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Filed Pursuant to Rule 424(b)(2)
Registraiton No. 333-68136
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED AUGUST 31, 2001
KERR-MCGEE CORPORATION
DIRECT PURCHASE AND DIVIDEND REINVESTMENT PLAN
Kerr-McGee Corporation (the "Company") hereby offers participation in its
Direct Purchase and Dividend Reinvestment Plan (the "Plan"). The Plan is
designed to provide investors with a convenient and economical way to purchase
shares of the Company's common stock (the "Common Stock") and to reinvest their
cash dividends in additional shares of Common Stock. No service fee or brokerage
commissions will be charged to participants for transactions made under the
Plan.
Participants in the Plan:
- Automatically reinvest cash dividends on all of the shares of Common
Stock held in their Plan accounts and as stockholders of record.
- May invest in Common Stock of the Company at current market prices by
making optional cash payments in any amount of at least $10 monthly, but
no more than $3,000 quarterly.
Persons who are not already shareholders may purchase Common Stock and
become a participant in the Plan by making an initial minimum investment of $750
and a maximum investment of $10,000.
UMB Bank, N.A., is administrator of the Plan and acts as agent for
participants ("UMB"). As agent it will use the initial investments, dividends
and optional cash payments received from participants to acquire shares of
Common Stock for the account of participants. UMB may purchase shares on the
open market or may purchase treasury shares from the Company.
This Prospectus Supplement relates to 300,000 authorized shares of the
Company's Common Stock offered for purchase under the Plan and should be
retained for future reference. The Company's Common Stock is presently traded on
the New York Stock Exchange.
In order to comply with the securities laws in certain jurisdictions,
shares offered under the Plan are being offered through Lehman Brothers.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS AUGUST 31, 2001
(REVISED TO UPDATE ADMINISTRATIVE INFORMATION)
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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THE COMPANY........................... S-3
THE PLAN.............................. S-3
Purpose and Advantages.............. S-3
Administration...................... S-3
Participation....................... S-4
Enrollment Procedures............... S-4
Purchases and Price of Shares....... S-5
Optional Cash Payments and Initial
Investments...................... S-6
Expenses and Costs.................. S-7
Reports to Participants............. S-7
Stock Certificates.................. S-7
Transfer of Shares.................. S-7
Tax Consequences.................... S-8
Termination of Participation........ S-8
Miscellaneous....................... S-9
USE OF PROCEEDS....................... S-10
PROSPECTUS
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ABOUT THIS PROSPECTUS................. 3
WHERE YOU CAN FIND INFORMATION........ 3
RISK FACTORS.......................... 5
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING STATEMENTS.......... 7
THE COMPANY........................... 8
USE OF PROCEEDS....................... 8
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS........................ 8
DESCRIPTION OF DEBT SECURITIES........ 9
DESCRIPTION OF PREFERRED STOCK........ 15
DESCRIPTION OF COMMON STOCK........... 17
DESCRIPTION OF STOCK PURCHASE
CONTRACTS AND STOCK PURCHASE
UNITS............................... 18
DESCRIPTION OF WARRANTS............... 18
PLAN OF DISTRIBUTION.................. 18
LEGAL MATTERS......................... 19
EXPERTS............................... 19
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY KERR-MCGEE. NEITHER THE DELIVERY OF
THIS PROSPECTUS, NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
KERR-MCGEE SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
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THE COMPANY
Kerr-McGee is an energy and inorganic chemical company with worldwide
operations. It acquires leases and concessions and explores for, develops,
produces and markets crude oil and natural gas onshore in the United States and
in the Gulf of Mexico, the U.K. sector of the North Sea, Southeast Asia, and
other areas. Kerr-McGee's chemical operations produce and market titanium
dioxide pigment and certain other specialty chemicals, heavy minerals and forest
products.
Our executive offices are located at Kerr-McGee Center, Oklahoma City,
Oklahoma 73125.
References herein to "Kerr-McGee Corporation," "Kerr-McGee" or the
"Company" include Kerr-McGee Corporation and its subsidiaries unless the context
requires otherwise.
THE PLAN
The following is a question and answer statement of the provisions of the
Direct Purchase and Dividend Reinvestment Plan:
PURPOSE AND ADVANTAGES
1. What is the purpose of the Plan?
The purpose of the Plan is to provide to Company shareholders and other
investors a convenient and economical way to purchase shares of the Company's
Common Stock and to reinvest their cash dividends in additional shares of Common
Stock.
2. What are some of the advantages of the Plan?
- Persons who are not already shareholders may purchase the Company's
Common Stock and become a participant in the Plan by making an initial
investment of at least $750 but no more than $10,000.
- Participants in the Plan may purchase additional shares of Common Stock
by making Optional Cash Payments in any amount of at least $10 monthly,
but not more than $3,000 quarterly. Optional Cash Payments may be made by
check or money order.
- All shares of Common Stock are purchased under the Plan without any
service fees or brokerage commissions.
- Participants may direct UMB to sell or transfer, at any time (but no more
than once monthly) and at no cost to the participant, all or a portion of
the participant's shares held under the Plan to another person.
- Statements of account are mailed on a monthly basis to participants
having activity in the Common Stock.
ADMINISTRATION
3. Who administers the Plan?
UMB administers the Plan, purchases and holds shares of Common Stock
acquired under the Plan, keeps records, sends statements of account activity to
participants and performs other duties related to the Plan. All
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Enrollment Forms, Optional Cash Payments, notices of withdrawal and all other
matters and communications related to the Plan should be addressed to:
UMB Bank, N.A.
Kerr-McGee Direct Purchase and Dividend Reinvestment Plan
Securities Transfer Division
P.O. Box 410064
Kansas City, MO 64141-0064
Phone: 877-860-5820 (Toll-Free)
PLEASE MENTION KERR-MCGEE CORPORATION IN ALL CORRESPONDENCE.
PARTICIPATION
4. Who is eligible to participate in the Plan?
Any person or entity, whether or not a holder of record of Common Stock, is
eligible to join the Plan, provided that (a) such person or entity fulfills the
prerequisites for participation described below under "Enrollment Procedures"
and (b) in the case of citizens or residents of a country other than the United
States, its territories, and possessions, participation would not violate local
laws applicable to the Company or the participant.
Participants in the Company's Savings Investment Plan (the "SIP") and/or
the Employee Stock Ownership Plan (the "ESOP") are not eligible to participate
with respect to shares held for their account in these plans. Such participants
who are also shareholders of record or who wish to make an initial investment
are, however, eligible to participate in the Plan with respect to shares held
outside the SIP and ESOP.
ENROLLMENT PROCEDURES
5. How does a person participate in the Plan?
After being furnished with a copy of this prospectus, a person may
participate in the Plan as provided below.
(a) Shareholders of record -- Record holders of Common Stock may join the
Plan by completing and signing an Enrollment Form and returning it to
UMB (see Question No. 6).
(b) Beneficial Owners -- A beneficial owner whose shares are registered in
a name other than his or her own (for example, in the name of a broker
or bank nominee) may participate by directing his or her broker or bank
to transfer the record ownership of all or a portion of the Common
Stock beneficially owned into the name of such person. Beneficial
owners can also elect to participate by making a new investment as
described in the next paragraph (c).
(c) Persons not presently record owners of shares of Common Stock -- A
person not presently owning Common Stock of record (which includes
beneficial owners as described in the preceding paragraph (b)) may
apply for enrollment in the Plan by completing and returning to UMB an
Enrollment Form, and making an initial investment in the form of a
check or money order in an amount not less than $750 and not more than
$10,000 (see Question No. 13).
(d) Participants in the Previous Plan -- The Plan replaces the Direct
Purchase and Dividend Reinvestment Plan previously maintained by
Kerr-McGee Operating Corporation (formerly Kerr-McGee Corporation) (the
"Previous Plan"). The shares of common stock of Kerr-McGee Operating
Corporation held in the Previous Plan were converted into shares of
Company Common Stock in the merger transaction involving the Company's
acquisition of HS Resources, Inc. (now named Kerr-McGee Rocky Mountain
Corporation). Without taking any action, participants in the Previous
Plan will automatically continue in the new Plan with the shares of
Company Common Stock into which their shares held in the Previous Plan
were converted. All prior participant instructions will continue
forward into the new Plan.
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6. What does the Enrollment Form provide?
The Enrollment Form authorizes UMB to automatically apply all cash
dividends on all shares held by the Plan toward the purchase of additional
Common Stock.
