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| Underwriting | Proceeds to | |||||
| Price to Public (1) | Discounts | Pioneer (1) | ||||
|
Per note
|
99.903% | 0.65% | 99.253% | |||
|
Total
|
$449,563,500 | $2,925,000 | $446,638,500 |
| Barclays Capital |
| Harris Nesbitt |
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| Issuer | Pioneer Natural Resources Company. | |
| Securities Offered | $450 million aggregate principal amount of 6.875% Senior Notes due 2018. | |
| Maturity | May 1, 2018. | |
| Interest Payment Dates | May 1 and November 1 of each year, commencing November 1, 2006. Interest on the notes will accrue from May 1, 2006, for the first interest payment and from the most recent interest payment date after the first interest payment. | |
| Ranking | The notes will be our senior unsecured obligations and will rank equally with all of our other senior unsecured indebtedness. | |
| Optional Redemption | We may redeem the notes, in whole or in part at any time and from time to time, at the redemption price set forth under “Description of Notes— Optional Redemption.” | |
| Form and Denomination | The notes will be issued in fully registered form. The notes will be represented by one or more global notes, deposited with a trustee as a custodian for DTC and registered in the name of Cede & Co., DTC’s nominee. Beneficial interests in the global notes will be shown on, and any transfer will be effective only through, records maintained by DTC and its participants. | |
| Covenants | The indenture under which the notes will be issued will limit, subject to the exceptions described herein, our ability to place liens on our assets and those of our subsidiaries without securing the notes equally and ratably with the other indebtedness secured by such liens and will limit our ability to engage in certain sale-leaseback transactions. The indenture will also include requirements that must be met if we consolidate or merge with, or sell, lease or convey all or substantially all of our assets to, another entity. See “Description of the Notes— Certain Covenants.” | |
| Use of Proceeds | We plan to use the net proceeds toward the repurchase of up to $350 million aggregate principal amount of our 6.50% Senior Notes due 2008 pursuant to a tender offer that we plan to commence soon after pricing of this offering. All remaining proceeds will be used for general corporate purposes. | |
| Events of Default | For a discussion of events that will permit acceleration of the payment of the principal of and accrued interest on the notes, see “Description of the Notes— Events of Default.” | |
| Listing | We do not intend to list the notes on any securities exchange. |
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| Governing Law | The notes and the indenture will be governed by, and construed in accordance with, the laws of the State of New York. | |
| Book-Entry Depositary | DTC | |
| Trustee | The Bank of New York Trust Company, N.A. |
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| Year Ended December 31, | ||||||||||||||||||||||||
| 2005 | ||||||||||||||||||||||||
| Historical | Pro Forma (b) | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||
|
Ratio of earnings to fixed charges
(a)
|
6.40 | 4.50 | 5.30 | 4.13 | 1.08 | 1.62 | ||||||||||||||||||
| (a) | The ratio has been computed by dividing earnings by fixed charges. For purposes of computing the ratio: |
| • | earnings consist of income from continuing operations before income taxes and cumulative effect of change in accounting principle, plus fixed charges and capitalized interest; and | |
| • | fixed charges consist of interest expense, capitalized interest, and the portion of rental expense deemed to be representative of the interest component of rental expense. |
| (b) | The pro forma ratio reflects the following adjustments: |
| • | the sales of our deepwater Gulf of Mexico assets and Argentina assets; | |
| • | the receipt of $1.975 billion in net proceeds from the sales of our deepwater Gulf of Mexico assets and Argentina assets; and | |
| • | the application of $900 million of the proceeds from the sale of our deepwater Gulf of Mexico assets and Argentina assets to eliminate outstanding indebtedness under our credit facility. |
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•
on a consolidated historical basis;
•
on a consolidated pro forma basis to reflect:
•
the receipt on December 31, 2005, of estimated net proceeds
of $1.975 billion from the sales of our deepwater Gulf of
Mexico assets and Argentina assets; and
•
the application of $900 million of the proceeds from the
sales of our deepwater Gulf of Mexico assets and Argentina
assets to eliminate outstanding indebtedness under our credit
facility;
•
on a consolidated pro forma as adjusted basis to reflect the pro
forma adjustments and:
•
the receipt of estimated net proceeds of approximately
$447 million from the issuance of our notes in this
offering; and
•
the application of $350 million of the net proceeds from
the issuance of our notes in this offering to reduce outstanding
indebtedness under our 6.50% senior notes due 2008 pursuant
to a tender offer that we plan to commence soon after the
pricing of this offering.
| December 31, 2005 | ||||||||||||||||
| Pro Forma As | ||||||||||||||||
| Historical | Pro Forma | Adjusted (a) | ||||||||||||||
| (in thousands) | ||||||||||||||||
|
Cash and cash equivalents
|
$ | 18,802 | $ | 915,899 | $ | 1,012,462 | ||||||||||
|
Long-term debt:
|
||||||||||||||||
|
Line of credit
|
$ | 900,000 | $ | — | $ | — | ||||||||||
|
81/4% senior
notes due 2007
|
32,075 | 32,075 | 32,075 | |||||||||||||
|
6.50% senior notes due 2008
|
350,000 | 350,000 | — | |||||||||||||
|
5.875% senior notes due 2012
|
6,110 | 6,110 | 6,110 | |||||||||||||
|
5.875% senior notes due 2016
|
526,875 | 526,875 | 526,875 | |||||||||||||
|
6.875% senior notes due 2018
|
— | — | 450,000 | |||||||||||||
|
4.75% senior convertible notes
due 2021
|
100,000 | 100,000 | 100,000 | |||||||||||||
|
7.20% senior notes due 2028
|
250,000 | 250,000 | 250,000 | |||||||||||||
| 2,165,060 | 1,265,060 | 1,365,060 | ||||||||||||||
|
Issuance discounts and premiums, net
|
(102,347 | ) | (102,347 | ) | (102,341 | ) | ||||||||||
|
Net deferred fair value hedge losses
|
(4,301 | ) | (4,301 | ) | (3,458 | ) | ||||||||||
|
Total long-term debt
|
2,058,412 | 1,158,412 | 1,259,261 | |||||||||||||
|
Stockholders’ equity:
|
||||||||||||||||
|
Common stock, $.01 par value
|
1,470 | 1,470 | 1,470 | |||||||||||||
|
Additional paid-in capital
|
3,775,794 | 3,775,794 | 3,775,794 | |||||||||||||
|
Treasury stock
|
(882,382 | ) | (882,382 | ) | (882,382 | ) | ||||||||||
|
Deferred compensation
|
(45,827 | ) | (42,091 | ) | (42,091 | ) | ||||||||||
|
Retained earnings (accumulated
deficit)
|
(184,320 | ) | 358,106 | 357,289 | ||||||||||||
|
Accumulated other comprehensive
income (loss):
|
||||||||||||||||
|
Net deferred hedge losses, net of
tax
|
(506,636 | ) | (374,807 | ) | (374,807 | ) | ||||||||||
|
Cumulative translation adjustment
|
59,003 | 52,615 | 52,615 | |||||||||||||
|
Total stockholders’ equity
|
2,217,102 | 2,888,705 | 2,887,888 | |||||||||||||
|
Total capitalization
|
$ | 4,275,514 | $ | 4,047,117 | $ | 4,147,149 | ||||||||||
| (a) | The foregoing table does not reflect the purchase of the remaining $359 million of stock repurchases authorized under our existing $1 billion stock repurchase program. It also excludes (1) gains or losses on derivatives that reduced our interest rate risk associated with the issuance of our notes in this offering and (2) costs associated with the tender offer for our 6.50% senior notes due 2008. |
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•
our general unsecured senior obligations;
•
equal (“pari passu”) in ranking with all of our
existing and future senior unsecured indebtedness; and
•
senior in right of payment to all of our existing and future
subordinated indebtedness.
•
the sum of the present values, calculated as of the date of
redemption, of:
•
each interest payment that, but for such redemption, would have
been payable on the note (or portion of the note) being redeemed
on each interest payment date occurring after the date of
redemption (excluding any accrued interest for the period prior
to the date of redemption); and
•
the principal amount that, but for such redemption, would have
been payable at the final maturity of the note (or portion of
the note) being redeemed; over
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•
the principal amount of the note (or portion of the note) being
redeemed.
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•
a limited purpose trust company organized under the laws of the
State of New York;
•
a “banking organization” within the meaning of the New
York Banking Law;
•
a member of the Federal Reserve System;
•
a “clearing corporation” within the meaning of the New
York Uniform Commercial Code, as amended; and
•
a “clearing agency” registered under Section 17A
of the Exchange Act.
•
upon deposit of each global note, DTC will credit the accounts
of participants in DTC designated by the underwriters with an
interest in the global note; and
•
ownership of the notes will be shown on, and the transfer of
ownership of the notes will be effected only through, records
maintained by DTC, with respect to the interests of participants
in DTC, and the records of participants and indirect
participants, with respect to the interests of persons other
than participants in DTC.
•
will not be entitled to have notes represented by the global
note registered in their names;
•
will not receive or be entitled to receive physical delivery of
certificated notes; and
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S-15
•
will not be considered the owners or holders of the notes under
the indenture for any purpose, including with respect to the
giving of any direction, instruction, or approval to the trustee
under the indenture.
•
the Depositary notifies us that it is unwilling or unable to
continue as depositary for the global notes or if at any time
the depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934 and a successor depositary
is not appointed by us within 90 days;
•
we in our discretion at any time determine not to have all of
the notes represented by the global notes;
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•
an event of default has occurred and is continuing; or
•
upon the occurrence of certain other events.
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•
failure to pay interest on Pioneer’s debt securities of
that series, or any payment with respect to the related coupons,
if any, for 30 days past the applicable due date;
•
failure to pay principal of, or premium, if any, on
Pioneer’s debt securities of that series when due, whether
at maturity, upon redemption, by declaration, upon required
repurchase or otherwise;
•
failure to make any sinking fund payment on debt securities of
that series when due;
•
failure to perform any covenant or agreement in the indenture,
including failure to comply with the provisions of the indenture
relating to consolidations, mergers and sales of assets, but
other than a covenant included in the indenture solely for the
benefit of a different series of Pioneer’s debt securities,
which failure to comply continues for 60 days after written
notice from the trustee or holders of 25% of the outstanding
principal amount of the debt securities of that series as
provided in the indenture;
•
failure to pay within any applicable grace period after final
maturity any indebtedness of Pioneer or its subsidiaries
totaling more than $20 million, or the acceleration of more
than $20 million of indebtedness of Pioneer or its
subsidiaries under the terms of the applicable debt instrument,
if the acceleration is not rescinded or the indebtedness is not
paid within 10 days after written notice from the trustee
or holders of 25% of the outstanding principal amount of the
debt securities of that series as provided in the indenture;
•
specified events relating to the bankruptcy, insolvency or
reorganization of Pioneer or any of its significant
subsidiaries; and
•
any other event of default provided with respect to debt
securities of that series.
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S-18
•
the holder gives the trustee written notice of a continuing
event of default with respect to a series of Pioneer’s debt
securities held by that holder;
•
holders of at least 25% of the aggregate principal amount of
that series make a request, in writing, and offer reasonable
indemnity, to the trustee for the trustee to institute the
requested proceeding;
•
the trustee does not receive direction contrary to the
holder’s request within 60 days following such notice,
request and offer of indemnity under the terms of the applicable
indenture; and
•
the trustee does not institute the requested proceeding within
60 days following such notice.
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S-19
•
the sum of:
•
discounted future net revenues from proved oil and gas reserves
of us and our subsidiaries calculated in accordance with SEC
guidelines before any provincial, territorial, state, federal or
foreign income taxes, as estimated by us in a reserve report
prepared as of the end of our most recently completed fiscal
year for which audited financial statements are available;
•
as increased by, as of the date of determination, the estimated
discounted future net revenues from:
•
estimated proved oil and gas reserves acquired since such
year-end, which reserves were not reflected in such year-end
reserve report; and
•
estimated oil and gas reserves attributable to upward revisions
of estimates of proved oil and gas reserves since such year-end
due to exploration, development or exploitation activities, in
each case calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year-end reserve report);
•
and decreased by, as of the date of determination, the estimated
discounted future net revenues from:
•
estimated proved oil and gas reserves produced or disposed of
since such year-end; and
•
estimated oil and gas reserves attributable to downward
revisions of estimates of proved oil and gas reserves since such
year-end due to changes in geological conditions or other
factors which would, in accordance with standard industry
practice, cause such revisions, in each case calculated on a
pre-tax basis and substantially in accordance with SEC
guidelines (utilizing the prices utilized in such year-end
reserve report);
in each case as estimated by our petroleum engineers or any
independent petroleum engineers engaged by us for that purpose;
plus
•
the capitalized costs that are attributable to oil and gas
properties of us and our subsidiaries to which no proved oil and
gas reserves are attributable, based on our books and records as
of a date no earlier than the date of our latest available
annual or quarterly financial statements; plus
•
the net working capital on a date no earlier than the date of
our latest annual or quarterly financial statements; and plus
•
the greater of:
•
the net book value of other tangible assets of us and our
subsidiaries, as of a date no earlier than the date of our
latest annual or quarterly financial statement; and
•
the appraised value, as estimated by independent appraisers, of
other tangible assets of us and our subsidiaries, as of a date
no earlier than the date of our latest audited financial
statements; minus
•
the sum of:
•
minority interests;
•
any net gas balancing liabilities of us and our subsidiaries
reflected in our latest audited financial statements;
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•
to the extent included in the sum obtained under the first item
in this definition, the discounted future net revenues,
calculated in accordance with SEC guidelines (utilizing the
prices utilized in our year-end reserve report), attributable to
reserves that are required to be delivered to third parties to
fully satisfy the obligations of us and our subsidiaries with
respect to volumetric production payments (determined, if
applicable, using the schedules specified with respect
thereto); and
•
the discounted future net revenues, calculated in accordance
with SEC guidelines, attributable to reserves subject to
dollar-denominated production payments which, based on the
estimates of production and price assumptions included in
determining the discounted future net revenues specified in the
first item in the definition, would be necessary to fully
satisfy the payment obligations of us and our subsidiaries with
respect to dollar-denominated production payments (determined,
if applicable, using the schedules specified with respect
thereto).
