
percentage of the principal amount of the notes).
PAID BY
ANADARKO PETROLEUM CORPORATION
------------------------------
Per note........................................ 0.650%
Deutsche Bank Securities Inc. has agreed to reimburse us for certain
expenses incurred in this offering.
In the ordinary course of business, some of the underwriters and their
affiliates have in the past and may in the future provide investment banking,
general financing and banking or other services to us and our affiliates. These
underwriters and their affiliates have received customary fees and commissions
for these transactions. Affiliates of the underwriters are lenders under our
existing committed credit facilities. We have no indebtedness outstanding with
affiliates of the underwriters under these committed credit facilities. An
affiliate of J.P. Morgan Securities Inc. holds approximately $139 million of our
currently outstanding floating-rate debt, with maturities ranging from 3 to 9
days, some or all of which may be repaid with the net proceeds from this
offering. Because more than 10% of the net proceeds of the offering will be paid
to the underwriters or their affiliates, this offering is being conducted in
compliance with Rule 2710 of the National Association of Securities Dealers,
Inc.'s Conduct Rules.
S-9
We have agreed to indemnify the underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended,
and to contribute to payments which the underwriters might be required to make
in that respect.
In connection with the offering, the underwriters may purchase and sell
notes in the open market. These transactions may include over-allotment,
syndicate covering transactions and stabilizing transactions. Over-allotment
involves syndicate sales of notes in excess of the principal amount of notes to
be purchased by the underwriters in the offering, which creates a syndicate
short position. Syndicate covering transactions involve purchases of the notes
in the open market after the distribution has been completed in order to cover
syndicate short positions. Stabilizing transactions consist of certain bids or
purchases of notes made for the purpose of preventing or retarding a decline in
the market price of the notes while the offering is in progress.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the notes. They may also cause the price of the
notes to be higher than the price that otherwise would exist in the open market
in the absence of these transactions. The underwriters may conduct these
transactions in the over-the-counter market or otherwise. If the underwriters
commence any of these transactions, they may discontinue them at any time.
Some of the underwriters may make the securities available for distribution
on the Internet through a proprietary Web site and/or a third-party system
operated by Market Axess Inc., an Internet-based communications technology
provider. Market Axess Inc. would provide the system as a conduit for
communications between the underwriters and their respective customers and would
not be a party to any transactions. Market Axess Inc., a registered
broker-dealer, would receive compensation from the underwriters based on
transactions the underwriters conduct through the system. The underwriters would
make the securities available to their respective customers through the Internet
distributions, whether made through a proprietary or third-party system, on the
same terms as distributions made through other channels. Other than this
prospectus supplement, the accompanying prospectus and any registration
statement of which they form a part, each in electronic format as filed with the
SEC, the information on any Web site is not a part of this prospectus
supplement, the accompanying prospectus or any registration statement of which
they form a part.
The notes are a new series of securities with no established trading
market. We do not intend to apply for listing of the notes on any securities
exchange or for quotation of the notes in any automated dealer quotation system.
The underwriters have advised us that they intend to make a market in this
series of notes, but the underwriters are under no obligation to do so and such
market-making activities may be terminated at any time without notice.
Therefore, no assurance can be given as to the liquidity of, or the trading
market for, the notes.
We estimate that our total expenses for this offering will be $150,000.
LEGAL MATTERS
The legality of the notes will be passed upon for us by Andrews & Kurth
L.L.P., Houston, Texas. Certain legal matters with respect to the notes will be
passed upon for the underwriters by Hughes Hubbard & Reed LLP, New York, New
York.
EXPERTS
The consolidated financial statements of Anadarko and its subsidiaries as
of December 31, 2001 and 2000 and for each of the years in the three-year period
ended December 31, 2001 incorporated by reference in the accompanying prospectus
have been incorporated by reference in this prospectus supplement in reliance
upon the report of KPMG LLP, independent accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
The audit report covering the December 31, 2001 and 2000 consolidated
financial statements refers to a change in accounting for derivative financial
instruments in 2001 and to a change in accounting for foreign crude oil
inventories in 2000.
S-10
The consolidated financial statements of Union Pacific Resources Group Inc.
and its subsidiaries as of and for the years ended December 31, 1999 and 1998
incorporated by reference in the accompanying prospectus have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. Arthur Andersen LLP
has not consented to the inclusion of their report in the accompanying
prospectus, and we have dispensed with the requirement to file their consent in
reliance upon Rule 437a of the Securities Act of 1933. Because Arthur Andersen
LLP has not consented to the inclusion of their report in the accompanying
prospectus, you will not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act for any untrue statements of a material fact
contained in the financial statements audited by Arthur Andersen LLP or any
omissions to state a material fact required to be stated therein.
With respect to the unaudited interim financial information of Union
Pacific Resources Group Inc. and its subsidiaries for the quarter ended March
31, 2000 incorporated by reference in the accompanying prospectus, Arthur
Andersen LLP has applied limited procedures in accordance with professional
standards for a review of that information. However, their separate report
thereon states that they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on their
report on that information should be restricted in light of the limited nature
of the review procedures applied. In addition, the accountants are not subject
to the liability provisions of Section 11 of the Securities Act of 1933 for
their report on the unaudited interim financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the
Securities Act.
FORWARD-LOOKING STATEMENTS
We have made in this prospectus supplement and in the reports and documents
incorporated herein by reference, and may from time to time otherwise make in
other public filings, press releases and discussions with our management,
forward-looking statements within the meaning of Sections 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934 concerning
our operations, economic performance and financial condition. These
forward-looking statements include information concerning future production and
reserves, schedules, plans, timing of developments, contributions from oil and
gas properties, and statements preceded by, followed by or that otherwise
include the words "believes," "expects," "anticipates," "intends," "estimates,"
"projects," "target," "goal," "plans," "objective," "should" or similar
expressions or variations on these expressions. For these statements, we claim
the protection of the safe harbor for forward-looking statements contained in
the Private Securities Litigation Reform Act of 1995. These statements are
subject to various risks and uncertainties, and actual results could differ
materially from those expressed or implied by these statements due to a number
of factors in addition to those discussed in our Annual Report on Form 10-K for
the year ended December 31, 2001 under the heading "Item 7. Management's
Discussion and Analysis of Financial Conditions and Results of
Operations -- Regulatory Matters and Additional Factors Affecting Business" and
in our other public filings, press releases and discussions with our management.
We do not undertake any obligation to publicly update or revise any
forward-looking statements.
You are invited to consult any additional disclosures we make in our
Quarterly Reports on Form 10-Q, Annual Report on Form 10-K and Current Reports
on Form 8-K filed with the Securities and Exchange Commission. Please read
"Where You Can Find More Information About Anadarko" in the accompanying
prospectus. Other factors besides those listed here could also adversely affect
us.
S-11
[ANADARKO PETROLEUM CORPORATION LOGO]
$1,000,000,000
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK
WARRANTS
PURCHASE CONTRACTS
PURCHASE UNITS
ANADARKO FINANCE COMPANY
DEBT SECURITIES GUARANTEED, TO THE EXTENT
DESCRIBED HEREIN, BY ANADARKO PETROLEUM CORPORATION
ANADARKO PETROLEUM CAPITAL TRUST I
ANADARKO PETROLEUM CAPITAL TRUST II
ANADARKO PETROLEUM CAPITAL TRUST III
TRUST PREFERRED SECURITIES GUARANTEED, TO THE EXTENT
DESCRIBED HEREIN, BY ANADARKO PETROLEUM CORPORATION.
------------------------
This prospectus contains summaries of the general terms of these
securities. We will provide specific terms of these securities, and the manner
in which they are being offered, in supplements to this prospectus. You should
read this prospectus and the applicable supplement carefully before you invest.
Our common stock is listed for trading on the New York Stock Exchange under
the symbol "APC."
INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. PLEASE READ "RISK
FACTORS" BEGINNING ON PAGE 8.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------
This prospectus is dated August 27, 2002
TABLE OF CONTENTS
PAGE
----
About this Prospectus....................................... 3
Anadarko Petroleum Corporation.............................. 3
Anadarko Finance Company.................................... 3
The Trusts.................................................. 4
Accounting Treatment........................................ 5
Ratios of Earnings to Fixed Charges and Earnings to Combined
Fixed Charges and Preferred Stock Dividends............... 5
New Accounting Principle -- Goodwill........................ 6
Where You Can Find More Information About Anadarko.......... 7
Risk Factors................................................ 8
Use of Proceeds............................................. 8
Description of Debt Securities.............................. 9
Description of Preferred Stock.............................. 18
Description of Depositary Shares............................ 20
Description of Common Stock................................. 23
Description of Securities Warrants.......................... 24
Description of Purchase Contracts and Purchase Units........ 25
Description of Trust Preferred Securities................... 25
Description of Guarantees of Trust Preferred Securities..... 26
Relationship Among the Trust Preferred Securities, the Debt
Securities and the Guarantees............................. 29
Plan of Distribution........................................ 31
Legal Matters............................................... 32
Experts..................................................... 32
2
SUMMARY
ABOUT THIS PROSPECTUS
This prospectus may not be used to sell securities unless it is accompanied
by a prospectus supplement.
This prospectus is part of a registration statement that Anadarko, Anadarko
Finance Company, Anadarko Petroleum Capital Trust I, Anadarko Petroleum Capital
Trust II and Anadarko Petroleum Capital Trust III filed with the Securities and
Exchange Commission (SEC) utilizing a "shelf " registration process. Under this
shelf process, we may sell Debt Securities, Preferred Stock, Depositary Shares,
Common Stock, Warrants, Purchase Agreements and Purchase Units and the Trusts
may issue Trust Preferred Securities in one or more offerings up to a total
dollar amount of $1,000,000,000.
This prospectus provides you with a general description of the securities
we and the Trusts may offer. Each time securities are sold, a prospectus
supplement will provide specific information about the terms of that offering.
The prospectus supplement may also add, update or change information contained
in this prospectus. If there is any inconsistency between the information in
this prospectus and any prospectus supplement, you should rely on the
information in the prospectus supplement. The registration statement filed with
the SEC includes exhibits that provide more details about the matters discussed
in this prospectus. You should read this prospectus, the related exhibits filed
with the SEC and any prospectus supplement, together with the additional
information described under the heading "Where You Can Find More Information
About Anadarko."
In this prospectus, the terms "Anadarko," "Company," "we," "us" and "our"
generally mean Anadarko Petroleum Corporation, a Delaware corporation, and its
consolidated subsidiaries.
Unless otherwise indicated, all dollar amounts in this prospectus are
expressed in U.S. dollars.
ANADARKO PETROLEUM CORPORATION
Anadarko Petroleum Corporation is among the largest independent oil and gas
exploration and production companies in the world, with 2.3 billion barrels of
oil equivalent of proved reserves as of December 31, 2001. The Company's major
areas of operations are located in the United States, primarily in Texas,
Louisiana, the mid-continent region and the western states, Alaska and in the
shallow and deep waters of the Gulf of Mexico, as well as in Canada and Algeria.