The Enrollment Form also authorizes UMB to apply all cash dividends on all
shares then or subsequently held of record by the participant under the same
registration toward the purchase of additional Common Stock, unless the
participant directs otherwise.
The Enrollment Form also allows a person who is not a shareholder of record
to purchase Common Stock with a minimum $750 and a maximum $10,000 payment and
thereby become a participant in the Plan. The form contains the required
certification as to backup withholding.
Under the Plan, dividends will be reinvested on a cumulative basis (i) on
all shares held in the Plan account until a participant withdraws from the Plan
altogether, or until the Plan is terminated and (ii) on all shares evidenced by
stock certificates registered in the participant's name under the same
registration, until a participant specifies otherwise, withdraws from the Plan
altogether, or until the Plan is terminated.
7. When may a person join the Plan?
Shareholders of record may join the Plan at any time by completing an
Enrollment Form and mailing it to UMB. Non-shareholders may enroll in the Plan
at any time by completing an Enrollment Form and making an initial investment of
at least $750 but not more than $10,000. Once in the Plan, such participant will
remain a participant until he or she discontinues participation.
PURCHASES AND PRICE OF SHARES
8. What is the source of Common Stock purchased under the Plan?
Shares of Common Stock will be, at the Company's discretion, purchased
either directly from the Company, in which event such shares will be shares held
by the Company as treasury stock, or on the open market, or by combination of
the foregoing.
9. When will shares be purchased under the Plan?
Purchases made directly from the Company will be made on the relevant
Investment Date (as defined in the next paragraph). Purchases on the open market
will begin on the Investment Date and will be completed as soon as practicable,
but no later than 30 days from such date except where completion at a later date
is necessary or advisable under any applicable federal securities laws. Such
purchases may be made on the New York Stock Exchange or on any other securities
exchange where such shares are traded, in the over-the-counter market or by
negotiated transactions and may be subject to such terms with respect to price,
delivery and other terms as UMB may agree. Neither the Company nor any
participant shall have any authority or power to direct the time or price at
which shares may be purchased, or the selection of the broker or dealer through
or from whom purchases are to be made. Participants become owners of shares
purchased under the Plan as of the date of purchase.
The Investment Date in any month in which a dividend is paid is the
dividend payment date and in any other month will be the first business day of
the month. If, however, the Investment Date falls on a date on which either UMB
or the New York Stock Exchange are closed, the first succeeding day on which
both UMB and the New York Stock Exchange are open will be the Investment Date.
10. What will be the price to the participant of shares purchased under the
Plan?
All purchases under the Plan will be made at 100% of the average price. In
the case of purchases from the Company of Common Stock, the average price is
determined by averaging the high and low sales prices of Common Stock as
reported on the New York Stock Exchange-Composite Transactions on the relevant
Investment Date. If no trading in Company Common Stock occurs on the New York
Stock Exchange on the relevant Investment Date, the purchase price per share
will be determined by averaging the high and low sales
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prices per share on the trading day immediately preceding the Investment Date
and the trading day immediately following the Investment Date.
In the case of purchases of Common Stock on the open market, the average
price will be the weighted average purchase price of shares purchased for the
relevant Investment Date.
11. How many shares of Common Stock will be purchased for participants?
The number of shares to be purchased depends on the amount of the
participant's dividends, if any, and any Optional Cash Payments or initial
investments received by UMB. Each participant's account will be credited with
the number of shares, including fractions computed to four decimal places, equal
to the total amount invested divided by the purchase price.
OPTIONAL CASH PAYMENTS AND INITIAL INVESTMENTS
12. How does the Optional Cash Payment feature of the Plan work?
All eligible shareholders of record (except for brokers and nominees) who
have submitted a signed Enrollment Form are eligible to make Optional Cash
Payments at any time. Payments may be made by check or money order. UMB will
apply any Optional Cash Payment received from a participant before a particular
Investment Date to the purchase of Common Stock for the account of the
participant (i) on such Investment Date if such Common Stock is purchased from
the Company and (ii) on such Investment Date or as soon as practicable after
such Investment Date if such Common Stock is purchased on the open market (see
Question 9).
13. How are Initial Investments made?
Initial investments must be at least $750 and no more than $10,000, in the
form of a check or money order made payable to UMB, and must be included with
the completed Enrollment Form and returned to UMB at the address listed on the
form.
14. When will Optional Cash Payments and initial investments received by UMB
be invested?
Optional Cash Payments and initial investments must be received by UMB
prior to an Investment Date to be invested beginning on that Investment Date.
Otherwise, the Optional Cash Payment or initial investment will be held by UMB
and invested beginning on the next Investment Date. See Question 9. No interest
will be paid on amounts held by UMB pending investment. Upon a participant's
written request received by UMB at least two business days prior to the
applicable Investment Date, an Optional Cash Payment or initial investment will
be returned to the participant. However, no refund of a check or money order
will be made until the funds have been actually received by UMB.
15. How and when may a participant sell all or a portion of the Common Stock
held in the Plan in the participant's account?
A participant may sell all or a portion of his or her Common Stock held by
the Plan any time (but not more than once monthly). As of the close of business
each Monday UMB will accumulate the shares to be sold. On the next business day
UMB will sell the accumulated shares on the open market and remit the proceeds
within five business days. Any Optional Cash Payment which had been sent to UMB
prior to any such notice to sell will be invested unless return of the amount is
expressly requested in the notice to sell and such notice to sell is received at
least two business days prior to the relevant Investment Date. The sale of the
participant's Common Stock will then be processed as promptly as possible on or
following the Investment Date. Upon the sale of all of a participant's Common
Stock held in the Plan account, a participant's interest in a fractional share
will be paid in cash based on the then current market price of Company Common
Stock. UMB, at its discretion, may terminate any account which contains less
than ten shares by paying the account holder the dollar value of such shares.
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EXPENSES AND COSTS
16. What are the costs to participants in the Plan?
There are no brokers' commissions and no fees or service charges connected
with stock purchases or sales. The Company pays these costs, along with any
costs for administration of the Plan.
REPORTS TO PARTICIPANTS
17. What reports will be sent to participants in the Plan?
Each participant in the Plan will receive a statement of account after each
Investment Date on which there has been a transaction for the account of such
participant, showing amounts invested, purchase price, shares purchased and
other information for the year to date. Each statement will include instructions
with respect to making Optional Cash Payments, or for transferring or selling
shares from the Plan. At each year-end, the statement will also include all
information pertaining to a participant's account for such year and should be
retained for income tax purposes. In addition, each participant will receive
copies of the same communications sent to every other holder of Common Stock,
which at the present time includes Annual Report to Shareholders, and the Notice
of Annual Meeting and Proxy Statement. Each participant will receive annually
Internal Revenue information on Form 1099 for reporting dividend income
received.
STOCK CERTIFICATES
18. What happens to stock certificates purchased under the Plan?
Shares purchased under the Plan will be automatically held in safekeeping
by UMB in its name or the name of its nominee. The number of shares (including
fractional interests) held for each participant will be shown on each statement
of account. Participants may obtain a new certificate for all or some of the
whole shares of Common Stock held in their Plan accounts upon written request to
UMB (but no more than once monthly). Any remaining shares will continue to be
held by UMB.
Dividends on shares delivered by UMB to the shareholder will either be paid
in cash to the shareholder, or will be reinvested pursuant to the shareholders
instructions to UMB.
TRANSFER OF SHARES
19. May a participant assign or transfer all or a part of his or her shares
held under the Plan to another person?
Yes. If a participant wishes to change the ownership of all or part of his
or her shares held under the Plan through gift, private sale or otherwise, the
participant may effect the transfer by contacting UMB. Transfers of less than
all of a participant's shares must be made in whole share amounts. No fraction
of a share may be transferred and no more than one transfer per month is
permitted. Requests for transfer are subject to the same requirements as for the
transfer of Common Stock certificates, including the requirement of a signature
guarantee.
20. If Plan shares are transferred to another person, will the Company issue a
stock certificate to the transferee?
No. Shares transferred will continue to be held by UMB under the Plan, an
account will be opened in the name of the transferee, if he or she is not
already a participant, and such transferee will automatically be enrolled in the
Plan. All dividends on shares transferred to and held in the transferee's Plan
account will be reinvested under the terms of the Plan. See the last paragraph
under Question 6.
21. How will a transferee be advised of his stock ownership?
The transferee will receive a statement showing the number of shares
transferred to and held in the transferee's Plan account.
