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FILED PURSUANT TO

RULE 424(B)(5)

REGISTRATION NO. 333-69500

PROSPECTUS SUPPLEMENT

(To Prospectus dated January 7, 2003)

 

5,600,000 Shares

 

 

Common Stock

 

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AGL Resources Inc. is offering 5,600,000 shares of its common stock.

 

Our common stock is listed on the New York Stock Exchange under the symbol “ATG.” On February 11, 2003, the last reported sale price of our common stock on the New York Stock Exchange was $22.16 per share.

 

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Investing in our common stock involves risks. See “Risk Factors” beginning on page S-13 of this prospectus supplement.

 

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		Per Share			Total
Public offering price		$	22.00		$	123,200,000
Underwriting discounts and commissions		$	0.77		$	4,312,000
Proceeds, before expenses, to AGL Resources		$	21.23		$	118,888,000

 

We have granted the underwriters a 30-day option to purchase up to an additional 840,000 shares of our common stock to cover over-allotments.

 

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The underwriters expect to deliver the shares to purchasers on or about February 14, 2003.

 

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Joint Book-Running Managers

 

Morgan Stanley

Banc of America Securities LLC

 

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Credit Lyonnais Securities (USA) Inc.

Credit Suisse First Boston

JPMorgan

SunTrust Robinson Humphrey

 

The date of this prospectus supplement is February 11, 2003

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changes in industrial, commercial and residential growth in our service territories;

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changes in price, supply and demand for natural gas and related products;

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impact of changes in state and federal legislation and regulation, including orders of various state public service commissions and of the Federal Energy Regulatory Commission, or FERC, on the gas and electric industries and on us, including the impact of Atlanta Gas Light Company’s performance-based rate plan;

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effects and uncertainties of deregulation and competition, particularly in markets where prices and providers historically have been regulated, unknown issues following deregulation such as the stability of certificated marketers, and unknown risks related to non-regulated businesses, including risks related to energy trading;

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market changes due to Georgia’s “Natural Gas Consumers’ Relief Act” of 2002;

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concentration of credit risk in certificated marketers;

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excess high-speed network capacity and demand for dark fiber in metropolitan network areas;

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market acceptance of new fiber optic technologies and products, as well as the adoption of new networking standards;

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our ability to negotiate new contracts with telecommunications providers for the provision of dark fiber services;

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utility and energy industry consolidation;

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impact of acquisitions and divestitures;

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the ultimate impact of the Sarbanes-Oxley Act of 2002 and any future changes in accounting regulations or practices in general with respect to public companies, the energy industry or our operations specifically;

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the enactment of new accounting standards by the Financial Accounting Standards Board, or FASB, or the SEC that could impact the way we record revenues, assets and liabilities, which could lead to negative impacts on reported earnings or increases in liabilities, which in turn could affect our reported results of operations;

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performance of equity and bond markets and the impact on pension funding costs;

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direct or indirect effects on our business, financial condition or liquidity resulting from a change in our credit rating or the credit ratings of our competitors or counterparties;

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interest rate fluctuations, financial market conditions and general economic conditions;

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uncertainties about environmental issues and the related impact of such issues;

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impact of changes in weather upon the temperature sensitive portions of our business;

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impact of litigation;

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impact of changes in prices on margins achievable in the non-regulated retail gas marketing business; and

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other risks described in our documents on file with the SEC.

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The following charts show our EBIT and total assets by business segment for and as of the year ended December 31, 2002:

 

 

Distribution Operations

 

Our distribution operations segment consists of three wholly-owned natural gas local distribution companies: Atlanta Gas Light Company, Chattanooga Gas Company and Virginia Natural Gas.

 

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Atlanta Gas Light Company, or AGLC, is a natural gas local distribution utility with distribution systems and related facilities serving 237 cities throughout Georgia, including Atlanta, Athens, Augusta, Brunswick, Macon, Rome, Savannah, and Valdosta. AGLC also has approximately 6.0 billion cubic feet, or Bcf, of liquefied natural gas, or LNG, storage capacity in three LNG plants to supplement the supply of natural gas during peak usage periods.

 

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Chattanooga Gas Company, or CGC, is a natural gas local distribution utility with distribution systems and related facilities serving 12 cities and surrounding areas in Tennessee, including the Chattanooga and Cleveland areas of Tennessee. CGC also has approximately 1.2 Bcf of LNG storage capacity in its LNG plant.

 

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Virginia Natural Gas, or VNG, is a natural gas local distribution utility with distribution systems and related facilities serving the Hampton Roads region of southeastern Virginia. VNG is one of the most modern natural gas local distribution companies in the United States, with approximately 50% of its main piping having been installed after 1980. VNG also operates approximately 155 miles of a separate high-pressure pipeline that provides delivery of gas to customers under firm transportation agreements within the state of Virginia.

 

The following table summarizes key statistics for our distribution operations as of December 31, 2002:

 

		AGLC/CGC		VNG		Total
Utility end-users (in 000s)		1,573		251		1,824
Gas throughput (in Bcf) for 12 months ended December 31, 2002		270		35		305
Miles of gas pipeline		29,912		4,946		34,858

 

 

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Wholesale Services

 

Our wholesale services segment includes Sequent Energy Management LP, our energy asset optimization, gas supply services and wholesale energy marketing and risk management subsidiary. Our asset optimization activities focus on capturing the value from idle or underutilized energy assets, typically by participating in transactions that balance the needs of various markets and time horizons. Sequent also aggregates gas from other marketers and producers and sells it to third parties. In addition, Sequent bundles this commodity with transportation and storage service and redelivers short and long-term transported commodity. Risk parameters are established by our risk management committee, which oversees risk management policies for the entire corporation. We use mark-to-market and position-limit methodologies as an integral part of managing the risk associated with our commodity, basis and storage positions. Additionally, we employ value-at-risk, or VaR, methodologies to evaluate our exposure to open positions. Based on a 95% confidence interval and employing a one-day and a 20-day holding period for all positions, as of December 31, 2002, Sequent’s positions had a VaR of $0.1 million and $0.3 million, respectively. As of December 31, 2002, Sequent had outstanding trades with approximately 120 approved counterparties with an average credit rating of BBB+.

 

Although Sequent is a non-regulated business, under varying agreements and practices, Sequent acts as asset manager for our regulated utilities. In its capacity as asset manager, Sequent captures value from idle or underutilized assets of the utilities by arbitraging pricing differences across different locations and differences in commodity prices over time. Profits from these activities are shared under varying agreements with the various utilities’ customers.