We are also active in Venezuela, Qatar, Oman, Egypt, Australia, Tunisia, Congo
and Gabon. The Company also actively markets natural gas, oil and natural gas
liquids production and owns and operates gas gathering systems in its core
producing areas. In addition, the Company engages in the hard minerals business
through non-operated joint ventures and royalty arrangements in several coal,
trona (natural soda ash) and industrial mineral mines located on lands within
and adjacent to its Land Grant holdings primarily in Wyoming, Colorado and Utah.
Our principal executive offices are located at 1201 Lake Robbins Dr., The
Woodlands, Texas 77380, and our telephone number is (832) 636-1000.
The foregoing is a description of the material information about Anadarko
and its business. For additional information about Anadarko and its business,
you should refer to the information described under the caption "Where You Can
Find More Information About Anadarko."
ANADARKO FINANCE COMPANY
Anadarko Finance Company (referred to herein as "Anadarko Finance") is a
wholly owned finance subsidiary of Anadarko Petroleum Corporation, organized as
an unlimited liability company under the laws of the province of Nova Scotia,
Canada. Anadarko Finance does not have any
3
material assets or operations. No separate financial statements of Anadarko
Finance are included in this prospectus. Anadarko does not expect that Anadarko
Finance will be filing annual, quarterly or current reports with the SEC.
The principal place of business of Anadarko Finance is 1201 Lake Robbins
Dr., The Woodlands, Texas 77380, telephone (832) 636-1000.
THE TRUSTS
Anadarko formed each Trust as a statutory business trust under Delaware
law. Each Trust's business is defined in a declaration of trust executed by
Anadarko, as sponsor, and The Bank of New York (Delaware), as Delaware trustee.
Each declaration of trust will be amended when trust preferred securities are
issued under it. An amended declaration of trust is called a "trust agreement"
in this prospectus.
The trust preferred securities and the trust common securities of each
Trust represent undivided beneficial interests in the assets of that Trust. The
trust preferred securities and the trust common securities together are
sometimes called the "trust securities" in this prospectus.
Anadarko owns, directly or indirectly, all the common securities of each
Trust, which have an aggregate liquidation value equal to at least 3% of the
total capital of each Trust. The trust preferred securities of each Trust will
represent the remaining percentage of each trust's total capitalization. The
trust common securities will have terms substantially equal to, and will rank
equal in priority of payment with, the trust preferred securities. However, if
Anadarko defaults on the subordinated debt securities owned by a trust or
another event of default under the applicable trust agreement occurs, then, so
long as the default continues, cash distributions and liquidation, redemption
and other amounts payable or deliverable on the trust securities of that Trust
must be paid or delivered to holders of the trust preferred securities of that
Trust before the holders of that Trust's common securities. No Trust may borrow
money, issue debt, exchange mortgages or pledge any of its assets. The trust
preferred securities will be guaranteed by Anadarko as described in this
prospectus and the applicable prospectus supplement.
Each Trust exists for the exclusive purpose of:
- issuing the trust common and trust preferred securities representing
undivided beneficial interests in the assets of the Trust;
- investing the gross proceeds of the trust common and trust preferred
securities in Anadarko's subordinated debt securities; and
- engaging only in those other activities necessary or incidental thereto.
Anadarko, as holder of the trust common securities of each Trust, will
appoint the trustees of that Trust. Unless otherwise specified in the applicable
prospectus supplement, the five trustees that will conduct each Trust's business
and affairs will consist of:
- three of Anadarko's employees, officers or affiliates, as administrative
trustees;
- The Bank of New York, as property trustee; and
- The Bank of New York (Delaware), as Delaware trustee.
The Bank of New York also serves as the indenture trustee for purposes of
compliance with the provisions of the Trust Indenture Act of 1939, the guaranty
trustee under Anadarko's guarantee in favor of the holders of trust preferred
securities and debt trustee under the indenture related to Anadarko's debt
securities. The property trustee holds title to Anadarko's subordinated debt
securities for the benefit of the holders of each Trust's trust common and trust
preferred securities. The property trustee has the power to exercise all rights,
powers and privileges under each
4
indenture as holder of Anadarko's subordinated debt securities. In addition, the
property trustee maintains exclusive control of a segregated, non-interest
bearing bank account to hold all payments made in respect of Anadarko's
subordinated debt securities for the benefit of the holders of each Trust's
trust common and trust preferred securities. The property trustee makes payments
of distributions and payment on liquidation, redemption and otherwise to the
holders of each Trust's trust common and trust preferred securities out of funds
from each Trust's bank account. Anadarko, as a direct or an indirect holder of
all of each Trust's trust common securities, has the right to appoint, remove or
replace any administrative trustee and to increase or decrease the number of
administrative trustees. Anadarko pays all fees and expenses related to each
Trust and each offering of trust common and trust preferred securities.
The rights of the holders of each Trust's trust preferred securities,
including economic rights, rights to information and voting rights, will be set
forth in the trust agreement relating to each Trust and in the Delaware Business
Trust Act. Each trust agreement, each indenture and each Anadarko guarantee will
also incorporate by reference terms of the Trust Indenture Act of 1939. Each
trust agreement, each indenture and each Anadarko guarantee will be qualified
under the Trust Indenture Act.
The prospectus supplement relating to the trust preferred securities of a
Trust will provide further information concerning that Trust.
No separate financial statements of any Trust are included in this
prospectus. Anadarko considers that such statements would not be material to
holders of the trust preferred securities because no Trust has any independent
operations, and the sole purpose of each Trust is investing the proceeds from
the sale of its trust securities in subordinated debt securities of Anadarko.
Anadarko does not expect that any of the Trusts will be filing annual, quarterly
or current reports with the SEC.
The principal place of business of each Trust will be c/o Anadarko
Petroleum Corporation, 1201 Lake Robbins Dr., The Woodlands, Texas 77380,
telephone (832) 636-1000.
ACCOUNTING TREATMENT
Each Trust will be treated as a subsidiary of Anadarko for financial
reporting purposes. Accordingly, Anadarko's consolidated financial statements
will include the accounts of each Trust. The trust preferred securities, along
with other trust preferred securities that Anadarko guarantees on an equivalent
basis, will be presented as a separate line item in Anadarko's consolidated
balance sheet, entitled "Guaranteed Preferred Beneficial Interests in
Subordinated Notes of Anadarko Petroleum Corporation or Subsidiaries." Anadarko
will record distributions that each Trust pays on the trust preferred securities
as an expense in its consolidated statement of income.
RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS
The following table sets forth Anadarko's consolidated ratios of earnings
to fixed charges and earnings to combined fixed charges and preferred stock
dividends for the periods shown:
YEARS ENDED DECEMBER 31,
------------------------------------
1997 1998 1999 2000 2001
---- ---- ---- ---- ----
Fixed Charges.................................... 3.04 0.05 1.77 7.35 --
Combined Fixed Charges and Preferred Stock
Dividends...................................... 3.04 0.05 1.53 6.80 --
Anadarko issued preferred stock in May 1998. No shares of preferred stock
were outstanding during any of the periods prior to May 1998.
5
As a result of the Company's net loss in 2001, Anadarko's earnings did not
cover fixed charges by $599 million and did not cover combined fixed charges and
preferred stock dividends by $610 million.
In 1998, Anadarko's earnings did not cover fixed charges by $90 million and
did not cover combined fixed charges and preferred stock dividends by $101
million.
The ratios were computed by dividing earnings by either fixed charges or
combined fixed charges and preferred stock dividends. For this purpose, earnings
include income before income taxes and fixed charges. Fixed charges include
interest and amortization of debt expenses and the estimated interest component
of rentals. Preferred stock dividends are adjusted to reflect the amount of
pre-tax earnings required for payment.
NEW ACCOUNTING PRINCIPLE -- GOODWILL
Statement of Financial Accounting Standard (SFAS) No. 142, "Goodwill and
Other Intangible Assets," requires discontinuing amortization of goodwill after
year-end 2001 and requires that goodwill be tested for impairment. The
impairment test requires allocating goodwill and all other assets and
liabilities to business levels referred to as reporting units. The fair value of
each reporting unit that has goodwill is determined and compared to the book
value of the reporting unit. If the fair value of the reporting unit is less
than the book value (including goodwill) then a second test is performed to
determine the amount of the impairment.
If the second test is necessary, the fair value of the reporting unit's
individual assets and liabilities is deducted from the fair value of the
reporting unit. This difference represents the implied fair value of goodwill,
which is compared to the book value of the reporting unit's goodwill. Any excess
of the book value of goodwill over the implied fair value of goodwill is the
amount of the impairment.
The goodwill impairment test is performed annually, and also at interim
dates upon the occurrence of significant events. Significant events include: a
significant adverse change in legal factors or business climate; an adverse
action or assessment by a regulator; a more-likely-than-not expectation that a
reporting unit or significant portion of a reporting unit will be sold;
significant adverse trends in current and future oil and gas prices;
nationalization of any of the Company's oil and gas properties; or, significant
increases in a reporting unit's carrying value relative to its fair value. The
initial goodwill impairment test is required to be performed using an effective
date of January 1, 2002.
In January 2002, the Company discontinued the amortization of goodwill in
accordance with SFAS No. 142. The transitional goodwill impairment test as of
January 1, 2002 was performed and no goodwill impairment was indicated. The
following table shows the effect of the elimination of amortization of goodwill
on our historical net income and net income per share as if SFAS No. 142 had
been in effect in prior years.
SIX MONTHS
ENDED
YEARS ENDED DECEMBER 31 JUNE 30
--------------------------------------- --------------
1997 1998 1999 2000 2001 2002 2001
millions except per share amounts ----- ------ ----- ----- ------ ----- ------
Net income..................................... $ 107 $ (49) $ 32 $ 796 $ (188) $ 327 $1,057
Add: Goodwill amortization..................... -- -- -- 31 73 -- 36
----- ------ ----- ----- ------ ----- ------
Adjusted net income............................ $ 107 $ (49) $ 32 $ 827 $ (115) $ 327 $1,093
----- ------ ----- ----- ------ ----- ------
Earnings per share -- basic.................... $0.90 $(0.41) $0.25 $4.32 $(0.75) $1.32 $ 4.22
Goodwill amortization per share -- basic....... -- -- -- 0.17 0.29 -- 0.14
----- ------ ----- ----- ------ ----- ------
Adjusted earnings per share -- basic........... $0.90 $(0.41) $0.25 $4.49 $(0.46) $1.32 $ 4.36
----- ------ ----- ----- ------ ----- ------
Earnings per share -- diluted.................. $0.89 $(0.41) $0.25 $4.16 $(0.75) $1.27 $ 3.99
Goodwill amortization per share -- diluted..... -- -- -- 0.16 0.29 -- 0.14
----- ------ ----- ----- ------ ----- ------
Adjusted earnings per share -- diluted......... $0.89 $(0.41) $0.25 $4.32 $(0.46) $1.27 $ 4.13
----- ------ ----- ----- ------ ----- ------
6
WHERE YOU CAN FIND MORE INFORMATION ABOUT ANADARKO
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549-0405. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available to the public at the
SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" into this prospectus the
information we file with it, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus.