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TAX CONSEQUENCES
22. What are the federal income tax consequences of participation in the Plan?
Reinvested Dividends. In the case of reinvested dividends, when UMB
acquires shares for a participant's account directly from the Company, the
participant must include in gross income a dividend equal to the number of
shares purchased with the participant's reinvested dividends multiplied by the
fair market value of the Common Stock on the relevant dividend payment date. The
participant's basis in those shares will also equal the fair market value of the
shares on the relevant dividend payment date.
Alternatively, when UMB purchases Common Stock for a participant's account
on the open market with reinvested dividends, a participant must include in
gross income a dividend equal to the actual purchase price to UMB of the shares
plus that portion of any brokerage commissions paid by UMB which are
attributable to the purchase of the participant's shares. The participant's
basis in Plan shares held for his or her account will be equal to their purchase
price plus allocable brokerage commissions.
Optional Cash Payments. In the case of the shares purchased on the open
market with Optional Cash Payments, shareholders will be in receipt of
additional income to be included in gross income to the extent of any brokerage
commissions paid by the Company. The participant's basis in the shares acquired
with Optional Cash Payments will be the cost of the shares to UMB plus an
allocable share of any brokerage commissions paid by the Company.
Additional Information. The holding period for shares purchased under the
Plan will begin the day after the date the shares are acquired. Under the
current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), the partial dividend exclusion available to individuals has been
eliminated and, in general, the corporate dividends-received deduction has been
reduced to 70%. Corporate shareholders also should be aware that the Code limits
the availability of the dividends-received deduction under the various special
rules, including the situation where a holder of stock incurs indebtedness
directly attributable to such stock. For further information on a corporate
shareholder's eligibility for the dividends-received deduction, participants
should consult with their tax advisors.
A participant will not realize any taxable income when he or she receives
certificates for whole shares credited to his or her account under the Plan,
either upon a request for such certificates or upon withdrawal from or
termination of the Plan. However, the participant who receives, upon withdrawal
from or termination of the Plan or upon a sale of all or a portion of the
participant's shares held in the Plan, a cash payment for the sale of Plan
shares held for such participant's account or for a fractional share then held
in his or her account will realize gain or loss measured by the difference
between the amount of the cash received and the participant's basis in such
shares or fractional share. Such gain or loss will be capital in character if
such shares or fractional shares are a capital asset in the hands of the
participant. The deductibility of any capital losses is subject to certain
restrictions. For further information as to the tax consequences to participants
in the Plan, participants should consult with their own tax advisors.
Tax Information. Each participant will receive annually Internal Revenue
information for reporting dividend information and determining the participant's
basis in Plan shares held in his or her account. See Question No. 17.
TERMINATION OF PARTICIPATION
23. How and when may a participant terminate participation in the Plan?
A participant may terminate participation in the Plan any time by notice in
writing to UMB. Any Optional Cash Payment which had been sent to UMB prior to
the request to terminate will be invested unless return of the amount is
expressly requested in the request for termination and such request is received
at least two business days prior to the relevant Investment Date. The request
for termination will then be processed as promptly as possible following the
Investment Date.
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24. How and when may individual participation be terminated by the Company or
UMB?
UMB, at its discretion, may terminate any account which contains less than
ten shares by paying the account holder the market value of such shares.
The Plan is intended as a long-term investment service by allowing
participants to accumulate shares of the Common Stock on a favorable basis over
a long period of time, thereby providing benefits to participants as well as the
Company. The Company or UMB, in their sole discretion, may terminate a
participant from the Plan if continuing participation by such participant is not
considered by either of them to be in the best interest of the Company.
25. What happens upon termination of a participant in the Plan?
As soon as practicable following any termination, UMB will send the
participant a certificate for the whole shares in the participant's Plan
account. If the participant so requests, UMB will sell all or a portion of such
shares. UMB will accumulate the shares to be sold as of the close of business
each Monday and then sell the accumulated shares on the open market on the next
business day and remit the proceeds five days thereafter. In every case of
termination, the participant's interest in a fractional share will be paid in
cash based on the then current market price of Company Common Stock.
After termination, dividends will be paid to the shareholder in cash unless
and until the shareholder rejoins the Plan, which he or she may do at any time
by requesting an Enrollment Form from the Agent.
MISCELLANEOUS
26. What happens when participants sell or transfer shares registered in their
names?
When participants sell or transfer shares of Common Stock registered in
their names, UMB will continue to invest the dividends on any remaining shares
held of record and on the shares credited to their accounts under the Plan in
accordance with prior instructions until otherwise notified.
27. What happens if the Company issues a stock dividend or declares a stock
split?
Any stock dividend or split shares of Common Stock distributed by the
Company on shares credited to the account of a participant under the Plan will
be added to the participant's account. Stock dividends or split shares
distributed on shares held directly by the participant and registered in the
participant's name will be mailed to such participant in the same manner as to
shareholders who are not participating in the Plan.
28. How will a participant's shares be voted at shareholders' meetings?
The participant retains full voting authority with respect to shares
registered both in his or her name and the shares held in the Plan. If a
participant does not direct UMB as to how the shares are to be voted, UMB will
not vote the shares. A participant will receive one proxy card showing the total
number of whole shares he or she holds, both those registered in the
participant's name and those the participant holds through the Plan.
29. May the Plan be modified or discontinued?
The Company reserves the right to suspend, amend, modify or terminate the
Plan at any time. All shareholders, both participants and non-participants in
the Plan, will be notified of any suspension, termination or significant
amendment or modification of the Plan. If the Plan is terminated, shares held in
the participant's account will be distributed as described in Question 25.
30. Who interprets and regulates the Plan?
The Company reserves the right to interpret and regulate the Plan, as
deemed desirable or necessary, in connection with its operation.
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31. What are the responsibilities of the Company and UMB under the Plan?
Neither the Company nor UMB will be liable for any good faith act or for
any good faith omission to act, including, without limitation, any claim or
liability arising out of failure to terminate a participant's account upon such
participant's death, the prices at which shares are purchased or sold for a
participant's account, the times when purchases or sales are made, or
fluctuations in the market value of Common Stock.
32. Does participation in the Plan involve any risk?
The risk to participants is the same as with any other investment in Common
Stock of the Company. A participant may lose an advantage otherwise available
from being able to select more specifically the timing of investment or sale of
shares. Participants must recognize that neither the Company nor UMB can assure
a profit or protect against a loss on the shares purchased under the Plan.
USE OF PROCEEDS
The Company does not know the number of shares that will ultimately be
purchased from the Company under the Plan nor the prices at which such shares
will be sold. Any proceeds are intended to be used for general corporate
purposes.
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Subject To Completion, Dated August 31, 2001
PROSPECTUS
[KM LOGO]
$2,000,000,000
KERR-MCGEE CORPORATION
DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK, STOCK PURCHASE CONTRACTS,
STOCK PURCHASE UNITS, WARRANTS
KERR-MCGEE OPERATING CORPORATION
GUARANTEES
KERR-MCGEE ROCKY MOUNTAIN CORPORATION
GUARANTEES
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer and sale is not permitted.
By this prospectus, we may offer up to $2,000,000,000 of debt securities
(which may be guaranteed by Kerr-McGee Operating Corporation and/or Kerr-McGee
Rocky Mountain Corporation), preferred stock, common stock, stock purchase
contracts, stock purchase units and warrants on terms to be determined at the
time of sale. We will provide more specific information regarding these
securities in supplements to this prospectus.
YOU SHOULD READ THIS PROSPECTUS, PARTICULARLY THE RISK FACTORS BEGINNING
ON PAGE 5, AND ANY SUPPLEMENT CAREFULLY BEFORE INVESTING.
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THESE SECURITIES HAVE NOT BEEN APPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR BY ANY STATE SECURITIES COMMISSION, NOR HAVE THOSE ORGANIZATIONS
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
August 31, 2001
12
TABLE OF CONTENTS
PAGE
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ABOUT THIS PROSPECTUS....................................... 3
WHERE YOU CAN FIND INFORMATION.............................. 3
RISK FACTORS................................................ 5
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 7
THE COMPANY................................................. 8
USE OF PROCEEDS............................................. 8
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDEND
REQUIREMENTS.............................................. 8
DESCRIPTION OF DEBT SECURITIES.............................. 9
DESCRIPTION OF PREFERRED STOCK.............................. 15
DESCRIPTION OF COMMON STOCK................................. 17
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE
UNITS..................................................... 18
DESCRIPTION OF WARRANTS..................................... 18
PLAN OF DISTRIBUTION........................................ 18
LEGAL MATTERS............................................... 19
EXPERTS..................................................... 19
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ABOUT THIS PROSPECTUS
This prospectus is part of a Registration Statement that Kerr-McGee
Corporation (which we refer to as "Kerr-McGee", "the Company", "we" or "us")
filed with the Securities and Exchange Commission (which we refer to as the
"SEC") utilizing a shelf registration process. Under this shelf process, we may
sell the unsecured Debt Securities (which may be guaranteed under Guarantees
issued by Kerr-McGee Operating Corporation and/or Kerr-McGee Rocky Mountain
Corporation), Preferred Stock, Common Stock, Stock Purchase Contracts, Stock
Purchase Units and Warrants (which we collectively refer to as the "Offered
Securities") described in this prospectus, in one or more offerings up to a
total dollar amount of $2,000,000,000. This prospectus provides you with a
general description of the Offered Securities we may offer. Each time we sell
Offered Securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus supplement
may also add, update or change information contained in this prospectus. You
should read both this prospectus and any prospectus supplement together with
additional information described below under "Where You Can Find Information."