 

Energy Investments

 

Our energy investments segment includes our investments in SouthStar Energy Services LLC, AGL Networks, LLC and US Propane LP.

 

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SouthStar is a joint venture formed in 1998 by subsidiaries of AGL Resources, Piedmont Natural Gas Company and Dynegy Inc. to market retail natural gas and related services to industrial, commercial and residential customers, principally in Georgia. SouthStar is the largest marketer in Georgia with a market share of 38% and operates under the trade name Georgia Natural Gas. Initially, our subsidiary owned a 50% interest, Piedmont’s subsidiary owned 30% and Dynegy’s subsidiary owned the remaining 20%. In January 2003, we announced our intention to purchase the 20% interest owned by the Dynegy subsidiary. The purchase price is $20 million and the transaction is expected to close in March 2003. Upon closing, our subsidiary will own a 70%, non-controlling financial interest in the partnership.

 

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AGL Networks, our wholly owned subsidiary, is a carrier-neutral provider of last-mile infrastructure and dark fiber solutions to a variety of customers in the Atlanta, Georgia and Phoenix, Arizona metropolitan areas, including local, regional and national telecommunication companies, wireless service providers, educational institutions and other commercial entities. AGL Networks typically provides conduit and dark fiber to its customers under long-term lease arrangements with terms that vary from three to 20 years. In addition to conduit and dark fiber leasing, AGL Networks also provides turnkey telecommunications network construction services.

 

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US Propane owns all of the general partnership interests, directly or indirectly, and approximately 29% of the limited partnership interests in Heritage Propane Partners, L.P., a publicly traded marketer of propane. Heritage is the fourth largest retail marketer of propane in the United States, delivering approximately 350 million gallons per year to approximately 600,000 customers in 28 states. We own 22.36% of the limited partnership interests in US Propane and 22.36% of the limited liability company that serves as US Propane’s general partner. The other limited partners are subsidiaries of TECO Energy, Inc., Piedmont Natural Gas Company and Atmos Energy Corporation. These companies also are the owners of US Propane’s general partner.

 

 

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Corporate Services

 

Our corporate services segment includes our non-operating business units, principally AGL Services Company and AGL Capital Corporation. AGL Services is a service company that provides business services to our various operations. AGL Capital was established to provide for our ongoing financing needs through a commercial paper program, the issuance of various debt and hybrid securities and other financing mechanisms.

 

Competitive Strengths

 

We believe our competitive strengths have enabled us to grow our business profitably and create significant shareholder value. These strengths include:

 

Distribution assets located in an attractive geographic region.    Our operations are concentrated in the southern United States, one of the fastest growing regions in the country in terms of both population and energy demand. We believe that the population growth in the southern United States should result in increased demand for natural gas and related infrastructure.

 

Proven track record of continuous improvement in EBIT.    We have continued to focus our efforts on reducing operating expenses and improving EBIT. As a result, since 2000, we have reduced our operational and maintenance expense per customer from $141 in 2000 to $135 in 2002 for AGLC/CGC and from $202 in 2000 to $173 in 2002 for VNG. In addition, during this period we have reduced operating expenses as a percentage of operating margin from 54% in 2000 to 49% in 2002 for AGLC/CGC and from 49% in 2000 to 46% in 2002 for VNG. The improvements to our operations have been achieved in part through increased investments in technology and automation as well as the implementation of best practices in our utility operations and workforce reductions.

 

Improved revenue stability.    Recent changes with respect to the regulation of AGLC in Georgia should provide us with greater stability in our revenues and cash flow. In April 2002, we reached an agreement with the Georgia Public Service Commission on its earnings review of AGLC that enabled us to implement a three-year performance-based rate plan. The order, effective May 1, 2002, reduced AGLC customers’ base rates by $10 million annually. This reduction in operating revenue will be largely offset by a reduction in depreciation expense. The performance-based rate plan allows AGLC to continue to earn a return on equity of 11%, while establishing an earnings band of between 10% and 12%. Three-quarters of any earnings above 12% will be shared with the natural gas customers of Georgia, and the remaining quarter will be retained by AGLC.

 

In Virginia, the Virginia State Corporation Commission, or VSCC, approved a two-year experimental weather normalization adjustment, or WNA, program effective November 2002 to reduce the effect of weather on customer bills. CGC operates under a WNA under the authority of the Tennessee Regulatory Authority. These WNAs should reduce customer bills when winter weather is colder than normal and surcharge customer bills when weather is warmer than normal. A factor based on customer usage and weather conditions during each billing cycle is used to determine the credit or surcharge. The WNA should provide customers with less volatile bills and VNG and CGC with more stable operating margins and less exposure to weather risk. As part of the VSCC approval, VNG agreed not to file for a general rate increase for at least two years.

 

Experienced management team.    Our senior management team is highly experienced in the natural gas, utility and energy industries. Our Chairman, President and CEO, Paula Rosput, has more than 20 years of utility and energy industry experience. Our senior management team, which averages over 20 years experience in industry and regulatory positions, has been strengthened over the past 18 months with the additions of a number of industry experts in asset optimization, operations, finance and regulatory and legal affairs.

 

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maximizing our return on invested capital and managing our capital spending;

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pursuing growth opportunities in the service areas for each operating utility to expand our customer base;

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providing efficient service while aggressively managing operating costs;

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working to achieve authorized returns and share the benefits with our customers; and

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maintaining stability through regulatory compacts.

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840,000 additional shares of common stock that the underwriters have a right to purchase from us within 30 days after the date of this prospectus supplement to cover over-allotments;

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2,483,756 shares issuable upon the exercise of stock options outstanding as of December 31, 2002 and having a weighted average exercise price of $20.07 per share; and

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8,867,269 additional shares available for issuance under our equity incentive plans as of December 31, 2002.

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(1)

As an indicator of our operating performance or liquidity, EBIT should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with generally accepted accounting principles, or GAAP. Our EBIT may not be comparable to a similarly titled measure of another company.

(2)

Reflects a non-GAAP measure of net income excluding significant gains or losses on the sale or disposal of assets and/or subsidiaries. Core earnings, as an indicator of operating performance or liquidity, should not be considered an alternative to, or more meaningful than, net income or cash flow as determined in accordance with GAAP. Our core earnings may not be comparable to a similarly titled measure of another company.

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our inability to integrate operations, systems and procedures;

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the assumption of unknown risks and liabilities;

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diversion of management’s attention and resources; and

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difficulty retaining and training acquired key personnel.

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adverse economic conditions;

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adverse general capital market conditions;

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poor performance and health of the utility industry in general;

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bankruptcy or financial distress of unrelated energy companies or certificated marketers in Georgia;

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decreases in the market price of and demand for natural gas;

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adverse regulatory actions that affect our local gas distribution companies; or

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terrorist attacks on our facilities or our suppliers.

