SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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SCHEDULE TO
(RULE 14d-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
EL PASO CORPORATION
(Name of Subject Company (Issuer))
EL PASO CORPORATION (ISSUER)
(Names of Filing Persons (Identifying Status as Offeror, Issuer or Other Person)
9.00% EQUITY SECURITY UNITS
(Title of Class of Securities)
28336L 20 8
(CUSIP Number of Class of Securities)
PEGGY A. HEEG, ESQ.
EL PASO CORPORATION
EL PASO BUILDING
1001 LOUISIANA STREET
HOUSTON, TEXAS 77002
(713) 420-2600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications on Behalf of Filing Persons)
COPY TO:
DAVID F. TAYLOR
LOCKE LIDDELL & SAPP LLP
600 TRAVIS
3400 JPMORGAN CHASE TOWER
HOUSTON, TEXAS 77002
(713) 226-1200
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE
$ 328,325,000 $ 26,562
* Estimated solely for the purpose of calculating the amount of the filing
fee pursuant to Rule 0-11 under the Securities Exchange Act of 1934, and
based on the product of (i) $28.55, the average high and low prices of the
9.00% Equity Security Units (the "units") as reported on the New York Stock
Exchange as of October 21, 2003 and (ii) 11,500,000 the total number of
units outstanding at the close of business on October 21, 2003.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: Filing Party:
----------- -------------------
Form or Registration No.: Date Filed:
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[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which
the statement relates:
[ ] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the
results of the tender offer: [ ]
SCHEDULE TO
This Tender Offer Statement on Schedule TO ("Schedule TO") is being filed
with the Securities and Exchange Commission by El Paso Corporation, a Delaware
corporation ("El Paso"), pursuant to Section 13(e) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), in connection with its offer to
exchange up to 11,500,000 of its outstanding 9.00% Equity Security Units
("Equity Security Units") for shares of its common stock, par value $3.00 per
share ("Common Stock"), and cash upon the terms and subject to the conditions
set forth in the Confidential Offering Memorandum, dated October 24, 2003 (the
"Offering Memorandum"), and in the related Letter of Transmittal, copies of
which are attached as Exhibits (a)(l)(A) and (a)(l)(B) hereto, respectively
(which, together with any supplements or amendments thereto, collectively
constitute the "Exchange Offer"). For each Equity Security Unit, El Paso will
deliver (1) 2.5063 shares of Common Stock and (2) cash in the amount of
$9.70 all as further described in the Offering Memorandum.
The information in the Exchange Offer, including all schedules and annexes
thereto, is hereby expressly incorporated herein by reference with respect to
all the items of this Schedule TO, except as otherwise set forth below.
ITEM 1. SUMMARY TERM SHEET.
The information set forth in the Offering Memorandum in the sections titled
"Questions and Answers About the Exchange Offer" and "Summary - The Exchange
Offer," is incorporated herein by reference.
ITEM 2. SUBJECT COMPANY INFORMATION.
(a) The name of the subject company is El Paso Corporation. The address of
El Paso's principal executive offices is 1001 Louisiana Street, Houston, Texas
77002. Its telephone number is (713) 420-2600.
(b) The information set forth in the Offering Memorandum in the sections
titled "Summary - The Exchange Offer" and "Description of the Equity Security
Units" is incorporated herein by reference.
(c) The Equity Security Units are listed on the New York Stock Exchange
("NYSE") under the symbol EP PrA. The information set forth in the Offering
Memorandum in the section titled "Price Range of Equity Security Units" is
incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON.
(a) The name of the filing person is El Paso Corporation. El Paso is the
subject company. The principal executive offices of El Paso are located at 1001
Louisiana Street, Houston, Texas 77002. Its telephone number is (713) 420-2600.