•
any liability, contingent or otherwise, of such person:
•
for borrowed money (whether or not the recourse of the lender is
to the whole of the assets of such person or only to a portion
thereof);
•
evidenced by a note, bond, debenture or similar
instrument; or
•
for the payment of money relating to a capitalized lease
obligation or other obligation (whether issued or assumed)
relating to the deferred purchase price of property;
•
all conditional sale obligations and all obligations under any
title retention agreement (even if the rights and remedies of
the seller under such agreement in the event of default are
limited to repossession or sale of such property);
•
all obligations for the reimbursement of any obligor on any
letter of credit, banker’s acceptance or similar credit
transaction other than as entered into in the ordinary course of
business;
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•
all indebtedness of others of the type referred to in the
preceding four items hereof secured by (or for which the holder
of such indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on any asset or property
(including, without limitation, leasehold interests and any
other tangible or intangible property) of such person, whether
or not such indebtedness is assumed by such person or is not
otherwise such person’s legal liability; provided that if
the obligations so secured have not been assumed in full by such
person or are otherwise not such person’s legal liability
in full, the amount of such indebtedness for the purposes of
this definition shall be limited to the lesser of the amount of
such indebtedness secured by such Lien or the fair market value
of the assets or the property securing such Lien;
•
all indebtedness of others of the type referred to in the
preceding five items hereof (including all interest and
dividends on any Indebtedness or preferred stock of any other
person the payment of which is) guaranteed, directly or
indirectly, by such person or that is otherwise its legal
liability or which such person has agreed to purchase or
repurchase or in respect of which such person has agreed
contingently to supply or advance funds; and
•
to the extent not otherwise included in this definition,
obligations in respect of hedging obligations.
•
pledges or deposits by such person under worker’s
compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness)
or leases to which such person is a party, or deposits to secure
public or statutory obligations of such person or deposits of
cash or United States government bonds to secure performance,
surety or appeal bonds to which such person is a party or which
are otherwise required of such person, or deposits as security
for contested taxes or import duties or for the payment of rent
or other obligations of like nature, in each case incurred in
the ordinary course of business;
•
Liens imposed by law, such as carriers’,
warehousemen’s, laborers’, materialmen’s,
landlords’, vendors’, workmen’s, operators’,
producers’ (including those arising pursuant to
Article 9.343 of the Texas Uniform Commercial Code or other
similar statutory provisions of other states with respect to
production purchased from others) and mechanics’ Liens, in
each case for sums not yet due or being contested in good faith
by appropriate proceedings;
•
Liens for property taxes, assessments and other governmental
charges or levies not yet delinquent or subject to penalties for
nonpayment or which are being contested in good faith by
appropriate proceedings;
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S-22
•
minor survey exceptions, minor encumbrances, easements or
reservations of or with respect to, or rights of others for or
with respect to, licenses,
rights-of-way, sewers,
electric and other utility lines and usages, telegraph and
telephone lines, pipelines, surface use, operation of equipment,
permits, servitudes and other similar matters or zoning or other
restrictions as to the use of real property or Liens incidental
to the conduct of the business of such person or to the
ownership of its properties which were not incurred in
connection with Indebtedness and which do not in the aggregate
materially adversely affect the value of such properties or
materially impair their use in the operation of the business of
such person;
•
Liens existing or provided for under the terms of agreements
existing on the date the notes were originally issued;
•
Liens on property or assets of, or any shares of stock of or
secured debt of, any person at the time we or any of our
subsidiaries acquired the property or the person owning such
property, including any acquisition by means of a merger or
consolidation with or into us or any of our subsidiaries;
•
Liens securing a hedging obligation so long as such hedging
obligation is of the type customarily entered into in connection
with, and is entered into for the purpose of, limiting risk;
•
Liens upon specific properties of us or any of our subsidiaries
securing Indebtedness incurred in the ordinary course of
business to provide all or part of the funds for the
exploration, drilling or development of those properties;
•
purchase money liens and liens securing certain non-recourse
indebtedness;
•
Liens securing only Indebtedness of one of our wholly-owned
subsidiaries to us or to one or more of our wholly-owned
subsidiaries;
•
Liens on any property to secure bonds for the construction,
installation or financing of pollution control or abatement
facilities or other forms of industrial revenue bond financing
or Indebtedness issued or guaranteed by the United States, any
state or any department, agency or instrumentality thereof;
•
government contract liens;
•
Liens in respect of production payments and reserve sales;
•
Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of defeasing Indebtedness
of us or any of our subsidiaries;
•
legal or equitable encumbrances deemed to exist by reason of
negative pledges or the existence of any litigation or other
legal proceeding and any related lis pendens filing
(excluding any attachment prior to judgment, judgment lien or
attachment lien in aid of execution on a judgment);
•
rights of a common owner of any interest in property held by
such person;
•
farmout, carried working interest, joint operating, unitization,
royalty, overriding royalty, sales and similar agreements
relating to the exploration or development of, or production
from, oil and gas properties entered into in the ordinary course
of business;
•
any defects, irregularities or deficiencies in title to
easements,
rights-of-way or other
properties that do not in the aggregate materially adversely
affect the value of such properties or materially impair their
use in the operation of the business of such person; and
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S-23
•
Liens to secure any refinancing, refunding, extension, renewal
or replacement (or successive refinancings, refundings,
extensions, renewals or replacements), as a whole or in part, of
any Indebtedness secured by any Lien referred to in the
foregoing fifth through thirteenth items of this definition;
provided, however, that (i) such new Lien shall be limited
to all or part of the same property that secured the original
Lien, plus improvements on such property, and (ii) the
Indebtedness secured by such Lien at such time is not increased
to any amount greater than the sum of (A) the outstanding
principal amount or, if greater, committed amount of the
Indebtedness described under the fifth through thirteenth items
of this definition at the time the original Lien became a
Permitted Lien and (B) an amount necessary to pay any fees
and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement.
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| Principal Amount | |||||
| Underwriters | of Notes | ||||
|
Deutsche Bank Securities
Inc.
|
$ | 283,757,962 | |||
|
Morgan Stanley & Co.
Incorporated
|
114,649,682 | ||||
|
ABN AMRO Incorporated
|
17,197,452 | ||||
|
Barclays Capital Inc.
|
17,197,452 | ||||
|
Harris Nesbitt Corp.
|
17,197,452 | ||||
|
Total
|
$ | 450,000,000 | |||
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S-27
•
the description of our common stock contained in our
Registration Statement on
Form 8-A, as filed
with the SEC on August 5, 1997, and the amendment thereto
filed with the SEC on August 8, 1997;
•
the description of the rights to purchase our Series A
Junior Participating Preferred Stock pursuant to our Stockholder
Rights Plan contained in our Registration Statement on
Form 8-A, as filed
with the SEC on July 24, 2001;
•
our Annual Report on
Form 10-K for the
year ended December 31, 2005, as filed with the SEC on
February 17, 2006;
•
our Current Reports on
Form 8-K, as filed
with the SEC on January 20, 2006; February 21, 2006;
February 28, 2006; March 8, 2006; April 3, 2006;
and April 10, 2006.
•
the first seven paragraphs of Exhibit 99.1 and all of
Exhibit 99.2 to our Current Report on
Form 8-K as filed
with the SEC on March 9, 2006; and
•
the first two paragraphs following the caption “Impact of
Drilling Update on First Quarter 2006 Financial Results” in
Exhibit 99.1 to our Current Report on
Form 8-K as filed
with the SEC on April 10, 2006.
Pioneer Natural Resources Company
5205 North O’Connor Blvd.
Suite 900
Irving, Texas 75039
Attention: Investor Relations
Telephone: (972) 444-9001
Table of Contents
PROSPECTUS
$1,000,000,000
Pioneer Natural Resources Company
Debt Securities
We may offer and sell securities from time to time in one or more classes or series and in amounts, at prices and on terms that we will determine at the time of the offering, with a total initial offering price of up to $1,000,000,000. Any debt securities we issue under this prospectus may be guaranteed by Pioneer Natural Resources USA, Inc., our direct wholly-owned subsidiary that we call Pioneer USA.
We will provide specific terms of the securities to be sold by us, including any guarantee by Pioneer USA, and the methods by which we will sell them in supplements to this prospectus. You should read this prospectus and any supplement carefully before you invest. This prospectus may not be used to offer or sell securities without a prospectus supplement describing the methods and terms of the offering. We may sell the securities directly or we may distribute them through underwriters or dealers. In addition, the underwriters may overallot a portion of the securities.
Our common stock is listed on the New York Stock Exchange under the symbol “PXD.”
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The date of this prospectus is May 22, 2002.
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that Pioneer and Pioneer USA filed with the Securities and Exchange Commission using a shelf registration process. Under this shelf process, Pioneer or Pioneer USA may sell any combination of the securities described in this prospectus in one or more offerings up to a total dollar amount of $1,000,000,000 or the equivalent denominated in foreign currencies. This prospectus provides you with a general description of the securities Pioneer or Pioneer USA may offer. Each time Pioneer or Pioneer USA sells securities, Pioneer or Pioneer USA will provide a prospectus supplement that will contain specific information about the terms of that offering. This prospectus does not contain all of the information included in the registration statement. For a more complete understanding of the offering of the securities, you should refer to the registration statement, including its exhibits. 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 under the heading “Where You Can Find More Information.”
You should rely only on the information contained or incorporated by reference in this prospectus and any prospectus supplement. Pioneer and Pioneer USA have not authorized anyone to provide you with different information. Pioneer and Pioneer USA are not making offers to sell the securities in any jurisdiction in which an 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 an offer or solicitation.
The information in this prospectus is accurate as of the date on the front cover. You should not assume that the information contained in this prospectus is accurate as of any other date.
In this prospectus, references to the terms “we,” “us” or “Pioneer” or other similar terms refer to Pioneer Natural Resources Company, and not to Pioneer Natural Resources USA, Inc., unless we state otherwise or the context indicates otherwise. References to “Pioneer USA” refer to Pioneer Natural Resources USA, Inc.
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UNCERTAINTY OF FORWARD-LOOKING STATEMENTS
This prospectus and the documents Pioneer and Pioneer USA incorporate by reference contain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. The forward-looking statements speak only as of the date made, and Pioneer and Pioneer USA undertake no obligation to update such forward-looking statements. These forward-looking statements may be identified by the use of the words “believe,” “expect,” “anticipate,” “will,” “contemplate,” “would” and similar expressions that contemplate future events. All statements other than statements of historical fact included or incorporated in this prospectus, including statements regarding Pioneer’s or Pioneer USA’s financial position, business strategy, production and reserve growth and other plans and objectives for Pioneer’s or Pioneer USA’s future operations, are forward-looking statements.
Although Pioneer and Pioneer USA believe that such forward-looking statements are based on reasonable assumptions, Pioneer and Pioneer USA give no assurance that Pioneer’s or Pioneer USA’s expectations will in fact occur. Important factors could cause actual results to differ materially from those in the forward-looking statements, including factors identified in Pioneer’s periodic reports incorporated in this prospectus by reference. Forward-looking statements are subject to risks and uncertainties and include information concerning general economic conditions and possible or assumed future results of operations, estimates of oil and gas production and reserves, drilling plans, future cash flows, anticipated capital expenditures, Pioneer’s realization of deferred tax assets, the level of future expenditures for environmental costs, and the strategies, plans and objectives of Pioneer’s management.
This cautionary statement expressly qualifies in their entirety all forward-looking statements attributable to Pioneer or Pioneer USA.
WHERE YOU CAN FIND MORE INFORMATION
Pioneer files annual, quarterly and special reports, proxy statements and other information with the Securities and Exchange Commission. Pioneer’s SEC filings are available to the public over the internet at the SEC’s web site at http://www.sec.gov. You may also read and copy any document Pioneer files at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.
Pioneer’s common stock is listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “PXD.” Pioneer’s reports and other information filed with the SEC can also be inspected at the offices of the New York Stock Exchange and the Toronto Stock Exchange.