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increasing the cost of future debt financing;

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limiting our ability to obtain additional financing, if we need it, for working capital, acquisitions, debt service requirements or other purposes;

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making it more difficult for us to satisfy our existing financial obligations;

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requiring us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce funds available to us for operations, future business opportunities or other purposes;

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prohibiting the payment of dividends on our common stock or adversely impacting our ability to pay such dividends at the current rate;

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increasing our vulnerability to adverse economic and industry conditions; and

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limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete.

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USE OF PROCEEDS

 

We estimate that the net proceeds from this offering after deducting the underwriting discounts and commissions and estimated offering expenses payable by us will be approximately $118.6 million (or approximately $136.5 million if the over-allotment option is exercised in full). We intend to use the net proceeds from this offering to repay a portion of our short-term indebtedness and for general corporate purposes. As of December 31, 2002, we had short-term debt of $388.6 million, with an average interest rate of 1.74%. Pending application of the net proceeds as described above, we may invest the net proceeds of the offering in short-term interest-bearing securities.

 

PRICE RANGE OF COMMON STOCK

 

Our common stock trades on the New York Stock Exchange under the symbol “ATG.” The following table sets forth, for the periods indicated, the range of high and low sale prices for our common stock.

 

		Common Stock Price
		High			Low
Year Ended September 30, 2001
First Quarter		$	23.00		$	19.25
Second Quarter			21.92			19.88
Third Quarter			24.09			21.22
Fourth Quarter			24.48			19.17
Transition Quarter Ended December 31, 2001			23.16			20.00
Year Ended December 31, 2002
First Quarter			23.66			21.08
Second Quarter			24.23			21.74
Third Quarter			23.59			17.94
Fourth Quarter			25.00			20.62
Year Ending December 31, 2003
First Quarter (through February 11, 2003)		$	25.18		$	22.16

 

On February 11, 2003, the last reported sale price for our common stock was $22.16 per share. As of February 10, 2003, there were 12,678 holders of record of our common stock.

 

DIVIDEND POLICY

 

We have paid quarterly cash dividends on our common stock without interruption since 1948. We paid annual dividends of $1.08 per share in 2002 and in 2001. Future dividends, declared at the discretion of our board of directors, will depend upon future earnings, financial requirements and other factors.

 

On January 27, 2003, our board of directors declared a quarterly dividend of $0.27 per share of AGL Resources common stock. Payment of the dividend will be made on March 1, 2003, to shareholders of record on February 14, 2003.

 

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CAPITALIZATION

 

The following table sets forth our consolidated capitalization as of December 31, 2002 (1) on an actual basis and (2) on an as adjusted basis to reflect the sale of 5,600,000 shares of our common stock and the application of the estimated net proceeds to repay short-term debt. This table should be read in conjunction with the detailed information and financial statements appearing in documents incorporated by reference in this prospectus supplement and the accompanying prospectus.

 

		As of December 31, 2002
		Actual			As Adjusted
		(In millions, except share data)
Cash and cash equivalents		$	8.4		$	8.4
Short-term debt and current portion of long-term debt		$	418.6		$	300.0
Long-term debt			767.0			767.0
Total debt			1,185.6			1,067.0
Subsidiaries obligated mandatorily redeemable preferred securities			227.2			227.2
Common shareholders’ equity			710.1			828.7
Total capitalization		$	2,122.9		$	2,122.9

 

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UNDERWRITING

 

Under the terms and subject to the conditions contained in an underwriting agreement dated the date of this prospectus supplement, the underwriters named below, for whom Morgan Stanley & Co. Incorporated and Banc of America Securities LLC are acting as the representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares of our common stock indicated below:

 

Name		Number of Shares
Morgan Stanley & Co. Incorporated		1,611,556
Banc of America Securities LLC		1,611,556
Credit Lyonnais Securities (USA) Inc.		547,555
Credit Suisse First Boston LLC		547,555
J.P. Morgan Securities Inc.		547,555
SunTrust Capital Markets, Inc.		547,555
Gabelli & Company, Inc.		93,334
Tokyo-Mitsubishi International plc		93,334
Total		5,600,000

 

The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus supplement are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus supplement if any such shares are purchased. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ over-allotment option described below.

 

The underwriters initially propose to offer part of the shares of common stock directly to the public at the public offering price listed on the cover page of this prospectus supplement and part to certain dealers at a price that represents a concession not in excess of $0.46 a share under the public offering price. After the initial offering of the shares of our common stock, the offering price and other selling terms may from time to time be varied by the representatives.

 

The following table shows the public offering price, underwriting discounts and commissions and proceeds, before expenses, to AGL Resources. This information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

 

		Total
		Per Share			Without Option			With Option
Public offering price		$	22.00		$	123,200,000		$	141,680,000
Underwriting discounts and commissions		$	0.77		$	4,312,000		$	4,958,800
Proceeds, before expenses, to AGL Resources		$	21.23		$	118,888,000		$	136,721,200

 

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus supplement, to purchase up to an aggregate of 840,000 additional shares of common stock at the public offering price listed on the cover page of this prospectus supplement, less underwriting discounts. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock hereby. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase approximately the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the next preceding table bears to the total number of shares of common stock listed next to the name of all underwriters in the next preceding table.

 

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The expenses of this offering payable by us, not including the underwriting discounts and commissions, are estimated at $250,000. In addition, in the event that the underwriters exercise their option to purchase up to an aggregate of 840,000 additional shares of common stock to cover over-allotments, we will reimburse the underwriters for expenses actually incurred by the underwriters up to $226,800 to cover the $0.27 per share quarterly dividend payable in connection with the over-allotment of shares. See “Dividend Policy” on page S-19 of this prospectus supplement.

 

We and our executive officers have agreed that, without the prior written consent of Morgan Stanley & Co. Incorporated and Banc of America Securities LLC on behalf of the underwriters, we, he or she will not, during the period ending 90 days after the date of this prospectus supplement:

 

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offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock; or

 

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enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock;

 

whether any transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, our executive officers have agreed that, without the prior consent of Morgan Stanley & Co. Incorporated and Banc of America Securities LLC on behalf of the underwriters, they will not, during the period ending 90 days after the date of this prospectus supplement, make any demand for, or exercise any right with respect to, the registration of any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock.

