-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, tzLtrVZc9phAE2J6dU1x0KQZNXXJXCDeSrccMt0vKDAzybJt5iB1FX2KFkngWoJG IGVgu6apIliUKdkf7e2QWg== 0000950131-94-001637.txt : 19941104 0000950131-94-001637.hdr.sgml : 19941104 ACCESSION NUMBER: 0000950131-94-001637 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19941102 SROS: CBOE SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SANTA FE PACIFIC CORP CENTRAL INDEX KEY: 0000732639 STANDARD INDUSTRIAL CLASSIFICATION: 4011 IRS NUMBER: 363258709 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-51435 FILM NUMBER: 94557323 BUSINESS ADDRESS: STREET 1: 1700 EAST GOLF RD CITY: SCHAUMBURG STATE: IL ZIP: 60173-5860 BUSINESS PHONE: 7089956000 FORMER COMPANY: FORMER CONFORMED NAME: SANTA FE SOUTHERN PACIFIC CORP DATE OF NAME CHANGE: 19890516 424B2 1 PRO SUPPLEMENT RULE NO. 424(b)(2) REGISTRATION NO. 33-51435 PROSPECTUS SUPPLEMENT (To Prospectus dated January 13, 1994) LOGO SANTA FE PACIFIC CORPORATION $100,000,000 8 3/8% Notes due November 1, 2001 Interest payable May 1 and November 1 ISSUE PRICE: 99.748% $100,000,000 8 5/8% Notes due November 1, 2004 Interest payable May 1 and November 1 ISSUE PRICE: 99.931% Interest on the 8 3/8% Notes due November 1, 2001 and the 8 5/8% Notes due November 1, 2004 (collectively referred to herein as the "Notes") is payable semiannually on May 1 and November 1 of each year, beginning May 1, 1995. The Notes will not be redeemable prior to maturity and will not be subject to any sinking fund. The Notes will be represented by one or more Global Securities registered in the name of The Depository Trust Company (the "Depositary") or its nominee. Interests in the Global Securities will be shown on, and transfer thereof will be effected only through, records maintained by the Depositary and its participants. Except as described herein, Notes in definitive form will not be issued. See "Description of Notes." Settlement for the Notes will be made in immediately available funds. So long as the Notes are represented by Global Securities registered in the name of the Depositary or its nominee, the Notes will trade in the Depositary's Same-Day Funds Settlement System, and secondary market trading activity in the Notes will therefore settle in immediately available funds. So long as the Notes are represented by Global Securities, all payments of principal and interest will be made by the Company in immediately available funds. See "Description of Notes--Same-Day Settlement and Payment" in this Prospectus Supplement. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - --------------------------------------------------------------------------------
UNDERWRITING PRICE TO DISCOUNTS AND PROCEEDS TO PUBLIC (1) COMMISSIONS(2) COMPANY (1)(3) - ------------------------------------------------------------------------- Per 8 3/8% Note 99.748% .625% 99.123% - ------------------------------------------------------------------------- Total $99,748,000 $625,000 $99,123,000 - ------------------------------------------------------------------------- Per 8 5/8% Note 99.931% .650% 99.281% - ------------------------------------------------------------------------- Total $99,931,000 $650,000 $99,281,000 - -------------------------------------------------------------------------
(1) Plus accrued interest, if any, from November 8, 1994. (2) The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (3) Before deducting expenses payable by the Company estimated at $325,000. The Notes are offered, subject to prior sale, when, as and if accepted by the Underwriters and subject to certain conditions. It is expected that delivery of the Notes will be made in book-entry form only on or about November 8, 1994 through the facilities of the Depositary, against payment therefor in same-day funds. J.P. MORGAN SECURITIES INC. GOLDMAN, SACHS & CO. SALOMON BROTHERS INC November 1, 1994 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH THEY RELATE OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION. ---------------- TABLE OF CONTENTS PROSPECTUS SUPPLEMENT PROSPECTUS
PAGE ---- Documents Incorporated by Reference. S-2 Use of Proceeds..................... S-3 Recent Developments................. S-3 Capitalization...................... S-6 Ratio of Earnings to Fixed Charges.. S-6 Summary Consolidated Financial Data. S-7 Description of Notes................ S-8 Underwriting........................ S-9 Experts............................. S-10
PAGE ---- Available Information............... 2 Documents Incorporated by Reference. 2 The Company......................... 3 Ratio of Earnings to Fixed Charges.. 3 Use of Proceeds..................... 4 Description of Debt Securities...... 4 Plan of Distribution................ 12 Validity of Securities.............. 13 Experts............................. 13
---------------- DOCUMENTS INCORPORATED BY REFERENCE The following documents previously filed with the Securities and Exchange Commission (the "Commission") by Santa Fe Pacific Corporation (herein referred to as "SFP" or the "Company") pursuant to the Securities Exchange Act of 1934 (the "Exchange Act") are incorporated by reference in this Prospectus: 1. SFP's Annual Report on Form 10-K for the year ended December 31, 1993 (which incorporates by reference certain information from SFP's Proxy Statement relating to the 1994 Annual Meeting of Stockholders and includes both Amendment No. 1 and Amendment No. 2 on Form 10-K/A dated June 29, 1994 and October 5, 1994, respectively); 2. SFP's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 1994 (including Amendment No. 1 thereto on Form 10-Q/A each dated October 5, 1994); and 3. SFP's Current Reports on Form 8-K dated June 29, 1994 (including Amendment No. 1 thereto on Form 8-K/A dated July 29, 1994), August 3, 1994 (including Amendment No. 1 thereto on Form 8-K/A dated October 5, 1994), October 5, 1994, October 19, 1994 and October 28, 1994 (which incorporates by reference certain reports filed by Burlington Northern Inc. ("BNI") and which includes pro forma information relating to the merger of the Company with BNI). S-2 All documents filed by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus Supplement and prior to the termination of the Offering shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus Supplement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus Supplement. The Company will provide without charge to each person to whom this Prospectus Supplement has been delivered a copy of any or all of the documents referred to above which have been or may be incorporated by reference herein other than exhibits to such documents (unless such exhibits are specifically incorporated by reference therein). Requests for such copies should be directed to Santa Fe Pacific Corporation, 1700 East Golf Road, Schaumburg, Illinois 60173-5860, Attention: Marsha K. Morgan, Corporate Secretary, telephone number (708) 995-6000. USE OF PROCEEDS The net proceeds from the sale of the Notes offered hereby will be used for general corporate purposes, including the funding of capital improvement projects and the repayment of short term borrowings, totaling $77.4 million outstanding on November 1, 1994 with an average interest rate of 4.95%. RECENT DEVELOPMENTS Santa Fe Pacific Gold Company ("SFP Gold"), previously a wholly owned subsidiary of the Company, completed the initial public offering of its common stock on June 23, 1994. Approximately 19 million shares were sold at a price of $14 per share resulting in net proceeds of $250.3 million, the majority of which was used for the repayment of outstanding debt of SFP Gold. On June 29, 1994, the Board of Directors of the Company declared a special dividend to holders of its common stock as of September 12, 1994, consisting of a distribution on a pro rata basis of its remaining 85.4% interest in SFP Gold. The distribution became effective September 30, 1994, and SFP Gold is now a separate, independent entity. The Company's 1993 consolidated financial statements and notes were retroactively restated to present SFP Gold as discontinued operations in the Company's Current Report on Form 8-K dated August 3, 1994 (as amended on Form 8-K/A dated October 5, 1994), which is incorporated herein by reference, and the financial information herein reflects the retroactive restatement. On June 29, 1994, the Company and BNI entered into a definitive Agreement and Plan of Merger (the "Merger Agreement"), which calls for the Company to merge with and into BNI, with BNI being the surviving corporation (the "Merger"). On October 26, 1994, after Union Pacific Corporation ("UPC") announced its competing bid (discussed below) for the acquisition of the Company, the Company and BNI amended the Merger Agreement to increase the exchange ratio in the Merger from 0.27 shares of BNI common stock for