INFORMATION THAT PIONEER AND PIONEER USA INCORPORATE BY REFERENCE
The SEC allows Pioneer and Pioneer USA to incorporate by reference the information Pioneer files with the SEC, which means that Pioneer and Pioneer USA 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 Pioneer files later with the SEC will automatically update and supersede this information. Pioneer and Pioneer USA incorporate by reference the documents listed below that Pioneer filed with the SEC under the Securities Exchange Act of 1934:
| • | the description of Pioneer’s common stock contained in its registration statement on Form 8-A, filed with the SEC on August 5, 1997, and the amendment to that registration statement filed with the SEC on August 8, 1997; | |
| • | the description of the rights to purchase Pioneer’s Series A Junior Participating Preferred Stock pursuant to Pioneer’s stockholder rights plan contained in Pioneer’s registration statement on Form 8-A filed with the SEC on July 24, 2001; |
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| • | Pioneer’s annual report on Form 10-K for the year ended December 31, 2001; | |
| • | Pioneer’s quarterly report on Form 10-Q for the three months ended March 31, 2002; and | |
| • | Pioneer’s current reports on Form 8-K, filed with the SEC on April 17, 2002, April 25, 2002, and April 29, 2002. |
Pioneer and Pioneer USA also incorporate by reference each of the documents that Pioneer files with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus until the offering of the securities terminates or Pioneer or Pioneer USA has filed with the SEC an amendment to the registration statement relating to this offering which deregisters all securities then remaining unsold.
You may request a copy of any of these filings, other than an exhibit to those filings unless Pioneer or Pioneer USA has specifically incorporated that exhibit by reference into the filing, at no cost, by telephoning or writing Pioneer or Pioneer USA at the following address:
| Pioneer Natural Resources Company | |
| 5205 North O’Connor Blvd., Suite 1400 | |
| Irving, Texas 75039 | |
| Attention: Investor Relations | |
| Telephone: (972) 444-9001 |
PIONEER AND PIONEER USA
Pioneer is an oil and gas exploration and production company with ownership interests in oil and gas properties located in the United States, Argentina, Canada, Gabon, South Africa and Tunisia. Pioneer USA is a direct wholly-owned subsidiary of Pioneer and owns almost all of Pioneer’s United States oil and gas properties.
The executive offices of Pioneer and Pioneer USA are located at 5205 N. O’Connor Blvd., Suite 1400, Irving, Texas 75039, telephone number: (972) 444-9001. Pioneer maintains other offices in Midland, Texas; Buenos Aires, Argentina; Calgary, Canada; and Capetown, South Africa.
USE OF PROCEEDS
Unless Pioneer or Pioneer USA informs you otherwise in the prospectus supplement, each of Pioneer and Pioneer USA expect to use the net proceeds from the sale of securities for general corporate purposes. These purposes may include, but are not limited to:
| • | reduction or refinancing of debt or other corporate obligations; | |
| • | acquisitions; | |
| • | capital expenditures; and | |
| • | working capital. |
Pending any specific application, each of Pioneer and Pioneer USA may initially invest funds in short-term marketable securities or apply them to the reduction of short-term indebtedness.
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RATIOS OF EARNINGS TO FIXED CHARGES AND
The following table sets forth Pioneer’s ratios of consolidated earnings to fixed charges and earnings to fixed charges and preferred stock dividends for the periods presented:
| Year Ended December 31, | ||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| March 31, 2002 | 2001 | 2000 | 1999 | 1998 | 1997 | |||||||||||||||||||
|
Ratio of earnings to fixed charges(b)
|
(a | ) | 1.73 | 1.96 | (a | ) | (a | ) | (a | ) | ||||||||||||||
|
Ratio of earnings to fixed charges and preferred
stock dividends(c)
|
(a | ) | 1.73 | 1.96 | (a | ) | (a | ) | (a | ) | ||||||||||||||
| (a) | The ratio indicates a less than one-to-one coverage because the earnings were insufficient to cover the fixed charges and preferred stock dividends by $4.5 million, $23.1 million, $730.8 million, and $1,377.6 million during the quarter ended March 31, 2002, and for the years ended December 31, 1999, 1998, and 1997, respectively. | |
| (b) | The ratio has been computed by dividing earnings by fixed charges. For purposes of computing the ratio: |
| • | earnings consist of income before income taxes and cumulative effect of a change in accounting principle, plus fixed charges, net of preferred stock dividends of a consolidated subsidiary and capitalized interest; and | |
| • | fixed charges consist of interest expense, capitalized interest, the portion of rental expense deemed to be representative of the interest component of rental expense, and preferred stock dividends of a consolidated subsidiary. |
| (c) | The ratio has been computed by dividing earnings by fixed charges and preferred stock dividends. For purposes of computing the ratio: |
| • | earnings consist of income before income taxes and cumulative effect of change in accounting principle, plus fixed charges and preferred stock dividends, net of preferred stock dividends of a consolidated subsidiary and capitalized interest; and | |
| • | fixed charges and preferred stock dividends consist of interest expense, capitalized interest, the portion of rental expense deemed to be representative of the interest component of rental expense, preferred stock dividends of a consolidated subsidiary, and preferred stock dividends. The dividends on the 6 1/4% Cumulative Guaranteed Monthly Income Convertible Preferred Shares of Parker & Parsley Capital LLC, a subsidiary of Pioneer’s predecessor, Parker & Parsley Petroleum Company, were recorded as interest expense for financial reporting purposes until those shares were converted into common stock of Parker & Parsley on July 28, 1997. |
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt securities that Pioneer may issue separately, upon exercise of a debt warrant, in connection with a stock purchase contract or as part of a stock purchase unit from time to time in the form of one or more series of debt securities. The applicable prospectus supplement will describe the specific terms of the debt securities offered through that prospectus supplement as well as any general terms described in this section that will not apply to those debt securities.
Pioneer’s senior debt securities will be issued under (1) an Indenture dated as of January 13, 1998, as supplemented, between Pioneer and The Bank of New York, as trustee, or (2) another indenture to be entered into by Pioneer and that or another trustee. Pioneer’s senior subordinated debt securities will be issued under a separate indenture to be entered into by Pioneer and that or another trustee. Under the indentures, Pioneer’s debt securities may be subordinated to other indebtedness of Pioneer. See “Description of Debt Securities — Subordination of Subordinated Debt Securities” below.
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A copy of Pioneer’s 1998 senior debt indenture has been previously filed with the SEC and incorporated by reference as an exhibit to the registration statement of which this prospectus is a part, and is incorporated by reference into this prospectus. Another form of senior debt indenture is filed as an exhibit to the registration statement of which this prospectus is a part and is incorporated by reference into this prospectus. A form of the senior subordinated debt indenture is filed as an exhibit to the registration statement of which this prospectus is a part and is incorporated by reference into this prospectus. You should refer to the applicable indenture for more specific information. In addition, you should consult the applicable prospectus supplement for particular terms of Pioneer’s debt securities.
The indentures will not limit the amount of debt securities that Pioneer may issue, and will permit Pioneer to issue securities from time to time in one or more series. The debt securities will be unsecured obligations of Pioneer, unless otherwise stated in the applicable prospectus supplement. Pioneer currently conducts substantially all of its operations through subsidiaries, and the holders of debt securities (whether senior or subordinated debt securities) will be effectively subordinated to the creditors of Pioneer’s subsidiaries. This means that creditors of Pioneer’s subsidiaries will have a claim to the assets of Pioneer’s subsidiaries that is superior to the claim of Pioneer’s creditors, including holders of Pioneer’s debt securities.
Generally, Pioneer will pay the principal of, premium, if any, and interest on Pioneer’s registered debt securities either at an office or agency that Pioneer maintains for that purpose or, if Pioneer elects, Pioneer may pay interest by mailing a check to your address as it appears on Pioneer’s register (or, at the election of the holder, by wire transfer to an account designated by the holder). Except as may be provided otherwise in the applicable prospectus supplement, no payment on a bearer security will be made by mail to an address in the United States or by wire transfer to an account in the United States. Except as may be provided otherwise in the applicable prospectus supplement, Pioneer will issue its debt securities only in fully registered form without coupons, generally in denominations of $1,000 or integral multiples of $1,000. Pioneer will not apply a service charge for a transfer or exchange of its debt securities, but Pioneer may require that you pay the amount of any applicable tax or other governmental charge.
The applicable prospectus supplement will describe the following terms of any series of debt securities that Pioneer may offer:
| 1. | the title of the debt securities; | |
| 2. | whether they are senior debt securities or subordinated debt securities; | |
| 3. | the total amount of the debt securities authorized and the amount outstanding, if any; | |
| 4. | any limit on the aggregate principal amount of the debt securities offered through that prospectus supplement; | |
| 5. | the identity of the person to whom Pioneer will pay interest if it is anybody other than the noteholder; | |
| 6. | when the principal of the debt securities will mature; | |
| 7. | the interest rate or the method for determining it, including any procedures to vary or reset the interest rate; | |
| 8. | when interest will be payable, as well as the record dates for determining to whom Pioneer will pay interest; | |
| 9. | where the principal of, premium, if any, and interest on the debt securities will be paid; |
| 10. | whether Pioneer has any obligation to redeem, repurchase or repay the debt securities under any mandatory or optional sinking funds or similar arrangements and the terms of those arrangements; | |
| 11. | when the debt securities may be redeemed if they are redeemable, as well as the redemption prices, and a description of the terms of redemption; |
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| 12. | whether Pioneer has any obligation to redeem or repurchase the debt securities at the holder’s option; | |
| 13. | the denominations of the debt securities, if other than $1,000 or an integral multiple of $1,000; | |
| 14. | the amount that Pioneer will pay the holder if the maturity of the debt securities is accelerated, if other than their principal amount; | |
| 15. | the currency in which Pioneer will make payments to the holder and, if a foreign currency, the manner of conversion from United States dollars; | |
| 16. | any index Pioneer may use to determine the amount of payment of principal of, premium, if any, and interest on the debt securities; | |
| 17. | whether the debt securities will be issued in electronic, global or certificated form; | |
| 18. | if the debt securities will be issued only in the form of a global note, the name of the depositary or its nominee and the circumstances under which the global note may be exchanged in whole or in part for other individual debt securities in definitive registered form; | |
| 19. | the applicability of the legal defeasance and covenant defeasance provisions in the applicable indenture; | |
| 20. | any additions or changes to events of default and, in the case of subordinated debt securities, any additional events of default that would result in acceleration of their maturity; | |
| 21. | whether the debt securities will be issued as registered securities or bearer securities and, if the debt securities are bearer securities, whether coupons will be attached, whether and to whom any additional interest payments shall be made, the circumstances, if any, under which the bearer debt securities may be exchanged for registered debt securities; | |
| 22. | any additions or changes to the covenants relating to permitted consolidations, mergers or sales of assets or otherwise; | |
| 23. | if any debt securities do not bear interest, the dates for any required reports to the trustee; | |
| 24. | the amount that will be deemed to be the principal amount of the debt securities as of a particular date before maturity if the principal amount payable at the stated maturity date will not be able to be determined on that date; | |
| 25. | whether the debt securities will be convertible into or exchangeable for any other securities and the terms and conditions upon which a conversion or exchange may occur, including the initial conversion or exchange price or rate, the conversion or exchange period and any other additional provisions; | |
| 26. | the terms of any repurchase or remarketing rights of third parties; | |
| 27. | the terms of any guarantee of the debt securities; and | |
| 28. | any other terms of the debt securities. |
Debt securities may bear interest at fixed or floating rates. Pioneer may issue its debt securities at an original issue discount, bearing no interest or bearing interest at a rate that, at the time of issuance, is below market rate, to be sold at a substantial discount below their stated principal amount. Generally speaking, if Pioneer’s debt securities are issued at an original issue discount and there is an event of default or acceleration of their maturity, holders will receive an amount less than their principal amount. Tax and other special considerations applicable to any series of debt securities, including original issue discount debt, will be described in the prospectus supplement in which Pioneer offers those debt securities.
Pioneer will have the ability under the indentures to reopen a previously issued series of debt securities and issue additional debt securities of that series or establish additional terms of the series. Pioneer is also permitted to issue debt securities with the same terms as previously issued debt securities.
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Pioneer will comply with Section 14(e) under the Securities Exchange Act of 1934 and any other tender offer rules under the Securities Exchange Act of 1934 that may then apply to any obligation Pioneer may have to purchase debt securities at the option of the holders. Any such obligation applicable to a series of debt securities will be described in the related prospectus supplement.
Subordination of Subordinated Debt Securities
Debt securities of a series may be subordinated to senior indebtedness to the extent set forth in the prospectus supplement relating to the subordinated debt securities. The definition of “senior indebtedness” (1) will include, among other things, Pioneer’s indebtedness, whether outstanding on the original issue date of the debt securities or incurred after such date, unless the instrument that creates or evidences such indebtedness provides that such obligations are subordinate in right of payment to the debt securities, and (2) will be specifically set forth in the prospectus supplement relating to the subordinated debt securities.
Subordinated debt securities of a particular series and any coupons relating to those debt securities will be subordinate in right of payment, to the extent and in the manner set forth in the indenture and the prospectus supplement relating to those subordinated debt securities, to the prior payment of all of Pioneer’s indebtedness that is designated as senior indebtedness with respect to that series.