WHERE YOU CAN FIND INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any materials on file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. Our filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information on the Public Reference Room.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we sell all of the securities:
- Our Proxy Statement-Prospectus included in our registration statement on
Form S-4 (declared effective on June 28, 2001).
- Our Current Report on Form 8-K dated August 1, 2001, and our related
Current Report on Form 8-K/A filed on August 29, 2001.
The following documents, which have been filed by Kerr-McGee Operating
Corporation (formerly named Kerr-McGee Corporation) with the SEC (SEC file
number 001-03939), are also incorporated by reference into this prospectus:
- Kerr-McGee Operating Corporation's Annual Report on Form 10-K for the
year ended December 31, 2000.
- Kerr-McGee Operating Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2001.
- Kerr-McGee Operating Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2001.
- Kerr-McGee Operating Corporation's Current Reports on Form 8-K dated
January 16, 2001, February 20, 2001, March 19, 2001, March 23, 2001,
April 10, 2001, April 15, 2001, May 13, 2001, May 14, 2001, May 21, 2001,
June 20, 2001 and July 18, 2001.
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The following documents, which have been filed by Kerr-McGee Rocky Mountain
Corporation (formerly named HS Resources, Inc.) with the SEC (SEC file number
001-13152), are also incorporated by reference into this prospectus:
- Kerr-McGee Rocky Mountain Corporation's Annual Report on Form 10-K for
the year ended December 31, 2000.
- Kerr-McGee Rocky Mountain Corporation's Quarterly Report on Form 10-Q for
the quarter ended March 31, 2001.
- Kerr-McGee Rocky Mountain Corporation's Current Reports on Form 8-K dated
February 15, 2001, March 20, 2001, April 25, 2001 and May 13, 2001.
You can get a free copy of any of the documents incorporated by reference
by making an oral or written request directed to:
Investor Relations
Kerr-McGee Corporation
P. O. Box 25861
Oklahoma City, Oklahoma 73125
Telephone (405) 270-3125
You should rely only on the information contained or incorporated in this
prospectus or any supplement. We have not authorized anyone else to provide you
with different information. You should not rely on any other representations.
Our affairs may change after this prospectus or any supplement is distributed.
You should not assume that the information in this prospectus or any supplement
is accurate as of any date other than the date on the front of those documents.
You should read all information supplementing this prospectus.
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RISK FACTORS
Prospective purchasers of the Offered Securities should carefully review
the information contained elsewhere in this prospectus and should particularly
consider the following matters.
VOLATILE PRODUCT PRICES AND MARKETS COULD ADVERSELY AFFECT RESULTS
Our results of operations are highly dependent upon the prices of and
demand for oil and gas and our chemical products. Historically, the markets for
oil and gas have been volatile and are likely to continue to be volatile in the
future. Accordingly, the prices received by us for our oil and gas production
are dependent upon numerous factors which are beyond our control. These factors
include, but are not limited to, the level of ultimate consumer product demand,
governmental regulations and taxes, the price and availability of alternative
fuels, the level of imports and exports of oil and gas, actions of the
Organization of Petroleum Exporting Countries and the overall economic
environment. Any significant decline in prices for oil and gas could have a
material adverse effect on our financial condition, results of operations and
quantities of reserves recoverable on an economic basis. Demand for titanium
dioxide is dependent on the demand for ultimate products utilizing titanium
dioxide pigment. This demand is generally dependent on the status of the
economy. The profitability of our products is dependent on the price realized
for them, the efficiency of our manufacturing costs, and the ability to acquire
feedstock at a competitive price. Should the industries in which we operate
experience significant price declines or other adverse market conditions, we may
not be able to generate sufficient cash flow from operations to meet our
obligations and make planned capital expenditures. In order to manage our
exposure to price risks in the sale of our oil and gas, we may from time to time
enter into commodities futures or option contracts to hedge a portion of our
crude oil and natural gas sales volume. Any such hedging activities may prevent
us from realizing the benefits of price increases above the levels reflected in
such hedges.
STATE AND LOCAL REGULATION OF OIL AND GAS DEVELOPMENT AND SURFACE DEVELOPMENT
CONFLICTS COULD ADVERSELY AFFECT RESULTS
State regulatory authorities have established rules and regulations
governing, among other things, permits for drilling and production, operations,
performance bonds, reports concerning operations, discharge, disposal and other
waste-related permits, well spacing, unitization and pooling of operations,
taxation, environmental and conservation matters. In general, these measures and
development activities make oil and gas development more difficult and their
application to our operations could adversely affect our results of operations.
FAILURE TO FUND CONTINUED CAPITAL EXPENDITURES COULD ADVERSELY AFFECT RESULTS
If our revenues substantially decrease as a result of lower oil and gas
prices or otherwise, we may have a limited ability to expend the capital
necessary to replace our reserves or to maintain production at current levels,
resulting in a decrease in production over time. We expect that we will continue
to make capital expenditures for the acquisition, exploration and development of
oil and gas reserves. Historically, we have financed these expenditures
primarily with cash flow from operations and proceeds from debt and equity
financings, asset sales and sales of partial interests in foreign concessions.
We believe that we will have sufficient cash flow from operations, available
drawings under our credit facilities and other debt financings to fund capital
expenditures. However, if our cash flow from operations is not sufficient to
satisfy our capital expenditure requirements, there can be no assurance that
additional debt or equity financing or other sources of capital will be
available to meet these requirements. If we are not able to fund our capital
expenditures, our interests in some of our properties may be reduced or
forfeited and our future cash generation may be materially adversely affected as
a result of the failure to find and develop reserves.
COSTS OF LEGAL MATTERS, ENVIRONMENTAL LIABILITIES AND REGULATION COULD EXCEED
ESTIMATES
We and/or our subsidiaries are or may become parties to a number of legal
and administrative proceedings involving environmental and/or other matters
pending in various courts or agencies. These include proceedings associated with
facilities currently or previously owned, operated or used by us, our
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subsidiaries and/or our predecessors, and include claims for personal injuries
and property damages. Our current and former operations also involve management
of regulated materials and are subject to various environmental laws and
regulations. These laws and regulations obligate us and/or our subsidiaries to
clean up various sites at which petroleum and other hydrocarbons, chemicals,
low-level radioactive substances and/or other materials have been disposed of or
released. Some of these sites have been designated Superfund sites by the
Environmental Protection Agency pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act. Similar environmental regulations
exist in foreign countries in which we and/or our subsidiaries operate. Of note,
environmental regulations in the North Sea are particularly stringent.
It is not possible for us to estimate reliably the amount and timing of all
future expenditures related to environmental and legal matters and other
contingencies because:
- some sites are in the early stages of investigation, and other sites may
be identified in the future;
- cleanup requirements are difficult to predict at sites where remedial
investigations have not been completed or final decisions have not been
made regarding cleanup requirements, technologies or other factors that
bear on cleanup costs;
- environmental laws frequently impose joint and several liability on all
potentially responsible parties, and it can be difficult to determine the
number and financial condition of other potentially responsible parties
and their share of responsibility for cleanup costs;
- environmental laws and regulations are continually changing, and court
proceedings are inherently uncertain; and
- some legal matters are in the early stages of investigation or
proceedings, and other legal matters may be identified in the future.
Although our management believes that it has established appropriate
reserves for cleanup costs, due to these uncertainties we could be required to
make additional reserves in the future.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made certain forward-looking statements in this document and in the
documents referred to in this document which are subject to risks and
uncertainties. These statements are based on the beliefs and assumptions of our
management and on the information currently available to our management.