Information filed with the SEC after the date of this prospectus, and prior to
the termination of the offering of the securities offered hereby, will update
and supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Section 13(a), 13(c), 14,
or 15(d) of the Securities Exchange Act of 1934 until our offering is completed:
(a) Annual Report on Form 10-K for the year ended December 31, 2001;
(b) Quarterly Reports on Form 10-Q for the periods ended March 31, 2002
and June 30, 2002.
(c) Current Reports on Form 8-K, filed July 28, 2000, January 30, 2002,
February 22, 2002, March 8, 2002 and August 14, 2002.
(d) The description of our common stock set forth in the registration
statement on Form 8-A, dated September 3, 1986; and
(e) The description of our Series C Junior Participating Preferred
Stock, set forth in the registration statement on Form 8-A dated
October 30, 1998, as amended in the amended registration statement
on Form 8-A12B/A, dated April 27, 2000.
You may request a copy of these filings, at no cost, by writing to or
telephoning us at our principal executive offices as follows:
Corporate Secretary
Anadarko Petroleum Corporation
1201 Lake Robbins Dr.
The Woodlands, TX 77380
(832) 636-1000
You should rely only on the information incorporated by reference or
provided in this prospectus or the prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted. You should not
assume that the information in this prospectus or the prospectus supplement is
accurate as of any date other than the date on the front of the document.
7
RISK FACTORS
You should carefully consider the factors contained in our Annual Report on
Form 10-K for the fiscal year ended December 31, 2001 under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Regulatory Matters and Additional Factors Affecting Business"
before investing in our or any Trust's securities. You should also consider
similar information contained in any Annual Report on Form 10-K or other
document filed by us with the SEC after the date of this prospectus before
deciding to invest in our or any Trust's securities. If applicable, we will
include in any prospectus supplement a description of those significant factors
that could make the offering described herein speculative or risky.
USE OF PROCEEDS
Unless specified otherwise in the applicable prospectus supplement, we
expect to use the net proceeds we receive from the sale of the securities
offered by this prospectus and the accompanying prospectus supplement for
general corporate purposes. The general corporate purposes include, among other
things:
- the repayment of outstanding indebtedness;
- working capital;
- capital expenditures; and
- acquisitions, which may consist of acquisitions of discrete assets or
businesses.
The actual application of proceeds from the sale of any particular tranche
of securities issued hereunder will be described in the applicable prospectus
supplement relating to such tranche of securities. The precise amount and timing
of the application of such proceeds will depend upon our funding requirements
and the availability and cost of other funds. The Trusts will use all proceeds
from the sale of trust common and trust preferred securities to purchase
Anadarko debt securities.
8
DESCRIPTION OF DEBT SECURITIES
The following description sets forth the general terms and provisions that
could apply to debt securities issued by Anadarko and to debt securities issued
by Anadarko Finance. All references to senior securities or senior debt
securities in this section includes debt securities issued by Anadarko Finance.
Each prospectus supplement will state the particular terms that actually will
apply to the debt securities included in the supplement.
The debt securities will be either our senior debt securities or our
subordinated securities or debt securities issued by Anadarko Finance. As of
June 30, 2002, we have issued an aggregate of $5.0 billion of senior securities
which amount includes an aggregate of $1.8 billion of debt securities issued by
Anadarko Finance. As of the date of this prospectus, we do not have any
subordinated securities outstanding.
In addition to the following summary, you should refer to the applicable
provisions of the following documents for more detailed information:
- the senior indenture;
- the subordinated indenture, and
- the Anadarko Finance Company senior indenture.
Copies of these indentures are included as exhibits to the registration
statement of which this prospectus is a part.
No indenture limits the aggregate principal amount of debt securities that
we may issue under that indenture. The debt securities may be issued in one or
more series as we may authorize at various times. All debt securities will be
unsecured. The senior securities will have the same rank as all of our other
unsecured and unsubordinated debt. The subordinated securities will be
subordinated to senior indebtedness as described under "-- Subordinated Debt
Securities". The prospectus supplement relating to the particular series of debt
securities being offered will specify the amounts, prices and terms of those
debt securities. These terms may include:
- whether the debt securities are senior securities or subordinated
securities;
- the title and the limit on the aggregate principal amount of the debt
securities;
- the dates on which the debt securities will mature;
- any annual rates (which may be fixed or variable), or the method of
determining any rates, at which the debt securities will bear interest;
- the dates from which interest shall accrue and the dates on which
interest will be payable;
- the currencies in which the debt securities are denominated and principal
and interest may be payable;
- any redemption or sinking fund terms;
- any event of default or covenant with respect to the debt securities of a
particular series, if not set forth in this prospectus;
- whether the debt securities are to be issued, in whole or in part, in the
form of one or more global securities and the depositary for the global
securities;
- whether payments of principal, premium or interest will be free from any
deduction for taxes, assessments or governmental charges payable by the
holders;
- whether we will pay additional amounts on debt securities held by a
non-U.S. person for any tax, assessment or governmental charge and, if
so, whether we will have the option to redeem such securities;
- if definitive securities may be issued, the conditions under which the
same may be issued;
9
- whether the debt securities are convertible into Anadarko common stock;
and,
- any other terms of the series, which will not conflict with the terms of
the applicable indenture.
We may issue debt securities of any series at various times and we may
reopen any series for further issuances from time to time without notice to
existing holders.
We will issue the debt securities in fully registered form without coupons.
Unless we specify otherwise in the applicable prospectus supplement, we will
issue debt securities denominated in U.S. dollars in denominations of $1,000 or
multiples of $1,000.
We will describe special federal income tax and other considerations
relating to debt securities denominated in foreign currencies or units of two or
more foreign currencies in the applicable prospectus supplement.
Unless we specify otherwise in the applicable prospectus supplement, the
covenants contained in the indentures and the debt securities will not provide
special protection to holders of debt securities if we enter into a highly
leveraged transaction, recapitalization or restructuring.
EXCHANGE, REGISTRATION AND TRANSFER
Debt securities of any series that are not global securities will be
exchangeable for other debt securities of the same series and of like aggregate
principal amount and tenor in different authorized denominations. In addition,
you may present debt securities for registration of transfer, together with a
duly executed form of transfer, at the office of the security registrar or at
the office of any transfer agent designated by us for that purpose with respect
to any series of debt securities and referred to in the applicable prospectus
supplement. No service charge is required for any transfer or exchange of debt
securities but we may require payment of any taxes and other governmental
charges. The security registrar or the transfer agent will effect the transfer
or exchange upon being satisfied with the documents of title and identity of the
person making the request. We have appointed the applicable trustee as security
registrar for the applicable indenture. We may at any time designate additional
transfer agents with respect to any series of debt securities.
In the event of any redemption in part, we will not be required to:
- issue, register the transfer of or exchange debt securities of any series
during a period beginning at the opening of business 15 days before the
mailing of notice of redemption of debt securities of that series to be
redeemed and ending at the close of business on the mailing date;
- register the transfer of or exchange any debt security, or portion
thereof, called for redemption, except the unredeemed portion of any
registered security being redeemed in part.
For a discussion of restriction on the exchange, registration and transfer
of global securities, see "-- Global Securities."
PAYMENT AND PAYING AGENTS
Unless we specify otherwise in the applicable prospectus supplement,
payment of principal, any premium and any interest on debt securities will be
made at the office of the paying agents that we designate at various times.
However, at our option, we may make interest payments by check mailed to the
address, as it appears in the security register, of the person entitled to the
payments. Unless we specify otherwise in the applicable prospectus supplement,
we will make payment of any installment of interest on debt securities to the
person in whose name that registered security is registered at the close of
business on the regular record date for such interest.
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Unless we specify otherwise in the applicable prospectus supplement, the
Corporate Trust Office of the trustee in the Borough of Manhattan, The City of
New York, will be designated as our sole paying agent for payments with respect
to debt securities that are issued solely as debt securities.
GLOBAL SECURITIES
The debt securities of a series may be issued in whole or in part in the
form of one or more global certificates that we will deposit with a depositary
identified in the applicable prospectus supplement. Unless and until it is
exchanged in whole or in part for the individual debt securities it represents,
a global security may not be transferred except as a whole:
- by the applicable depositary to a nominee of the depositary,
- by any nominee to the depositary itself or another nominee, or
- by the depositary or any nominee to a successor depositary or any nominee
of the successor.
We will describe the specific terms of the depositary arrangement with
respect to a series of debt securities in the applicable prospectus supplement.
We anticipate that the following provisions will generally apply to depositary
arrangements.
When we issue a global security in registered form, the depositary for the
global security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the individual debt
securities represented by that global security to the accounts of persons that
have accounts with the depositary ("participants"). Those accounts will be
designated by the dealers, underwriters or agents with respect to the underlying
debt securities or by us if those debt securities are offered and sold directly
by us. Ownership of beneficial interests in a global security will be limited to
participants or persons that may hold interests through participants. For
interests of participants, ownership of beneficial interests in the global
security will be shown on records maintained by the applicable depositary or its
nominee. For interests of persons other than participants, that ownership
information will be shown on the records of participants. Transfer of that
ownership will be effected only through those records. The laws of some states
require that certain purchasers of securities take physical delivery of
securities in definitive form. These limits and laws may impair our ability to
transfer beneficial interests in a global security.
As long as the depositary for a global security, or its nominee, is the
registered owner of that global security, the depositary or nominee will be
considered the sole owner or holder of the debt securities represented by the
global security for all purposes under the applicable indenture. Except as
provided below, owners of beneficial interests in a global security:
- will not be entitled to have any of the underlying debt securities
registered in their names,
- will not receive or be entitled to receive physical delivery of any of
the underlying debt securities in definitive form, and
- will not be considered the owners or holders under the indenture relating
to those debt securities.
Payments of principal of, any premium on and any interest on individual
debt securities represented by a global security registered in the name of a
depositary or its nominee will be made to the depositary or its nominee as the
registered owner of the global security representing such debt securities.
Neither we, the trustee for the debt securities, any paying agent nor the
registrar for the debt securities will be responsible for any aspect of the
records relating to or payments made by the depositary or any participants on
account of beneficial interests in the global security.
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We expect that the depositary or its nominee, upon receipt of any payment
of principal, any premium or interest relating to a global security representing
any series of debt securities, immediately will credit participants' accounts
with the payments. Those payments will be credited in amounts proportional to
the respective beneficial interests of the participants in the principal amount
of the global security as shown on the records of the depositary or its nominee.