Upon any payment or distribution of Pioneer’s assets to creditors or upon a total or partial liquidation or dissolution of Pioneer or in a bankruptcy, receivership, or similar proceeding relating to Pioneer or its property, holders of senior indebtedness will be entitled to receive payment in full in cash of the senior indebtedness before holders of subordinated debt securities will be entitled to receive any payment of principal, premium, if any, or interest with respect to the subordinated debt securities and, until the senior indebtedness is paid in full, any distribution to which holders of subordinated debt securities would otherwise be entitled will be made to the holders of senior indebtedness (except that holders of subordinated debt securities may receive shares of stock and any debt securities that are subordinated to senior indebtedness to at least the same extent as the subordinated debt securities), all as described in the applicable prospectus supplement.
Unless otherwise provided in an applicable prospectus supplement, Pioneer may not (1) make any payments of principal, premium, if any, or interest with respect to subordinated debt securities, (2) make any deposit for the purpose of defeasance of the subordinated debt securities, or (3) repurchase, redeem, or otherwise retire (except, in the case of subordinated debt securities that provide for a mandatory sinking fund, by Pioneer’s delivery of subordinated debt securities to the trustee in satisfaction of Pioneer’s sinking fund obligation) any subordinated debt securities if:
| • | any principal, premium, or interest with respect to senior indebtedness is not paid within any applicable grace period (including at maturity); or | |
| • | any other default on senior indebtedness occurs and the maturity of that senior indebtedness is accelerated in accordance with its terms, |
unless, in either case, the default has been cured or waived and the acceleration has been rescinded, the senior indebtedness has been paid in full in cash, or Pioneer and the trustee receive written notice approving the payment from the representatives of each issue of specified senior indebtedness as described in the applicable prospectus supplement.
Unless otherwise provided in an applicable prospectus supplement, during the continuance of any default (other than a default described in the preceding paragraph) with respect to any senior indebtedness pursuant to which the maturity of that senior indebtedness may be accelerated immediately without further notice (except such notice as may be required to effect the acceleration) or the expiration of any applicable grace periods, Pioneer may not pay the subordinated debt securities for such periods after notice of the default from the representative of specified senior indebtedness as shall be specified in the applicable prospectus supplement.
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By reason of this subordination, in the event of insolvency, Pioneer’s creditors who are holders of senior indebtedness or holders of any indebtedness or preferred stock of Pioneer’s subsidiaries, as well as certain of Pioneer’s general creditors, may recover more, ratably, than the holders of the subordinated debt securities.
Events of Default
Except as may be provided otherwise in a prospectus supplement, any of the following events will constitute an event of default for a series of debt securities under an indenture:
| • | failure to pay interest on Pioneer’s debt securities of that series, or any payment with respect to the related coupons, if any, for 30 days past the applicable due date; | |
| • | failure to pay principal of, or premium, if any, on Pioneer’s debt securities of that series when due, whether at maturity, upon redemption, by declaration, upon required repurchase or otherwise; | |
| • | failure to make any sinking fund payment on debt securities of that series when due; | |
| • | failure to perform any covenant or agreement in the indenture, including failure to comply with the provisions of the indenture relating to consolidations, mergers and sales of assets, but other than a covenant included in the indenture solely for the benefit of a different series of Pioneer’s debt securities, which failure to comply continues for 90 days after written notice from the trustee or holders of 25% of the outstanding principal amount of the debt securities of that series as provided in the indenture; | |
| • | acceleration of more than $50,000,000 of indebtedness of Pioneer under the terms of the applicable debt instrument if the acceleration is not rescinded or the indebtedness is not paid within 10 days after written notice from the trustee or holders of 25% of the outstanding principal amount of the debt securities of that series as provided in the indenture; | |
| • | specified events relating to the bankruptcy, insolvency or reorganization of Pioneer or any of its significant subsidiaries; and | |
| • | any other event of default provided with respect to debt securities of that series. |
An event of default with respect to one series of debt securities is not necessarily an event of default for another series.
If there is an event of default with respect to a series of Pioneer’s debt securities, which continues for the requisite amount of time, either the trustee or holders of at least 25% of the aggregate principal amount of that series may declare the principal amount of and interest on all of the debt securities of that series to be due and payable immediately, except that if an event of default occurs due to bankruptcy, insolvency or reorganization as provided in the applicable indenture, then the principal of and interest on the debt securities shall become due and payable immediately without any act by the trustee or any holder of debt securities. If the securities were issued at an original issue discount, less than the stated principal amount may become payable.
Before the acceleration of the maturity of the debt securities of any series, the holders of a majority in aggregate principal amount of the debt securities of that series may, on behalf of the holders of all debt securities and any related coupons of that series, waive any past default or event of default and its consequences for that series, except (1) a default in the payment of the principal, premium, or interest with respect to those debt securities or (2) a default with respect to a provision of the applicable indenture that cannot be amended without the consent of each holder affected by the amendment. In case of a waiver of a default, that default shall cease to exist, any event of default arising from that default shall be deemed to have been cured for all purposes, and Pioneer, the trustee, and the holders of the senior debt securities of that series will be restored to their former positions and rights under the indenture.
The trustee under an indenture will, within 90 days after the occurrence of a default known to it with respect to a series of debt securities, give to the holders of the debt securities of that series notice of all
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A holder may institute a suit against Pioneer for enforcement of such holder’s rights under the applicable indenture, for the appointment of a receiver or trustee, or for any other remedy only if the following conditions are satisfied:
| • | the holder gives the trustee written notice of a continuing event of default with respect to a series of Pioneer’s debt securities held by that holder; | |
| • | holders of at least 25% of the aggregate principal amount of that series make a request, in writing, and offer reasonable indemnity, to the trustee for the trustee to institute the requested proceeding; | |
| • | the trustee does not receive direction contrary to the holder’s request within 60 days following such notice, request and offer of indemnity under the terms of the applicable indenture; and | |
| • | the trustee does not institute the requested proceeding within 60 days following such notice. |
The indentures will require Pioneer every year to deliver to the trustee a statement as to performance of Pioneer’s obligations under the indentures and as to any defaults.
A default in the payment of any of Pioneer’s debt securities, or a default with respect to Pioneer’s debt securities that causes them to be accelerated, may give rise to a cross-default under Pioneer’s bank credit facility or other indebtedness.
Satisfaction and Discharge of the Indentures
An indenture will generally cease to be of any further effect with respect to a series of debt securities if:
| • | Pioneer has delivered to the applicable trustee for cancellation all debt securities of that series (with certain limited exceptions); or | |
| • | all debt securities and coupons of that series not previously delivered to the trustee for cancellation have become due and payable, and Pioneer has deposited with the trustee as trust funds the entire amount sufficient to pay at maturity or upon redemption all of those debt securities and coupons; |
and if, in either case, Pioneer also pays or causes to be paid all other sums payable under the applicable indenture by Pioneer.
Legal Defeasance and Covenant Defeasance
Any series of Pioneer’s debt securities may be subject to the defeasance and discharge provisions of the applicable indenture if so specified in the applicable prospectus supplement. If those provisions are applicable, Pioneer may elect either:
| • | legal defeasance — which will permit Pioneer to defease and be discharged from, subject to limitations, all of its obligations with respect to those debt securities; or | |
| • | covenant defeasance — which will permit Pioneer to be released from its obligations to comply with covenants relating to those debt securities as described in the applicable prospectus supplement, which may include obligations concerning subordination of Pioneer’s subordinated debt securities. |
If Pioneer exercises its legal defeasance option with respect to a series of debt securities, payment of those debt securities may not be accelerated because of an event of default. If Pioneer exercise its
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Unless otherwise provided in the applicable prospectus supplement, Pioneer may invoke legal defeasance or covenant defeasance with respect to any series of its debt securities only if:
| • | Pioneer irrevocably deposits with the trustee, in trust, an amount in funds or U.S. government obligations which, through the payment of principal and interest in accordance with their terms, will provide money in an amount sufficient to pay, when due upon maturity or redemption, as the case may be, the principal of, premium, if any, and interest on those debt securities; | |
| • | Pioneer delivers to the trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. government obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay the principal, premium, and interest when due with respect to all the debt securities of that series to maturity or redemption, as the case may be; | |
| • | 123 days pass after the deposit is made and, during the 123-day period, no default relating to Pioneer’s bankruptcy, insolvency or reorganization occurs that is continuing at the end of that period; | |
| • | no event of default has occurred and is continuing on the date of the deposit and after giving effect to the deposit; | |
| • | the deposit is not a default under any other agreement binding on Pioneer and, in the case of subordinated debt securities, is not prohibited by the subordination provisions of the indenture; | |
| • | Pioneer delivers to the trustee an opinion of counsel to the effect that the trust resulting from the deposit is not, or is qualified as, a regulated investment company under the Investment Company Act of 1940; | |
| • | Pioneer delivers to the trustee an opinion of counsel addressing certain federal income tax matters relating to the defeasance; and | |
| • | Pioneer delivers to the trustee an officers’ certificate and an opinion of counsel, each stating that all conditions precedent to the defeasance and discharge of the debt securities of that series as contemplated by the applicable indenture have been complied with. |
Modification and Waiver
Pioneer may enter into supplemental indentures for the purpose of modifying or amending an indenture with the consent of holders of at least a majority in aggregate principal amount of each series of Pioneer’s outstanding debt securities affected. However, unless otherwise provided in the applicable prospectus supplement, the consent of all of the holders of Pioneer’s debt securities that are affected by any modification or amendment is required for any of the following:
| • | to reduce the percentage in principal amount of debt securities of any series whose holders must consent to an amendment; | |
| • | to reduce the rate of or extend the time for payment of interest on any debt security or coupon or reduce the amount of any interest payment to be made with respect to any debt security or coupon; | |
| • | to reduce the principal of or change the stated maturity of principal of, or any installment of principal of or interest on, any debt security or reduce the amount of principal of any original issue discount security that would be due and payable upon declaration of acceleration of maturity; | |
| • | to reduce the premium payable upon the redemption of any debt security or change the time at which any debt security may or shall be redeemed; |
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| • | to make any debt security payable in a currency other than that stated in that debt security; | |
| • | to modify the subordination provisions of Pioneer’s subordinated debt securities in a manner adverse to holders; | |
| • | to release any security that may have been granted with respect to the debt securities; | |
| • | to make any change in the provisions of the indenture relating to waivers of defaults or amendments that require unanimous consent; | |
| • | to change any obligations provided for in the indenture to pay any additional interest with respect to bearer securities; | |
| • | to limit Pioneer’s obligations to maintain a paying agency outside the United States for payment on bearer securities or limit Pioneer’s obligation to redeem certain bearer securities; | |
| • | to change any place of payment where any debt security or any premium or interest on any debt security is payable; | |
| • | to impair the right to bring a lawsuit for the enforcement of any payment on or after the stated maturity of any debt security (or in the case of redemption, on or after the date fixed for redemption); or | |
| • | to modify any of the above provisions of the indenture, except to increase the percentage in principal amount of debt securities of any series whose holders must consent to an amendment or to provide that certain other provisions of the indenture cannot be modified or waived without the consent of the holder of each outstanding debt security affected by the modification or waiver. |
In addition, Pioneer and the trustee with respect to an indenture may enter into supplemental indentures without the consent of the holders of debt securities for one or more of the following purposes (in addition to any other purposes specified in an applicable prospectus supplement):
| • | to evidence that another person has become Pioneer’s successor under the provisions of the indenture relating to consolidations, mergers, and sales of assets and that the successor assumes Pioneer’s covenants, agreements, and obligations in the indenture and in the debt securities; | |
| • | to surrender any of Pioneer’s rights or powers under the indenture, to add to Pioneer’s covenants further covenants, restrictions, conditions, or provisions for the protection of the holders of all or any series of debt securities, and to make a default in any of these additional covenants, restrictions, conditions, or provisions a default or an event of default under the indenture; | |
| • | to cure any ambiguity or to make corrections to the indenture, any supplemental indenture, or any debt securities, to convey, transfer, assign, mortgage or pledge any property to or with the trustee, or to make such other provisions in regard to matters or questions arising under the indenture that do not adversely affect the interests of any holders of debt securities of any series; | |
| • | to modify or amend the indenture to permit the qualification of the indenture or any supplemental indenture under the Trust Indenture Act of 1939 as then in effect; | |
| • | to add to or change any of the provisions of the indenture to provide that bearer securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal or premium with respect to registered securities or of principal, premium, or interest with respect to bearer securities, or to permit registered securities to be exchanged for bearer securities, so long as none of these actions adversely affects the interests of the holders of debt securities or any coupons of any series in any material respect or permits the issuance of debt securities of any series in uncertificated form; | |
| • | to comply with the provisions of the indenture relating to consolidations, mergers, and sales of assets; |
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| • | to modify the subordination provisions of Pioneer’s subordinated debt securities in a manner that would limit or terminate the benefits available to any holder of senior indebtedness (or its representative) under such subordination provisions; | |
| • | to add guarantees with respect to any or all of the debt securities or to secure any or all of the debt securities; | |
| • | to make any change that does not adversely affect the rights of any holder of a series of debt securities under the indenture; | |
| • | to add to, change, or eliminate any of the provisions of the indenture with respect to one or more series of debt securities, so long as the addition, change, or elimination not otherwise permitted under the indenture will (1) neither apply to any debt security of any series created before the execution of the supplemental indenture and entitled to the benefit of that provision nor modify the rights of the holders of that debt security with respect to that provision or (2) become effective only when there is none of that debt security outstanding; | |
| • | to evidence and provide for the acceptance of appointment by a successor or separate 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 necessary to provide for the administration of the indenture by more than one trustee; and | |
| • | to establish the form or terms of debt securities and coupons, if any, of any series. |
Consolidation, Merger and Sale of Assets
Unless otherwise provided in the applicable prospectus supplement, the indentures prohibit Pioneer from consolidating with or merging into another business entity, or transferring or leasing substantially all of Pioneer’s assets, unless:
| • | Pioneer is the continuing entity in the case of a merger; or | |
| • | the surviving or acquiring entity is a U.S. corporation and it expressly assumes Pioneer’s obligations with respect to Pioneer’s debt securities by executing a supplemental indenture; | |
| • | immediately after giving effect to the transaction, no default or event of default would occur or be continuing; | |
| • | the successor company waives any right to redeem any bearer security under circumstances in which the successor company would be entitled to redeem the bearer security but Pioneer would have not been entitled to redeem that bearer security if the consolidation, merger or sale had not occurred; and | |
| • | Pioneer has delivered to the trustee an officers’ certificate and an opinion of counsel, each stating that the consolidation, merger, or sale complies with the indenture. |
Conversion or Exchange Rights
If debt securities of any series are convertible or exchangeable, the applicable prospectus supplement will specify:
| • | the type of securities into which they may be converted or exchanged; | |
| • | the conversion price or exchange ratio, or its method of calculation; | |
| • | whether conversion or exchange is mandatory or at your election; | |
| • | how and when the conversion price or exchange ratio may be adjusted; and | |
| • | any other important terms concerning the conversion or exchange rights. |
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Global Securities
Pioneer’s debt securities may be issued in the form of one or more global securities that will be deposited with a depositary or its nominee identified in the applicable prospectus supplement. If so, each global security will be issued in the denomination of the aggregate principal amount of securities that it represents. Unless and until it is exchanged in whole or in part for debt securities that are in definitive registered form, a global security may not be transferred or exchanged except as a whole to the depositary, another nominee of the depositary, or a successor of the depositary or its nominee. The applicable prospectus supplement will describe this concept more fully.