Forward-looking statements include information concerning our possible or
assumed future results and may be preceded by, followed by, or otherwise include
the words "believes," "expects," "anticipates," "intends," "plans," "estimates"
or similar expressions.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. The future results and values of our stock
and other securities may differ materially from those expressed in these
forward-looking statements. Many of the factors that will determine these
results and values are beyond our ability to control or predict. Stockholders
and holders of other securities of the Company are cautioned not to put undue
reliance on any forward-looking statements. Except for our ongoing obligations
to disclose material information as required by the federal securities laws, we
do not have any intention or obligation to update forward-looking statements
after we distribute this document, even if new information, future events or
other circumstances have made them incorrect or misleading. For those
statements, we claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995.
You should understand that various factors, in addition to those discussed
elsewhere in this document and in the documents referred to in this document,
could affect our future results and could cause results to differ materially
from those expressed in such forward-looking statements, including:
- materially adverse changes in general economic conditions or in the
markets served by us, including changes in the prices of oil, natural
gas, titanium dioxide pigments and other chemicals;
- the success of our oil and natural gas exploration, development and
production programs;
- uncertainties about estimates of reserves;
- the financial resources of competitors;
- changes in laws and regulations, including environmental laws, or changes
in the administration of such laws and regulations;
- the quality of future opportunities that may be presented to or pursued
by us;
- the ability to generate cash flows or obtain financing to fund growth and
the cost of such financing;
- the ability to respond to challenges in international markets, including
changes in currency exchange rates, political or economic conditions, and
trade and regulatory matters; and
- the ability to complete and integrate appropriate acquisitions, strategic
alliances and joint ventures.
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THE COMPANY
As a result of the August 1, 2001 merger involving Kerr-McGee Operating
Corporation (formerly named Kerr-McGee Corporation) and Kerr-McGee Rocky
Mountain Corporation (formerly named HS Resources, Inc.), we are a holding
company with two wholly owned subsidiaries, Kerr-McGee Operating Corporation and
Kerr-McGee Rocky Mountain Corporation. We are the fourth largest independent,
nonintegrated oil and gas exploration, development and production company based
in the United States in terms of proved oil and gas reserves on a pro forma
basis as of December 31, 2000. Proved reserves as of December 31, 2000 on a pro
forma basis totaled 1.3 billion barrels of oil equivalent with 84% of these
located in our core operating areas of the United States and the North Sea. We
also conduct offshore oil and gas exploration and/or production activities in
Algeria, Australia, Benin, Brazil, China, Gabon, the Gulf of Mexico, Morocco,
North Sea and Thailand. We conduct onshore exploration and/or production
operations in the United States, Ecuador, Indonesia, the United Kingdom,
Kazakhstan and Yemen.
Our operations originated in 1929 with the formation of Anderson & Kerr
Drilling Company. With oil and gas exploration, development and production as
our base, we have expanded into titanium dioxide pigment manufacturing and
marketing and into the mining and marketing of minerals. We own a large
inventory of natural resources that includes oil and gas reserves and mineral
deposits.
Our primary chemical product is titanium dioxide pigment, which is produced
at six titanium dioxide plants located in Australia, Belgium, Germany, the
Netherlands and the United States. In addition, our chemical operations produce
and market inorganic industrial and specialty chemicals, heavy minerals and
forest products. We produce and market other industrial chemicals including
synthetic rutile, manganese products and sodium chlorate and specialty chemicals
including boron trichloride and elemental boron. We produce the heavy minerals
ilmenite, synthetic and natural rutile, zircon and leucoxene. Our forest
products operations treat railroad crossties and other hardwood products and
provide wood treating services.
Our executive offices are located at Kerr-McGee Center, Oklahoma City,
Oklahoma 73125.
USE OF PROCEEDS
We will use the proceeds we receive from selling these Offered Securities
for acquisitions or for other general corporate purposes. General corporate
purposes may include capital expenditures, payment of debt, or any other
purposes that may be stated in the supplements. The proceeds may be invested
temporarily until they are used for their stated purpose.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO COMBINED
FIXED CHARGES AND PREFERRED STOCK DIVIDEND REQUIREMENTS
The ratio of earnings to fixed charges for each of the periods indicated is
as follows:
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31,(1) JUNE 30,(1)
-------------------------------- -----------------
1996 1997 1998 1999 2000 2000 2001
---- ---- ---- ---- ---- ------- -------
4.1 3.9 N/A(2) 2.2 6.8 4.8 9.2
---------------
(1) At no time during the periods indicated has Kerr-McGee Operating Corporation
had any preferred stock outstanding. Therefore, unless otherwise indicated,
ratio of earnings to combined fixed charges and preferred dividend
requirements will be the same.
(2) Earnings were inadequate to cover fixed charges by $548 million for the year
ended December 31, 1998.
For purposes of computing the ratios, the earnings calculation is: income
from continuing operations + income taxes + fixed charges - capitalized
interest. Fixed charges calculation is: all interest + interest factor of rental
expense.
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DESCRIPTION OF DEBT SECURITIES
The following description of the terms of the Debt Securities summarizes
certain general terms that will apply to the Debt Securities. The description is
not complete, and we refer you to the Indenture, a copy of which is an exhibit
to the Registration Statement of which this prospectus is a part. For your
reference, in several cases below we have noted the section in the Indenture
that the paragraph summarizes. Capitalized items have the meanings assigned to
them in the Indenture. The referenced sections of the Indenture and the
definitions of capitalized terms are incorporated by reference in the following
summary.
We may issue Debt Securities either separately, or together with, upon
conversion of or in exchange for other securities. The Debt Securities will be
issued under an Indenture between Kerr-McGee and Citibank, N.A., as Trustee.
This summary of the Indenture is qualified by reference to the Indenture. You
should refer to the Indenture in addition to reading this summary. The summary
is not complete and is subject to the specific terms of the Indenture.
GENERAL
Under the Indenture, we can issue an unlimited amount of Debt Securities.
Each time that we issue a new series of Debt Securities, the supplement to the
prospectus relating to that new series will specify the terms of those Debt
Securities, including:
- Designation, amount and denominations;
- Percentage of principal amount at which Debt Securities will be issued;
- Maturity date;
- Interest rate and payment dates;
- Terms and conditions of exchanging or converting Debt Securities for
other securities;
- Currency of issue;
- Redemption terms; and
- Whether the Debt Securities and/or any Guarantees will be senior, senior
subordinated or subordinated.
Payments relating to the Debt Securities generally will be paid at
Citibank's corporate trust office. However, we may elect to pay interest by
mailing checks directly to the registered holders of the Debt Securities. You
can transfer your Debt Securities at Citibank's corporate trust office.
RANKING
Unless otherwise described in the prospectus supplement for any series, the
Debt Securities will be unsecured and will rank on a parity with all of our
other unsecured and unsubordinated indebtedness.
We are a holding company and conduct substantially all of our operations
through subsidiaries. Our right to participate as a shareholder in any
distribution of assets of any subsidiary (and thus the ability of holders of the
Debt Securities to benefit as creditors of the Company from such distribution)
is junior to creditors of that subsidiary. As a result, claims of holders of the
Debt Securities will generally have a junior position to claims of creditors of
our subsidiaries, except to the extent that we may be recognized as a creditor
of those subsidiaries or those subsidiaries guarantee the Debt Securities.
Claims of creditors of our subsidiaries include substantial amounts of long-term
debt.
We will issue the Debt Securities in registered form without coupons, which
Debt Securities may be in the form of a global security (see Description of Debt
Securities -- Global Securities). You can transfer or exchange your Debt
Securities without a service charge, but we may require advance payment of any
tax or other governmental transfer or exchange charge.
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REOPENING OF ISSUE
We may, from time to time, reopen an issue of Debt Securities without the
consent of the holders of the Debt Securities and issue additional Debt
Securities with the same terms (including maturity and interest payment terms)
as Debt Securities issued on an earlier date. After such additional Debt
Securities are issued they will be fungible with the previously issued Debt
Securities to the extent specified in the applicable prospectus supplement.