 

The restrictions described in the preceding paragraph do not apply to:

 

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the sale by us of shares to the underwriters pursuant to the underwriting agreement;

 

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the issuance by us, pursuant to any written employee or director benefit plan in existence on the date hereof (subject to certain exceptions), of shares pursuant to the exercise of any option or other convertible security outstanding on the date hereof or otherwise if in form and amounts consistent with our recent past practices; or

 

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transactions by any person other than us relating to shares of our common stock or other securities acquired in open market transactions after the completion of this offering.

 

In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. As an additional means of facilitating the offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. The underwriting syndicate may also reclaim selling concessions allowed to an underwriter or a dealer for distributing the common stock in the offering if the syndicate repurchases previously distributed common stock to cover syndicate short positions or to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

 

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In the ordinary course of their business, certain of the underwriters and their respective affiliates have provided, or may in the future provide, investment banking and other financial services to us or our subsidiaries, including underwriting, the provision of financial advice and the extension of credit. These underwriters and their affiliates have received, and may in the future receive, customary fees and commissions for their services.

 

We have agreed to indemnify the underwriters against a variety of liabilities, including liabilities under the Securities Act of 1933.

 

LEGAL MATTERS

 

Our counsel, McKenna Long & Aldridge LLP, Atlanta, Georgia, will pass upon the validity of our shares of common stock offered hereby. Alston & Bird LLP, Atlanta, Georgia, has advised the underwriters with regard to various matters relating to the shares of common stock offered hereby and this prospectus supplement. Alston & Bird LLP also acts as our counsel in connection with various matters.

 

EXPERTS

 

The consolidated balance sheets as of December 31, 2002 and 2001 and September 30, 2001, and the related statements of consolidated income, common shareholders’ equity, and cash flows for the years ended December 31, 2002, September 30, 2001 and September 30, 2000, and the three months ended December 31, 2001 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

 

OTHER MATTERS

 

As a result of the Sarbanes-Oxley Act of 2002 and related regulations adopted and proposed by the SEC and the New York Stock Exchange, audit committees of public companies are now formally charged with the responsibility of evaluating, retaining and discharging a company's independent auditors. Our audit committee takes this responsibility very seriously and recently requested that our senior management begin a process of evaluating and interviewing a limited number of national accounting firms, including our current independent auditors, Deloitte & Touche LLP. To the extent that the audit committee decides to replace our current independent auditors, such a change would likely be effective beginning with our financial statements for the year ending December 31, 2003.

 

The report of Deloitte & Touche LLP with respect to our audited financial statements as described above in “Experts,” contains no adverse opinion or disclaimer of opinion and is not qualified or modified as to uncertainty, audit scope or accounting principles. Further, Deloitte & Touche LLP has confirmed to us that during the periods covered by their report and through the date hereof, there have been no disagreements between us and Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

 

WHERE YOU CAN FIND MORE INFORMATION

 

Available Information

 

We file reports, proxy statements and other information with the SEC. You may obtain copies of this information by mail from the Public Reference Room of the SEC, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Further information on the operation of the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an

 

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Internet site at http://www.sec.gov that contains reports, proxy and information statements, and information regarding registrants like us that file electronically. Reports, proxy statements, and other information concerning us may also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. We also maintain an Internet site at http:www.aglresources.com that contains information concerning us and our affiliates. The information at our Internet site is not incorporated in this prospectus supplement and the accompanying prospectus by reference, and you should not consider it a part of this prospectus supplement and the accompanying prospectus.

 

Incorporation by Reference

 

The rules of the SEC allow us to “incorporate by reference” information into this prospectus supplement and the accompanying prospectus, which means that we can disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus supplement and the accompanying prospectus, and later information that we file with the SEC will automatically update and supersede that information. This prospectus supplement and the accompanying prospectus incorporate by reference the documents set forth below that we have previously filed with the SEC.

 

SEC Filings (File No. 1-14174)		Period/Date
Annual Report on Form 10-K		Year ended September 30, 2001
Quarterly Reports on Form 10-Q		Transition quarter from October 1, 2001 to December 31, 2001; and quarters ended March 31, June 30, and September 30, 2002
Current Reports on Form 8-K		October 2 and November 7, 2001; April 11, May 8, August 8 and December 23, 2002; January 31, 2003
Registration Statement on Form 8-A		March 6, 1996

 

We are also incorporating by reference additional documents that we file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 between the date of this prospectus supplement and the termination of the offering of the common stock. In no event, however, will any of the information that we disclose under Item 9 of any Current Report on Form 8-K that we may from time to time file with the SEC be incorporated by reference into, or otherwise included in, this prospectus supplement or the accompanying prospectus.

 

We will provide without charge to each person, including any beneficial owner, to whom a copy of this prospectus supplement and the accompanying prospectus has been delivered, a copy of any and all of these filings. You may request a copy of these filings by writing or telephoning us at:

 

AGL Resources Inc.

817 West Peachtree Street, N.W.

10th Floor

Atlanta, Georgia 30308

Attention: Investor Relations

Telephone: (404) 584-3801

 

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Annual Report on Form 10-K for the fiscal year ended September 30, 2000 filed on December 18, 2000;

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Quarterly Reports on Form 10-Q for the quarters ended December 31, 2000, March 31, 2001 and June 30, 2001;

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Current Report on Form 8-K filed on August 27, 2001 (event date: August 27, 2001);

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Current Report on Form 8-K filed on May 23, 2001 (event date: May 14, 2001);

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Current Report on Form 8-K filed on May 8, 2001 (event date: May 8, 2001);

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Current Report on Form 8-K filed on April 27, 2001 (event date: April 26, 2001);

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Current Report on Form 8-K filed on March 1, 2001 (event date: February 23, 2001);

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Current Report on Form 8-K filed on November 17, 2000 (event date: November 17, 2000);

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Current Report on Form 8-K filed on October 18, 2000 (event date: October 6, 2000), as amended by Form 8-K/A filed on December 20, 2000;

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Proxy Statement filed December 18, 2000 relating to our 2001 Annual Meeting of Shareholders; and

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Description of our common stock contained in Form 8-A (Item 1) dated March 6, 1996.

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Business prospects;

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State and Federal regulation;

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Deregulation;

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Concentration of credit risk;

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Environmental investigations and cleanups;

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Quantitative and qualitative disclosures about market risk;

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Acquisitions and the integration of the acquired assets;

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Fluctuations in price of natural gas and energy related commodities;

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Economic conditions;

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Propane operations; and

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Changes required by the Public Utility Holding Company Act of 1935.