Pursuant to General Instruction C to Schedule TO, the following persons are
the directors and/or executive officers of El Paso:
NAME POSITION
John M. Bissell Director
Juan Carlos Braniff Director
James L. Dunlap Director
Robert W. Goldman Director
Anthony W. Hall, Jr. Director
Ronald L. Kuehn, Jr. Director, Chairman of the Board of Directors
J. Carleton MacNeil, Jr. Director
J. Michael Talbert Director
Malcolm Wallop Director
John Whitmire Director
Joe B. Wyatt Director
Douglas L. Foshee President and Chief Executive Officer and Director
D. Dwight Scott Executive Vice President and Chief Financial Officer
John W. Somerhalder II Executive Vice President and President, Pipeline Group
Peggy A. Heeg Executive Vice President and General Counsel
Robert G. Phillips President, El Paso Field Services
Rodney D. Erskine President, El Paso Production Company
Robert W. Baker President, El Paso Merchant Energy
The business address and telephone number of each of the above directors
and executive officers is c/o El Paso Corporation, 1001 Louisiana Street,
Houston, Texas 77002, (713) 420-2600.
ITEM 4. TERMS OF THE TRANSACTION.
(a)(1)(i) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer," "The Exchange Offer"
and "Description of the Equity Security Units" is
incorporated herein by reference.
(a)(1)(ii) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer," "The Exchange Offer
- Terms of the Exchange Offer" and "Description of Our
Capital Stock" is incorporated herein by reference.
(a)(1)(iii) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer" and "The Exchange
Offer - Expiration Date; Extension; Modification;
Termination" is incorporated herein by reference.
(a)(1)(iv) Not applicable.
(a)(1)(v) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer" and "The Exchange
Offer - Expiration Date; Extension; Modification;
Termination" is incorporated herein by reference.
(a)(1)(vi) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer" and "The Exchange
Offer - Withdrawals of Tenders" is incorporated herein by
reference.
(a)(1)(vii) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer," "The Exchange Offer
- Withdrawals of Tenders" and "The Exchange Offer -
Procedures for Exchanging Equity Security Units" is
incorporated herein by reference.
(a)(1)(viii) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer," "Summary - The Exchange Offer" and "The Exchange
Offer" is incorporated herein by reference.
(a)(1)(ix) Not applicable.
(a)(1)(x) The information set forth in the Offering Memorandum in the
sections titled "Description of Our Capital Stock,"
"Description of the Equity Security Units" and "Comparison
of Rights Between the Equity Security Units and Our Common
Stock" is incorporated herein by reference.
(a)(1)(xi) The information set forth in the Offering Memorandum in the
section titled "The Exchange Offer - Accounting Treatment"
is incorporated herein by reference.
(a)(1)(xii) The information set forth in the Offering Memorandum in the
section titled "United States Federal Income Tax
Consequences" is incorporated herein by reference.
(a)(2)(i-vii) Not applicable.
(b) To the best knowledge of El Paso, none of the subject
securities are to be purchased from any officer, director or
affiliate of El Paso.
ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
(e) El Paso has entered into the following agreements (each of
which is filed as an exhibit to this Schedule TO) in
connection with the Equity Security Units: Eighth
Supplemental Indenture, dated as of June 26, 2002, between
El Paso and HSBC Bank USA, as successor to JPMorgan Chase
Bank (formerly known as The Chase Manhattan Bank), as
Trustee (including form of Senior Note due August 16, 2007);
Purchase Contract Agreement (including forms of Units and
Stripped Units), dated as of June 26, 2002, between El Paso
and HSBC Bank USA, as successor to JPMorgan Chase Bank, as
Purchase Contract Agent; Pledge Agreement, dated as of June
26, 2002, among El Paso, The Bank of New York, as Collateral
Agent, Custodial Agent and Securities Intermediary, and HSBC
Bank USA, as successor to JPMorgan Chase Bank, as Purchase
Contract Agent; Remarketing Agreement, dated as of June 26,
2002, among El Paso, HSBC Bank USA, as successor to JPMorgan
Chase Bank, as Purchase Contract Agent, and Credit Suisse
First Boston Corporation, as Remarketing Agent.
The information set forth in the Offering Memorandum in the
sections titled "Risk Factors -- The market for our common
stock could be adversely affected by future issuances of our
common stock.", "Description of our Common Stock -- Current
Transactions Concerning Our Common Stock" and "Description
of the Equity Security Units -- Current Transactions
Concerning the Equity Security Units" is incorporated herein
by reference.
ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
(a) The information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer" and "The Exchange Offer - Purpose and Effects of the
Exchange Offer" is incorporated herein by reference.
(b) The Equity Security Units acquired pursuant to the Exchange
Offer will be cancelled and retired.
(c) (1) None.
(2) On February 5, 2003, El Paso announced its 2003
Operational and Financial Plan. El Paso's Current
Reports on Form 8-K regarding the 2003 Operational and
Financial Plan dated February 5, 2003, February 10,
2003, February 25, 2003, March 13, 2003, April 15,
2003, April 16, 2003, April 17, 2003, April 22, 2003,
April 24, 2003, April 24, 2003, April 30, 2003, and
July 17, 2003, and September 23, 2003 are incorporated
herein by reference.
(3) On June 26, 2003, El Paso issued a press release
announcing that it had executed two definitive
settlement agreements that resolve the principal
litigation and claims against El Paso relating to the
sale of delivery of natural gas and/or electricity to
or in the Western United States. In connection with the
settlement agreements, El Paso has agreed to issue
approximately 26.4 million shares of its common stock
on behalf of the settling parties. El Paso's Current
Report on Form 8-K dated July 9, 2003, which includes
the June 26, 2003 press release, is incorporated herein
by reference.
(4) None.
(5) None.
(6) None.
(7) None.
(8) None.
(9) None.
(10) None.
ITEM 7. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION.
(a) The Exchange Offer involves the exchange of Equity Security
Units for up to an aggregate of 28,822,450 shares of our
Common Stock and up to an aggregate of $111,550,000 cash. We
intend to fund the cash component of the exchange
consideration from our available cash. In addition, El Paso
will pay cash in lieu of fractional shares. We intend to
fund any such cash payment from our available cash. The
information set forth in the Offering Memorandum in the
sections titled "Questions and Answers About the Exchange
Offer" and "The Exchange Offer" is incorporated herein by
reference.
(b) None.
(d) Not applicable.
ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) None.
(b) The information set forth in the Offering Memorandum in the
section titled "Description of the Equity Security Units -
Current Transactions Concerning the Equity Security Units"
is incorporated herein by reference.
ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
(a) None.
ITEM 10. FINANCIAL STATEMENTS.
(a) The following financial statements and financial information
are incorporated herein by reference:
(1) The audited financial statements of El Paso and
related notes thereto set forth on pages 87 through 190
of El Paso's Current Report on Form 8-K filed September
23, 2003.
(2) The unaudited financial statements of El Paso and
related notes thereto set forth on pages 1 through 41
of El Paso's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003 and on pages 1 through 53
of El Paso's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003.
(3) The following table presents the ratio of earnings to
fixed charges for El Paso and its consolidated
subsidiaries for the periods indicated:
YEAR ENDED SIX MONTHS ENDED JUNE 30,
-------------------------------------------- --------------------------
2002 2001 2000 1999 1998 2003 2002
---- ---- ---- ---- ---- ---- ----
RATIO OF EARNINGS TO FIXED -- 1.1X 2.1X 1.2X -- -- 1.7X
CHARGES (1)(2)
(1) Reflects the reclassification of our petroleum markets business, as
discontinued operations.
(2) Earnings were inadequate to cover fixed charges by $1,086 million and $91
million for the years ended December 31, 2002 and 1998 and by $756 million
for the six months ended June 30, 2003.
For the purposes of computing these ratios, earnings means pre-tax income
(loss) from continuing operations before:
o minority interest in consolidated subsidiaries;
o income or losses from equity investees, adjusted to
reflect actual distributions from equity investments; and
o fixed charges;
less:
o capitalized interest; and
o preferred returns on consolidated subsidiaries.
Fixed charges means the sum of the following:
o interest costs, not including interest on rate refunds;
o amortization of debt costs;
o that portion of rental expense which El Paso believes
represents an interest factor; and
o preferred returns on consolidated subsidiaries.
(4) The book value of the Common Stock at June 30,
2003 was $11.32 per share.