DEBT GUARANTEES
Kerr-McGee Operating Corporation and/or Kerr-McGee Rocky Mountain
Corporation may guarantee the payment of principal, premium, if any, and
interest, if any, on the Debt Securities and the payment of mandatory sinking
fund payments, if any. (Section 14.01)
DEFINITIONS
The covenants in the Indenture, which we summarize below, use the following
terms:
- Subsidiary: A corporation of which we own a majority of the voting stock
either directly or indirectly. (Section 1.01)
- Restricted Subsidiary: Any subsidiary which we designate as a Restricted
Subsidiary or which owns or leases any Principal Property (see the next
definition). The term does not include a subsidiary if its principal
business is leasing assets, financing the sale of products or holding the
securities of other subsidiaries. (Section 1.01)
- Principal Property: Any U.S. mineral property owned by the Company or any
Restricted Subsidiary capable of producing in paying quantities and any
manufacturing plant owned by the Company or any Restricted Subsidiary in
the U.S. (including the land and fixtures), unless our board of directors
determines that the property or plant is not material to our total
business. The term does not include any facility acquired to control or
abate air, water, noise, odor, or other pollution, or facilities financed
through industrial revenue bonds or similar financing. (Section 1.01)
- Consolidated Net Tangible Assets: The total amount of assets on our
consolidated balance sheet and the balance sheets of our Restricted
Subsidiaries, less any reserves and after deducting: (1) current
liabilities and (2) goodwill, trade names, trademarks, patents,
unamortized debt discount and expense and other like intangibles.
(Section 1.01)
- Funded Debt: Money borrowed or debt evidenced by bonds or debentures, or
similar instruments or agreements having a maturity of more than one year
(or less than one year but which is renewable after that year at the
borrower's option). (Section 1.01)
- Debt: Notes, bonds, debentures or other similar evidences of
indebtedness. (Section 10.08)
- Mortgage: A pledge, mortgage or other lien securing a debt. (Section
10.08)
CERTAIN COVENANTS
The Indenture includes the following covenants. These covenants use certain
terms that are defined above. The covenants for a series of Debt Securities may
differ from those described below. If they do, this will be described in the
supplement to this prospectus relating to that series.
Restrictions on Secured Debt
After the date of the Indenture, if we or any of our Restricted
Subsidiaries incur or guarantee a debt secured by either a mortgage on any of
our Principal Property or on a Restricted Subsidiary's stock or debt, we will
secure the Debt Securities on the same basis, unless the amount of the new debt
plus the value of all sale
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and leaseback transactions involving Principal Properties would not exceed 5% of
Consolidated Net Tangible Assets. The restrictions do not apply to debt secured
by the following:
- Mortgages on our property or the property of a Restricted Subsidiary,
which existed on the date of the Indenture.
- Mortgages on the property, stock or debt of a corporation that existed
when the corporation became a Restricted Subsidiary.
- Mortgages on the property of a Restricted Subsidiary, which only secures
indebtedness owed by the Subsidiary to another Restricted Subsidiary or
us.
- Mortgages in favor of governmental bodies to secure progress, advance or
other payments.
- Mortgages on acquired property, stock or debt which existed at the time
of the acquisition (including acquisition through merger or
consolidation) and certain purchase money and construction mortgages.
- Mortgages on our property or the property of a Restricted Subsidiary to
secure payment of the costs of operations, increase the production and
disposition of minerals from the property or indebtedness incurred to
provide funds for such purposes.
- Any extension, renewal or refunding of the foregoing.
The debt listed above will be excluded when computing our secured debt.
The restrictions will not apply to sale and leaseback transactions if the
proceeds are applied to the retirement of Funded Debt. Secured debt will not be
deemed to be created by the transfer of an interest in property in the form
commonly referred to as a "production payment". (Sections 10.08 and 10.09)
Restrictions on Sales and Leasebacks
We may not enter into any sale and leaseback transaction involving any
Principal Property after the date of the Indenture unless:
- The sale or transfer occurs within 120 days after construction is
complete and the Principal Property is fully operational.
- We could mortgage the property under Section 10.08 of the Indenture for
an amount equal to the proceeds of the sale and leaseback transaction
without securing the Debt Securities on the same basis.
- We use an amount equal to the market value of the Principal Property
being leased to retire Funded Debt within 120 days. This restriction will
not apply to any sale and leaseback transaction between us (or a
Restricted Subsidiary) and a Restricted Subsidiary, or involving the
taking back of a lease for a period of less than three years. (Section
10.09)
Merger and Consolidation
The Indenture generally permits a consolidation or merger between
Kerr-McGee and another corporation. It also permits the sale by Kerr-McGee of
all or substantially all of our property and assets. If this happens, the
resulting or acquiring corporation will assume all of our responsibilities and
liabilities under the Indenture. If the resulting or acquiring corporation has
outstanding Debt secured by a Mortgage on any Principal Property, or shares of
stock of a Restricted Subsidiary, the Debt Securities will be equally and
ratably secured with (or prior to) the Debt secured by such Mortgage. This
restriction will not apply if the Mortgage could be created pursuant to Section
10.08 of the Indenture (see "Restrictions on Secured Debt" above) without
equally and ratable securing the Debt Securities. (Section 8.03)
MODIFICATION
Generally, our rights and obligations and the holders' rights may be
modified if the holders of a majority of the outstanding Debt Securities
consent. However, no modification or amendment may occur without the
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consent of the affected holder of the Debt Security if that modification or
amendment would do any of the following:
- Change the stated maturity date of the principal of, or any installment
of interest on, any of the holder's Debt Security.
- Reduce the principal amount of, or the interest (or premium, if any) on,
the Debt Security (including in the case of a discounted Debt Security,
the amount payable upon acceleration of maturity or provable in
bankruptcy).
- Change the currency of payment of the Debt Security.
- Impair the right to institute suit for the enforcement of any payment on
the Debt Security or adversely affect the right of repayment, if any, at
the option of the holder.
- Reduce the percentage of holders of Debt Securities necessary to modify
or amend the Indenture.
A modification which changes a covenant or provision expressly included
solely for the benefit of holders of one or more particular series will not
affect the rights of holders of Debt Securities of any other series. (Section
9.02)
Kerr-McGee or Citibank may make modifications without the consent of the
Debt Securities holders in order to do the following: (Section 9.01)
- Evidence that another corporation has succeeded to Kerr-McGee and assumed
our obligations.
- Convey security for the Debt Securities to Citibank.
- Add covenants, restrictions or conditions for the protection of the Debt
Security holders.
- Provide for the issuance of Debt Securities in coupon or fully registered
form.
- Establish the form or terms of Debt Securities of any series.
- Cure any ambiguity or correct any defect in the Indenture which does not
adversely affect the interests of a holder.
- Evidence the appointment of a successor trustee or more than one trustee.
EVENTS OF DEFAULT
In the Indenture, an Event of Default means any one of the following:
- Failure to pay interest on a Debt Security for 30 days;
- Failure to pay principal and premium, if any, when due;
- Failure to pay sinking fund installment when due;
- Failure by us or by a guarantor of the Debt Securities to perform any
other covenant in the Indenture that continues for 60 days after receipt
of notice;
- Certain events in bankruptcy, insolvency or reorganization; or
- A Guarantee ceasing to be in effect in accordance with its terms, or the
denial by a guarantor of its obligations under a Guarantee.
An Event of Default relating to one series of Debt Securities does not
necessarily constitute an Event of Default with respect to any other series
issued under the Indenture. If an Event of Default exists with respect to a
series of Debt Securities, Citibank or the holders of at least 25% of the
outstanding Debt Securities of that series (or of all the outstanding Debt
Securities in the case of defaults due to failure to perform a covenant in the
Indenture or certain events in bankruptcy, insolvency, or reorganization) may
declare the principal of that series (or of all outstanding Debt Securities, as
the case may be) due and payable.
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Any Event of Default with respect to a particular series of Debt Securities
may be waived by the holders of a majority of the outstanding Debt Securities of
that series (or of all the outstanding Debt Securities as the case may be),
except for a failure to pay principal, premium or interest on the Debt Security.
(Sections 5.01, 5.02 and 5.08)
Citibank may withhold notice to the holders of the Debt Securities of any
default (except in payment of principal, premium, interest or sinking fund
payment) if Citibank thinks it is in the interest of the holders. (Section 6.02)
Subject to the specific duties that arise under the Indenture if an Event
of Default exists, Citibank is not obligated to exercise any of its rights or
powers under the Indenture at the request of the holders of the Debt Securities,
unless they provide reasonable indemnity satisfactory to it (Sections 6.01 and
6.03). Generally, the holders of a majority of the outstanding Debt Securities
can direct the proceeding for a remedy available to Citibank or for exercising
any power conferred on Citibank as the trustee. (Section 5.08)
TRUSTEE'S RELATIONSHIP
Citibank has loaned us substantial amounts of money in the past and may
continue to do so. Citibank serves as a depository for us and performs other
services for us in the normal course of business. The Indenture provides that we
will indemnify Citibank against any loss, liability or expense incurred that
arises from the trust created by the Indenture unless the loss, liability or
expense results from Citibank's negligence or willful misconduct. (Section 6.07)
GLOBAL SECURITIES
We may issue some of the Debt Securities as Global Securities that will be
deposited with a depository identified in a prospectus supplement. Global
Securities may be issued in either registered or bearer form and may be either
temporary or permanent. A prospectus supplement will contain additional
information about depository arrangements.