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Changes in price, availability and demand for natural gas and related products;

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Impact of changes in state and federal legislation and regulation on both the gas and electric industries;

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Industrial, commercial, and residential growth and economic conditions in our service territories;

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Effects and uncertainties of deregulation and competition, particularly in markets where prices and providers historically have been regulated, unknown risks related to nonregulated businesses, and unknown issues such as the stability of certificated marketers;

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Concentration of credit risk in certificated marketers (e.g., approximately eight certified marketers compete in Georgia’s retail gas market);

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Industry consolidation;

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Impact of acquisitions and divestitures;

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Changes in accounting policies and practices issued periodically by accounting standard-setting bodies;

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Interest rate fluctuations, financial market conditions, and economic conditions, generally;

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Uncertainties about environmental issues and the related impact of such issues;

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Impact of changes in weather upon the temperature sensitive portions of the business; and

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Other factors and the related impact of such factors.

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Atlanta Gas Light Company, a natural gas local distribution utility;

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Virginia Natural Gas, Inc., a natural gas local distribution utility;

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Chattanooga Gas Company, a natural gas local distribution utility;

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Sequent Energy Management, LP, formerly AGL Energy Services, Inc., an asset optimization and wholesale energy trading and marketing company;

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AGL Services Company, a service company established in accordance with the Public Utility Holding Company Act of 1935;

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AGL Capital Corporation, a financing subsidiary; and

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Several other non-utility subsidiaries.

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SouthStar Energy Services LLC, a joint venture among a subsidiary of AGL Resources and subsidiaries of Dynegy Holdings, Inc. and Piedmont Natural Gas Company. SouthStar markets natural gas and related services to residential and small commercial customers in Georgia and to industrial customers in the Southeast. SouthStar began marketing natural gas to customers in Georgia during the first quarter of fiscal 1999 under the trade name Georgia Natural Gas Services.

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AGL Investments, Inc., which directly or indirectly owns or manages certain non-utility businesses, including:

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AGL Propane Services, Inc., which has approximately 22% ownership interest in US Propane LLC. US Propane owns 34% of Heritage Propane Partners, which engages in the sale of propane and related products and services throughout the United States; and

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AGL Networks, LLC, which was formed in August, 2000 for the purpose of partnering with other telecommunication companies to serve Atlanta’s rapidly growing demand for high-speed network capacity. In April, 2001, the Georgia Public Service Commission granted AGL Networks’ Competitive Local Exchange Carrier License, which grants AGL Networks the rights to construct last-mile connectivity and provide dark fiber network services in the State of Georgia.

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AGL Capital Corporation, which was established to finance the acquisition of Virginia Natural Gas, to refinance existing short-term debt and to provide working capital to AGL Resources and its subsidiaries through a commercial paper program, the issuance of debt securities and other financing mechanisms.

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The Trust is a wholly-owned subsidiary of AGL Capital or AGL Resources, which files consolidated financial information under the Exchange Act.

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The Trust does not have any independent operations other than issuing the Trust Preferred Securities and Common Securities and purchasing the Junior Subordinated Debentures.

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The obligations of AGL Capital and AGL Resources under the Junior Subordinated Debentures and Trust Preferred Securities Guarantee have the effect of providing a full, irrevocable and unconditional guarantee of the Trust’s obligations under the Trust Preferred Securities. Holders of Trust Preferred Securities may, under certain circumstances, enforce these obligations directly against AGL Capital and AGL Resources.

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the title of the offered debt securities;

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any limit on the aggregate principal amount of the offered debt securities;

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the person or persons to whom interest on the offered debt securities shall be payable on any interest payment date if other than the person in whose name the offered debt security is registered on the regular record date;

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the date or dates on which the principal of the offered debt securities is payable;

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the rate or rates (or manner in which interest is to be determined) at which the offered debt securities will bear interest, if any, and the date from which such interest, if any, will accrue and the regular record date for the interest payable on the offered debt securities on any interest payment date;

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the periods within which, the prices at which and the terms and conditions upon which the offered debt securities may be redeemed, in whole or in part, at our option;

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our obligation, if any, to redeem or purchase the offered debt securities pursuant to any sinking fund or at the option of the holder and the price or prices at which and the terms and conditions upon which such offered debt securities will be redeemed or purchased;

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whether the offered debt securities are to be issued in whole or in part in the form of one or more global notes and, if so, the identity of the depositary for such global notes; and

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any events of default (in addition to those specified in the indenture) or other terms and conditions with respect to the offered debt securities that are not inconsistent with the terms of the indenture.

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to issue, register the transfer of or exchange debt securities during the period of 15 days prior to giving any notice of redemption or

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to issue, register the transfer of or exchange any debt security selected for redemption in whole or in part, except the unredeemed portion of any debt security being redeemed in part. (See Section 305.)

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failure to pay any interest on any debt security within 30 days after the same becomes due and payable;

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failure to pay principal of or any premium on any debt security within three (3) business days of when due;

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failure to perform, or breach of, any other covenant or warranty in the indenture (other than a covenant or warranty included in the indenture solely for the benefit of one or more series of debt securities other than that series), continued for 90 days after written notice to us by the trustee or by the holders of at least 25% in principal amount of the outstanding debt securities to us and the trustee as provided in the indenture;

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certain events of bankruptcy, insolvency, conservatorship, receivership or reorganization; and

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any other event of default provided with respect to the debt securities of that series. (See Section 801.)

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we have paid or deposited with the trustee a sum sufficient to pay:

(1)

all overdue interest on all debt securities of such series;

(2)

the principal of and premium, if any, on any debt securities of such series which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed hereof in such debt securities;

(3)

to the extent that payment of such interest is lawful, interest upon overdue interest at the rate or rates prescribed therefor in such debt securities;

(4)

all amounts due to the trustee under the indenture; and

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any other event or events of default with respect to the debt securities of such series, other than the nonpayment of the principal of the debt securities of such series which has become due solely by such declaration of acceleration, have been cured or waived as provided in the indenture. (See Section 802.)

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such direction will not be in conflict with any rule of law or with the indenture and would not involve the trustee in personal liability in circumstances where reasonable indemnity could not be adequate and

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the trustee may take any other action it deems proper which is not inconsistent with such direction. (See Section 812.)