We also expect that payments by participants to owners of beneficial interests
in the global security held through those participants will be governed by
standing instructions and customary practices. This is now the case with
securities held for the accounts of customers registered in "street name." Those
payments will be the sole responsibility of those participants.
If the depositary for a series of debt securities is at any time unwilling,
unable or ineligible to continue as depositary and we do not appoint a successor
depositary within 90 days, we will issue individual debt securities of that
series in exchange for the global security or securities representing that
series. In addition, we may at any time in our sole discretion determine not to
have any debt securities of a series represented by one or more global
securities. In that event, we will issue individual debt securities of that
series in exchange for the global security or securities. Further, if we
specify, an owner of a beneficial interest in a global security may, on terms
acceptable to us, the trustee and the applicable depositary, receive individual
debt securities of that series in exchange for those beneficial interests. The
foregoing is subject to any limitations described in the applicable prospectus
supplement. In any such instance, the owner of the beneficial interest will be
entitled to physical delivery of individual debt securities equal in principal
amount to the beneficial interest and to have the debt securities registered in
its name. Those individual debt securities will be issued in any authorized
denominations.
MODIFICATION OF THE INDENTURES
Under each indenture our rights and obligations and the rights of the
holders may be modified with the consent of the holders of at least a majority
in principal amount of the then outstanding debt securities of each series
affected by the modification. None of the following modifications, however, is
effective against any holder without the consent of the holders of all of the
affected outstanding debt securities:
- changing the maturity, installment or interest rate of any of the debt
securities;
- reduce the principal amount of (or premium, if any) or interest on any
debt security;
- reduce the amount of principal of an original issue discount security
payable upon acceleration of maturity;
- changing the conversion provisions of any of the debt securities, or
subordination provisions of the subordinated indenture, in a manner
adverse to the holders;
- change the place or currency of payment of (or premium, if any) or
interest on any debt security;
- reducing the percentage required for modifications or waivers of
compliance with the indentures;
- impair the right of a holder to institute suit for the enforcement of any
payment on or with respect to any debt security; or
- with some exceptions, modifying the provisions for the waiver of
covenants and defaults and any of the foregoing provisions.
Any actions we or the trustee may take toward adding to our covenants,
adding events of default or establishing the structure or terms of the debt
securities as permitted by the indentures will not require the approval of any
holder of debt securities. In addition, we or the trustee may
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cure ambiguities or inconsistencies in the indentures or make other provisions
without the approval of any holder as long as no holder's interests are
materially and adversely affected.
EVENTS OF DEFAULT, NOTICE AND WAIVER
"Event of default" when used in an indenture, will mean any of the
following in relation to a series of debt securities:
- failure to pay interest on any debt security for 60 days after the
interest becomes due;
- failure to pay the principal or any premium on any debt security when
due;
- failure to deposit any sinking fund payment for 60 days after such
payment becomes due;
- failure to perform or breach of any other covenant or warranty in the
indenture that continues for 90 days after our being given notice from
the trustee or the holders of at least 25% in principal amount of the
outstanding debt securities of the series;
- default in the payment when due of other indebtedness in an aggregate
principal amount in excess of $25,000,000, causing such indebtedness to
become due prior to its stated maturity, and such default is not cured
within 30 days after notice from the trustee or the holders of at least
5% in principal amount of the outstanding debt securities of the series;
- a creditor commences involuntary bankruptcy, insolvency or similar
proceedings against us and we are unable to obtain a stay or dismissal of
that proceeding within 90 days;
- we voluntarily seek relief under bankruptcy, insolvency or similar laws
or we consent to a court entering an order for relief against us under
those laws; or
- any other event of default provided for debt securities of that series.
If any event of default relating to outstanding debt securities of any
series occurs and is continuing, either the trustee or the holders of at least
25% in principal amount of the outstanding debt securities of that series may
declare the principal of all of the outstanding debt securities of such series
to be due and immediately payable.
The indentures provide that the holders of at least 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 of exercising any trust or power conferred on the trustee, with
respect to the debt securities of that series. The trustee may act in any way
that is consistent with those directions and may decline to act if any of the
directions is contrary to law or to the indentures or would involve the trustee
in personal liability.
The indentures provide that the holders of at least a majority in principal
amount of the outstanding debt securities of any series may on behalf of the
holders of all of the outstanding debt securities of the series waive any past
default (and its consequences) under the indentures relating to the series,
except a default (a) in the payment of the principal of or any premium on or
interest on any of the debt securities of the series, or (b) with respect to a
covenant or provision of such indentures which, under the terms of such
indentures, cannot be modified or amended without the consent of the holders of
all of the outstanding debt securities of the series affected.
The indentures contain provisions entitling the trustee, subject to the
duty of the trustee during an event of default to act with the required standard
of care, to be indemnified by the holders of the debt securities of the relevant
series before proceeding to exercise any right or power under the indentures at
the request of those holders.
The indentures require the trustee to, within 90 days after the occurrence
of a default known to it with respect to any series of outstanding debt
securities, give the holders of that series notice of the default if uncured and
unwaived. However, the trustee may withhold this notice if it in good
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faith determines that the withholding of this notice is in the interest of those
holders. However, the trustee may not withhold this notice in the case of a
default in payment of principal, premium, interest or sinking fund installment
with respect to any debt securities of the series. The above notice shall not be
given until at least 60 days after the occurrence of a default in the
performance or a breach of a covenant or warranty in the applicable indenture
other than a covenant to make payment. The term "default" for the purpose of
this provision means any event that is, or after notice or lapse of time, or
both, would become, an event of default with respect to the debt securities of
that series.
Each indenture requires us to file annually with the trustee a certificate,
executed by one of our officers, indicating whether the officer has knowledge of
any default under the indenture.
REPLACEMENT OF SECURITIES
We will replace any mutilated debt security at the expense of the holder
upon surrender of the mutilated debt security to the appropriate trustee. We
will replace debt securities that are destroyed, stolen or lost at the expense
of the holder upon delivery to the appropriate trustee of evidence of the
destruction, loss or theft of the debt securities satisfactory to us and to the
trustee. In the case of a destroyed, lost or stolen debt security, an indemnity
satisfactory to the appropriate trustee and us may be required at the expense of
the holder of the debt security before a replacement debt security will be
issued.
DEFEASANCE
When we use the term defeasance, we mean discharge from some or all of our
obligations under the indenture. If we deposit with the trustee funds or
government securities sufficient to make payments on any series of debt
securities on the dates those payments are due and payable and other specified
conditions are satisfied, then, at our option, either of the following will
occur:
- we will be discharged from our obligations with respect to the debentures
("legal defeasance"); or
- the related events of default will no longer apply to us ("covenant
defeasance").
If we defease any series of debt securities, the holders of such securities
will not be entitled to the benefits of the applicable indenture, except for our
obligations to register the transfer or exchange of such securities, replace
stolen, lost or mutilated securities or maintain paying agencies and hold moneys
for payment in trust. In case of covenant defeasance, our obligation to pay
principal, premium and interest on the applicable series of debt securities will
also survive.
We will be required to deliver to the trustee an opinion of counsel that
the deposit and related defeasance would not cause the holders of the applicable
series of debt securities to recognize income, gain or loss for federal income
tax purposes. If we elect legal defeasance, that opinion of counsel must be
based upon a ruling from the United States Internal Revenue Service or a change
in law to that effect.
GOVERNING LAW
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
SENIOR DEBT SECURITIES LIMITATIONS ON LIENS
Neither we nor any domestic subsidiary of ours will issue, assume or
guarantee any debt secured by a mortgage, lien, pledge or other encumbrance upon
real or personal property of ours or of any of our domestic subsidiaries that is
located in the continental U.S. without providing that
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the senior securities will be secured equally and ratably or prior to the debt.
However, this provision shall not apply to the following:
- Mortgages existing on the date of the senior indenture;
- Mortgages existing at the time a corporation becomes a domestic
subsidiary of ours or at the time it is merged into or consolidated with
us or a domestic subsidiary of ours;
- Mortgages in favor of Anadarko or any domestic subsidiary of ours;
- Mortgages on property (a) existing at the time of the property's
acquisition, (b) to secure payment of all or part of the property's
purchase price, or (c) to secure debt incurred prior to, at the time of
or within 180 days after the acquisition, the completion of construction
or the commencement of full operation of the property or for the purpose
of financing all or part of the property's purchase price;
- Mortgages in favor of the United States of America, any state, any other
country or any political subdivision required by contract or statute;
- Mortgages on property to secure all or part of the cost of construction,
development or repair, alteration or improvement of the property not
later than one year after the completion of or the placing into operation
the property;
- Mortgages on minerals or geothermal resources in place, or on related
leasehold or other property interests which are incurred to finance
development, production or acquisition costs;
- Mortgages on equipment used or usable for drilling, servicing or
operation of oil, gas, coal or other mineral properties or of geothermal
properties;
- Mortgages required by any contract or statute in order to permit us or a
subsidiary of ours to perform any contract or subcontract made with or at
the request of the U.S., any state or any department, agency or
instrumentality of either; or
- Any extension, renewal or replacement of any mortgage referred to in the
preceding items or of any debt secured by those mortgages as long as the
extension, renewal or replacement will be limited to substantially the
same property (plus improvements) which secured the mortgage.
Notwithstanding anything mentioned above, we and any one or more of our
domestic subsidiaries may issue, assume or guarantee debt secured by mortgages
that would otherwise be subject to the foregoing restrictions in an aggregate
principal amount which, together with the aggregate outstanding principal amount
of all other debt of ours and our domestic subsidiaries that would otherwise be
subject to the foregoing restrictions, does not at any one time exceed 10% of
the aggregate amount of assets of Anadarko and its domestic subsidiaries after
deducting therefrom all current liabilities, unamortized debt discount, expense
and other like intangibles as calculated on our consolidated balance sheet as of
a date within 150 days prior to the date of determination.
The following types of transactions, among others, shall not be deemed to
create debt secured by mortgages: (1) the sale or other transfer of oil, gas or
other minerals in place for a period of time until, or in an amount such that,
the transferee will realize from the sale or transfer a specified amount
(however determined) of money or such minerals, or the sale or other transfer of
any other interest in property of the character commonly referred to as an oil
payment or a production payment, and (2) the sale or transfer by Anadarko or a
domestic subsidiary of properties to a partnership, joint venture or other
entity in which we or our domestic subsidiary would retain partial ownership of
the properties.
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THE TRUSTEE
The Bank of New York is trustee under the senior indenture and the Anadarko
Finance Company senior indenture. The trustee or its affiliates have other
customary banking relationships with us and our affiliates.