The specific material terms of the depositary arrangement with respect to any portion of a series of Pioneer’s debt securities that will be represented by a global security will be described in the applicable prospectus supplement. Pioneer anticipates that the following provisions will apply to Pioneer’s depositary arrangements.
Upon the issuance of any global security, and its deposit with or on behalf of the depositary, the depositary will credit, on its book-entry registration and transfer system, the principal amounts of Pioneer’s debt securities represented by the global security to the accounts of participating institutions that have accounts with the depositary or its nominee. The underwriters or agents engaging in the distribution of Pioneer’s debt securities, or Pioneer, if Pioneer is offering and selling its debt securities directly, will designate the accounts to be credited. Ownership of beneficial interests in a global security will be limited to participating institutions or their clients. The depositary or its nominee will keep records of the ownership and transfer of beneficial interests in a global security by participating institutions. Participating institutions will keep records of the ownership and transfer of beneficial interests by their clients. The laws of some jurisdictions may require that purchasers of Pioneer’s securities receive physical certificates, which may impair a holder’s ability to transfer its beneficial interests in global securities.
While the depositary or its nominee is the registered owner of a global security, the depositary or its nominee will be considered the sole owner of all of Pioneer’s debt securities represented by the global security for all purposes under the indentures. Generally, if a holder owns beneficial interests in a global security, that holder will not be entitled to have Pioneer’s debt securities registered in that holder’s own name, and that holder will not be entitled to receive a certificate representing that holder’s ownership. Accordingly, if a holder owns a beneficial interest in a global security, the holder must rely on the depositary and, if applicable, the participating institution of which that holder is a client to exercise the rights of that holder under the applicable indenture.
The depositary may grant proxies and otherwise authorize participating institutions to take any action that a holder is entitled to take under the indentures. Pioneer understands that, according to existing industry practices, if Pioneer requests any action of holders, or any owner of a beneficial interest in a global security wishes to give any notice or take any action, the depositary would authorize the participating institutions to give the notice or take the action, and the participating institutions would in turn authorize their clients to give the notice or take the action.
Generally, Pioneer will make payments on its debt securities represented by a global security directly to the depositary or its nominee. It is Pioneer’s understanding that the depositary will then credit the accounts of participating institutions, which will then distribute funds to their clients. Pioneer also expects that payments by participating institutions to their clients will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of clients registered in “street names,” and will be the responsibility of the participating institutions. Neither Pioneer nor the trustee, nor their respective agents, will have any responsibility, or bear any liability, for any aspects of the records relating to or payments made on account of beneficial interests in a global security, or for maintaining, supervising or reviewing records relating to beneficial interests.
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Generally, a global security may be exchanged for certificated debt securities only in the following instances:
| • | the depositary notifies Pioneer that it is unwilling or unable to continue as depositary, or it ceases to be a registered clearing agency, if required to be registered by law, and a successor is not appointed within 90 days; or | |
| • | Pioneer determines in its sole discretion that it will no longer have debt securities represented by a global securities or that it will permit global securities to be exchanged for certificated debt securities. |
The following is based on information furnished to Pioneer:
| Unless otherwise specified in the applicable prospectus supplement, The Depository Trust Company, which Pioneer refers to as “DTC,” will act as depositary for securities issued in the form of global securities. Global securities will be issued only as fully-registered securities registered in the name of Cede & Co., which is DTC’s nominee. One or more fully-registered global securities will be issued for these securities representing in the aggregate the total number of these securities, and will be deposited with or on behalf of DTC. | |
| DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants deposit with it. DTC also facilitates the settlement among its participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, the American Stock Exchange and the National Association of Securities Dealers. Access to the DTC system is also available to others, known as indirect participants, such as securities brokers and dealers, banks and trust companies that clear through or maintain custodial relationships with direct participants, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC. | |
| Purchases of securities within the DTC system must be made by or through direct participants, which will receive a credit for the securities on DTC’s records. The ownership interest of each actual purchaser of each security, commonly referred to as the beneficial owner, is in turn to be recorded on the direct and indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchases, but beneficial owners are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the direct or indirect participants through which the beneficial owners purchased securities. Transfers of ownership interests in securities issued in the form of global securities are accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their ownership interests in these securities, except if use of the book-entry system for such securities is discontinued. | |
| DTC has no knowledge of the actual beneficial owners of the securities issued in the form of global securities. DTC’s records reflect only the identity of the direct participants to whose accounts such securities are credited, which may or may not be the beneficial owners. The participants will remain responsible for keeping accounts of their holdings on behalf of their customers. | |
| Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants, and by direct participants and indirect participants to beneficial owners, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. |
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| Any redemption notices need to be sent to DTC. If less than all of the securities of a series or class are being redeemed, DTC’s practice is to determine by lot the amount to be redeemed from each participant. | |
| Although voting with respect to securities issued in the form of global securities is limited to the holders of record, when a vote is required, neither DTC nor Cede & Co. will itself consent or vote with respect to such securities. Under its usual procedures, DTC would mail an omnibus proxy to the issuer of the securities as soon as possible after the record date. The omnibus proxy assigns Cede & Co.’s consenting or voting rights to those direct participants to whose accounts such securities are credited on the record date, identified in a listing attached to the omnibus proxy. | |
| Payments in respect of securities issued in the form of global securities will be made by the issuer of such securities to DTC. DTC’s practice is to credit direct participants’ accounts on the relevant payment date in accordance with their respective holdings shown on DTC’s records unless DTC has reason to believe that it will not receive payments on such payment date. Payments by participants to beneficial owners will be governed by standing instructions and customary practices and will be the responsibility of such participant and not of DTC or Pioneer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments to DTC are the responsibility of the issuer of the applicable securities, disbursement of such payments to direct participants is the responsibility of DTC, and disbursements of such payments to the beneficial owners is the responsibility of direct and indirect participants. |
DTC may discontinue providing its services as depositary with respect to any securities at any time by giving reasonable notice to the issuer of such securities. If a successor depositary is not obtained, individual security certificates representing such securities are required to be printed and delivered. Pioneer, at its option, may decide to discontinue use of the system of book-entry transfers through DTC or a successor depositary.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Pioneer believes to be accurate, but Pioneer assumes no responsibility for its accuracy. Pioneer has no responsibility for the performance by DTC or its participants of their obligations as described in this prospectus or under the rules and procedures governing their operations.
Debt securities may be issued as registered securities (which will be registered as to principal and interest in the register maintained by the registrar for those senior debt securities) or bearer securities (which will be transferable only by delivery). If debt securities are issuable as bearer securities, certain special limitations and considerations will apply, as set forth in the applicable prospectus supplement.
Pioneer’s Trustee
The current trustee for Pioneer’s debt securities issued under its 1998 indenture is The Bank of New York. Pioneer may engage additional or substitute trustees with respect to particular series of Pioneer’s debt securities. Pioneer or Pioneer USA may maintain banking and other commercial relationships with any trustee, including The Bank of New York, and its affiliates in the ordinary course of business. A trustee may own Pioneer’s debt securities.
Governing Law
The indentures and the debt securities are governed by the laws of the State of New York.
DESCRIPTION OF CAPITAL STOCK
Pioneer authorized capital stock consists of 600,000,000 shares of stock, including:
| • | 500,000,000 shares of common stock, $0.01 par value per share, of which 115,034,172 shares were issued and outstanding as of May 14, 2002; and |
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| • | 100,000,000 shares of preferred stock, $0.01 par value per share, including one share that has been designated as Special Preferred Voting Stock, which share was issued and outstanding on such date, and 500,000 shares that have been designated as Series A Junior Participating Preferred Stock, $0.01 par value per share, in connection with Pioneer’s rights agreement, of which no shares are currently issued or outstanding. |
In addition, Pioneer Natural Resources Canada Inc., an indirect wholly-owned subsidiary of Pioneer that we call Pioneer Canada, has 940,790 exchangeable shares issued and outstanding as of May 14, 2002, each of which is exchangeable into Pioneer’s common stock.
Common Stock
This section describes the general terms of Pioneer’s common stock. For more detailed information, you should refer to Pioneer’s amended and restated certificate of incorporation and amended and restated bylaws, copies of which have been filed with the SEC. These documents are also incorporated by reference into this prospectus.
Holders of Pioneer’s common stock are entitled to one vote per share with respect to each matter submitted to a vote of Pioneer’s stockholders, subject to voting rights that may be established for shares of Pioneer’s preferred stock, if any. Except as may be provided in connection with Pioneer’s preferred stock (such as the special preferred voting stock) or as otherwise may be required by law or Pioneer’s amended and restated certificate of incorporation, Pioneer’s common stock is the only capital stock entitled to vote in the election of directors. Pioneer’s common stock does not have cumulative voting rights.
Subject to the rights of holders of Pioneer’s preferred stock, if any, holders of Pioneer’s common stock are entitled to receive dividends and distributions lawfully declared by Pioneer’s board of directors. If Pioneer liquidates, dissolves, or winds up its business, whether voluntarily or involuntarily, holders of Pioneer’s common stock will be entitled to receive any assets available for distribution to Pioneer’s stockholders after Pioneer has paid or set apart for payment the amounts necessary to satisfy any preferential or participating rights to which the holders of each outstanding series of preferred stock are entitled by the express terms of such series of preferred stock.
The outstanding shares of Pioneer’s common stock are fully paid and nonassessable. Pioneer’s common stock does not have any preemptive, subscription or conversion rights. Pioneer may issue additional shares of its authorized common stock as it is authorized by its board of directors from time to time, without stockholder approval, except as may be required by applicable stock exchange requirements.
Preferred Stock
This section describes the general terms and provisions of Pioneer’s preferred stock. The applicable prospectus supplement will describe the specific terms of the shares of preferred stock offered through that prospectus supplement, as well as any general terms described in this section that will not apply to those shares of preferred stock. Pioneer will file a copy of the certificate of designations that contains the terms of each new series of preferred stock with the SEC each time Pioneer issues a new series of preferred stock. Each certificate of designations will establish the number of shares included in a designated series and fix the designation, powers, privileges, preferences and rights of the shares of each series as well as any applicable qualifications, limitations or restrictions. You should refer to the applicable certificate of designations as well as Pioneer’s amended and restated certificate of incorporation before deciding to buy shares of Pioneer’s preferred stock as described in the applicable prospectus supplement.
Pioneer’s board of directors has been authorized to provide for the issuance of shares of Pioneer’s preferred stock in multiple series without the approval of stockholders. With respect to each series of Pioneer’s preferred stock, Pioneer’s board of directors has the authority to fix the following terms:
| • | the designation of the series; | |
| • | the number of shares within the series; |
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| • | whether dividends are cumulative and, if cumulative, the dates from which dividends are cumulative; | |
| • | the rate of any dividends, any conditions upon which dividends are payable, and the dates of payment of dividends; | |
| • | whether the shares are redeemable, the redemption price and the terms of redemption; | |
| • | the amount payable to you for each share you own if Pioneer dissolves or liquidates; | |
| • | whether the shares are convertible or exchangeable, the price or rate of conversion or exchange, and the applicable terms and conditions; | |
| • | any restrictions on issuance of shares in the same series or any other series; | |
| • | voting rights applicable to the series of preferred stock; and | |
| • | any other rights, preferences or limitations of such series. |
Your rights with respect to your shares of preferred stock will be subordinate to the rights of Pioneer’s general creditors. Shares of Pioneer’s preferred stock that Pioneer issues will be fully paid and nonassessable, and will not be entitled to preemptive rights unless specified in the applicable prospectus supplement.