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evidence the assumption by any of our successors of our obligations under the indenture or with respect to the debt securities;

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add to our covenants or surrender any of our rights under the indenture;

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add any events of default, in addition to those specified in the indenture, with respect to any series of outstanding debt securities;

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change or eliminate any provision of the indenture or add any new provision to the indenture; provided, however, that if such change, elimination or addition will adversely affect the interests of holders of debt securities of any series in any material respect, such change, elimination or addition will become effective with respect to such series only when there is no debt security of such series remaining outstanding under the indenture;

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provide collateral security for the debt securities;

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establish the form or terms of debt securities of any series;

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evidence the appointment of a successor trustee with respect to the debt securities of one or more series and to add to or change any of the provisions of the indenture as shall be necessary to provide for or to facilitate the administration of the trusts under the indenture by more than one trustee;

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provide for the procedures required to permit the utilization of a noncertificated system of registration for any series of debt securities;

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subject to certain conditions, change the place where debt securities may be transferred, exchanged or paid; or

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cure any ambiguity or inconsistency or make any other provisions with respect to matters and questions arising under the indenture, provided such provisions shall not adversely affect the interests of the holders of debt securities of any series in any material respect. (See Section 1201.)

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change the stated maturity of the principal of, or any installment of principal of or interest, if any, on, any debt security;

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reduce the principal amount of, or premium or interest, if any, on, any debt security;

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reduce the amount of principal of an original issue discount debt security payable upon acceleration of the maturity thereof;

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change the currency in which any principal of, or premium or interest, if any, on, any debt security is payable;

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impair the right to institute suit for the enforcement of any payment on or with respect to any debt security;

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reduce the percentage in principal amount of the outstanding debt securities of any series, the consent of whose holders is required for modification or amendment of the indenture or for waiver of compliance with certain provisions of the indenture or for waiver of certain defaults;

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reduce the requirements for quorum or voting; or

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amend certain other provisions of the indenture relating to amendments and defaults.

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the payment in full of the principal of (and premium, if any) and interest on all of the debt securities of such series or the deposit with the trustee of an amount in cash or eligible obligations (or a combination thereof) sufficient for such payment or redemption, in accordance with the indenture;

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the payment by us of all other sums required under the indenture; and

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the delivery of a certificate by us to the trustee stating that all conditions relating to the satisfaction and discharge of the indenture have been complied with. (See Section 702.)

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with respect to debt securities denominated in United States dollars, government obligations (which include direct obligations of, or obligations unconditionally guaranteed by, the United States of America entitled to the benefit of the full faith and credit thereof and certificates, depositary receipts or other instruments which evidence a direct ownership interest in such obligations or in any specific interest or principal payments due in respect thereof); and

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with respect to debt securities denominated in a currency other than United States Dollars or in a composite currency, such other obligations or instruments as shall be specified with respect to such debt securities, as contemplated by the indenture.

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declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock (which includes common and preferred stock);

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make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any of its debt securities that rank equal in priority with or junior in right of payment to, with respect to AGL Capital, the Junior Subordinated Debentures or with respect to AGL Resources, debt that is subordinated to its Senior Indebtedness; or

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make any guarantee payments with respect to any guarantee of the debt securities of any of their respective subsidiaries if such guarantees rank equal in priority with or junior in right of payment to, with respect to AGL Capital, the Junior Subordinated Debentures or with respect to AGL Resources, debt that is subordinated to its Senior Indebtedness (other than (a) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, common stock, (b) any declaration of a dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the guarantees, (d) the purchase of fractional shares resulting from a reclassification of capital stock or the exchange or conversion of one class, or series of capital stock for another class or series of capital stock, and (e) the purchase of fractional interests in shares of capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged).

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in the case of the repayment of the Junior Subordinated Debentures on the Stated Maturity Date, the Maturity Redemption Price (equal to the principal of, and accrued interest on, the Junior Subordinated Debentures);

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in the case of the optional prepayment of the Junior Subordinated Debentures prior to a date to be specified in the Trust Agreement upon the occurrence and continuation of a Tax Event or an Investment Company Act Event, the Special Event Redemption Price (equal to the Special Event Prepayment Price in respect of the Junior Subordinated Debentures); and

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in the case of the optional prepayment of the Junior Subordinated Debentures on or after a date to be specified in the Trust Agreement, the Optional Redemption Price (equal to the Optional Prepayment Price in respect of the Junior Subordinated Debentures). See “Description of Junior Subordinated Debentures—Optional Prepayment” and “—Special Event Prepayment.”

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with respect to a redemption of the Trust Preferred Securities, Trust Preferred Securities having a Liquidation Amount equal to the principal amount of Junior Subordinated Debentures to be paid in accordance with their terms and

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with respect to a distribution of Junior Subordinated Debentures upon the liquidation of the Trust, Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Trust Preferred Securities of the holder to whom such Junior Subordinated Debentures are distributed.

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certain events of bankruptcy, dissolution or liquidation of AGL Capital;

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the distribution of a Like Amount of the Junior Subordinated Debentures to the holders of the Trust Preferred Securities, if AGL Capital, as Sponsor, has given written direction to the Property Trustee to terminate the Trust (which direction is optional and, except as described above, wholly within the discretion of AGL Capital, as Sponsor);

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redemption of all of the Trust Preferred Securities as described under “—Redemption;”

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expiration of the term of the Trust; and

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the entry of an order for the dissolution of the Trust by a court of competent jurisdiction.

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the Trust Preferred Securities will no longer be deemed to be outstanding;

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each registered global certificate, if any, representing Trust Preferred Securities and held by DTC or its nominee will receive a registered global certificate or certificates representing the Junior Subordinated Debentures to be delivered upon such distribution; and

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any certificates representing Trust Preferred Securities not held by DTC or its nominee will be deemed to represent Junior Subordinated Debentures having a principal amount equal to the Liquidation Amount of such Trust Preferred Securities, and bearing accrued and unpaid interest in an amount equal to the accumulated and unpaid Distributions on such Trust Preferred Securities until such certificates are presented to the Administrative Trustees or their agent for cancellation, whereupon AGL Capital will issue to such holder, and the Debenture Trustee will authenticate, a certificate representing such Junior Subordinated Debentures.

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default by the Trust or the Property Trustee in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days;

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default by the Trust or the Property Trustee in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or

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default in the performance, or breach, in any material respect, of any other covenant or warranty of the Trustees in the Declaration, and continuation of such default or breach for a period of 90 days after notice to the defaulting Trustee or Trustees.

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such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Trust Securities or (b) substitutes for the Trust Preferred Securities other securities having substantially the same terms as the Trust Preferred Securities (the “Successor Securities”) so long as the Successor Securities rank the same as the Trust Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise;

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AGL Capital expressly appoints a trustee of such successor entity possessing the same powers and duties as the Property Trustee as the holder of the Junior Subordinated Debentures;

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the Trust Preferred Securities or any Successor Securities are listed, or any Successor Securities will be listed upon notification of issuance, on any national securities exchange, quotation system or other organization on which the Trust Preferred Securities are then listed or quoted, if any;

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such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Trust Preferred Securities (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization;

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such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Trust Preferred Securities (including any Successor Securities) in any material respect;

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such successor entity has a purpose identical to that of the Trust, (vii) prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, AGL Capital has received an opinion from independent counsel to the Trust experienced in such matters to the effect that (a) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the holders of the Trust Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”); and

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AGL Resources, AGL Capital or any permitted successor or assignee owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee.