DESCRIPTION OF GUARANTEES OF ANADARKO FINANCE DEBT SECURITIES
The debt securities issued by Anadarko Finance will be irrevocably and
unconditionally guaranteed on a senior unsecured basis by Anadarko pursuant to a
guarantee (the "Parent Guarantee") included in the indenture. Pursuant to the
Parent Guarantee, Anadarko will guarantee the due and punctual payment of the
principal of, interest and premium on, and liquidated damages, with respect to
the securities, when the same shall become due, whether by acceleration or
otherwise. The Parent Guarantee is enforceable against Anadarko without any need
to first enforce the notes against Anadarko Finance.
The Parent Guarantee of Anadarko Finance debt securities will be an
unsecured and unsubordinated general obligation of Anadarko and will rank on
parity with all of Anadarko's other unsecured and unsubordinated indebtedness.
The Parent Guarantee will be effectively subordinated to all existing and
future obligations of Anadarko's subsidiaries. As of June 30, 2002, Anadarko's
subsidiaries, including Anadarko Finance, had $3.1 billion of indebtedness.
SUBORDINATED DEBT SECURITIES
Under the subordinated indenture, payment of the principal, interest and
any premium on the subordinated securities will generally be subordinated in
right of payment to the prior payment in full of all of our senior indebtedness.
"Senior indebtedness" is defined as the principal of, any premium and
accrued and unpaid interest on the following items, whether outstanding on or
created, incurred or assumed after the date of execution of the subordinated
indenture:
- our indebtedness for money borrowed (other than the subordinated
securities);
- guarantees by us of indebtedness for money borrowed of any other person;
and,
- indebtedness evidenced by notes, debentures, bonds or other instruments
of indebtedness for the payment of which we are responsible or liable, by
guarantees or otherwise.
Senior indebtedness shall also be deemed to include modifications,
renewals, extensions and refundings of any of the types of indebtedness,
liability, obligations or guarantee listed above, unless the relevant instrument
provides that such indebtedness, liability, obligation or guarantee, or such
modification, renewal, extension or refunding, is not senior in right of payment
to the subordinated securities.
No payment by us on account of principal of, any premium or interest on the
subordinated securities except for sinking fund payments as described below may
be made if:
- any default or event of default with respect to any senior indebtedness
occurs and is continuing, or
- any judicial proceeding is pending with respect to any default in payment
of senior indebtedness.
Sinking fund payments may be made during a suspension of principal or
interest payments on subordinated debt provided the sinking fund payments are
made by securities redeemed or acquired prior to the default or by means of
conversion of the securities.
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If any subordinated security is declared due and payable before its
specified date, or upon any payment or distribution of assets by us to creditors
upon our dissolution, winding up, liquidation or reorganization, all principal
of, any premium and interest due or to become due on all senior indebtedness
must be paid in full before the holders of subordinated securities are entitled
to receive or take any payment. Subject to the payment in full of all senior
indebtedness, the holders of the subordinated securities are to be subrogated to
the rights of the holders of senior indebtedness to receive payments or
distribution of our assets applicable to senior indebtedness until the
subordinated securities are paid in full.
By reason of this subordination, in the event of insolvency, our creditors
who are holders of senior indebtedness, as well as some of our general
creditors, may recover more, ratably, than the holders of the subordinated
securities.
The subordinated indenture will not limit the amount of senior indebtedness
or debt securities which may be issued by us or any of our subsidiaries.
CONVERSION RIGHTS
The prospectus supplement will provide if a series of our debt securities
is convertible into Anadarko stock and the initial conversion price per share at
which the securities may be converted.
The subordinated indenture contains additional provisions regarding
conversion rights. If a convertible subordinated security has not been redeemed,
the holder of such convertible security may convert the security, or any portion
of the principal amount in integral multiples of $1,000, at the conversion price
in effect at the time of conversion into shares of Anadarko stock. Conversion
rights shall expire at the close of business on the date specified in the
prospectus supplement for a series of convertible subordinated securities.
Conversion rights expire at the close of business on the redemption date in the
case of any convertible subordinated securities called for redemption.
In order to exercise the conversion privilege, the person entitled to
convert the convertible subordinated security must surrender to Anadarko, at any
office or agency of Anadarko maintained for that purpose, the security with a
written notice of the election to convert the security, and if less than the
entire principal amount of the security is being converted, the amount of
security to be converted. In addition, if the convertible subordinated security
is converted during the period between a record date for the payment of interest
and the related interest payment date the person entitled to convert the debt
security must pay to Anadarko an amount equal to the interest payable on the
principal amount being converted.
No interest on converted subordinated securities will be paid by Anadarko
on any interest payment date after the date of conversion except for those
securities surrendered during the period between a record date for the payment
of interest and the related interest payment date.
Convertible subordinated securities shall be deemed to have been converted
immediately prior to the close of business on the day of surrender of the
security. No fractional shares of stock will be issued upon conversion, but an
adjustment in cash will be made based on the market price at the close of
business on the date of conversion.
The conversion price will be subject to adjustment upon the occurrence of
events specified in the applicable prospectus supplement. Anadarko may also
decrease the conversion price as it considers necessary in order that any event
treated for federal income tax purposes as a dividend of stock or stock rights
will not be taxable to the holders of Anadarko stock.
Anadarko will pay any and all transfer taxes that may be payable in respect
of the issue or delivery of shares of stock on conversion of the securities.
Anadarko is not required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of shares in a name other than that
of the holder of the security to be converted and no issue and delivery shall
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be made unless and until the person requesting the issue has paid the amount of
any such tax or established to the satisfaction of Anadarko that such tax has
been paid.
After the occurrence of:
- consolidation with or merger of Anadarko into any other corporation;
- any merger of another corporation into Anadarko; or
- any sale or transfer of substantially all of the assets of Anadarko
which results in any reclassification, change or conversion of the stock, the
holders of any convertible subordinated securities will be entitled to receive
on conversion the kind and amount of shares of stock or other securities, cash
or other property receivable upon such event by a holder of Anadarko stock
immediately prior to the occurrence of the event.
DESCRIPTION OF PREFERRED STOCK
Our Restated Articles of Incorporation authorize the board of directors of
Anadarko, without further stockholder action, to provide for the issuance of up
to 2,000,000 shares of preferred stock, in one or more series, and to fix the
designations, terms, and relative rights and preferences, including the dividend
rate, voting rights, conversion rights, redemption and sinking fund provisions
and liquidation values of each of these series. We may amend from time to time
our restated articles to increase the number of authorized shares of preferred
stock. Any amendment like this would require the approval of the holders of a
majority of the outstanding shares. As of the date of this prospectus, we have
103,000 shares of 5.46% Series B Cumulative Preferred Stock outstanding and
200,000 shares of Series C Junior Participating Preferred Stock authorized for
issuance under our rights agreement, none of which is outstanding.
The particular terms of any series of preferred stock being offered by us
under this shelf registration will be described in the prospectus supplement
relating to that series of preferred stock. Those terms may include:
- the title and liquidation preference per share of the preferred stock and
the number of shares offered;
- the purchase price of the preferred stock;
- the dividend rate (or method of calculation), the dates on which
dividends will be paid and the date from which dividends will begin to
accumulate;
- any redemption or sinking fund provisions of the preferred stock;
- any conversion provisions of the preferred stock;
- the voting rights, if any, of the preferred stock; and,
- any additional dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of the
preferred stock.
If the terms of any series of preferred stock being offered differ from the
terms set forth in this prospectus, those terms will also be disclosed in the
prospectus supplement relating to that series of preferred stock. You should
also refer to the certificate of designation establishing a particular series of
preferred stock that will be filed with the Secretary of State of the State of
Delaware and the SEC in connection with any offering of preferred stock.
The preferred stock will, when issued, be fully paid and nonassessable.
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DIVIDEND RIGHTS
The preferred stock will be preferred over the common stock as to payment
of dividends. Before any dividends or distributions (other than dividends or
distributions payable in common stock) on the common stock shall be declared and
set apart for payment or paid, the holders of shares of each series of preferred
stock will be entitled to receive dividends when, as and if declared by the
board of directors of Anadarko. We will pay those dividends either in cash,
shares of common stock or preferred stock or otherwise, at the rate and on the
date or dates set forth in the prospectus supplement. With respect to each
series of preferred stock, the dividends on each share of the series will be
cumulative from the date of issue of the share unless some other date is set
forth in the prospectus supplement relating to the series. Accruals of dividends
will not bear interest.
RIGHTS UPON LIQUIDATION
The preferred stock will be preferred over the common stock as to asset
distributions so that the holders of each series of preferred stock will be
entitled to be paid, upon our voluntary or involuntary liquidation, dissolution
or winding up and before any distribution is made to the holders of common
stock, the amount set forth in the applicable prospectus supplement. However, in
this case the holders of preferred stock will not be entitled to any other or
further payment. If upon any liquidation, dissolution or winding up our net
assets are insufficient to permit the payment in full of the respective amounts
to which the holders of all outstanding preferred stock are entitled, our entire
remaining net assets will be distributed among the holders of each series of
preferred stock in amounts proportional to the full amounts to which the holders
of each series are entitled.
REDEMPTION
All shares of any series of preferred stock will be redeemable to the
extent set forth in the prospectus supplement relating to the series. All shares
of any series of preferred stock will be convertible into shares of common stock
or into shares of any other series of preferred stock to the extent set forth in
the applicable prospectus supplement.
PREFERRED STOCK PURCHASE RIGHTS
On October 30, 1998, we entered into a rights agreement with The Chase
Manhattan Bank, as rights agent, providing for a dividend of one preferred stock
purchase right for each outstanding share of our common stock. We issued the
dividend to stockholders of record on November 10, 1998, and holders of shares
of common stock issued since that date are issued rights with their shares. The
rights trade automatically with shares of common stock and become exercisable
only under the circumstances described below. The rights are designed to protect
the interests of Anadarko and our stockholders against coercive takeover
tactics. The purpose of the rights is to encourage potential acquirers to
negotiate with the board of directors of Anadarko prior to attempting a takeover
and to provide the board with leverage in negotiating on behalf of all
stockholders the terms of any proposed takeover. The rights may have
anti-takeover effects. The rights should not, however, interfere with any merger
or other business combination approved by the board of directors of Anadarko.
Until a right is exercised, the right will not entitle the holder to
additional rights as an Anadarko stockholder, including, without limitation, the
right to vote or to receive dividends. Upon becoming exercisable, each right
will entitle its holder to purchase from us one one-thousandth of a share of
Series C Junior Participating Preferred Stock at a purchase price of $175 per
right, subject to adjustment. In general, the rights will not be exercisable
until the earlier of (a) any time that we learn that a person or group or an
affiliate or associate of the person or group has acquired, or has obtained the
right to acquire, beneficial ownership of 15% or more of our outstanding common
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stock, unless provisions preventing accidental triggering of the rights apply
and (b) the close of business on the date, if any, designated by the board of
directors of Anadarko following the commencement of, or first public disclosure
of an intent to commence, a tender or exchange offer for 15% or more of our
outstanding common stock. Below we refer to the earlier of those dates as the
"distribution date" and the person or group acquiring at least 15% of our common
stock as an "acquiring person." In the event that we are acquired in a merger or
other business combination, or 50% or more of our consolidated assets or earning
power are sold after a person becomes an acquiring person, each right will
entitle its holder to purchase, for the purchase price, that number of common
shares of the corporation which at the time of the transaction would have a
market value of twice the right exercise price.