each share of Company common stock to 0.34 shares of BNI common stock for each share of Company common stock. Upon completion of the merger, BNI will change its name to Burlington Northern Santa Fe Corporation. Mr. Gerald Grinstein, BNI's chairman and chief executive officer, will be chairman of the surviving corporation. Mr. Robert D. Krebs, chairman, president and chief executive officer of the Company, will be president and chief executive officer of the surviving corporation. Two-thirds of the directors of the surviving corporation will be designated by BNI, and one-third of the directors of the surviving corporation will be designated by the Company. The Merger has been approved by the boards of directors of the Company and BNI, but is still subject to a number of conditions, including approval by the stockholders of both the Company and BNI and approval by the Interstate Commerce Commission (the "ICC"). S-3 Under existing law, the ICC is required to enter a final order with respect to the Merger within 31 months after BNI's and the Company's application for approval is filed. BNI and the Company have requested the ICC to decide the case on an expedited basis and the parties expect that the ICC decision will be made on a time frame significantly shorter than the 31-month period required by law. On October 5, 1994, the ICC served an order establishing a schedule that would result in a final ICC decision within 535 days from the filing of the application. The parties filed the application on October 13, 1994. Notwithstanding this schedule, there can be no assurance that the ICC will issue a decision any sooner than the 31-month period permitted the ICC by law. If approved and all conditions to the Merger are satisfied or waived, consummation of the Merger may not occur for two or more years in the future. Upon consummation of the Merger, which is subject to the foregoing regulatory and stockholder approvals, BNI, as the surviving corporation, will be the obligor under the Notes. Prior to the consummation of the Merger, BNI will have no obligations under the Notes. The following information about BNI is derived from documents filed by BNI with the Commission under the Exchange Act. BNI was incorporated in the State of Delaware in 1981 as part of a holding company reorganization. BNI and its majority-owned subsidiaries are primarily engaged in the rail transportation business. BNI's principal subsidiary is Burlington Northern Railroad Company ("BN Railroad"). BN Leasing Corporation, a wholly owned subsidiary of BNI, was formed in 1989 to acquire railroad rolling stock and other equipment necessary for the transportation and other business affairs of BNI. BN Railroad operates the largest railroad system in the United States based on miles of road and second main track, with approximately 24,500 total miles at December 31, 1993. The principal cities served include Chicago, Minneapolis- St. Paul, Fargo-Moorhead, Billings, Spokane, Seattle, Portland, St. Louis, Kansas City, Des Moines, Omaha, Lincoln, Cheyenne, Denver, Fort Worth, Dallas, Houston, Galveston, Tulsa, Wichita, Springfield (Missouri), Memphis, Birmingham, Mobile and Pensacola. The transportation of coal is BN Railroad's single largest source of revenues, accounting for approximately one-third of the total. Based on carloadings and tons hauled, BN Railroad is the largest transporter of western low-sulfur coal in the United States. Based on the same criteria, BN Railroad is also the largest rail transporter of grain in North America. Other significant aspects of BN Railroad's business include intermodal transportation and the transportation of forest products, chemicals, consumer products, minerals processors, iron and steel, vehicles and machinery and aluminum, non- ferrous metals and ores. On October 5, 1994, UPC provided the Company with an unsolicited written proposal (the "UPC Proposal") to acquire SFP in a tax-free merger in which SFP stockholders would receive, for each share of SFP common stock, .344 of a share of UPC common stock, having a value of $18 per SFP share based on the closing price on October 4, 1994 of UPC common stock. On October 30, 1994, UPC announced that it was revising the UPC Proposal to offer .407 of a share of UPC common stock for each share of SFP common stock. On October 31, 1994, .407 of a share of UPC common stock (based on the closing price on that date) had a value of $19.89. The transaction contemplated in the UPC Proposal is subject to ICC approval, the termination of the Merger Agreement, execution of a definitive agreement and the approval of the Board of Directors and the stockholders of both SFP and UPC. The UPC Proposal is also conditioned upon the satisfactory completion of a due diligence review of SFP. The UPC Proposal stated that UPC is prepared to grant conditions to Southern Pacific, BNI or other railroads, including access to points that would otherwise change from two serving railroads to one, rights to handle service-sensitive business moving between California, Chicago and the Midwest, and access to the Kansas and Oklahoma grain markets. The UPC Proposal further stated that UPC envisions that certain members of the SFP Board would be invited to serve on UPC's Board. The UPC Proposal further stated that UPC was prepared to immediately commence negotiation of a definitive merger agreement containing mutually agreeable terms and conditions. After discussions at board meetings and consultations with its financial and legal advisors, the SFP Board unanimously decided to reject the UPC Proposal and reaffirm its recommendation to SFP's stockholders that they approve the Merger Agreement and the Merger. On October 30, 1994, SFP announced that the Board of Directors of SFP will consider the revised UPC Proposal, although SFP noted that the UPC Proposal requires SFP to terminate the Merger Agreement with BNI and that the UPC Proposal is subject to a number of conditions including the approval of the ICC. S-4 Various lawsuits have been filed with respect to the Merger, including by UPC and certain shareholders seeking to enjoin consummation of the Merger. The Company believes that all of these lawsuits are meritless and intends to oppose them vigorously. In connection with a Special Meeting of Stockholders of SFP to be held November 18, 1994, for stockholders to consider and vote upon a proposal to approve and adopt the Merger Agreement, the Company has sent stockholders of record as of October 19, 1994 a Joint Proxy Statement/Prospectus, dated October 12, 1994, as supplemented by a Supplemental Joint Proxy Statement/Prospectus dated October 28, 1994. On October 13, 1994, UPC announced that it intended to solicit proxies from the Company's stockholders to vote against approval of the Merger. On October 19, 1994, the Company announced results for the quarter ended September 30, 1994. SFP reported net income for such third quarter of $50.5 million or $0.27 per share compared to a net loss of $2.8 million or $0.01 per share for the third quarter of 1993. The increase in net income primarily relates to: (i) higher operating income due to increased traffic levels, continued operating efficiencies, and the adverse effects of flooding in the midwest in 1993; (ii) higher equity in earnings of Santa Fe Pacific Pipeline Partners, L.P. ("Pipelines") of $12.8 million, which includes a $12.2 million special litigation and environmental charge in 1993; (iii) higher income taxes in 1993 which reflect a $27.7 million charge for the retroactive effect of an increase in the federal income tax rate from 34% to 35%; and (iv) lower interest expense. The above increases are partially offset by a $28.8 million decrease in other income-net. Other income-net in 1993 included pre-tax credits totaling $21.6 million related to the favorable outcome of arbitration and litigation settlements. Income for the third quarter of 1993 also included $7.5 million from the Company's discontinued gold operations. These gold operations were treated as discontinued as of June 30, 1994 and made no contribution to 1994 third quarter income. SFP reported net income from continuing operations of $50.5 million or $0.27 per share for the third quarter of 1994 compared to adjusted net income from continuing operations of $12.0 million or $0.07 per share for the third quarter of 1993. This increase is primarily due to the factors described above. Adjustments for the third quarter of 1993 include the Pipelines litigation and environmental charge, the retroactive increase in tax rates, and the favorable arbitration and litigation settlements, discussed above. S-5 CAPITALIZATION The following table sets forth the consolidated capitalization of the Company as of June 30, 1994, and as adjusted to give effect to the issuance of the Notes offered hereby.