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to cure any ambiguity, correct or supplement any provisions in the Trust Agreement that may be inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under the Trust Agreement, which shall not be inconsistent with the other provisions of the Trust Agreement; or

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to modify, eliminate or add to any provisions of the Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are outstanding or to ensure that the Trust will not be required to register as an “investment company” under the Investment Company Act; provided, however, that such action shall not adversely affect in any material respect the interests of the holders of the Trust Securities, and any amendments of the Trust Agreement shall become effective when notice thereof is given to the holders of the Trust Securities.

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with the consent of holders representing a majority (based upon Liquidation Amount) of the outstanding Trust Preferred Securities; and

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upon receipt by the Administrative Trustees of an opinion of counsel to the effect that such amendment or the exercise of any power granted to the Administrative Trustees in accordance with such amendment will not affect the Trust’s status as a grantor trust for United States federal income tax purposes or the Trust’s exemption from status as an “investment company” under the Investment Company Act.

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change the amount or timing of any Distribution on the Trust Preferred Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Trust Preferred Securities as of a specified date or

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restrict the right of a holder of Trust Preferred Securities to institute suit for the enforcement of any such payment on or after such date.

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direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or executing any trust or power conferred on such Property Trustee with respect to the Junior Subordinated Debentures;

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waive certain past defaults under the Indenture;

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exercise any right to rescind or annul a declaration of acceleration of the maturity of the principal of the Junior Subordinated Debentures; or

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consent to any amendment, modification or termination of the Indenture or the Junior Subordinated Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the holders of a majority in Liquidation Amount of all outstanding Trust Preferred Securities provided, however, that where a consent under the Indenture would require the consent of each holder of Junior Subordinated Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior approval of each holder of the Trust Preferred Securities.

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any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interests in the Global Trust Preferred Securities, or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Trust Preferred Securities or

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any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

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DTC notifies the Trust that it is unwilling or unable to continue as Depositary for the Global Trust Preferred Security and the Trust thereupon fails to appoint a successor Depositary within 90 days or has ceased to be a clearing agency registered under the Exchange Act;

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AGL Capital in its sole discretion elects to cause the issuance of the Trust Preferred Securities in certificated form; or

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there shall have occurred and be continuing an Event of Default or any event which after notice or lapse of time or both would be an Event of Default under the Trust Agreement.

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check mailed to the address of the Person entitled thereto as such address shall appear in the register for Junior Subordinated Debentures or

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by transfer to an account maintained by the Person entitled thereto as specified in such register, provided that proper transfer instructions have been received by the relevant Record Date.

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declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock (which includes common and preferred stock); or

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make any payment of principal, interest or premium, if any, on or repay, repurchase or redeem any of its debt securities that rank equal in priority with or junior in right of payment to, with respect to AGL Capital, the Junior Subordinated Debentures or with respect to AGL Resources, debt that is subordinated to its Senior Indebtedness; or

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make any guarantee payments with respect to any guarantee of the debt securities of any of their respective subsidiaries if such guarantee ranks equal in priority with or junior in right of payment to, with respect to AGL Capital, the Junior Subordinated Debentures or with respect to AGL Resources, debt that is subordinated to its Senior Indebtedness (other than (a) dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, common stock, (b) any declaration of a dividend in connection with the implementation of a stockholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (c) payments under the Guarantee, (d) the purchase of fractional shares resulting from a reclassification of capital stock or the exchange or conversion of one class or series of capital stock for another class or series of capital stock and (e) the purchase of fractional interests in shares of capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged).

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the date the Distributions on the Trust Preferred Securities would have been payable except for the election to begin or extend such Extended Interest Payment Period or

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the date the Administrative Trustees are required to give notice to any securities exchange or other quotation system or to holders of Trust Preferred Securities of the record date or the date such Distributions are payable, but in any event not less than one Business Day prior to such record date. The Debenture Trustee shall give notice of AGL Capital’s election to begin or extend a new Extended Interest Payment Period to the holders of the Trust Preferred Securities. There is no limitation on the number of times that AGL Capital may elect to begin an Extended Interest Payment Period.

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the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to all or part of the income received or accrued on the Junior Subordinated Debentures or the Trust Preferred Securities;

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interest payable by AGL Capital on the Junior Subordinated Debentures or the Trust Preferred Securities is not, or within 90 days of the date of such opinion will not be, deductible by AGL Capital, in whole or in part, for United States federal income tax purposes; or

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the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

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extend the Stated Maturity, or reduce the principal amount of the Junior Subordinated Debentures or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption, or impair or affect the right of any holder of Junior Subordinated Debentures to institute suit for payment or

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reduce the percentage of principal amount of Junior Subordinated Debentures, the holders of which are required to consent to any such modification of the Indenture.

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failure for 30 days to pay any interest on the Junior Subordinated Debentures or any Other Debentures, when due (subject to the deferral of any due date in the case of an Extended Interest Payment Period);

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failure to pay any principal or premium, if any, on the Junior Subordinated Debentures or any Other Debentures within three Business Days of when due whether at maturity, upon redemption, by declaration of acceleration of maturity or otherwise;

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failure to observe or perform in any material respect certain other covenants or warranties contained in the Indenture for 90 days after written notice to AGL Capital from the Debenture Trustee or the holders of at least 25% in aggregate outstanding principal amount of Junior Subordinated Debentures; or

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certain events of bankruptcy, insolvency or reorganization of AGL Capital.

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in case AGL Capital consolidates with or merges into another Person or conveys or transfers its properties and assets substantially as an entirety to any Person, the successor Person is organized under the laws of the United States or any State or the District of Columbia, and such successor Person expressly assumes AGL Capital’s obligations on the Junior Subordinated Debentures;

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immediately after giving effect thereto, no Debenture Event of Default, and no event which, after notice or lapse of time or both, would become a Debenture Event of Default, shall have occurred and be continuing; and

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certain other conditions as prescribed in the Indenture are met.