Any rights that are at any time beneficially owned by an acquiring person,
or any associate or affiliate of the acquiring person, will be null and void and
nontransferable, and any holder of such right, including any purported
transferee or subsequent holder, will be unable to exercise or transfer the
right.
The rights will expire at the close of business on November 10, 2008,
unless redeemed before that time. At any time prior to the earlier of (a) the
time a person or group becomes an acquiring person and (b) the expiration date,
the board of directors of Anadarko may redeem the rights in whole, but not in
part, at a price of $.01 per right. This amount is subject to adjustment as
provided in the rights agreement.
The preceding summary describes the material terms of the preferred stock
purchase rights. You should refer to the applicable provisions of the rights
agreement and the form of right certificate, which are incorporated by reference
to Exhibit 4.1 to our Form 8-A, filed with the SEC on October 30, 1998.
PROVISIONS OF ANADARKO'S RESTATED CERTIFICATE OF INCORPORATION
In the event of a proposed merger or tender offer, proxy contest or other
attempt to gain control of us which is not approved by the board of directors of
Anadarko, it would be possible for the board of directors of Anadarko to
authorize the issuance of one or more series of preferred stock with voting
rights or other rights and preferences which would impede the success of the
proposed merger, tender offer, proxy contest or other attempt to gain control of
us. This authority may be limited by applicable law, the restated articles and
the applicable rules of the stock exchanges upon which the common stock is
listed. The consent of the holders of common stock would not be required for any
issuance of preferred stock like this.
The restated articles also provide that the board of directors of Anadarko
is classified into three classes and that some provisions of the restated
articles may be amended only by the affirmative vote of the holders of at least
80% of the voting power of our then outstanding voting stock.
DESCRIPTION OF DEPOSITARY SHARES
The following is a general description of the depositary shares to which
this prospectus and any prospectus supplement may relate. The applicable
prospectus supplement will describe the specific terms of the depositary shares
offered through that prospectus supplement, as well as any general terms
described in this section that will not apply to those depositary shares.
The following description of depositary shares is subject to the detailed
provisions of the depositary receipts and the deposit agreement relating to the
applicable series of preferred stock, the form of each of which has been filed
as an exhibit to the registration statement of which this prospectus is a part.
Whenever particular provisions of the depositary receipts or deposit agreement,
or terms defined therein, are referred to, those provisions or definitions are
incorporated by reference herein and such descriptions are qualified in their
entirety by such reference. We urge you to read the depositary receipts and the
depositary agreement because they,
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and not this description, describe every detail of the terms of the depositary
shares. The summary below of the general terms of the depositary shares will be
supplemented by the more specific terms in a prospectus supplement.
GENERAL
We may, at our option, elect to offer fractional shares of preferred stock,
rather than full shares of preferred stock. If we exercise this option, we will
issue to the public receipts for depositary shares, and each of these depositary
shares will represent a fraction (to be set forth in the applicable prospectus
supplement) of a share of a particular series of preferred stock.
The shares of any series of preferred stock underlying the depositary
shares will be deposited under a deposit agreement between us and a bank or
trust company selected by us. The depositary will have its principal office in
the United States and a combined capital and surplus of at least $50,000,000.
Subject to the terms of the deposit agreement, each owner of a depositary share
will be entitled, in proportion to the applicable fraction of a share of
preferred stock underlying that depositary share, to all the rights and
preferences of the preferred stock underlying that depositary share. Those
rights include dividend, voting, redemption and liquidation rights.
The depositary shares will be evidenced by depositary receipts issued
pursuant to the deposit agreement. Depositary receipts will be distributed to
those persons purchasing the fractional shares of preferred stock underlying the
depositary shares, in accordance with the terms of the offering.
Pending the preparation of definitive engraved depositary receipts, the
depositary may, upon our written order, issue temporary depositary receipts
substantially identical to the definitive depositary receipts but not in
definitive form. These temporary depositary receipts entitle their holders to
all the rights of definitive depositary receipts which are to be prepared
without unreasonable delay. Temporary depositary receipts will then be
exchangeable for definitive depositary receipts at our expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The depositary will distribute all cash dividends or other cash
distributions received with respect to the preferred stock to the record holders
of depositary shares relating to the preferred stock in proportion to the number
of depositary shares owned by those holders.
If there is a distribution other than in cash, the depositary will
distribute property received by it to the record holders of depositary shares
that are entitled to receive the distribution, unless the depositary determines
that it is not feasible to make the distribution. If this occurs, the depositary
may, with our approval, sell the property and distribute the net proceeds from
the sale to the applicable holders.
REDEMPTION OF DEPOSITARY SHARES
If a series of preferred stock represented by depositary shares is subject
to redemption, the depositary shares will be redeemed from the proceeds received
by the depositary resulting from the redemption, in whole or in part, of that
series of preferred stock held by the depositary. The redemption price per
depositary share will be equal to the applicable fraction of the redemption
price per share payable with respect to that series of the preferred stock.
Whenever we redeem shares of preferred stock that are held by the depositary,
the depositary will redeem, as of the same redemption date, the number of
depositary shares representing the shares of preferred stock so
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redeemed. If fewer than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or pro rata as may be
determined by the depositary.
VOTING THE PREFERRED STOCK
Upon receipt of notice of any meeting at which the holders of the preferred
stock are entitled to vote, the depositary will mail the information contained
in the notice to the record holders of the depositary shares underlying the
preferred stock. Each record holder of the depositary shares on the record date
(which will be the same date as the record date for the preferred stock) will be
entitled to instruct the depositary as to the exercise of the voting rights
pertaining to the amount of the preferred stock represented by such holder's
depositary shares. If proper voting instructions are timely received by the
depositary, the depositary will then vote the number of shares of preferred
stock underlying those depositary shares in accordance with such instructions,
and we will agree to take all actions which may be deemed necessary by the
depositary to enable the depositary to do so. The depositary will not vote the
shares of preferred stock to the extent it does not receive specific
instructions from the holders of depositary shares underlying the preferred
stock.
AMENDMENT AND TERMINATION OF THE DEPOSITARY AGREEMENT
The form of depositary receipt evidencing the depositary shares and any
provision of the deposit agreement may at any time be amended by agreement
between us and the depositary. However, any amendment which materially and
adversely alters the rights of the holders of depositary shares will not be
effective unless the amendment has been approved by the holders of at least a
majority of the depositary shares then outstanding. The deposit agreement may be
terminated by us or by the depositary only if (a) all outstanding depositary
shares have been redeemed or (b) there has been a final distribution of the
underlying preferred stock in connection with our liquidation, dissolution or
winding up and the preferred stock has been distributed to the holders of
depositary receipts.
CHARGES OF DEPOSITARY
We will pay all transfer and other taxes and governmental charges arising
solely from the existence of the depositary arrangements. We will also pay
charges of the depositary in connection with the initial deposit of the
preferred stock and any redemption of the preferred stock. Holders of depositary
receipts will pay other transfer and other taxes and governmental charges and
those other charges, including a fee for the withdrawal of shares of preferred
stock upon surrender of depositary receipts, as are expressly provided in the
deposit agreement to be for their accounts.
MISCELLANEOUS
The depositary will forward to holders of depositary receipts all reports
and communications from us that we deliver to the depositary and that we are
required to furnish to the holders of the preferred stock.
Neither we nor the depositary will be liable if either of us is prevented
or delayed by law or any circumstance beyond our control in performing our
respective obligations under the deposit agreement. Our obligations and those of
the depositary will be limited to performance in good faith of our respective
duties under the deposit agreement. Neither we nor they will be obligated to
prosecute or defend any legal proceeding in respect of any depositary shares or
preferred stock unless satisfactory indemnity is furnished. We and the
depositary may rely upon written advice of counsel or accountants, or upon
information provided by persons presenting preferred stock for deposit, holders
of depositary receipts or other persons believed to be competent and on
documents believed to be genuine.
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RESIGNATION AND REMOVAL OF DEPOSITARY
The depositary may resign at any time by delivering notice to us of its
election to resign. We may remove the depositary at any time. Any resignation or
removal will take effect upon the appointment of a successor depositary and its
acceptance of the appointment. The successor depositary must be appointed within
60 days after delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United States and
having a combined capital and surplus of at least $50,000,000.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
450,000,000 shares of common stock. As of June 30, 2002, we had 254,360,443
shares of common stock issued and had reserved 26,449,366 additional shares of
common stock for issuance under our various stock and compensation incentive
plans, convertible debentures and plan of merger with Union Pacific Resources
Group, Inc.
The following summary describes the material features of our common stock.
For additional information, you should refer to the applicable provisions of the
following documents:
- the restated certificate of incorporation, which is incorporated by
reference to Exhibit 4(a) to our Registration Statement on Form S-3 (No.
333-60496) dated May 9, 2001;
- the amendment to the restated certificate of incorporation, which is
incorporated by reference to Exhibit 4.1 to our Form 8-K dated July 28,
2000; and,
- the by-laws, as amended, which are incorporated by reference to Exhibit
3(e) to our Form 10-Q for the quarter ended September 30, 2000.
DIVIDENDS
On July 29, 2002, our board of directors declared dividends of $0.075 per
share on our common stock and $13.65 per share on our 5.46% Series B Cumulative
Preferred Stock. The amount of any future common stock dividends declared would
be at the discretion of our board of directors and would depend on earnings,
financial condition, capital requirements and other relevant factors. The amount
of future common stock dividends will be determined by the board of directors on
a quarterly basis. The holders of common stock are entitled to receive dividends
when, as and if declared by the board of directors of Anadarko, out of funds
legally available for their payment subject to the rights of holders of
preferred stock.
VOTING RIGHTS
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders.
RIGHTS UPON LIQUIDATION
In the event of our voluntary or involuntary liquidation, dissolution or
winding up, the holders of common stock will be entitled to share equally in any
of our assets available for distribution after the payment in full of all debts
and distributions and after the holders of all series of outstanding preferred
stock have received their liquidation preferences in full.
MISCELLANEOUS
The outstanding shares of common stock are fully paid and nonassessable.
The holders of common stock are not entitled to preemptive or redemption rights.
Shares of common stock are not
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convertible into shares of any other class of capital stock. Mellon Investor
Shareholder Services LLC, South Hackensack, New Jersey, is the transfer agent
and registrar for the common stock.