ACTUAL AS ADJUSTED -------- ----------- (UNAUDITED) (IN MILLIONS) Total Debt: Equipment obligations............................. $ 495.4 $ 495.4 Pipeline Exchangeable Debentures.................. 219.0 219.0 Senior Notes...................................... 200.0 200.0 Term Loan......................................... 72.5 72.5 Mortgage bonds.................................... 95.8 95.8 Notes offered hereby.............................. -- 200.0 Other obligations................................. 21.8 21.8 -------- -------- Total Debt(1)................................... 1,104.5 1,304.5 -------- -------- Shareholders' Equity: Common stock...................................... 190.0 190.0 Paid-in capital................................... 858.0 858.0 Retained earnings................................. 212.3 212.3 Treasury stock.................................... (104.4) (104.4) -------- -------- Total Shareholders' Equity...................... 1,155.9 1,155.9 -------- -------- Total Capitalization................................ $2,260.4 $2,460.4 ======== ========
- -------- (1) Total debt includes current maturities of $172.2 million with respect to the Company's long term debt as of June 30, 1994. The above table does not include $77.4 million in short term borrowings incurred subsequent to June 30, 1994. See "Use of Proceeds." RATIO OF EARNINGS TO FIXED CHARGES The ratio of earnings to fixed charges of the Company for the six months ended June 30, 1994 and 1993, and for each of the five years ended December 31, 1993 is shown below. The ratio of earnings to fixed charges has been computed on a consolidated basis. Earnings represent income from continuing operations before income taxes less equity in undistributed earnings of unconsolidated affiliates, plus fixed charges. Fixed charges represent interest costs, amortization of debt discount and issue costs, and the estimated interest portion of rental charges. The ratios do not include the Company's gold operations and the ratios therefore differ from those presented in the accompanying Prospectus.
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ------------ ---------------------------- 1994 1993 1993 1992 1991 1990 1989 ----- ----- ---- ---- ---- ------ ------ Ratio of Earnings to Fixed Charges (1)............................... 3.1 3.5 3.0 1.2 1.4 -- -- Deficiency in earnings to cover fixed charges (in millions)(1).... -- -- -- -- -- $395.6 $524.5
- -------- (1) Earnings for the six months ended June 30, 1993 and for the year ended December 31, 1993 include a $145.4 million gain on the sale of rail lines in southern California by The Atchison, Topeka and Santa Fe Railway Company ("Santa Fe Railway"). Excluding this gain, the ratios would have been 1.9 and 2.2, respectively. Earnings in 1992 include a $320.4 million Santa Fe Railway special charge and a $204.9 million gain on the sale of rail lines in southern California. Excluding these items the ratio would have been 1.8. Earnings in 1990 include a $342.1 million charge for an unfavorable litigation settlement. Excluding this charge SFP was unable to fully cover fixed charges by $53.5 million. Earnings in 1989 include a $441.8 million Santa Fe Railway special charge. Excluding this charge, SFP was unable to fully cover fixed charges by $82.7 million. S-6 SUMMARY CONSOLIDATED FINANCIAL DATA The following summary consolidated financial data for the six months ended June 30, 1994 and 1993 have been derived from the Company's unaudited interim consolidated financial statements and, in the Company's opinion, all adjustments necessary to fairly summarize such information have been included therein. The summary consolidated financial data for 1993, 1992, and 1991 have been derived from the Company's audited consolidated financial statements. The Summary Consolidated Financial Data should be read in conjunction with those financial statements and notes thereto that are incorporated by reference herein. See "Documents Incorporated by Reference." As a result of the June 29, 1994 declaration of a dividend of the Company's interest in SFP Gold to the Company's stockholders, the following financial data reflects the Company's gold operations as discontinued operations.
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ----------------- ------------------------------ 1994 1993 1993 1992 1991 -------- -------- -------- -------- -------- (DOLLARS IN MILLIONS) For the Period: Operating revenues....... $1,289.7 $1,192.3 $2,409.2 $2,251.7 $2,153.5 Operating income (loss).. 188.1 153.3 317.7 (22.8)(1) 255.4 Income from continuing operations(2)........... 102.6 134.6 177.4 21.1 62.4 Income from discontinued operations, net of income taxes(3)......... 23.1 140.0 161.4 42.4 34.0 Extraordinary charges/accounting changes................. -- -- -- (168.0) -- Net income (loss)........ 125.7 274.6 338.8 (104.5) 96.4 At Period-End: Total assets............. 5,717.2 5,333.6 5,374.0 4,946.4 4,812.1 Total debt............... 1,104.5 1,291.7 1,175.8 1,306.7 1,702.0 Shareholders' equity..... 1,155.9 1,209.4 1,268.3 928.5 1,036.9
- -------- (1) Includes a pre-tax Santa Fe Railway special charge of $320.4 million. (2) Income from continuing operations for the six months ended June 30, 1994 includes the after tax effects of a gain on sale of an investment, a favorable litigation settlement, a credit resulting from a change in postretirement medical benefits eligibility requirements and an adverse appellate court decision. Income from continuing operations for the six months ended June 30, 1993 includes the after tax effect of gain on sale of rail lines in southern California. Adjusted for these items, income from continuing operations for the six months ended June 30, 1994 and 1993 would have been $73.0 million and $49.4 million, respectively. 1993 income from continuing operations includes the after tax effect of gain on sale of rail lines in southern California, favorable outcome of arbitration and litigation settlements, special charges at Santa Fe Pacific Pipeline Partners, L.P. ("Pipelines"), and the retroactive impact of the increase in federal income tax rate to 35%. 1992 income from continuing operations includes the after tax effect of Santa Fe Railway and Pipelines special charges and gain on sale of rail lines in southern California. Adjusted for these items income from continuing operations would have been $114.5 million and $96.4 million in 1993 and 1992, respectively. (3) Discontinued operations represents income from the Company's gold operations and includes an after tax gain of $108.3 million related to an exchange of mineral assets with Hanson Natural Resources Company during the first half of 1993. S-7 DESCRIPTION OF NOTES The following description of the particular terms of the Notes supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities set forth in the accompanying Prospectus, to which description reference is hereby made. Whenever a defined term is referred to and not herein defined, the definition thereof is contained in the accompanying Prospectus or in the Indenture referred to therein. GENERAL The 8 3/8% Notes due November 1, 2001 (the "8 3/8% Notes") and the 8 5/8% Notes due November 1, 2004 (the "8 5/8% Notes") are each to be issued under a Restated Indenture, dated as of November 1, 1994 (the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee, which Indenture is more fully described under the heading "Description of Debt Securities" in the accompanying Prospectus. The Notes will rank pari passu with each other and with all other unsecured and unsubordinated indebtedness of the Company. The 8 3/8% Notes will bear interest at 8 3/8% per annum and will mature on November 1, 2001. The 8 5/8% Notes will bear interest at 8 5/8% per annum and will mature on November 1, 2004. The Notes will bear interest from November 8, 1994 or from the most recent interest payment date to which interest has been paid or provided for, payable semiannually in arrears on May 1 and November 1 of each year, commencing May 1, 1995, to the persons in whose names the Notes are registered at the close of business on the immediately preceding April 15 and October 15, respectively, whether or not such day is a Business Day. The covenant regarding Liens described in the accompanying Prospectus under the heading "Description of Debt Securities--Certain Covenants" is replaced by a covenant described as follows: In the Indenture, the Company covenants that it will not, and it will not permit any subsidiary to, create, assume, incur or suffer to exist any Lien upon any stock or indebtedness of Santa Fe Railway to secure any Obligation (other than the Securities) of the Company, any Subsidiary or any other Person, unless all of the Outstanding Securities are directly secured equally and ratably with such indebtedness; provided, however, that Santa Fe Railway may secure any indebtedness of Santa Fe Railway with other indebtedness of Santa Fe Railway. (Section 1008). The Indenture defines the term "Santa Fe Railway" to include any successor or assign thereof, whether by merger or otherwise. The purpose of this change is to harmonize the Lien limitation applicable to the Notes to the comparable provisions applicable to certain indebtedness of BNI. Upon consummation of the Merger, the Company will be required to offer to prepay the Company's $200 million aggregate principal amount of 12.65% Senior Notes due October 1, 2000 (the "12.65% Senior Notes"), together with accrued interest and a make-whole premium based on market interest rates at the time of the Merger and the then-remaining weighted average life of the 12.65% Senior Notes. Neither the Trustee nor Holders of the Notes will have the right to accelerate payment of the Notes as a result of any prepayment or offer to prepay the 12.65% Senior Notes resulting from the consummation of the Merger. BOOK-ENTRY SYSTEM Upon issuance, the Notes will be represented by a Global Security deposited with, or on behalf of, The Depository Trust Company, New York, New York, which will act as Depositary with respect to the Notes (the "Depositary"). The Global Security representing the Notes will be registered in the name