Copies of the financial statements incorporated herein by reference
pursuant to clause (a) of this Item 10 can be obtained as provided in the
section of the Offering Memorandum titled "Where You Can Find More Information."
(b) The information set forth in the Offering Memorandum in the
section titled "Summary - Unaudited Consolidated Pro Forma Financial
Information" is incorporated herein by reference.
ITEM 11. ADDITIONAL INFORMATION
(a) (1) None.
(2) None.
(3) Not applicable.
(4) Not applicable.
(5) None.
(b) The information set forth in the Offering Memorandum and the
related Letter of Transmittal, copies of which are filed as
Exhibits (a)(l)(A) and (a)(l)(B) hereto, respectively, is
incorporated herein by reference.
ITEM 12. EXHIBITS.
(a)(1)(A) Offering Memorandum, dated October 24, 2003.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Form of Letter to Clients.
(a)(1)(E) Form of Letter to Registered Holders and Depository
Trust Company Participants.
(a)(1)(F) Form of Letter to Holders.
(a)(2) None.
(a)(3) None.
(a)(4) None.
(a)(5) Press Release, dated October 24, 2003.
(b) Not applicable.
(d)(1) Eighth Supplemental Indenture, dated as of June 26,
2002, between El Paso and HSBC Bank USA, as successor to
JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as Trustee (including form of Senior
Note due August 16, 2007).
(d)(2) Purchase Contract Agreement (including forms of Units
and Stripped Units), dated as of June 26, 2002, between
El Paso and HSBC Bank USA, as successor to JPMorgan
Chase Bank, as Purchase Contract Agent.
(d)(3) Pledge Agreement, dated as of June 26, 2002, among El
Paso, The Bank of New York, as Collateral Agent,
Custodial Agent and Securities Intermediary, and
HSBC Bank USA, as successor to JPMorgan Chase Bank,
as Purchase Contract Agent.
(d)(4) Remarketing Agreement, dated as of June 26, 2002, among
El Paso, HSBC Bank USA, as successor to JPMorgan Chase
Bank, as Purchase Contract Agent, and Credit Suisse
First Boston Corporation, as Remarketing Agent.
(g) Not applicable.
(h) Not applicable.
ITEM 13. INFORMATION REQUIRED BY SCHEDULE 13E-3.
Not applicable.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
EL PASO CORPORATION
By: /s/ D. Dwight Scott
---------------------------------
Name: D. Dwight Scott
Title: Executive Vice President and
Chief Financial Officer
Dated: October 24, 2003
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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(a)(1)(A) Offering Memorandum, dated October 24, 2003.
(a)(1)(B) Letter of Transmittal.
(a)(1)(C) Notice of Guaranteed Delivery.
(a)(1)(D) Form of Letter to Clients.
(a)(1)(E) Form of Letter to Registered Holders and Depository
Trust Company Participants.
(a)(1)(F) Form of Letter to Holders.
(a)(2) None.
(a)(3) None.
(a)(4) None.
(a)(5) Press Release, dated October 24, 2003.
(b) Not applicable.
(d)(1) Eighth Supplemental Indenture, dated as of June 26,
2002, between El Paso and HSBC Bank USA, as successor to
JPMorgan Chase Bank (formerly known as The Chase
Manhattan Bank), as Trustee (including form of Senior
Note due August 16, 2007).
(d)(2) Purchase Contract Agreement (including forms of Units
and Stripped Units), dated as of June 26, 2002, between
El Paso and HSBC Bank USA, as successor to JPMorgan
Chase Bank, as Purchase Contract Agent.
(d)(3) Pledge Agreement, dated as of June 26, 2002, among El
Paso, The Bank of New York, as Collateral Agent,
Custodial Agent and Securities Intermediary, and HSBC
Bank USA, as successor to JPMorgan Chase Bank, as
Purchase Contract Agent.
(d)(4) Remarketing Agreement, dated as of June 26, 2002, among
El Paso, HSBC Bank USA, as successor to JPMorgan Chase
Bank, as Purchase Contract Agent, and Credit Suisse
First Boston Corporation, as Remarketing Agent.
(g) Not applicable.
(h) Not applicable.