DESCRIPTION OF SECURITIES WARRANTS
We may issue securities warrants for the purchase of debt securities,
preferred stock or common stock. Securities warrants may be issued independently
or together with debt securities, preferred stock or common stock and may be
attached to or separate from any offered securities. Each series of securities
warrants will be issued under a separate warrant agreement to be entered into
between us and a bank or trust company, as warrant agent. The securities warrant
agent will act solely as our agent in connection with the securities warrants
and will not assume any obligation or relationship of agency or trust for or
with any registered holders of securities warrants or beneficial owners of
securities warrants. In addition to this summary, you should refer to the
securities warrant agreement, including the forms of securities warrant
certificate representing the securities warrants, relating to the specific
securities warrants being offered for the complete terms of the securities
warrant agreement and the securities warrants. That securities warrant
agreement, together with the terms of securities warrant certificate and
securities warrants, will be filed with the SEC in connection with the offering
of the specific securities warrants.
The particular terms of any issue of securities warrants will be described
in the prospectus supplement relating to the issue. Those terms may include:
- the designation, aggregate principal amount, currencies, denominations
and terms of the series of debt securities purchasable upon exercise of
securities warrants to purchase debt securities and the price at which
the debt securities may be purchased upon exercise;
- the designation, number of shares, stated value and terms (including,
without limitation, liquidation, dividend, conversion and voting rights)
of the series of preferred stock purchasable upon exercise of securities
warrants to purchase shares of preferred stock and the price at which
such number of shares of preferred stock of such series may be purchased
upon such exercise;
- the number of shares of common stock purchasable upon the exercise of
securities warrants to purchase shares of common stock and the price at
which such number of shares of common stock may be purchased upon such
exercise;
- the date on which the right to exercise the securities warrants will
commence and the date on which the right will expire;
- United States federal income tax consequences applicable to the
securities warrants; and,
- any other terms of the securities warrant.
Securities warrants for the purchase of preferred stock and common stock
will be offered and exercisable for U.S. dollars only. Securities warrants will
be issued in registered form only. The exercise price for securities warrants
will be subject to adjustment in accordance with the applicable prospectus
supplement.
Each securities warrant will entitle its holder to purchase the principal
amount of debt securities or the number of shares of preferred stock or common
stock at the exercise price set forth in, or calculable as set forth in, the
applicable prospectus supplement. The exercise price may be adjusted upon the
occurrence of events as set forth in the prospectus supplement. After the close
of business on the expiration date, unexercised securities warrants will become
void. We will specify the place or places where, and the manner in which,
securities warrants may be exercised in the applicable prospectus supplement.
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Prior to the exercise of any securities warrants to purchase debt
securities, preferred stock or common stock, holders of the securities warrants
will not have any of the rights of holders of the debt securities, preferred
stock or common stock purchasable upon exercise, including:
- in the case of securities warrants for the purchase of debt securities,
the right to receive payments of principal of, any premium or interest on
the debt securities purchasable upon exercise or to enforce covenants in
the applicable indenture; or,
- in the case of securities warrants for the purchase of preferred stock or
common stock, the right to vote or to receive any payments of dividends
on the preferred stock or common stock purchasable upon exercise.
DESCRIPTION OF PURCHASE CONTRACTS AND PURCHASE UNITS
We may issue purchase contracts representing contracts obligating holders
to purchase from Anadarko, and Anadarko to sell to the holders, or for Anadarko
to issue in exchange for other securities a specified number of shares of common
stock or preferred stock (or a range of numbers of shares pursuant to a
predetermined formula) at a future date or dates or on the occurrence of
specified events. The price or exchange rate per share of common stock or
preferred stock may be fixed at the time the contracts are issued or may be
determined by reference to a specific formula set forth in the contracts.
The purchase contracts may be issued separately or as a part of units,
often known as purchase units, consisting of a purchase contract and the
following:
- senior debt securities or subordinated securities of Anadarko or one of
its subsidiaries;
- debt obligations of third parties, including U.S. treasury securities;
- trust preferred securities of the Trusts, all of whose trust common
securities are owned by Anadarko or by subsidiaries of Anadarko; or
- any combination of the foregoing
securing the holder's obligations to purchase the common stock or preferred
stock under the purchase contracts.
The purchase contracts may require Anadarko to make periodic payments to
the holders of the purchase units or vice versa, and such payments may be
unsecured or prefunded on some basis. The purchase contracts may require holders
to secure their obligations thereunder in a specified manner, and in certain
circumstances Anadarko may deliver newly issued prepaid purchase contracts,
often known as prepaid securities, upon release to a holder of any collateral
securing such holder's obligations under the original purchase contract.
The applicable prospectus supplement will describe the material terms of
any purchase contracts or purchase units and, if applicable, prepaid securities.
For more information regarding same, you should review the purchase contracts,
the collateral arrangements and the depositary arrangements, if applicable,
relating to such purchase contracts or purchase units and, if applicable, the
prepaid securities and the document pursuant to which the prepaid securities
will be issued. These documents will be filed with the SEC promptly after the
offering of such purchase contracts or purchase units and, if applicable,
prepaid securities.
DESCRIPTION OF TRUST PREFERRED SECURITIES
Each Trust may issue only one series of trust preferred securities. The
Trust Agreement of each Trust will authorize the administrative trustees to
issue the trust preferred securities of that Trust on behalf of that Trust. For
additional information you should refer to the applicable trust
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agreement. The form of trust agreement is an exhibit to the registration
statement, of which this prospectus is a part.
The prospectus supplement for a particular series of trust preferred
securities being offered will disclose the specific terms related to the
offering, including the price or prices at which the trust preferred securities
to be offered will be issued. Those terms will include some or all of the
following:
- the title of the series;
- the number of trust preferred securities of the series;
- the yearly distribution rate, or the method of determining that rate, and
the date or dates on which distributions will be payable;
- the date or dates, or method of determining the date or dates, from which
distributions will be cumulative;
- the amount that will be paid out of the assets of the Trust to the
holders of the trust preferred securities upon the voluntary or
involuntary dissolution, winding-up or termination of the Trust;
- any obligation that the Trust has to purchase or redeem the trust
preferred securities, and the price at which, the period within which,
and the terms and conditions upon which the Trust will purchase or redeem
them;
- any voting rights of the trust preferred securities that are in addition
to those legally required, including any right that the holders of the
trust preferred securities have to approve certain actions under or
amendments to the trust agreement;
- any right that the Trust has to defer distributions on the trust
preferred securities in the event that Anadarko extends the interest
payment period on the related subordinated debt securities of Anadarko;
and
- any other rights, preferences, privileges, limitations or restrictions
upon the trust preferred securities of the series.
Anadarko will guarantee each series of trust preferred securities to the
extent described below under the caption "Description of Guarantees."
The applicable prospectus supplement will describe any material United
States federal income tax considerations that apply to the trust preferred
securities.
DESCRIPTION OF GUARANTEES OF TRUST PREFERRED SECURITIES
Anadarko will execute the guarantees from time to time for the benefit of
the holders of the trust preferred securities of the respective Trusts. The Bank
of New York will act as guarantee trustee under each guarantee. The guarantee
trustee will hold each guarantee for the benefit of the holders of the trust
preferred securities to which it relates.
The following summary of the guarantees describes the material features of
the guarantees. For additional information regarding same, you should review the
form of guarantee, which is included as an exhibit to the registration
statement, of which this prospectus is a part.
GENERAL
Anadarko will irrevocably and unconditionally agree under each guarantee to
pay the guarantee payments that are described below, to the extent specified in
that guarantee, to the holders of the trust preferred securities to which the
guarantee relates, to the extent that the
26
guarantee payments are not paid by or on behalf of the related Trust. Anadarko
is required to pay the guarantee payments to the extent specified in the
relevant guarantee regardless of any defense, right of set-off or counterclaim
that Anadarko may have or may assert against any person.
The following payments and distributions on the trust preferred securities
of a Trust are guarantee payments:
- any accrued and unpaid distributions required to be paid on the trust
preferred securities of the Trust, but only to the extent that the Trust
has funds legally and immediately available for those distributions;
- the redemption price for any trust preferred securities that the Trust
calls for redemption, including all accrued and unpaid distributions to
the redemption date, but only to the extent that the Trust has funds
legally and immediately available for the payment; and
- upon dissolution, winding-up or termination of the Trust, other than in
connection with the distribution of subordinated notes to the holders of
trust securities of the Trust or the redemption of all the trust
preferred securities of the Trust, the lesser of:
- the sum of the liquidation amount and all accrued and unpaid
distributions on the trust preferred securities of the Trust to the
payment date, to the extent that the Trust has funds legally and
immediately available for the payment; and
- the amount of assets of the Trust remaining available for distribution
to holders of the trust preferred securities of the Trust in liquidation
of the Trust.
Anadarko may satisfy its obligation to make a guarantee payment by making
that payment directly to the holders of the related trust preferred securities
or by causing the Trust to make the payment to those holders.
Each guarantee will be a full and unconditional guarantee, subject to
certain subordination provisions, of the guarantee payments with respect to the
related trust preferred securities from the time of issuance of those trust
preferred securities, except that the guarantee will only apply to the payment
of distributions and other payments on the trust preferred securities when the
Trust has sufficient funds legally and immediately available to make those
distributions or other payments.
If Anadarko does not make the required payments on the subordinated notes
that the property trustee holds under a Trust, that Trust will not make the
related payments on its trust preferred securities.
SUBORDINATION
Anadarko's obligations under each guarantee will be unsecured obligations
of Anadarko. Those obligations will rank:
- subordinate and junior in right of payment of all of Anadarko's other
liabilities, other than obligations or liabilities that rank equal in
priority or subordinate by their terms;
- equal in priority with Anadarko's preferred stock and 5.46% Series B
Cumulative Preferred Stock and similar guarantees; and
- senior to Anadarko's common stock.
Anadarko has 5.46% Series B Cumulative Preferred Stock outstanding that
will rank equal in priority with the guarantees and has common stock outstanding
that will rank junior to the guarantees.
Each guarantee will be a guarantee of payment and not of collection. This
means that the guaranteed party may institute a legal proceeding directly
against Anadarko, as guarantor, to
27
enforce its rights under the guarantee without first instituting a legal
proceeding against any other person or entity.
The terms of the trust preferred securities will provide that each holder
of the trust preferred securities, by accepting those trust preferred
securities, agrees to the subordination provisions and other terms of the
related guarantee.
AMENDMENTS AND ASSIGNMENT
Anadarko may amend each guarantee without the consent of any holder of the
trust preferred securities to which that guarantee relates if the amendment does
not materially and adversely affect the rights of those holders. Anadarko may
otherwise amend each guarantee with the approval of the holders of at least
66 2/3% of the outstanding trust preferred securities to which that guarantee
relates.
TERMINATION
Each guarantee will terminate and be of no further effect when:
- the redemption price of the trust preferred securities to which the
guarantee relates is fully paid;
- Anadarko distributes the related subordinated debt securities to the
holders of those trust preferred securities; or
- the amounts payable upon liquidation of the related Trust are fully paid.
Each guarantee will remain in effect or will be reinstated if at any time
any holder of the related trust preferred securities must restore payment of any
sums paid to that holder with respect to those trust preferred securities or
under that guarantee.