Pioneer’s ability to issue preferred stock, or rights to purchase such shares, could discourage an unsolicited acquisition proposal. For example, Pioneer could impede a business combination by issuing a series of preferred stock containing class voting rights that would enable the holders of such preferred stock to block a business combination transaction. Alternatively, Pioneer could facilitate a business combination transaction by issuing a series of preferred stock having sufficient voting rights to provide a required percentage vote of the stockholders. Additionally, under certain circumstances, Pioneer’s issuance of preferred stock could adversely affect the voting power of the holders of Pioneer’s common stock. Although Pioneer’s board of directors is required to make any determination to issue any preferred stock based on its judgment as to the best interests of Pioneer’s stockholders, Pioneer’s board of directors could act in a manner that would discourage an acquisition attempt or other transaction that some, or a majority, of Pioneer’s stockholders might believe to be in their best interests or in which stockholders might receive a premium for their stock over prevailing market prices of such stock. Pioneer’s board of directors does not at present intend to seek stockholder approval prior to any issuance of currently authorized stock, unless otherwise required by law or applicable stock exchange requirements.
| Special Preferred Voting Stock. |
In connection with Pioneer’s December 1997 acquisition of Chauvco Resources Ltd., an Alberta, Canada corporation, Pioneer’s board of directors designated one share of the authorized shares of preferred stock as special preferred voting stock. Pioneer refers to that one share as the voting share. The Montreal Trust Company of Canada holds the voting share as trustee on behalf of the holders of exchangeable shares of Pioneer Canada. The certificate of designations for the voting share includes the following important terms:
| • | No dividends will be paid to the share trustee as the holder of the voting share. | |
| • | The share trustee, as the holder of the voting share, is entitled to all of the voting rights attached to the voting share, including the right to vote on any matter on which Pioneer’s common stockholders are entitled to vote. Except as required by law, the holder of the voting share will vote together with Pioneer’s common stockholders as a single class. | |
| • | The holders of exchangeable shares have the right to submit stockholder proposals to the share trustee and the share trustee has agreed to submit any such proposals to Pioneer. Such stockholder proposals may be considered at any meeting of Pioneer at which the holders of Pioneer’s common stock are entitled to submit stockholder proposals. Pioneer will accept all stockholder proposals |
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| submitted by the share trustee, but each holder of exchangeable shares may submit only one proposal. | ||
| • | So long as any exchangeable shares are outstanding, the number of shares of special preferred voting stock shares will not be increased or decreased, and no other term of the special preferred voting stock may be amended without the approval of the holder of the voting share. | |
| • | The voting share does not have any conversion rights. | |
| • | The voting share does not have any redemption rights so long as the exchangeable shares are outstanding, but Pioneer will automatically redeem the voting share for $1.00 when no exchangeable shares are outstanding. Pioneer will cancel the voting share if Pioneer purchases or otherwise acquires it. Pioneer may not reissue the voting share. | |
| • | The voting share will rank senior to each share of Pioneer’s common stock in any distribution of assets in a liquidation, dissolution or winding-up of Pioneer. In any liquidation, dissolution or winding-up, the holder of the voting share will be entitled to receive a liquidation preference of $1.00 before any distribution to the holders of Pioneer’s common stock, but only after the liquidation preference of any other shares of preferred stock of Pioneer has been paid in full. | |
| • | While the voting share is outstanding, Pioneer will (1) comply with all terms of the exchangeable shares and with all associated contractual obligations of Pioneer, and (2) not amend, alter or repeal the terms and conditions of the special preferred voting stock without the approval of the holder of the voting share. |
Rights Agreement
Attached to each share of Pioneer’s common stock and each exchangeable share of Pioneer Canada is one preferred share purchase right. Each right entitles the registered holder to purchase from Pioneer one one-thousandth of a share of Series A Junior Participating Preferred Stock, par value $0.01, at a price of $95.00 per one one-thousandth of a share of Series A Junior Participating Preferred Stock, subject to adjustment. The rights expire on July 31, 2011, unless the final expiration date is extended or unless the rights are earlier redeemed by Pioneer.
The rights represented by the certificates for Pioneer’s common stock are not exercisable, and are not separately transferable from the common stock, until the earlier of:
| • | ten days after a person or group has become an “acquiring person.” A person or group becomes an acquiring person: |
| (A) | When the person (other than Southeastern Asset Management, Inc., its affiliates or its permitted transferees) acquires beneficial ownership of 15% or more of Pioneer’s common stock; |
| (B) | When Southeastern Asset Management, Inc. or its affiliates becomes the beneficial owner of one share of common stock in excess of the greater of (1) the lesser of (a) the percentage of shares of common stock beneficially owned by Southeastern Asset Management, Inc. or its affiliates as of the date of the rights agreement or (b) the lowest percentage of shares of common stock beneficially owned by Southeastern Asset Management, Inc. or its affiliates after such date or (2) 15% of Pioneer’s outstanding common stock; or | |
| (C) | When a permitted transferee of Southeastern Asset Management, Inc. or its affiliates becomes the beneficial owner of one share of common stock in excess of the greater of (1) the lesser of (a) the percentage of shares of common stock beneficially owned by the permitted transferee on the date that it acquires such shares from Southeaster Asset Management, Inc. or its affiliates or (b) the lowest percentage of shares of common stock beneficially owned by the permitted transferee after such date or (2) 15% of Pioneer’s outstanding common stock; or |
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| • | ten business days, or a later date determined by the board of directors, after the commencement or first public announcement of a tender or exchange offer that would result in a person or group beneficially owning 15% or more of Pioneer’s outstanding common stock. |
The earlier of these two dates is called the “distribution date.” Separate certificates for the rights will be mailed to holders of record of Pioneer’s common stock as of the distribution date. The rights could then begin trading separately from Pioneer’s common stock.
Generally, in the event that a person or group becomes an acquiring person, each right, other than the rights owned by the acquiring person, will entitle the holder to receive, upon exercise of the right, common stock having a value equal to two times the exercise price of the right. In the event that Pioneer is acquired in a merger, consolidation, or other business combination transaction or more than 50% of Pioneer’s assets, cash flow or earning power is sold or transferred, each right, other than the rights owned by an acquiring person, will entitle the holder to receive, upon the exercise of the right, common stock of the surviving corporation having a value equal to two times the exercise price of the right.
At any time after the acquisition by the acquiring person of beneficial ownership of 15% or more of the outstanding shares of Pioneer’s common stock and before the acquisition by the acquiring person of 50% or more of the voting power of the outstanding shares of Pioneer’s common stock, the board of directors may exchange the rights, other than rights owned by the acquiring person, which would have become void, in whole or in part, at an exchange ratio of one share of Pioneer’s common stock for each two shares of Pioneer’s common stock for which each right is then exercisable, subject to adjustment.
The rights are redeemable in whole, but not in part, at $0.001 per right until any person or group becomes an acquiring person. The ability to exercise the rights terminates at the time that the board of directors elects to redeem the rights. Notice of redemption will be given by mail to the registered holders of the rights. At no time will the rights have any voting rights.
The number of outstanding rights, the exercise price payable, and the number of shares of Series A Junior Participating Preferred Stock or other securities or property issuable upon exercise of the rights are subject to customary adjustments from time to time to prevent dilution.
The rights have certain anti-takeover effects. The rights may cause substantial dilution to a person or group that attempts to acquire Pioneer on terms not approved by Pioneer’s board of directors, except in the case of an offer conditioned on a substantial number of rights being acquired. The rights should not interfere with any merger or other business combination that Pioneer’s board of directors approves.
The shares of Series A Junior Participating Preferred Stock that may be purchased upon exercise of the right will rank junior to all other series of Pioneer’s preferred stock, if any, or any similar stock that specifically provides that it ranks prior to the shares of Series A Junior Participating Preferred Stock. The shares of Series A Junior Participating Preferred Stock will be nonredeemable. Each share of Series A Junior Participating Preferred Stock will be entitled to a minimum preferential quarterly dividend of $1.00 per share, if, as and when declared, but will be entitled to an aggregate dividend of 1,000 times the dividend declared per share of Pioneer’s common stock. In the event of liquidation, the holders of the shares of Series A Junior Participating Preferred Stock will be entitled to a minimum preferential liquidation payment of $1,000 per share, but will be entitled to an aggregate payment of 1,000 times the payment made per share of Pioneer’s common stock. Each share of Series A Junior Participating Preferred Stock will have 1,000 votes, voting together with Pioneer’s common stock. In the event of any merger, consolidation or other transaction in which Pioneer’s common stock is exchanged, each share of Series A Junior Participating Preferred Stock will be entitled to receive 1,000 times the amount and type of consideration received per share of Pioneer’s common stock. These rights are protected by customary anti-dilution provisions. Because of the nature of the Series A Junior Participating Preferred Stock’s dividend, liquidation and voting rights, the value of the interest in a share of Series A Junior Participating Preferred Stock purchasable upon the exercise of each right should approximate the value of one share of Pioneer’s common stock.
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The description of the rights contained in this section does not describe every aspect of the rights. The rights agreement dated as of July 20, 2001, between Pioneer and the rights agent, contains the full legal text of the matters described in this section. A copy of the rights agreement has been incorporated by reference in the registration statement of which this prospectus forms a part. See “Where You Can Find More Information” for information on how to obtain a copy.
Limitation on Directors’ Liability
Pioneer’s amended and restated certificate of incorporation provides, as authorized by Section 102(b)(7) of the Delaware General Corporation Law, that Pioneer’s directors will not be personally liable to Pioneer or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:
| • | for any breach of the director’s duty of loyalty to Pioneer or its stockholders; | |
| • | for acts or omission not in good faith or which involve intentional misconduct or a knowing violation of law; | |
| • | for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or | |
| • | for any transaction from which the director derived an improper personal benefit. |
The inclusion of this provision in Pioneer’s amended and restated certificate of incorporation may have the effect of reducing the likelihood of derivative litigation against directors, and may discourage or deter stockholders or management from bringing a lawsuit against directors for breach of their duty of care, even though such an action, if successful, might otherwise have benefited Pioneer and its stockholders.
Section 203 of the Delaware General Corporation Law
Section 203 of the Delaware General Corporation Law prohibits a defined set of transactions between a Delaware corporation, such as Pioneer, and an “interested stockholder.” An interested stockholder is defined as a person who, together with any affiliates or associates of such person, beneficially owns, directly or indirectly, 15% or more of the outstanding voting shares of a Delaware corporation. This provision may prohibit business combinations between an interested stockholder and a corporation for a period of three years after the date the interested stockholder becomes an interested stockholder. The term “business combination” is broadly defined to include mergers, consolidations, sales or other dispositions of assets having a total value in excess of 10% of the consolidated assets of the corporation, and some other transactions that would increase the interested stockholder’s proportionate share ownership in the corporation.
This prohibition is effective unless:
| • | The business combination is approved by the corporation’s board of directors prior to the time the interested stockholder becomes an interested stockholder; | |
| • | The interested stockholder acquired at least 85% of the voting stock of the corporation, other than stock held by directors who are also officers or by qualified employee stock plans, in the transaction in which it becomes an interested stockholder; or | |
| • | The business combination is approved by a majority of the board of directors and by the affirmative vote of 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. |
Special Charter and Bylaw Provisions
Pioneer’s amended and restated certificate of incorporation contains provisions requiring that advance notice be delivered to Pioneer of any business to be brought by a stockholder before an annual meeting of stockholders and providing for certain procedures to be followed by stockholders in nominating persons for election to Pioneer’s board of directors. Generally, such advance notice provisions provide that the
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Pioneer’s amended and restated certificate of incorporation provides that stockholders may not act by written consent in lieu of a meeting. Special meetings of the stockholders may be called by Pioneer’s board of directors, but may not be called by Pioneer’s stockholders. Pioneer’s amended and restated bylaws may be amended by Pioneer’s board of directors or by the affirmative vote of the holders of at least 66 2/3% of the aggregate voting power of Pioneer’s outstanding capital stock entitled to vote in the election of directors.