of a nominee of the Depositary. Except under the circumstances described in the accompanying Prospectus under "Description of Debt Securities--Global Securities," the Notes will not be issuable in definitive form. So long as the Notes are represented by a Global Security, the Depositary's nominee will be considered the sole owner S-8 or holder of the Notes for all purposes under the Indenture, and the beneficial owners of the Notes will be entitled only to those rights and benefits afforded to them in accordance with the Depositary's regular operating procedures. See "Description of Debt Securities--Global Securities" in the Prospectus. The Depositary has advised the Company and the Underwriters as follows: The Depositary is a limited-purpose trust company organized under the laws of the State of New York, 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 Exchange Act. The Depositary was created to hold securities for its participants and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book- entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. The Depositary's participants include securities brokers and dealers (including the Underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or their representatives) own the Depositary. Access to the Depositary's book-entry system is also available to other entities, such as banks, brokers, dealers and trust companies, that clear through or maintain a custodial relationship with a participant, either directly or indirectly. A further description of the Depositary's procedures with respect to Global Securities is set forth in the accompanying Prospectus under "Description of Debt Securities--Global Securities." The Depositary has confirmed to the Company, the Underwriters and the Trustee that it intends to follow such procedures with respect to the Notes. SAME-DAY SETTLEMENT AND PAYMENT Settlement for the Notes will be made by the Underwriters in immediately available funds. So long as the Notes are represented by Global Securities, all payments of principal and interest will be made by the Company in immediately available funds. Secondary trading in long-term notes and debentures of corporate issuers is generally settled in clearinghouse or next-day funds. In contrast, so long as the Notes are represented by Global Securities registered in the name of the Depositary or its nominee, the Notes will trade in the Depositary's Same-Day Funds Settlement System, and secondary market trading activity in the Notes will therefore be required by the Depositary to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in immediately available funds on trading activity in the Notes. UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement dated the date hereof, the Company has agreed to sell to the Underwriters named below, severally, and each of the Underwriters has severally agreed to purchase, the principal amount of Notes set forth opposite its name below:
PRINCIPAL AMOUNT OF NOTES ------------------------- UNDERWRITERS 8 3/8% NOTES 8 5/8% NOTES ------------ ------------ ------------ J.P. Morgan Securities Inc..................... $ 34,000,000 $ 34,000,000 Goldman, Sachs & Co............................ 33,000,000 33,000,000 Salomon Brothers Inc........................... 33,000,000 33,000,000 ------------ ------------ Total...................................... $100,000,000 $100,000,000 ============ ============
Under the terms and conditions of the Underwriting Agreement, the Underwriters are obligated to take and pay for all of the Notes if any are taken. The Underwriters initially propose to offer the Notes directly to the public at the public offering prices set forth on the cover page of this Prospectus Supplement and to certain dealers at such price less a concession not in excess of .375% of the principal amount of the 8 3/8% Notes and .400% of the principal amount of the S-9 8 5/8% Notes. The Underwriters may allow, and such dealers may reallow, a concession to certain other dealers not in excess of .250% of the principal amount of the 8 3/8% Notes and .250% of the principal amount of the 8 5/8% Notes. After the initial public offering of the Notes, the public offering price and such concessions may be changed. The Company does not intend to apply for listing of the Notes on a national securities exchange. The Notes are a new series of securities with no established trading market. The Company has been advised by the Underwriters that such Underwriters intend to make a market in the Notes, as permitted by applicable laws and regulations, but are not obligated to do so and may discontinue market making at any time at the sole discretion of such Underwriters without notice. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Notes. The Company has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. In the ordinary course of their respective businesses, each of the Underwriters and certain of their respective affiliates have individually engaged, and may in the future engage, in investment banking and commercial banking transactions with the Company and its affiliates. In addition, the Company has engaged Goldman, Sachs & Co. as its financial advisor in connection with the Merger and related matters for which Goldman, Sachs & Co. will receive customary fees. EXPERTS The consolidated financial statements of SFP as of December 31, 1993 and 1992 and for each of the three years in the period ended December 31, 1993, incorporated by reference in this Prospectus to SFP's Form 8-K/A dated October 5, 1994, have been so incorporated in reliance on the reports of Price Waterhouse LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The consolidated financial statements of BNI as of December 31, 1993 and 1992 and for each of the three years in the period ended December 31, 1993, incorporated by reference in this Prospectus, have been incorporated herein by reference in reliance on the report of Coopers & Lybrand L.L.P., independent accountants, given on the authority of that firm as experts in accounting and auditing. S-10 SANTA FE PACIFIC CORPORATION DEBT SECURITIES ---------------- Santa Fe Pacific Corporation (the "Company") may from time to time offer debt securities consisting of debentures, notes and/or other unsecured evidences of indebtedness in one or more series at an aggregate initial offering price not to exceed $250,000,000 or its equivalent in any other currency or composite currency ("Debt Securities"). The Debt Securities may be offered as separate series in amounts, at prices, and on terms to be determined at the time of sale. The accompanying Prospectus Supplement sets forth with regard to the series of Debt Securities in respect of which this Prospectus is being delivered (the "Securities") the title, aggregate principal amount, denominations (which may be in United States dollars, in any other currency or in a composite currency), maturity, rate, if any (which may be fixed or variable), and time of payment of any interest, any terms for redemption at the option of the Company or the holder, any terms for sinking fund payments, any listing on a securities exchange and the initial public offering price and any other terms in connection with the offering and sale of such Securities. The Company may sell Debt Securities to or through one or more underwriters or underwriters syndicates led by one or more managing underwriters, and also may sell Debt Securities directly to other purchasers or through agents. The accompanying Prospectus Supplement sets forth the names of any underwriters or agents involved in the sale of the Debt Securities in respect of which this Prospectus is being delivered, the principal amounts, if any, to be purchased by underwriters and the compensation, if any, of such underwriters or agents. See "Plan of Distribution" for possible indemnification arrangements for underwriters, agents and their controlling persons. This prospectus may not be used to consummate sales of Debt Securities unless accompanied by the Prospectus Supplement applicable to the Debt Securities being sold. ---------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- The date of this Prospectus is January 13, 1994 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Reports, proxy and information statements and other information filed with the Commission can be inspected and copied during normal business hours at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its regional offices at Seven World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Such reports, proxy and information statements, and other information concerning the Company can also be inspected at the offices of the New York Stock Exchange (the "NYSE"), 20 Broad Street, New York, New York 10005, the Chicago Stock Exchange, 440 South LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock Exchange, 301 Pine Street, San Francisco, California 94104, on which exchanges the common stock of the Company is listed. This Prospectus constitutes a part of a registration statement on Form S-3 (together with all amendments and exhibits, the "Registration Statement") filed by the Company (File No. 1-8627) with the Commission under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus omits certain of the information contained in the Registration Statement, and reference is hereby made to the Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the Debt Securities offered hereby. Any statements contained herein concerning the provisions of any document are not necessarily complete, and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. DOCUMENTS INCORPORATED BY REFERENCE The following documents heretofore filed by the Company under the Exchange Act with the Commission are incorporated herein by reference: (1) Annual Report on Form 10-K for the year ended December 31, 1992; (2) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993, and September 30, 1993; and (3) the Current Report on Form 8-K dated June 25, 1993 and Current Report on Form 8-K/A (Amendment No. 1) with respect thereto. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the Offering shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus has been delivered a copy of any or all of the documents referred to above which have been or may be incorporated by reference herein other than exhibits to such documents (unless such exhibits are specifically incorporated by reference therein). Requests for such copies should be directed to Santa Fe Pacific Corporation, 1700 East Golf Road, Schaumburg, Illinois 60173-5860, Attention: Marsha K. Morgan, Corporate Secretary, telephone number (708) 995- 6000. Unless otherwise indicated, currency amounts in the Prospectus and any Prospectus Supplement are stated in United States dollars ("$" or "dollars"). IN CONNECTION WITH THE DISTRIBUTION OF THE DEBT SECURITIES, THE UNDERWRITERS OR AGENTS MAY EFFECT TRANSACTIONS IN THE DEBT SECURITIES WITH A VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICES OF THE DEBT SECURITIES AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN ANY OVER-THE-COUNTER MARKET OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. 2 THE COMPANY Through its subsidiaries, the Company is engaged in rail transportation, the exploration, development, and production of gold, and pipeline transportation of refined petroleum products. SANTA FE RAILWAY The Atchison, Topeka and Santa Fe Railway Company ("Santa Fe Railway") is a major Class I freight railroad and as of December 31, 1992 operated approximately 8,750 route miles of track (approximately 7,800 of which were owned including easements) extending from Chicago to the Gulf of Mexico and the West Coast. Santa Fe Railway had 1992 revenues of $2,252 million, representing 90 percent of the Company's total revenues. Santa Fe Railway transports a wide range of manufacturing, agricultural, and natural resource products in 12 midwestern, southwestern, and western states. Intermodal business is the largest segment of Santa Fe Railway's business mix, accounting for over 40 percent of revenues. Carload commodities, which comprise other significant segments, include chemicals and petroleum, coal and other minerals and ores, grain and grain products, beverages, canned goods and grocery products, motor vehicles and parts, forest products, and metals. SFP GOLD Santa Fe Pacific Gold Corporation and its subsidiaries ("SFP Gold") conduct gold mining operations and explore for precious metals deposits. SFP Gold owns the Twin Creeks and Lone Tree gold mines in Nevada and the Mesquite gold mine in California. Gold contained in proven and probable in-place ore reserves totaled 11.2 million ounces in place as of June 30, 1993. SFP Gold expects to produce approximately 600,000 ounces of gold in 1993 and 900,000 ounces in 1994, which would rank it as the sixth largest primary gold producing company headquartered in North America. SFP Gold owns or controls approximately seven million acres of fee mineral rights in the western United States. The Company's management and board of directors are continuing to review the possibility of SFP Gold becoming a publicly-traded company as occurred with the Company's former real estate and energy subsidiaries. This evaluation, and the timing of any such actions, involve a number of economic, business, tax, and other considerations. In June 1993, the Company filed a request with the Internal Revenue Service for a ruling that a spin-off of SFP Gold would qualify as a tax-free distribution to the Company's stockholders. No ruling has yet been received. PIPELINES Through its subsidiaries, the Company owns an interest in, and serves as the general partner of, Santa Fe Pacific Pipeline Partners, L.P., a publicly traded Delaware master limited partnership formed in 1988 to acquire and operate a refined petroleum products pipeline system operating in the western United States. The Company is incorporated in the State of Delaware. The Company's principal executive offices are located at 1700 East Golf Road, Schaumburg, Illinois 60173-5860, telephone number (708) 995-6000. RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges of the Company for each of the five years ended December 31, 1992, and for the nine month period ended September 30, 1993.
YEAR ENDED DECEMBER 31, NINE MONTHS ENDED ---------------------------- SEPTEMBER 30, 1993 1992 1991 1990 1989 1988 ------------------ ---- ---- ------ ------ ---- Ratio of Earnings to Fixed Charges....................... 5.0 1.5 1.5 -- -- 1.0 Deficiency in earnings to cover fixed charges (in millions)................. -- -- -- $178.8 $473.1 --
3 The ratio of earnings to fixed charges has been computed on a consolidated basis. Earnings represent income from continuing operations before income taxes less equity in undistributed earnings of unconsolidated affiliates, plus fixed charges. Fixed charges represent interest costs, amortization of debt discount and issue costs, and the estimated interest portion of rental charges. Nine months ended September 30, 1993 earnings include a $145.4 million gain on the sale of California lines and a $217.5 million gain on the exchange of mineral assets. Excluding these gains, the ratio would have been 2.3. Earnings in 1992 include a $320.4 million Rail special charge and a $204.9 million gain on the sale of California lines. Excluding these items the ratio would have been 2.0. Earnings in 1990 include a $187.1 million charge for net unfavorable litigation settlements. Excluding this net charge, the ratio would have been 1.0. Earnings in 1989 include $441.8 million for Rail special charges. Excluding these charges, SFP was unable to fully cover fixed charges by $31.3 million. USE OF PROCEEDS Net proceeds from the sale of the Debt Securities of any series will be specified in the Prospectus Supplement applicable to such series and are expected to be used for general corporate purposes. DESCRIPTION OF DEBT SECURITIES The Debt Securities are to be issued under an Indenture (the "Indenture"), between the Company and The First National Bank of Chicago, as Trustee (the "Trustee"), a copy of which is filed as an exhibit to the Registration Statement of which this Prospectus is a part. The Debt Securities may be issued from time to time in one or more series. The particular terms of each series, or of Securities forming a part of a series, which are offered by a Prospectus Supplement will be described in such Prospectus Supplement. The following summaries of certain provisions of the Indenture do not purport to be complete and are subject, and are qualified in their entirety by reference, to all the provisions of the Indenture, including the definitions therein of certain terms, and, with respect to any particular Securities, to the description of the terms thereof included in the Prospectus Supplement relating thereto. Wherever particular Sections or defined terms of the Indenture are referred to herein or in a Prospectus Supplement, such Sections or defined terms are incorporated by reference herein or therein, as the case may be. The Company is a holding company, conducting its operations through its operating subsidiaries. Accordingly, the Company's ability to service the Debt Securities is dependent, in part, on its ability to obtain dividends or loans from such operating subsidiaries which may be subject to contractual restrictions. In addition, the rights of the Company and the rights of its creditors, including holders of the Debt Securities, to participate in any distribution of the assets of a subsidiary upon the liquidation or recapitalization of such subsidiary will be subject to the prior claims of the subsidiary's creditors except to the extent the Company itself may be a creditor with recognized claims against the subsidiary. The covenants in the Indenture would not necessarily afford the holders of the Debt Securities protection in the event of a decline in the Company's credit quality resulting from highly leveraged or other transactions involving the Company. GENERAL The Indenture provides that Debt Securities in separate series may be issued thereunder from time to time without limitation as to aggregate principal amount. The Company may specify a maximum aggregate principal amount for the Debt Securities of any series. (Section 301) The Debt Securities are to have such terms and provisions which are not inconsistent with the Indenture, including as to maturity, principal and interest, as the Company may determine. The Debt Securities will be unsecured obligations of the Company and will rank on a parity with all other unsecured and unsubordinated indebtedness of the Company. 4 The applicable Prospectus Supplement will set forth the price or prices at which the Debt Securities to be offered will be issued and will describe the following terms of such Securities: (1) the title of such Securities; (2) any limit on the aggregate principal amount of such Securities or the series of which they are a part; (3) the date or dates on which the principal of any of such Securities will be payable; (4) the rate or rates at which any of such Securities will bear interest, if any, the date or dates from which any such interest will accrue, the Interest Payment Dates on which any such interest will be payable and the Regular Record Date for any such interest payable on any Interest Payment Date; (5) the place or places where the principal of and any premium and interest on any of such Securities will be payable; (6) the period or periods within which, the price or prices at which and the terms and conditions on which any of such Securities may be redeemed, in whole or in part, at the option of the Company; (7) the obligation, if any, of the Company to redeem or purchase any of such Securities pursuant to any sinking fund or analogous provision or at the option of the Holder thereof, and the period or periods within which, the price or prices at which and the terms and conditions on which any of such Securities will be redeemed or purchased, in whole or in part, pursuant to any such obligation; (8) the denominations in which any of such Securities will be issuable, if other than denominations of $1,000 and any integral multiple thereof; (9) if the amount of principal of or any premium or interest on any of such Securities may be determined with reference to an index or pursuant to a formula, the