EVENTS OF DEFAULT
An event of default will occur under any guarantee if Anadarko fails to
perform any of its payment obligations under that guarantee. The holders of a
majority of the trust preferred securities of any series may waive any such
event of default and its consequences on behalf of all of the holders of the
trust preferred securities of that series. The guarantee trustee is obligated to
enforce the guarantee for the benefit of the holders of the trust preferred
securities of a series if an event of default occurs under the related
guarantee.
The holders of a majority of the trust preferred securities to which a
guarantee relates have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the guarantee trustee with
respect to that guarantee or to direct the exercise of any trust or power that
the guarantee trustee holds under that guarantee. Any holder of the related
trust preferred securities may institute a legal proceeding directly against
Anadarko to enforce that holder's rights under the guarantee without first
instituting a legal proceeding against the guarantee trustee or any other person
or entity.
CONCERNING THE GUARANTEE TRUSTEE
The Bank of New York will be the guarantee trustee. It will also be the
property trustee, the subordinated indenture trustee and the senior indenture
trustee. Anadarko and certain of its affiliates maintain deposit accounts and
banking relationships with The Bank of New York. The Bank of New York also
serves as trustee under other indentures pursuant to which securities of
Anadarko and certain of its affiliates are outstanding.
The guarantee trustee will perform only those duties that are specifically
set forth in each guarantee unless an event of default under the guarantee
occurs and is continuing. In case an event
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of default occurs and is continuing, the guarantee trustee will exercise the
same degree of care as a prudent individual would exercise in the conduct of his
or her own affairs. Subject to those provisions, the guarantee trustee is under
no obligation to exercise any of its powers under any guarantee at the request
of any holder of the related trust preferred securities unless that holder
offers reasonable indemnity to the guarantee trustee against the costs, expenses
and liabilities which it might incur as a result.
AGREEMENTS AS TO EXPENSES AND LIABILITIES
Anadarko will enter into an agreement as to expenses and liabilities under
each Trust Agreement. Each agreement as to expenses and liabilities will provide
that Anadarko will, with certain exceptions, irrevocably and unconditionally
guarantee the full payment of any indebtedness, expenses or liabilities of the
related Trust to each person or entity to whom that Trust becomes indebted or
liable. The exceptions are the obligations of the Trust to pay to the holders of
the related trust preferred securities or other similar interests in that Trust
the amounts due to the holders under the terms of those trust preferred
securities or those similar interests.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE DEBT SECURITIES AND THE GUARANTEES
As long as we make payments of interest and other payments when due on the
subordinated debt securities purchased by a Trust, those payments will be
sufficient to cover distributions and other payments due on the trust preferred
securities, primarily because:
- the aggregate principal amount of the subordinated debt securities will
be equal to the sum of the aggregate stated liquidation preference of the
trust securities;
- the interest rate and interest and other payment dates of the
subordinated debt securities will match the distribution rate and
distribution and other payment dates for the trust preferred securities;
- we will pay any and all costs, expenses and liabilities of the Trusts,
except the Trusts' obligations to holders of its trust preferred
securities under the terms of such trust preferred securities; and
- the trust agreement of each Trust prohibits the trust from engaging in
any activity that is not consistent with the limited purposes of the
Trust.
We irrevocably guarantee payments of distributions and other amounts due on
the trust preferred securities of a Trust, to the extent the Trust has funds
available for the payment of such distributions as described in "Description of
Guarantees" in this prospectus. Taken together, our obligations under the
subordinated debt securities, the subordinated indenture, the trust agreements
and the trust guarantees provide a full, irrevocable and unconditional guarantee
of payments of distributions and other amounts due on the trust preferred
securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such a guarantee. It is only
the combined operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of each of the Trust's obligations
under its trust preferred securities. If we do not make payments on the
subordinated debt securities, the Trusts will not pay distributions or other
amounts due on the trust preferred securities. The trust guarantees do not cover
payment of distributions when the applicable Trust does not have sufficient
funds to pay the distributions. In this event, the remedies of a holder of the
trust preferred securities of the trust are described in this prospectus under
"Description of Guarantees -- Events of Default." Our obligations under the
trust guarantees are unsecured and are subordinate and junior in right of
payment to all of our other liabilities.
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Notwithstanding anything to the contrary in the subordinated indenture and
to the extent set forth in the subordinated indenture, we have the right to
set-off any payment we are otherwise required to make under the indenture with
and to the extent we have made or are concurrently on the date of such payment
making, a payment under a trust guarantee.
A holder of trust preferred securities of a Trust may institute a legal
proceeding directly against us to enforce its rights under the trust guarantee
without first instituting a legal proceeding against the trust guarantee
trustee, the Trust or any other person or entity.
The trust preferred securities of a Trust evidence a beneficial interest in
the trust. The Trusts exist for the sole purpose of issuing the trust securities
and investing the proceeds in our subordinated debt securities. A principal
difference between the rights of a holder of trust preferred securities and a
holder of subordinated debt securities is that a holder of subordinated debt
securities is entitled to receive from us the principal amount of and interest
accrued on debt securities held, while a holder of trust preferred securities is
entitled to receive distributions from a trust, or from us under the trust
guarantee, if and to the extent the trust has funds available for the payment of
such distributions.
Upon any voluntary or involuntary termination, winding-up or liquidation of
a trust involving the liquidation of the subordinated debt securities, the
holders of the trust preferred securities of the trust will be entitled to
receive, out of assets held by the trust and after satisfaction of liabilities
to creditors of the trust as provided by applicable law, the liquidation
distribution in cash. Upon any voluntary or involuntary liquidation or
bankruptcy of us, the property trustees of a trust, as holder of the
subordinated debt securities of the trust, would be a subordinated creditor of
us, subordinated in right of payment to all of our senior debt, but entitled to
receive payment in full of principal and interest, before any of our
stockholders receive payments or distributions. Since we are the guarantor under
the trust guarantees and we have agreed to pay for all costs, expenses and
liabilities of the Trusts other than the Trusts' obligations to the holders of
the trust preferred securities, the positions of a holder of trust preferred
securities and a holder of subordinated debt securities relative to other
creditors and to our shareholders in the event of our liquidation or bankruptcy
would be substantially the same.
A default or event of default under any of our senior debt will not
constitute a default or event of default under the subordinated indenture.
However, in the event of payment defaults under, or acceleration of, our senior
debt, the subordination provisions of the subordinated indenture provide that no
payments may be made on the debt securities until our senior debt has been paid
in full or any payment default under our senior debt has been cured or waived.
Our failure to make required payments on a series of subordinated debt
securities would constitute an event of default under the subordinated
indenture.
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PLAN OF DISTRIBUTION
We may sell the debt securities, preferred stock, depositary shares, common
stock, securities warrants, purchase contracts, purchase units or trust
preferred securities (together referred to as the "offered securities") (a)
through underwriters or dealers, (b) directly to one or a limited number of
institutional purchasers or (c) through agents. This prospectus or the
applicable prospectus supplement will set forth the terms of the offering of any
offered securities, including the name or names of any underwriters, dealers or
agents, the price of the offered securities and the net proceeds to us from such
sale, any underwriting commissions or other items constituting underwriters'
compensation.
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 a
fixed public offering price or at varying prices determined at the time of sale.
The offered securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
investment banking firms or others, as designated. Unless otherwise set forth in
the applicable prospectus supplement, the obligations of the underwriters or
agents to purchase the offered securities will be subject to conditions
precedent and the underwriters will be obligated to purchase all the offered
securities if any are purchased. Any initial public offering price and any
underwriting commissions or other items constituting underwriters' compensation
may be changed from time to time.
If a dealer is utilized in the sale of any offered securities, we will sell
those offered securities to the dealer, as principal. The dealer may then resell
the offered securities to the public at varying prices to be determined by the
dealer at the time of resale.
We may sell offered securities directly to one or more institutional
purchasers, or through agents at a fixed price or prices, which may be changed,
or at varying prices determined at time of sale. Unless otherwise indicated in
the prospectus supplement, any agent will be acting on a best effort basis for
the period of its appointment.
If an applicable prospectus supplement indicates, we will authorize agents,
underwriters or dealers to solicit offers by specified institutions to purchase
offered securities from us at the public offering price set forth in the
prospectus supplement under delayed delivery contracts providing for payment and
delivery on a specified date in the future. These contracts will be subject only
to those conditions set forth in the prospectus supplement, and the prospectus
supplement will set forth the commission payable for solicitation of the
contracts.
Under agreements entered into with us, agents and underwriters who
participate in the distribution of the offered securities may be entitled to
indemnification by us against certain civil liabilities, including liabilities
under the Securities Act of 1933, or to contribution with respect to payments
which the agents or underwriters may be required to make. Agents and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of business.
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LEGAL MATTERS
The validity of the offered securities will be passed upon for us by
Andrews & Kurth, Mayor, Day & Caldwell L.L.P. Houston, Texas, for the Trusts by
Potter Anderson & Corroon LLP, Wilmington, Delaware, for Anadarko Finance by
McInnes Cooper, Halifax, Nova Scotia, Canada, and for any underwriters, dealers
or agents by Hughes Hubbard & Reed LLP, New York, New York.
EXPERTS
The consolidated financial statements of Anadarko and its subsidiaries as
of December 31, 2001 and 2000 and for each of the years in the three-year period
ended December 31, 2001, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The audit report covering the December 31, 2001 and 2000 consolidated
financial statements refers to a change in accounting for derivative financial
instruments in 2001 and to a change in accounting for foreign crude oil
inventories in 2000.
The consolidated financial statements of Union Pacific Resources Group Inc.
and its subsidiaries as of and for the years ended December 31, 1999 and 1998
incorporated by reference in the registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports. Arthur Andersen LLP
has not consented to the inclusion of their report in this prospectus, and we
have dispensed with the requirement to file their consent in reliance upon Rule
437a of the Securities Act of 1933. Because Arthur Andersen LLP has not
consented to the inclusion of their report in this prospectus, you will not be
able to recover against Arthur Andersen LLP under Section 11 of the Securities
Act for any untrue statements of a material fact contained in the financial
statements audited by Arthur Andersen LLP or any omissions to state a material
fact required to be stated therein.
With respect to the unaudited interim financial information of Union
Pacific Resources Group Inc. and its subsidiaries for the quarter ended March
31, 2000 incorporated by reference in the registration statement, Arthur
Andersen LLP has applied limited procedures in accordance with professional
standards for a review of that information. However, their separate report
thereon states that they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on their
report on that information should be restricted in light of the limited nature
of the review procedures applied. In addition, the accountants are not subject
to the liability provisions of Section 11 of the Securities Act of 1933 for
their report on the unaudited interim financial information because that report
is not a "report" or a "part" of the registration statement prepared or
certified by the accountants within the meaning of Sections 7 and 11 of the Act.
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