Pioneer’s amended and restated certificate of incorporation also contains a “fair price” provision that applies to certain business combination transactions involving any person or group that beneficially owns at least 10% of the aggregate voting power of Pioneer’s outstanding capital stock, referred to as a “related person.” The “fair price” provision requires the affirmative vote of the holders of:
| • | at least 80% of Pioneer’s voting stock; and | |
| • | at least 66 2/3% of Pioneer’s voting stock not beneficially owned by the related person, to approve certain transactions between the related person and Pioneer or its subsidiaries, including any merger, consolidation or share exchange, any sale, lease, exchange, pledge or other disposition of Pioneer’s assets or its subsidiaries having a fair market value of at least $10 million, any transfer or issuance of Pioneer’s securities or its subsidiaries’ securities, any adoption of a plan or proposal by Pioneer of its voluntary liquidation or dissolution, certain reclassifications of Pioneer’s securities or recapitalizations or certain other transactions, in each case involving the related person. |
This voting requirement will not apply to certain transactions, including:
| • | any transaction in which the consideration to be received by the holders of each class or series of capital stock is: | |
| • | the same in form and amount as that paid in a tender offer in which the related person acquired at least 50% of the outstanding shares of such class or series and which was consummated not more than one year earlier; or | |
| • | not less in amount than the highest per share price paid by the related person for shares of such class or series; or | |
| • | any transaction approved by Pioneer’s continuing directors. |
This provision could have the effect of delaying or preventing change in control in a transaction or series of transactions that did not satisfy the “fair price” criteria.
The provisions of Pioneer’s amended and restated certificate of incorporation relating to the limitation of actions taken by written consent, and the “fair price” provision may be amended only by the affirmative vote of the holders of at least 80% of the aggregate voting power of Pioneer’s outstanding capital stock entitled to vote for the election of directors.
The foregoing provisions of Pioneer’s amended and restated certificate of incorporation and Pioneer’s amended and restated bylaws, together with the rights agreement and the provisions of Section 203 of the Delaware General Corporation Law, could have the effect of delaying, deferring or preventing a change in
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Transfer Agent and Registrar
Continental Stock Transfer & Trust Company serves as the registrar and transfer agent for the common stock.
Stock Exchange Listing
Pioneer’s common stock is listed on the New York Stock Exchange and the Toronto Stock Exchange. The trading symbol for Pioneer’s common stock on these exchanges is “PXD.”
Pioneer Canada Exchangeable Shares
In connection with the acquisition of Chauvco Resources Ltd., Pioneer (1) issued the voting share to a share trustee for the benefit of the holders, other than Pioneer and its subsidiaries, of the exchangeable shares issued by Pioneer Canada, (2) entered into a support agreement and a voting and exchange trust agreement and (3) assumed specified obligations with respect to the exchangeable shares. The rights, privileges, restrictions and conditions attaching to the exchangeable shares may be changed only with the approval of the holders of the exchangeable shares. The exchangeable shares have the rights and preferences described below.
| Dividends. |
Holders of exchangeable shares are entitled to receive dividends equal to dividends paid from time to time by Pioneer on shares of its common stock. The declaration date, record date and payment date for dividends on the exchangeable shares will be the same as that for the corresponding dividends on Pioneer’s common stock.
| Voting Rights. |
The holders of the exchangeable shares are entitled to instruct the share trustee to vote with respect to any matter, proposition or question on which Pioneer’s common stockholders are entitled to vote.
| Redemption. |
Optional Redemption — Subject to Pioneer’s exercise of its optional call right, as described below under the heading “Call Rights — Optional Call Right Instead of Optional Redemption,” each holder of exchangeable shares, at the holder’s option, may redeem each of the holder’s exchangeable shares for one share of Pioneer’s common stock plus any unpaid dividends on such exchangeable shares. Pioneer Canada, or, if it is unable to do so, Pioneer must pay the redemption price on the date specified by the holder, which date must be not less than three nor more than 10 business days after the redemption request.
Automatic Redemption — Upon at least 120 days’ prior written notice by Pioneer Canada to the holders of exchangeable shares and subject to Pioneer’s exercise of its optional call right, as described below under the heading “Call Rights — Optional Call Right Instead of Automatic Redemption,” on the automatic redemption date, as defined below, Pioneer Canada will redeem each outstanding exchangeable share for one share of Pioneer’s common stock plus any unpaid dividends on such exchangeable shares. Automatic redemption date means December 18, 2003, unless (a) that date is extended by Pioneer Canada’s board of directors to a date not later than December 31, 2005, or (b) such date shall be accelerated to an earlier date, but no earlier than the third anniversary of the first issuance of exchangeable shares, by Pioneer Canada’s board of directors if at the time of acceleration less than 5% of the number of
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| Exchange Rights. |
Optional Exchange Right — Upon a proposed liquidation, dissolution or winding-up of Pioneer Canada and subject to Pioneer’s exercise of its optional call right, as described below under the heading “Call Rights — Liquidation Call Right Instead of Optional Exchange Right,” the share trustee, if instructed by a holder of exchangeable shares, has the right to require Pioneer Canada, or if it is unable to do so, Pioneer, to purchase each of such holder’s exchangeable shares in exchange for one share of Pioneer’s common stock plus any unpaid dividends on such exchangeable shares.
Automatic Exchange Right — Upon the liquidation, dissolution or winding-up of Pioneer, the share trustee, on behalf of the holders of the exchangeable shares, has the right to automatically exchange each exchangeable share for one share of Pioneer’s common stock plus any unpaid dividends on such exchangeable shares.
| Call Rights. |
Liquidation Call Right Instead of Optional Exchange Right — In the event of a proposed liquidation, dissolution or winding-up of Pioneer Canada, Pioneer has the right to purchase all of the outstanding exchangeable shares from the holders of the exchangeable shares on the effective date of any such liquidation, dissolution or winding-up in exchange for shares of Pioneer’s common stock.
Optional Call Right Instead of Automatic Redemption — Notwithstanding any proposed automatic redemption of the exchangeable shares by Pioneer Canada, as described above under the heading “Redemption — Automatic Redemption,” Pioneer has the overriding optional call right to purchase all of the outstanding exchangeable shares from the holders of the exchangeable shares on the automatic redemption date in exchange for shares of Pioneer’s common stock plus any unpaid dividends on the exchangeable shares.
Optional Call Right Instead of Optional Redemption — A proposed optional redemption by Pioneer Canada in response to a holder’s request to redeem such holder’s exchangeable shares will be deemed to be an offer of such exchangeable shares to Pioneer. Pioneer has the overriding optional call right to purchase the exchangeable shares tendered by such holder on the requested redemption date in exchange for shares of Pioneer’s common stock plus any unpaid dividends on the exchangeable shares.
If the holder revokes his redemption request, Pioneer will not purchase such holder’s exchangeable shares nor will Pioneer Canada redeem such shares. If the holder does not revoke his redemption request, on the redemption date Pioneer will acquire or Pioneer Canada will redeem, as the case may be, such exchangeable shares, in either case for one share of Pioneer’s common stock for each exchangeable share plus any unpaid dividends on such exchangeable shares.
Effect of Call Right Exercise — If Pioneer exercises one or more of its call rights, it will directly issue shares of its common stock to holders of exchangeable shares and will become the holder of such exchangeable shares. Pioneer will not be entitled to exercise any voting rights attached to the exchangeable shares it so acquires. If Pioneer declines to exercise its call rights when applicable, it will be required, pursuant to the support agreement described below, to issue shares of its common stock to Pioneer Canada which will, in turn, transfer such stock to the holders of exchangeable shares in consideration for the return and cancellation of such exchangeable shares.
| Delivery of Pioneer’s Common Stock. |
Pioneer has agreed to ensure that all shares of its common stock to be delivered by it under the support agreement or on the exercise of the exchange rights under the voting and exchange trust agreement are duly registered, qualified or approved under applicable Canadian and United States securities laws, if required, so that such shares may be freely traded by the holder of such shares, other
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| Other Agreements by Pioneer Related to Exchangeable Shares. |
Under the support agreement, Pioneer has agreed that:
| • | Pioneer will not declare or pay dividends on its common stock unless Pioneer Canada is able to and simultaneously pays an equivalent dividend on the exchangeable shares; | |
| • | Pioneer will ensure that Pioneer Canada is able to provide to the holders of the exchangeable shares the equivalent number of shares of Pioneer’s common stock in the event of a liquidation, dissolution or winding- up of Pioneer Canada, an optional redemption request by a holder of exchangeable shares, or the automatic redemption of the exchangeable shares by Pioneer Canada; | |
| • | Pioneer will not vote or otherwise take any action or omit to take any action causing the liquidation, dissolution or winding-up of Pioneer Canada; | |
| • | without the prior approval of Pioneer Canada and the holders of the exchangeable shares, Pioneer will not (1) distribute additional shares of its common stock or rights to subscribe for such shares or other property or assets to all or substantially all holders of shares of its common stock, or (2) change its common stock nor effect any tender offer, share exchange offer, issuer bid, take-over bid or similar transaction affecting its common stock, unless, in either case, Pioneer Canada makes simultaneously the same or an equivalent distribution on or change to the exchangeable shares, or in the rights of the holders of such shares; | |
| • | so long as there remain outstanding any exchangeable shares not owned by Pioneer or any entity controlled by Pioneer, Pioneer will remain the beneficial owner, directly or indirectly, of all outstanding shares of Pioneer Canada other than the exchangeable shares; | |
| • | with certain limited exceptions, the support agreement may not be amended without the approval of the holders of the exchangeable shares; and | |
| • | Pioneer will not exercise any voting rights attached to the exchangeable shares owned by it or any entity controlled by it on any matter considered at meetings of holders of exchangeable shares, including any approval sought from such holders in respect of matters arising under the support agreement. |
DESCRIPTION OF DEPOSITARY SHARES
General
Pioneer may offer fractional shares of preferred stock, rather than full shares of preferred stock. If Pioneer does so, Pioneer may issue receipts for depositary shares that each represent a fraction of a share of a particular series of preferred stock. The prospectus supplement will indicate that fraction. The shares of preferred stock represented by depositary shares will be deposited under a depositary agreement between Pioneer and a bank depositary. The phrase “bank depositary” means a bank or trust company that meets certain requirements and is selected by Pioneer. Each owner of a depositary share will be entitled to all the rights and preferences of the preferred stock represented by the depositary share. The depositary shares will be evidenced by depositary receipts issued pursuant to the depositary agreement. Depositary receipts will be distributed to those persons purchasing the fractional shares of preferred stock in accordance with the terms of the offering.
Pioneer has summarized some common provisions of a depositary agreement and the related depositary receipts. The forms of the depositary agreement and the depositary receipts relating to any
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Dividends and Other Distributions
If Pioneer pays a cash distribution or dividend on a series of preferred stock represented by depositary shares, the bank depositary will distribute such dividends to the record holders of such depositary shares. If the distributions are in property other than cash, the bank depositary will distribute the property to the record holders of the depositary shares. However, if the bank depositary determines that it is not feasible to make the distribution of property, the bank depositary may, with Pioneer’s approval, sell such property and distribute the net proceeds from such sale to the record holders of the depositary shares.
Redemption of Depositary Shares
If Pioneer redeems a series of preferred stock represented by depositary shares, the bank depositary will redeem the depositary shares from the proceeds received by the bank depositary in connection with the redemption. The redemption price per depositary share will equal the applicable fraction of the redemption price per share of the preferred stock. If fewer than all the depositary shares are redeemed, the depositary shares to be redeemed will be selected by lot or pro rata as the bank depositary may determine.
Voting the Preferred Stock
Upon receipt of notice of any meeting at which the holders of the preferred stock represented by depositary shares are entitled to vote, the bank depositary will mail the notice to the record holders of the depositary shares relating to such preferred stock. Each record holder of these depositary shares on the record date (which will be the same date as the record date for the preferred stock) may instruct the bank depositary as to how to vote the preferred stock represented by such holder’s depositary shares. The bank depositary will endeavor, insofar as practicable, to vote the amount of the preferred stock represented by such depositary shares in accordance with such instructions, and Pioneer will take all action which the bank depositary deems necessary in order to enable the bank depositary to do so. The bank depositary will abstain from voting shares of the preferred stock to the extent it does not receive specific instructions from the holders of depositary shares representing such preferred stock.
Amendment and Termination of the Depositary Agreement
The form of depositary receipt evidencing the depositary shares and any provision of the depositary agreement may be amended by agreement between the bank depositary and Pioneer. However, any amendment that materially and adversely alters the rights of the holders of depositary shares will not be effective unless such amendment has been approved by the holders of at least a majority of the depositary shares then outstanding. The depositary agreement may be terminated by the bank depositary or Pioneer only if (1) all outstanding depositary shares have been redeemed or (2) there has been a final distribution in respect of the preferred stock in connection with any liquidation, dissolution or winding up of Pioneer and such distribution has been distributed to the holders of depositary shares.
Charges of Bank Depositary
Pioneer will pay all transfer and other taxes and governmental charges arising solely from the existence of the depositary arrangements. Pioneer will pay charges of the bank depositary in connection with the initial deposit of the preferred stock and any redemption of the preferred stock. Holders of depositary shares will pay other transfer and other taxes and governmental charges and any other charges, including a fee for the withdrawal of shares of preferred stock upon surrender of depositary receipts, as are expressly provided in the depositary agreement to be payable by such holders.
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Withdrawal of Preferred Stock
Except as may be provided otherwise in the applicable prospectus supplement, upon surrender of depositary receipts at the principal office of the bank depositary, subject to the terms of the depositary agreement, the owner of the depositary shares may demand delivery of the number of whole shares of preferred stock and all money and other property, if any, represented by those depositary shares. Partial shares of preferred stock will not be issued. If the depositary receipts delivered by the holder evidence a number of depositary shares in excess of the number of depositary shares representing the number of whole shares of preferred stock to be withdrawn, the bank depositary will deliver to such holder at the same time a new depositary receipt evidencing the excess number of depositary shares. Holders of preferred stock thus withdrawn may not thereafter deposit those shares under the depositary agreement or receive depositary receipts evidencing depositary shares therefor.