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have become due and payable or

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will become due and payable at maturity within one year, and AGL Capital deposits or causes to be deposited with the Debenture Trustee funds, in trust, for the purpose and in an amount sufficient to pay and discharge the entire indebtedness on the Junior Subordinated Debentures not previously delivered to the Debenture Trustee for cancellation, for the principal (and premium, if any) and interest to the date of the deposit or to the Stated Maturity Date, as the case may be, then the Indenture will cease to be of further effect (except as to AGL Capital’s obligations to pay all other sums due pursuant to the Indenture and to provide the officers’ certificates and opinions of counsel described therein), and AGL Capital will be deemed to have satisfied and discharged the Indenture.

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any Senior Indebtedness of AGL Capital is not paid when due;

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any applicable grace period with respect to such default has ended and such default has not been cured or waived or ceased to exist; or

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the maturity of any Senior Indebtedness of AGL Capital has been accelerated because of a default.

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to maintain directly or indirectly 100% ownership of the Common Securities of the Trust (provided that certain successors which are permitted pursuant to the Indenture may succeed to AGL Capital’s ownership of the Common Securities);

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not to voluntarily terminate, wind up or liquidate the Trust, except in connection with a distribution of Junior Subordinated Debentures to the holders of the Trust Preferred Securities in liquidation of the Trust; and

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to use its reasonable efforts, consistent with the terms and provisions of the Trust Agreement to cause the Trust to remain classified as (a) a business trust, except in connection with certain mergers, consolidations or amalgamations permitted by the Trust Agreement, and (b) a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes.

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any accumulated and unpaid Distributions required to be paid on Trust Preferred Securities, to the extent that the Trust has funds on hand legally available therefor at such time;

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the applicable Redemption Price with respect to Trust Preferred Securities called for redemption, to the extent that the Trust has funds on hand legally available therefor at such time; or

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upon a voluntary or involuntary termination and liquidation of the Trust, the lesser of (a) the Liquidation Distribution, to the extent that the Trust has funds on hand legally available therefor, and (b) the amount of assets of the Trust remaining available for distribution to holders of Trust Preferred Securities. AGL Resources’ obligation to make a Trust Preferred Guarantee Payment may be satisfied by direct payment of the required amounts by AGL Resources to the holders of the Trust Preferred Securities or by causing the Trust to pay such amounts to such holders.

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the aggregate principal amount or Prepayment Price of the Junior Subordinated Debentures will be equal to the sum of the Liquidation Amount or Redemption Price, as applicable, of the Trust Preferred Securities and Common Securities;

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the interest rate and interest and other payment dates on the Junior Subordinated Debentures will match the interest rate and interest and other payment dates for the Trust Securities;

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AGL Capital shall pay for all and any costs, expenses and liabilities of the Trust except the Trust’s obligations to holders of Trust Preferred Securities under such Trust Preferred Securities; and

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the Trust Agreement will provide that the Trust is not authorized to engage in any activity that is not consistent with the limited purposes thereof.

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10 days following a public announcement that a person or group of affiliated or associated persons have acquired beneficial ownership of 10% or more of the outstanding shares of our common stock or

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10 business days (or such later date as may be determined by action of the board of directors) following the commencement of, or announcement of, a tender offer, the consummation of which would result in the beneficial ownership by a person or group of 10% or more of the outstanding shares of common stock,

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prior to becoming an interested shareholder, obtained the approval of our board of directors for either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder;

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becomes the beneficial owner of at least 90% of our outstanding voting stock in the same transaction in which the shareholder became an interested shareholder, excluding for purposes of determining the number of shares outstanding those shares owned by officers, directors, subsidiaries and certain employee stock plans; or

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subsequent to the acquisition of 10% or more of our outstanding voting stock, acquires additional shares resulting in ownership of at least 90% of our outstanding voting stock and obtains approval of the business combination by the holders of a majority of our shares, other than those shares held by an interested shareholder, officers, directors, subsidiaries and certain employee stock plans.

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certain valuation, consideration and pricing issues are satisfied and specified in our articles of incorporation; or

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if both of the following conditions have been satisfied: (i) the business combination has been approved by two-thirds of the continuing directors and (ii) at the time of such approval, the continuing directors comprised at least a majority of the board of directors.

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a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting;

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the name and address, as they appear on our corporate books, of the shareholder proposing such business;

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the class and number of shares of which are beneficially owned by such shareholder;

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the dates upon which the shareholder acquired such shares;

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documentary support for any claim of beneficial ownership;

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any material interest of such shareholder in such business;

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a statement in support of the matter and, for proposals sought be included in our proxy statement, any other information required by Securities and Exchange Commission Rule 14a-8; and

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as to each person whom the shareholder proposes to nominate for election or reelection as director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and evidence satisfactory to us that such nominee has no interests that would limit their ability to fulfill their duties of office).

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Subject to the rights of the holders of preferred stock ranking prior and superior to the junior preferred stock with respect to dividends, the holders of the junior preferred stock, in preference to the holders of common stock, and of any other stock ranking junior to the junior preferred stock, are entitled to receive, when, as and if declared by the board of directors out of funds legally available for the purpose, quarterly dividends in an amount per share equal to the greater of $1.00 or, subject to adjustment, a multiple of all dividends declared on the common stock. The dividends are cumulative on outstanding shares of junior preferred stock.

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Each share of junior preferred stock entitles the holder to 100 votes on all matters upon which the holders of the common stock are entitled to vote.

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Any shares of junior preferred stock that are purchased or otherwise acquired by us in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof.

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Upon any liquidation, dissolution or winding up of us, with certain exceptions, no distribution shall be made to the holders of the common stock or of shares of any other stock ranking junior, upon liquidation, dissolution or winding up, to the junior preferred stock unless, prior thereto, the holders of shares of junior preferred stock have received $100.00 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not earned or declared, to the date of such payment.

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In case we enter into any consolidation, merger, combination, share exchange or other transaction in which the shares of common stock are converted into, exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of junior preferred stock will be similarly converted into, exchanged for or changed into an amount per share (subject to the provisions for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which each share of common stock is converted or exchanged.

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The shares of junior preferred stock are not redeemable from any holder.

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The junior preferred stock ranks, with respect to the payment of dividends and the distribution of assets upon our liquidation, dissolution or winding up, junior to all other classes and series of preferred stock and senior to the common stock.

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to the public through a group of underwriters managed or co-managed by one or more underwriters;

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through one or more agents;

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directly to purchasers; or

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through a combination of any such methods of sale.

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at a fixed price or prices, which may be changed;

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at market prices prevailing at the time of sale;

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at prices related to those prevailing market prices; or

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at negotiated prices.

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the name or names of any agents or underwriters;

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the public offering or purchase price;

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any discounts and commissions to be allowed or paid to dealers; and

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any exchanges on which the securities will be listed.

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