Registered Global Securities will be registered in the depositary's name or
in the name of its nominee. When we issue a Global Security, the depositary will
credit that amount of Debt Securities to the investors that have accounts with
the depository or its nominee. The underwriters or the Debt Security holders'
agent will designate the accounts to be credited, unless the Debt Securities are
offered and sold directly by Kerr-McGee, in which case, we will designate the
appropriate account to be credited.
Investors who have accounts with a depository, and people who have an
interest in those institutions, are the beneficial owners of Global Securities
held by that particular depository.
Kerr-McGee will not maintain records regarding ownership or the transfer of
Global Securities held by a depository or to nominee. If you are the beneficial
owner of Global Securities held by a depository, you must get information
directly from the depository.
As long as a depositary is the registered owner of a Global Security, that
depository will be considered the sole owner of the Debt Securities represented
by that Global Security. Except as set forth below, beneficial owners of Global
Securities held by a depository will not be entitled to:
- Register the represented Debt Securities in their names;
- Receive physical delivery of the Debt Securities; or
- Be considered the owners or holders of the Global Security under the
Indenture.
Payments on Debt Securities registered in the name of a depositary or its
nominee will be made to the depositary or its nominee. (Section 2.03)
When a depositary receives a payment, it must immediately credit the
accounts in amounts proportionate to the account holders' interests in the
Global Security. The beneficial owners of a Global Security should, and are
expected to, establish standing instructions and customary practices with their
investor that has an account
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with the depository, so that payments can be made with regard to securities
beneficially held for them, much like securities held for the accounts of
customers in bearer form or registered in "street name."
A Global Security can only be transferred in whole by the depository to a
nominee of such depository, or to another nominee of a depository. If a
depositary is unwilling or unable to continue as a depository and we do not
appoint a successor depository within ninety (90) days, we will issue Debt
Securities in exchange for all of the Global Securities held by that depository.
In addition, we may eliminate all Global Securities at any time and issue Debt
Securities in exchange for them. Further, we may allow a depository to surrender
a Global Security in exchange for Debt Securities on any terms that are
acceptable to us and the depositary. Finally, an interest in the Global Security
is exchangeable for a definitive Debt Security if an event of default has
occurred as described above under "Events of Default". (Section 3.07)
If any of these events occur, we will execute and Citibank will
authenticate and deliver to the beneficial owners of the Global Security in
question a new registered security in an amount equal to and in exchange for
that person's beneficial interest in the exchanged Global Security. The
depository will receive a new Global Security in an amount equal to the
difference, if any, between the amount of the surrendered Global Security and
the amount of Debt Securities delivered to the beneficial owners. Debt
Securities issued in exchange for Global Securities will be registered in the
same names and in the same denominations as indicated by the depository's
records and in accordance with the instructions from its direct and indirect
participants. (Section 3.07)
The laws of certain jurisdictions require some people who purchase securities to
actually take physical possession of those securities. The limitations imposed
by these laws may impair your ability to transfer your beneficial interests in a
Global Security.
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DESCRIPTION OF PREFERRED STOCK
GENERAL
Our Certificate of Incorporation authorizes our Board of Directors or a
committee of our Board of Directors to cause Preferred Stock to be issued in one
or more series, without stockholder action. The Board of Directors is authorized
to issue up to 40,000,000 shares of Preferred Stock, $1 par value per share, and
can determine the number of shares of each series, and the rights, preference
and limitations of each series. We may amend the Charter to increase the number
of authorized shares of preferred stock in a manner permitted by the Charter and
the Delaware General Corporation Law.
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 number of shares of the series of Preferred Stock being offered;
- The title and liquidation preference per share of that series of the
Preferred Stock;
- The purchase price of the Preferred Stock;
- The dividend rate (or method for determining such rates);
- The dates on which dividends will be paid;
- Whether dividends on that series of Preferred Stock will be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall
commence to accumulate;
- Any redemption or sinking fund provisions applicable to that series of
preferred stock;
- Any conversion or exchange provisions applicable to that series of
preferred stock;
- Whether we have elected to offer Depositary Shares with respect to that
series of preferred stock; and
- Any additional dividend, liquidation, redemption, sinking fund and other
rights and restrictions applicable to that series of preferred stock.
If the terms of any series of Preferred Stock being offered differ from the
terms set forth herein, those terms will also be disclosed in the prospectus
supplement relating to that series of Preferred Stock. The following summary is
not complete. You should refer to the Certificate of Designations relating to
the series of the Preferred Stock for the complete terms of that Preferred
Stock. That Certificate of Designations will be filed with the SEC promptly
after the offering of the Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the prospectus supplement, in the event we
liquidate, dissolve or wind-up our business, each series of Preferred Stock will
have the same rank as to dividends and distributions as each other series of the
Preferred Stock we may issue in the future. The Preferred Stock will have no
preemptive rights.
DIVIDEND RIGHTS
Holders of Preferred Stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors, cash dividends at the rates
and on the dates set forth in the prospectus supplement. Dividend rates may be
fixed or variable or both. Different series of Preferred Stock may be entitled
to dividends at different dividend rates or based upon different methods of
determination. Each dividend will be payable to the holders of record as they
appear on our stock books on record dates determined by the Board of Directors.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as specified in the prospectus supplement. If the Board of
Directors fails to declare a dividend on any series of Preferred Stock for which
dividends are noncumulative, then the right to receive that dividend will be
lost, and we will have no obligation to pay the dividend for that dividend
period, whether or not dividends are declared for any future dividend period.
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No full dividends will be declared or paid on any series of Preferred
Stock, unless full dividends for the dividend period commencing after the
immediately preceding dividend payment date (and cumulative dividends still
owing, if any) have been or contemporaneously are declared and paid on all other
series of Preferred Stock that have the same rank as, or rank senior to, that
Preferred Stock. When those dividends are not paid in full, dividends will be
declared pro rata, so that the amount of dividends declared per share on that
series of Preferred Stock and on each other series of preferred stock having the
same rank as, or ranking senior to, that series of Preferred Stock will in all
cases bear to each other the same ratio that accrued dividends per share on that
series of Preferred Stock and the other preferred stock bear to each other. In
addition, generally, unless full dividends, including cumulative dividends still
owing, if any, on all outstanding shares of any series of Preferred Stock have
been paid, no dividends will be declared or paid on the Common Stock and
generally we may not redeem or purchase any Common Stock. No interest, or sum of
money in lieu of interest, will be paid in connection with any dividend payment
or payments which may be in arrears.
Unless otherwise described in the prospectus supplement, the amount of
dividends payable for each dividend period will be computed by annualizing the
applicable dividend rate and dividing by the number of dividend periods in a
year, except that the amount of dividends payable for the initial dividend
period or any period shorter than a full dividend period shall be computed on
the basis of a 360-day year consisting of twelve 30-day months and, for any
period less than a full month, the actual number of days elapsed in the period.
RIGHTS UPON LIQUIDATION
In the event we liquidate, dissolve or wind-up our affairs, either
voluntarily or involuntarily, the holders of each series of Preferred Stock will
be entitled to receive liquidating distributions in the amount set forth in the
prospectus supplement relating to each series of Preferred Stock, plus an amount
equal to accrued and unpaid dividends, if any, before any distribution of assets
is made to the holders of Common Stock. If the amounts payable with respect to
Preferred Stock of any series and any stock having the same rank as that series
of Preferred Stock are not paid in full, the holders of Preferred Stock and of
such other stock will share ratably in any such distribution of assets in
proportion to the full respective preferential amounts to which they are
entitled. After the holders of each series of Preferred Stock and any stock
having the same rank as the Preferred Stock are paid in full, they will have no
right or claim to any of our remaining assets. Neither the sale of all or
substantially all our property or business nor a merger or consolidation by us
with any other corporation will be considered a dissolution, liquidation or
winding up by us of our business or affairs.
REDEMPTION
Any series of Preferred Stock may be redeemable, in whole or in part, at
our option. In addition, any series of Preferred Stock may be subject to
mandatory redemption pursuant to a sinking fund. The redemption provisions that
may apply to a series of Preferred Stock, including the redemption dates and the
redemption prices for that series, will be set forth in the prospectus
supplement.