Miscellaneous
The bank depositary will forward to holders of depositary shares all reports and communications from Pioneer that are delivered to the bank depositary and that Pioneer is required to furnish to the holders of the preferred stock.
Neither the bank depositary nor Pioneer will be liable if Pioneer is prevented or delayed by law or any circumstance beyond its control in performing its obligations under the depositary agreement. The obligations of the bank depositary and Pioneer under the depositary agreement will be limited to performance in good faith of their respective duties under the depositary agreement, and Pioneer will not be obligated to prosecute or defend any legal proceeding in respect of any depositary shares or preferred stock unless satisfactory indemnity is furnished. Pioneer may rely upon written advice of counsel or accountants, or upon information provided by persons presenting preferred stock for deposit, holders of depositary shares or other persons believed to be competent and on documents believed to be genuine.
Resignation and Removal of Bank Depositary
The bank depositary may resign at any time by delivering to Pioneer notice of its election to do so, and Pioneer may at any time remove the bank depositary. Any such resignation or removal will take effect upon the appointment of a successor bank depositary and its acceptance of such appointment. The successor bank depositary must be appointed within 60 days after delivery of the notice of resignation or removal and must be a bank or trust company meeting the requirements of the depositary agreement.
DESCRIPTION OF WARRANTS
General Description of Warrants
Pioneer may issue warrants for the purchase of debt securities, preferred stock or common stock. Warrants may be issued independently or together with other securities and may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between Pioneer and a bank or trust company, as warrant agent. The warrant agent will act solely as Pioneer’s agent in connection with the warrants and will not have any obligation or relationship of agency or trust for or with any holders or beneficial owners of warrants. A copy of the warrant agreement will be filed with the SEC in connection with the offering of warrants.
Debt Warrants
The prospectus supplement relating to a particular issue of warrants to purchase debt securities will describe the terms of those warrants, including the following:
| • | the title of the warrants; | |
| • | the offering price for the warrants, if any; |
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| • | the aggregate number of the warrants; | |
| • | the designation and terms of the debt securities that may be purchased upon exercise of the warrants; | |
| • | if applicable, the designation and terms of the debt securities that the warrants are issued with and the number of warrants issued with each debt security; | |
| • | if applicable, the date from and after which the warrants and any debt securities issued with them will be separately transferable; | |
| • | the principal amount of debt securities that may be purchased upon exercise of a warrant and the price at which the debt securities may be purchased upon exercise; | |
| • | the dates on which the right to exercise the warrants will commence and expire; | |
| • | if applicable, the minimum or maximum amount of the warrants that may be exercised at any one time; | |
| • | whether the warrants represented by the warrant certificates or the debt securities that may be issued upon exercise of the warrants will be issued in registered or bearer form; | |
| • | information relating to book-entry procedures, if any; | |
| • | the currency or currency units in which the offering price, if any, and the exercise price are payable; | |
| • | if applicable, a discussion of material United States federal income tax considerations; | |
| • | anti-dilution provisions of the warrants, if any; | |
| • | redemption or call provisions, if any, applicable to the warrants; | |
| • | any additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants; and | |
| • | any other information Pioneer thinks is important about the warrants. |
Stock Warrants
The prospectus supplement relating to a particular issue of warrants to purchase common stock or preferred stock will describe the terms of the common stock warrants and preferred stock warrants, including the following:
| • | the title of the warrants; | |
| • | the offering price for the warrants, if any; | |
| • | the aggregate number of the warrants; | |
| • | the designation and terms of the common stock or preferred stock that maybe purchased upon exercise of the warrants; | |
| • | if applicable, the designation and terms of the securities that the warrants are issued with and the number of warrants issued with each security; | |
| • | if applicable, the date from and after which the warrants and any securities issued with the warrants will be separately transferable; | |
| • | the number of shares of common stock or preferred stock that may be purchased upon exercise of a warrant and the price at which the shares may be purchased upon exercise; | |
| • | the dates on which the right to exercise the warrants commence and expire; |
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| • | if applicable, the minimum or maximum amount of the warrants that may be exercised at any one time; | |
| • | the currency or currency units in which the offering price, if any, and the exercise price are payable; | |
| • | if applicable, a discussion of material United States federal income tax considerations; | |
| • | anti-dilution provisions of the warrants, if any; | |
| • | redemption or call provisions, if any, applicable to the warrants; | |
| • | any additional terms of the warrants, including terms, procedures and limitations relating to the exchange and exercise of the warrants; and | |
| • | any other information Pioneer thinks is important about the warrants. |
Exercise of Warrants
Each warrant will entitle the holder of the warrant to purchase at the exercise price set forth in the applicable prospectus supplement the principal amount of debt securities or shares of preferred stock or common stock being offered. Holders may exercise warrants at any time up to the close of business on the expiration date set forth in the applicable prospectus supplement. After the close of business on the expiration date, unexercised warrants are void. Holders may exercise warrants as set forth in the prospectus supplement relating to the warrants being offered.
Until you exercise your warrants to purchase Pioneer’s debt securities, preferred stock, or common stock, you will not have any rights as a holder of Pioneer’s debt securities, preferred stock, or common stock, as the case may be, by virtue of your ownership of warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS AND
Pioneer may issue stock purchase contracts, including contracts obligating holders to purchase from Pioneer, and obligating Pioneer to sell to the holders, a specified number of shares of common stock or other securities at a future date or dates, which Pioneer refers to in this prospectus as “stock purchase contracts.” The price per share of the securities and the number of shares of the securities 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 part of units consisting of a stock purchase contract and debt securities, preferred securities, warrants or other securities or debt obligations of third parties, including U.S. treasury securities, securing the holders’ obligations to purchase the securities under the stock purchase contracts, which Pioneer refers to in this prospectus as “stock purchase units.” The stock purchase contracts may require holders to secure their obligations under the stock purchase contracts in a specified manner. The stock purchase contracts also may require Pioneer to make periodic payments to the holders of the stock purchase units or vice versa, and those payments may be unsecured or refunded on some basis.
The stock purchase contracts, and, if applicable, collateral or depositary arrangements, relating to the stock purchase contracts or stock purchase units, will be filed with the SEC in connection with the offering of stock purchase contracts or stock purchase units. The prospectus supplement relating to a particular issue of stock purchase contracts or stock purchase units will describe the terms of those stock purchase contracts or stock purchase units, including the following:
| • | if applicable, a discussion of material United States federal income tax considerations; and | |
| • | any other information Pioneer thinks is important about the stock purchase contracts or the stock purchase units. |
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DESCRIPTION OF GUARANTEES OF DEBT SECURITIES
Pioneer USA may issue guarantees of debt securities offered by Pioneer in any prospectus supplement. A copy of the guarantee will be filed with the SEC in connection with the offering of guarantees. Each guarantee will be issued under an indenture. The prospectus supplement relating to a particular issue of guarantees will describe the terms of those guarantees, including the following:
| • | the series of debt securities to which the guarantees apply; | |
| • | whether the guarantees are secured or unsecured; | |
| • | whether the guarantees are conditional or unconditional; | |
| • | whether the guarantees are senior or subordinate to other guarantees or debt; | |
| • | the terms under which the guarantees may be amended, modified, waived, released or otherwise terminated, if different from the provisions applicable to the guaranteed debt securities; | |
| • | any additional terms of the guarantees; and | |
| • | any other information Pioneer USA thinks is important about the guarantees. |
PLAN OF DISTRIBUTION
Pioneer or Pioneer USA may sell the offered securities in and outside the United States (1) through underwriters or dealers, (2) directly to purchasers, including Pioneer’s affiliates and stockholders, in a rights offering, (3) through agents or (4) through a combination of any of these methods. The prospectus supplement will include the following information:
| • | the terms of the offering; | |
| • | the names of any underwriters or agents; | |
| • | the name or names of any managing underwriter or underwriters; | |
| • | the purchase price or initial public offering price of the securities; | |
| • | the net proceeds to Pioneer or Pioneer USA from the sale of the securities; | |
| • | any delayed delivery arrangements; | |
| • | any underwriting discounts, commissions and other items constituting underwriters’ compensation; | |
| • | any discounts or concessions allowed or reallowed or paid to dealers; and | |
| • | any commissions paid to agents. |
Sale through Underwriters or Dealers
If underwriters are used in the sale, the underwriters will acquire the securities for their own account for resale to the public, either on a firm commitment basis or a best efforts basis. The underwriters may resell the securities from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. Underwriters may offer securities to the public either through underwriting syndicates represented by one or more managing underwriters or directly by one or more firms acting as underwriters. Unless Pioneer or Pioneer USA informs you otherwise in the prospectus supplement, the obligations of the underwriters to purchase the securities will be subject to certain conditions. The underwriters may change from time to time any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers.
Pioneer may also make direct sales through subscription rights distributed to its existing stockholders on a pro rata basis, which may or may not be transferable. In any distribution of subscription rights to Pioneer’s stockholders, if all of the underlying securities are not subscribed for, Pioneer may then sell the
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During and after an offering through underwriters, the underwriters may purchase and sell the securities in the open market. These transactions may include overallotment and stabilizing transactions and purchases to cover syndicate short positions created in connection with the offering. The underwriters may also impose a penalty bid, which means that selling concessions allowed to syndicate members or other broker-dealers for the offered securities sold for their account may be reclaimed by the syndicate if the offered securities are repurchased by the syndicate in stabilizing or covering transactions. These activities may stabilize, maintain or otherwise affect the market price of the offered securities, which may be higher than the price that might otherwise prevail in the open market. If commenced, the underwriters may discontinue these activities at any time.
Some or all of the securities that Pioneer or Pioneer USA offers though this prospectus may be new issues of securities with no established trading market. Any underwriters to whom Pioneer or Pioneer USA sells its securities for public offering and sale may make a market in those securities, but they will not be obligated to do so and they may discontinue any market making at any time without notice. Accordingly, each of Pioneer and Pioneer USA cannot assure you of the liquidity of, or continued trading markets for, any securities that it offers.
If dealers are used in the sale of securities, Pioneer or Pioneer USA will sell the securities to them as principals. The dealers may then resell those securities to the public at varying prices determined by the dealers at the time of resale. Pioneer or Pioneer USA will include in the prospectus supplement the names of the dealers and the terms of the transaction.
Direct Sales and Sales through Agents
Pioneer or Pioneer USA may sell the securities directly. In this case, no underwriters or agents would be involved. Pioneer or Pioneer USA may also sell the securities through agents designated from time to time. In the prospectus supplement, Pioneer or Pioneer USA will name any agent involved in the offer or sale of the offered securities, and Pioneer or Pioneer USA will describe any commissions payable to the agent. Unless Pioneer or Pioneer USA informs you otherwise in the prospectus supplement, any agent will agree to use its reasonable best efforts to solicit purchases for the period of its appointment.
Pioneer or Pioneer USA may sell the securities directly to institutional investors or others who may be deemed to be underwriters within the meaning of the Securities Act of 1933 with respect to any sale of those securities. Pioneer or Pioneer USA will describe the terms of any such sales in the prospectus supplement.
Remarketing Arrangements
Offered securities may also be offered and sold, if so indicated in the applicable prospectus supplement, in connection with a remarketing upon their purchase, in accordance with a redemption or repayment pursuant to their terms, or otherwise, by one or more remarketing firms, acting as principals for their own accounts or as agents for Pioneer or Pioneer USA. Any remarketing firm will be identified and the terms of its agreements, if any, with Pioneer or Pioneer USA and its compensation will be described in the applicable prospectus supplement. Remarketing firms may be deemed to be underwriters, as that term is defined in the Securities Act of 1933, in connection with the securities remarketed.
Delayed Delivery Contracts
If Pioneer or Pioneer USA so indicates in the prospectus supplement, Pioneer or Pioneer USA may authorize agents, underwriters or dealers to solicit offers from certain types of institutions to purchase securities from Pioneer or Pioneer USA at the public offering price under delayed delivery contracts. These contracts would provide for payment and delivery on a specified date in the future. The contracts
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General Information
Pioneer or Pioneer USA may have agreements with the agents, dealers, underwriters and remarketing firms to indemnify them against certain civil liabilities, including liabilities under the Securities Act of 1933, or to contribute with respect to payments that the agents, dealers, underwriters or remarketing firms may be required to make. Agents, dealers, underwriters and remarketing firms may be customers of, engage in transactions with or perform services for Pioneer or Pioneer USA in the ordinary course of their businesses.
LEGAL MATTERS
Except as set forth in the applicable prospectus supplement, Vinson & Elkins L.L.P., Dallas, Texas, will pass upon the validity of Pioneer’s debt securities, common stock, preferred stock, depositary shares, warrants, stock purchase contracts and stock purchase units and Pioneer USA’s guarantees of debt securities.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated financial statements included in our annual report on Form 10-K as of December 31, 2001 and 2000, and for each of the years in the three-year period ended December 31, 2001, as set forth in their report, which is incorporated by reference in this prospectus and the registration statement. Our financial statements are incorporated by reference in this prospectus and the registration statement in reliance upon Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.
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