If a series of Preferred Stock is subject to mandatory redemption, the
prospectus supplement will specify the year we can begin to redeem shares of the
Preferred Stock, the number of shares of the Preferred Stock we can redeem each
year, and the redemption price per share. We may pay the redemption price in
cash, stock or in cash that we have received specifically from the sale of our
capital stock, as specified in the prospectus supplement. If the redemption
price is to be paid only from the proceeds of the sale of our capital stock, the
terms of the series of Preferred Stock may also provide that, if no such capital
stock is sold or if the amount of cash received is insufficient to pay in full
the redemption price then due, the series of Preferred Stock will automatically
be converted into shares of the applicable capital stock pursuant to conversion
provisions specified in the prospectus supplement.
If fewer than all the outstanding shares of any series of Preferred Stock
are to be redeemed, whether by mandatory or optional redemption, the Board of
Directors will determine the method for selecting the shares to be redeemed,
which may be by lot or pro rata or by any other method determined to be
equitable. From and after the redemption date, dividends will cease to accrue on
the shares of Preferred Stock called for
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redemption and all rights of the holders of those shares (except the right to
receive the redemption price) will cease.
In the event that full dividends, including accrued but unpaid dividends,
if any, have not been paid on any series of Preferred Stock, we may not redeem
that series in part and we may not purchase or acquire any shares of that series
of Preferred Stock, except by any offer made on the same terms to all holders of
that series of Preferred Stock.
VOTING RIGHTS
Except as indicated in the prospectus supplement, or except as expressly
required by applicable law, the holders of Preferred Stock will not be entitled
to vote.
DESCRIPTION OF COMMON STOCK
As of the date of this prospectus, we are authorized to issue up to
300,000,000 shares of Common Stock. As of June 30, 2001, we had 95,116,303
shares of Common Stock issued and outstanding.
The following summary is not complete. You should refer to the applicable
provisions of the Charter, including the Certificates of Designations pursuant
to which any outstanding series of Preferred Stock may be issued, and the
Delaware General Corporation Law for a complete statement of the terms and
rights of the Common Stock.
Dividends. Holders of Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors, out of funds legally available for
their payment (subject to the rights of holders of the preferred stock, if any).
Voting Rights. Each holder of Common Stock is entitled to one vote per
share. Subject to the rights, if any, of the holder of any series of preferred
stock pursuant to applicable law or the provision of the Certificate of
Designations creating that series, all voting rights are vested in the holders
of shares of Common Stock.
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, if any, have received their liquidation
preferences in full.
Rights Agreement. We have adopted a Rights Agreement, which provides for
the issuance of a right (which we refer to as a Kerr-McGee Right), to the holder
of each of our shares of Common Stock. If anyone acquires 15% or more of our
outstanding Common Stock (which we refer to as an Acquiring Person), each holder
of the Kerr-McGee Right (other than the Acquiring Person) will be entitled to
purchase additional shares of Common Stock (or, in certain cases, other of our
securities, or cash or other property) having a current market value of two
times the exercise price of $215. Otherwise, prior to an Acquiring Person
acquiring 50% or more of the outstanding Common Stock, we may elect to issue a
share of Common Stock in exchange for each Kerr-McGee Right (other than
Kerr-McGee Rights held by the Acquiring Person). In addition, if we are acquired
in a merger or other business combination or 50% or more of our assets or
earning power are sold, each holder of a Kerr-McGee Right will be entitled to
buy, at the exercise price, common stock of the acquirer having a current market
value of two times the exercise price. At any time before there is an Acquiring
Person, we can redeem the Kerr-McGee Rights in whole, but not in part, for $0.01
per each Kerr-McGee Right, or may amend the Rights Agreement in any way without
the consent of the holders of the Kerr-McGee Rights.
Miscellaneous. The issued and outstanding shares of Common Stock are fully
paid and nonassessable. Holders of shares of Common Stock are not entitled to
preemptive rights or cumulative rights. Shares of Common Stock are not
convertible into shares of any other class of capital stock.
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DESCRIPTION OF STOCK PURCHASE CONTRACTS AND STOCK PURCHASE UNITS
We may issue Stock Purchase Contracts representing contracts obligating
holders to purchase from us and us to sell to the holders a specified number of
shares of Common Stock or Preferred Stock at a future date or dates. The price
per share of Common Stock or Preferred Stock may be fixed at the time the Stock
Purchase Contracts are issued or may be determined by reference to a specific
formula set forth in the Stock Purchase Contracts.
The Stock Purchase Contracts may be issued separately or as a part of
units, often known as Stock Purchase Units, consisting of a Stock Purchase
Contract and either
- Debt Securities, or
- debt obligations of third parties, including U.S. Treasury securities,
securing the holder's obligations to purchase the Common Stock or Preferred
Stock under the Stock Purchase Contracts. The Stock Purchase Contracts may
require us to make periodic payments to the holders of the Stock Purchase Units
or vice versa, and such payments may be unsecured or prefunded on some basis.
The Stock Purchase Contracts may require holders to secure their obligations in
a specified manner and in certain circumstances we may deliver newly issued
prepaid Stock Purchase Contracts, often known as prepaid securities, upon
release to a holder of any collateral securing each holder's obligations under
the original Stock Purchase Contract.
The applicable prospectus supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units and, if applicable, prepaid
securities. The description in the prospectus supplement will not contain all of
the information that you may find useful. For more information, you should
review the Stock Purchase Contracts, the collateral arrangements and depositary
arrangements, if applicable, relating to such Stock Purchase Contracts or Stock
Purchase Units and, if applicable, the prepaid securities and the document
pursuant to which the prepaid securities will be issued, which will be filed
with the SEC promptly after the offering of such Stock Purchase Contracts or
Stock Purchase Units and, if applicable, prepaid securities.
DESCRIPTION OF WARRANTS
We may issue Warrants for the purchase of Debt Securities, Preferred Stock
or Common Stock. We may issue Warrants independently or together with other
securities. Each series of Warrants will be issued under a separate Warrant
Agreement to be entered into between us and a bank or trust company, as warrant
agent. You should refer to the Warrant Agreement relating to the specific
Warrants being offered for the complete terms of the Warrant Agreement and the
Warrants.
Each Warrant will entitle the 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 prospectus
supplement. The exercise price may be subject to adjustment upon the occurrence
of certain events, as set forth in the prospectus supplement. After the close of
business on the expiration date of the Warrant, unexercised Warrants will become
void. The place or places where, and the manner in which, Warrants may be
exercised shall be specified in the prospectus supplement.
PLAN OF DISTRIBUTION
We may sell the Offered Securities through underwriters, dealers or agents,
or we may sell directly to one or more purchasers including through a dividend
reinvestment program. The prospectus supplement names any underwriters, states
the purchase price and the proceeds received by us, any underwriting discounts
and other items constituting underwriters' compensation, the initial public
offering price, any discounts or concessions to dealers, and any securities
exchanges on which the Offered Securities may be listed.
If underwriters are used in the sale, the Offered Securities will be
acquired by the underwriters for their own account. The underwriters may resell
the Offered Securities 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
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Offered Securities may be offered through an underwriting syndicate represented
by many underwriters. The obligations of the underwriters to purchase the
Offered Securities will be subject to certain conditions. The underwriters will
be obligated to purchase all the Offered Securities if any are purchased. Any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
These Offered Securities may be sold directly by us or through agents. Any
agent will be named, and any commissions payable to that agent will be set forth
in the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any agent will be acting on a best efforts basis.
We may authorize agents, underwriters or dealers to solicit offers by
specified institutions to purchase Offered Securities pursuant to 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. The prospectus supplement will set forth the
commission payable for soliciting such contracts.
We may agree to indemnify underwriters, dealers or agents against certain
civil liabilities, including liabilities under the Securities Act of 1933, and
may also agree to contribute to payments which the underwriters, dealers or
agents may be required to make.
LEGAL MATTERS
Simpson Thacher & Bartlett will issue an opinion about the legality of the
securities for us. Any underwriters will be advised about issues relating to
this offering by their own legal counsel.
EXPERTS
The audited financial statements and schedule of Kerr-McGee Operating
Corporation (formerly named Kerr-McGee Corporation) incorporated by reference or
included in Kerr-McGee Corporation's Annual Report on Form 10-K for the year
ended December 31, 2000 have been incorporated by reference in this prospectus
and elsewhere in the registration statement and 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.
The audited financial statements of Kerr-McGee Rocky Mountain Corporation
(formerly named HS Resources, Inc.) included in HS Resources, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2000 have been incorporated
by reference in this prospectus and elsewhere in the registration statement and
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
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