manner in which such amounts will be determined; (10) if other than the currency of the United States of America, the currency, currencies or currency units in which the principal of or any premium or interest on any of such Securities will be payable (and the manner in which the equivalent of the principal amount thereof in the currency of the United States of America is to be determined for any purpose, including for the purpose of determining the principal amount deemed to be Outstanding at any time); (11) if the principal of or any premium or interest on any of such Securities is to be payable, at the election of the Company or the Holder thereof, in one or more currencies or currency units other than those in which such Securities are stated to be payable, the currency, currencies or currency units in which payment of any such amount as to which such election is made will be payable, the periods within which and the terms and conditions upon which such election is to be made and the amount so payable (or the manner in which such amount is to be determined); (12) if other than the entire principal amount thereof, the portion of the principal amount of any of such Securities which will be payable upon declaration of acceleration of the Maturity thereof; (13) if the principal amount payable at the Stated Maturity of any of such Securities will not be determinable as of any one or more dates prior to the Stated Maturity, the amount which will be deemed to be such principal amount as of any such date for any purpose, including the principal amount thereof which will be due and payable upon any Maturity other than the Stated Maturity or which will be deemed to be Outstanding as of any such date (or, in any such case, the manner in which such deemed principal amount is to be determined); (14) if applicable, that such Securities, in whole or any specified part, are defeasible pursuant to the provisions of the Indenture described under "Defeasance and Covenant Defeasance-- Defeasance and Discharge" or "Defeasance and Covenant Defeasance-- Covenant Defeasance", or under both such captions; (15) whether any of such Securities will be issuable in whole or in part in the form of one or more Global Securities and, if so, the respective Depositaries for such Global Securities, the form of any legend or legends to be borne by any such Global Security in addition to or in lieu of the legend referred to under "Form, Exchange and Transfer--Global Securities" and, if different from those described under such caption, any circumstances under which any such Global Security may be exchanged in whole or in part for Securities registered, and any transfer of such Global Security in whole or in part may be registered, in the names of Persons other than the Depositary for such Global Security or its nominee; (16) any addition to or change in the Events of Default applicable to any of such Securities and any change in the right of the Trustee or the Holders to declare the principal amount of any of such Securities due and payable; (17) any addition to or change in the covenants in the Indenture described under "Certain Covenants" applicable to any of such Securities; and (18) any other terms of such Securities not inconsistent with the provisions of the Indenture. (Section 301) Debt Securities, including Original Issue Discount Securities, may be sold at a substantial discount below their principal amount. Certain special United States federal income tax considerations (if any) applicable to Debt Securities sold at an original issue discount may be described in the applicable Prospectus Supplement. 5 In addition, certain special United States federal income tax or other considerations (if any) applicable to any Debt Securities which are denominated in a currency or currency unit other than United States dollars may be described in the applicable Prospectus Supplement. FORM, EXCHANGE AND TRANSFER The Debt Securities of each series will be issuable only in fully registered form, without coupons, and, unless otherwise specified in the applicable Prospectus Supplement, only in denominations of $1,000 and integral multiples thereof. (Section 302) At the option of the Holder, subject to the terms of the Indenture and the limitations applicable to Global Securities, Debt Securities of each series will be exchangeable for other Debt Securities of the same series of any authorized denomination and of a like tenor and aggregate principal amount. (Section 305) Subject to the term of the Indenture and the limitations applicable to Global Securities, Debt Securities may be presented for exchange as provided above or for registration of transfer (duly endorsed or with the form of transfer endorsed thereon duly executed) at the office of the Security Registrar or at the office of any transfer agent designated by the Company for such purpose. No service charge will be made for any registration of transfer or exchange of Debt Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. Such transfer or exchange will be effected upon the Security Registrar or such transfer agent, as the case may be, being satisfied with the documents of title and identity of the person making the request. The Company has appointed the Trustee as Security Registrar. Any transfer agent (in addition to the Security Registrar) initially designated by the Company for any Debt Securities will be named in the applicable Prospectus Supplement. (Section 305) The Company may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve a change in the office through which any transfer agent acts, except that the Company will be required to maintain a transfer agent in each Place of Payment for the Debt Securities of each series. (Section 1002) If the Debt Securities of any series (or of any series and specified terms) are to be redeemed in part, the Company will not be required to (i) issue, register the transfer of or exchange any Debt Security of that series (or of that series and specified terms, as the case may be) during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any such Debt Security that may be selected for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Debt Security so selected for redemption, in whole or in part, except the unredeemed portion of any such Debt Security being redeemed in part. (Section 305) GLOBAL SECURITIES Some or all of the Debt Securities of any series may be represented, in whole or in part, by one or more Global Securities which will have an aggregate principal amount equal to that of the Debt Securities represented thereby. Each Global Security will be registered in the name of a Depositary or a nominee thereof identified in the applicable Prospectus Supplement, will be deposited with such Depositary or nominee or a custodian therefor and will bear a legend regarding the restrictions on exchanges and registration of transfer thereof referred to below and any such other matters as may be provided for pursuant to the Indenture. Notwithstanding any provision of the Indenture or any Debt Security described herein, no Global Security may be exchanged in whole or in part for Debt Securities registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or any nominee of such Depositary unless (i) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or has ceased to be qualified to act as such as required by the Indenture, (ii) there shall have occurred and be continuing an Event of Default 6 with respect to the Debt Securities represented by such Global Security or (iii) there shall exist such circumstances, if any, in addition to or in lieu of those described above as may be described in the applicable Prospectus Supplement. All securities issued in exchange for a Global Security or any portion thereof will be registered in such names as the Depositary may direct. (Sections 204 and 305) As long as the Depositary, or its nominee, is the registered Holder of a Global Security, the Depositary or such nominee, as the case may be, will be considered the sole owner and Holder of such Global Security and the Debt Securities represented thereby for all purposes under the Debt Securities and the Indenture. Except in the limited circumstances referred to above, owners of beneficial interests in a Global Security will not be entitled to have such Global Security or any Debt Securities represented thereby registered in their names, will not receive or be entitled to receive physical delivery of certificated Debt Securities in exchange therefor and will not be considered to be the owners or Holders of such Global Security or any Debt Securities represented thereby for any purpose under the Debt Securities or the Indenture. All payments of principal of and any premium and interest on a Global Security will be made to the Depositary or its nominee, as the case may be, as the Holder thereof. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the ability to transfer beneficial interests in a Global Security. Ownership of beneficial interests in a Global Security will be limited to institutions that have accounts with the Depositary or its nominee ("participants") and to persons that may hold beneficial interests through participants. In connection with the issuance of any Global Security, the Depositary will credit, on its book-entry registration and transfer system, the respective principal amounts of Debt Securities represented by the Global Security to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the Depositary (with respect to participants' interests) or any such participant (with respect to interests of persons held by such participants on their behalf). Payments, transfers, exchanges and other matters relating to beneficial interests in a Global Security may be subject to various policies and procedures adopted by the Depositary from time to time. None of the Company, the Trustee or any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the Depositary's or any participant's records relating to, or for payments made on account of, beneficial interests in a Global Security, or for maintaining, supervising or reviewing any records relating to such beneficial interests. Secondary trading in notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, beneficial interests in a Global Security, in some cases, may trade in the Depositary's same-day funds settlement system, in which secondary market trading activity in those beneficial interests would be required by the Depositary to settle in immediately available funds. There is no assurance as to the effect, if any, that settlement in immediately available funds would have on trading activity in such beneficial interests. Also, settlement for purchases of beneficial interests in a Global Security upon the original issuance thereof may be required to be made in immediately available funds. PAYMENT AND PAYING AGENTS Unless otherwise indicated in the applicable Prospectus Supplement, payment of interest on a Debt Security on any Interest Payment Date will be made to the Person in whose name such Debt Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest. (Section 307) Unless otherwise indicated in the applicable Prospectus Supplement, principal of and any premium and interest on the Debt Securities of a particular series will be payable at the office of such Paying Agent or Paying Agents as the Company may designate for such purpose from time to time, except that at the option of the Company payment of any interest may be made by check mailed to the address of the Person entitled thereto as such address appears in the Security Register. Unless otherwise indicated in the applicable 7 Prospectus Supplement, the corporate trust office of the Trustee in The City of New York or in Chicago, Illinois will be designated as the Company's sole Paying Agent for payments with respect to Securities of each series. Any other Paying Agents initially designated by the Company for the Securities of a particular series will be named in the applicable Prospectus Supplement. The Company may at any time designate additional Paying Agents or rescind the designation of any Paying Agent or approve a change in the office through which any Paying Agent acts, except that the Company will be required to maintain a Paying Agent in each Place of Payment for the Securities of a particular series. (Section 1002) Any money paid by the Company to a Paying Agent for the payment of the principal of or any premium or interest on any Security which remain unclaimed at the end of two years after such principal, premium or interest has become due and payable may be repaid to the Company at the Company's request. (Section 1003) CERTAIN COVENANTS The Indenture provides that the Company may not incur, and will not permit any Restricted Subsidiary (as defined below) to incur, any lien on any real or personal property (including stock or debt obligations of a Restricted Subsidiary) to secure any debt without making, or causing such Restricted Subsidiary to make, effective provision for securing the Debt Securities (and, if the Company shall so determine, any other debt of the Company which is not subordinate to the Debt Securities or of such Restricted Subsidiary) (x) equally and ratably with such debt as to such property for so long as such debt shall be so secured or (y) in the event such debt is debt of the Company which is subordinate in right or payment to the Debt Securities, prior to such debt as to such property for so long as such debt shall be so secured; provided, however, that nothing herein shall limit the ability of the Company and its Restricted Subsidiaries to incur a lien to secure any debt if the sum of the amount of debt secured by a lien entered into after the date of the Indenture and otherwise prohibited by the Indenture does not exceed 20% of Consolidated Net Tangible Assets (as defined below). (Section 1008) This limitation does not apply to (i) liens with respect to debt existing on the date of the Indenture, (ii) liens securing only the Debt Securities, (iii) liens in favor of the Company, (iv) liens on property existing immediately prior to the time of acquisition thereof and not in anticipation of the financing of such acquisition, (v) liens to secure industrial revenue or development bonds, (vi) liens on property to secure debt incurred to finance all or part of the cost of acquiring, repairing, constructing or improving such property so long as the commitment of the creditor to extend the credit secured by such lien is made no later than 12 months after the later of (A) the completion of the acquisition, repair or improvement of such property and (B) the placing in operation of such property, (vii) liens on the stock or assets of a corporation existing at the time such corporation becomes a Restricted Subsidiary; (viii) liens to secure debt incurred to extend, renew, refinance or refund debt secured by liens referred to in the foregoing clauses (i) to (vii) so long as such lien does not extend to any other property and the debt so secured is not increased, (ix) subject to certain conditions, liens securing debt owing by the Company to a wholly-owned subsidiary; and (x) judgment liens, so long as the finality of such judgment is being contested in good faith and execution thereon is stayed. "Restricted Subsidiary" means, at any time, any corporation, other than SFP Gold of which: (i) more than 50% of the voting stock at such time is owned or controlled by the Company or by one or more of the other Restricted Subsidiaries and (ii) the operating assets and principal business at such time shall be carried on within the United States or Canada. "Consolidated Net Tangible Assets" means the aggregate amount of total assets after deducting therefrom (i) all current liabilities, including the current portion of long- term debt and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense, and other like intangibles, of the Company and its Restricted Subsidiaries as included in the most recent balance sheet of the Company and its consolidated subsidiaries prepared in accordance with generally accepted accounting principles. As of September 30, 1993, Consolidated Net Tangible Assets was approximately $4.2 billion. CONSOLIDATION, MERGER AND SALE OF ASSETS The Company may not consolidate with or merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, any Person (a "successor Person"), and may not permit any Person to 8 merge into, or convey, transfer or lease its properties and assets substantially as an entirety to, the Company, unless (i) the successor Person (if any) is a corporation, partnership, trust or other entity organized and validly existing under the laws of any domestic jurisdiction and assumes the Company's obligations on the Debt Securities and under the Indenture and (ii) immediately after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing. (Section 801) EVENTS OF DEFAULT Each of the following will constitute an Event of Default under the Indenture with respect to Debt Securities of any series: (a) failure to pay principal of or any premium on any Debt Security of that series when due; (b) failure to pay any interest on any Debt Securities of that series when due, continued for 30 days; (c) failure to deposit any sinking fund payment, when due, in respect of any Security of that series; (d) failure to perform any other covenant of the Company in the Indenture (other than a covenant included in the Indenture solely for the benefit of a series other than that series), continued for 60 days after written notice has been given by the Trustee, or the Holders of at least 25% in principal amount of the Outstanding Securities of that series, as provided in the Indenture; (e) acceleration of any indebtedness for money borrowed by the Company having an aggregate principal amount outstanding of at least $25 million, if such indebtedness has not been discharged or such acceleration has not been rescinded or annulled within 10 days after written notice has been given by the Trustee, or the Holders of at least 25% in principal amount of the Outstanding Securities of that series, as provided in the Indenture; and (f) certain events in bankruptcy, insolvency or reorganization. If an Event of Default (other than an Event of Default described in clause (f) above) with respect to the Debt Securities of any series at the time Outstanding shall occur and be continuing, either the Trustee or the Holders of at least 25% in aggregate principal amount of the Outstanding Securities of that series by notice as provided in the Indenture may declare the principal amount of the Debt Securities of that series (or, in the case of any Debt Security that is an Original Issue Discount Security or the principal amount of which is not then determinable, such portion of the principal amount of such Debt Security, or such other amount in lieu of such principal amount, as may be specified in the terms of such Debt Security) to be due and payable immediately. If an Event of Default described in clause (f) above with respect to the Debt Securities of any series at the time Outstanding shall occur, the principal amount of all the Debt Securities of that series (or, in the case of any such Original Issue Discount Security or other Debt Security, such specified amount) will automatically, and without any action by the Trustee or any Holder, become immediately due and payable. After any such acceleration, but before a judgment or decree based on acceleration, the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series may, under certain circumstances, rescind and annul such acceleration if all Events of Default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the Indenture. (Section 502) For information as to waiver of defaults, see "Modification and Waiver". Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable indemnity. (Section 603) Subject to such provisions for the indemnification of the Trustee, the Holders of a majority in aggregate principal amount of the Outstanding Securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee with respect to the Debt Securities of that series. (Section 512) No Holder of a Debt Security of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such Holder has previously given to the Trustee written notice of a continuing Event of Default with respect to the Debt Securities of that series, (ii) the Holders of at least 25% in aggregate principal amount of 9 the Outstanding Securities of that series have made written request, and such Holder or Holders have offered reasonable indemnity, to the Trustee to institute such proceeding as trustee and (iii) the Trustee has failed to institute such proceeding, and has not received from the Holders of a majority in aggregate principal amount of the Outstanding Securities of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (Section 507) However, such limitations do not apply to a suit instituted by a Holder of a Debt Security for the enforcement of payment of the principal of or any premium or interest on such Debt Security on or after the applicable due date specified in such Debt Security. (Section 508) The Company will be required to furnish to the Trustee annually a statement by certain of its officers as to whether or not the Company, to their knowledge, is in default in the performance or observance of any of the terms, provisions and conditions of the Indenture and, if so, specifying all such known defaults. (Section 1004) MODIFICATION AND WAIVER Modifications and amendments of the Indenture may be made by the Company and the Trustee with the consent of the Holders of a majority in aggregate principal amount of the Outstanding Securities of each series affected by such modification or amendment; provided, however, that no such modification or amendment may, without the consent of the Holder of each Outstanding Security affected thereby, (a) change the Stated Maturity of the principal of, or any instalment of principal of or interest on, any Debt Security, (b) reduce the principal amount of, or any premium or interest on, any Debt Security, (c) reduce the amount of principal of an Original Issue Discount Security or any other Debt Security payable upon acceleration of the Maturity thereof, (d) change the place or currency of payment of principal of, or any premium or interest on, any Debt Security, (e) impair the right to institute suit for the enforcement of any payment on or with respect to any Debt Security, (f) reduce the percentage in principal amount of Outstanding Securities of any series, the consent of whose Holders is required for modification or amendment of the Indenture, (g) reduce the percentage in principal amount of Outstanding Securities of any series necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults, or (h) modify such provisions with respect to modification and waiver. (Section 902) The Holders of a majority in principal amount of the Outstanding Securities of any series may waive any past default or compliance with certain restrictive provisions under the Indenture, except a default in the payment of principal, premium or interest and certain covenants and provisions of the Indenture which cannot be amended without the consent of the Holder of each Outstanding Security of such series affected. (Sections 513 and 1009) The Indenture provides that in determining whether the Holders of the requisite principal amount of the Outstanding Securities have given or taken any direction, notice, consent, waiver or other action under the Indenture as of any date, (i) the principal amount of an Original Issue Discount Security that will be deemed to be Outstanding will be the amount of the principal thereof that would be due and payable as of such date upon acceleration of the Maturity thereof to such date, (ii) if, as of such date, the principal amount payable at the Stated Maturity of a Debt Security is not determinable (for example, because it is based on an index), the principal amount of such Debt Security deemed to be Outstanding as of such date will be an amount determined in the manner prescribed for such Debt Security and (iii) the principal amount of a Debt Security denominated in one or more foreign currencies or currency units that will be deemed to be Outstanding will be the U.S. dollar equivalent, determined as of such date in the manner prescribed for such Debt Security, of the principal amount of such Debt Security (or, in the case of a Debt Security described in clause (i) or (ii) above, of the amount described in such clause). Certain Debt Securities, including those for whose payment or redemption money has been deposited or set aside in trust for the Holders and those that have been fully defeased pursuant to Section 1302, will not be deemed to be Outstanding. (Section 101) Except in certain limited circumstances, the Company will be entitled to set any day as a record date for the purpose of determining the Holders of Outstanding Securities of any series entitled to give or take any 10 direction, notice, consent, waiver or other action under the Indenture, in the manner and subject to the limitations provided in the Indenture. In certain limited circumstances, the Trustee will be entitled to set a record date for action by Holders. If a record date is set for any action to be taken by Holders of a particular series, such action may be taken only by persons who are Holders of Outstanding Securities of that series on the record date. To be effective, such action must be taken by Holders of the requisite principal amount of such Debt Securities within a specified period following the record date. For any particular record date, this period will be 180 days or such shorter period as may be specified by the Company (or the Trustee, if it set the record date), and may be shortened or lengthened (but not beyond 180 days) from time to time. (Section 104) DEFEASANCE AND COVENANT DEFEASANCE If and to the extent indicated in the applicable Prospectus Supplement, the Company may elect, at its option at any time, to have the provisions of Section 1302, relating to defeasance and discharge of indebtedness, or Section 1303, relating to defeasance of certain restrictive covenants in the Indenture, applied to the Debt Securities of any series, or to any specified part of a series. (Section 1301) Defeasance and Discharge. The Indenture provides that, upon the Company's exercise of its option (if any) to have Section 1302 applied to any Debt Securities, the Company will be discharged from all its obligations with respect to such Debt Securities (except for certain obligations to exchange or register the transfer of Debt Securities, to replace stolen, lost or mutilated Debt Securities, to maintain paying agencies and to hold moneys for payment in trust) upon the deposit in trust for the benefit of the Holders of such Debt Securities of money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such Debt Securities on the respective Stated Maturities in accordance with the terms of the Indenture and such Debt Securities. Such defeasance or discharge may occur only if, among other things, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Company has received from, or there has been published by, the United States Internal Revenue Service a ruling, or there has been a change in tax law, in either case to the effect that Holders of such Debt Securities will not recognize gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge were not to occur. (Sections 1302 and 1304) Defeasance of Certain Covenants. The Indenture provides that, upon the Company's exercise of its option (if any) to have Section 1303 applied to any Debt Securities, the Company may omit to comply with certain restrictive covenants, including those described under "Certain Covenants" and any that may be described in the applicable Prospectus Supplement, the occurrence of certain Events of Default, which are described above in clause (d) (with respect to such restrictive covenants) and clause (e) under "Events of Default" and any that may be described in the applicable Prospectus Supplement, will be deemed not to be or result in an Event of Default, in each case with respect to such Debt Securities. The Company, in order to exercise such option, will be required to deposit, in trust for the benefit of the Holders of such Debt Securities, money or U.S. Government Obligations, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such Debt Securities on the respective Stated Maturities in accordance with the terms of the Indenture and such Debt Securities. The Company will also be required, among other things, to deliver to the Trustee an Opinion of Counsel to the effect that Holders of such Debt Securities will not recognize gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and defeasance were not to occur. In the event the Company exercised this option with respect to any Debt Securities and such Debt Securities were declared due and payable because of the occurrence of any Event of Default, the amount of money and U.S. 11 Government Obligations so deposited in trust would be sufficient to pay amounts due on such Debt Securities at the time of their respective Stated Maturities but might not be sufficient to pay amounts due on such Debt Securities upon any acceleration resulting from such Event of Default. In such case, the Company would remain liable for such payments. (Sections 1303 and 1304) NOTICES Notices to Holders of Debt Securities will be given by mail to the addresses of such Holders as they may appear in the Security Register. (Sections 101 and 106) TITLE The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name a Debt Security is registered as the absolute owner thereof (whether or not such Debt Security may be overdue) for the purpose of making payment and for all other purposes. (Section 308) GOVERNING LAW The Indenture and the Debt Securities will be governed by, and construed in accordance with, the law of the State of New York. (Section 112) REGARDING THE TRUSTEE The First National Bank of Chicago has lending and other customary banking relationships with the Company. PLAN OF DISTRIBUTION The Company may sell Debt Securities to or through one or more underwriters or underwriters syndicates led by one or more underwriters, and also may sell Debt Securities directly to other purchasers or through agents. The distribution of the Debt Securities may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In connection with the sale of Debt Securities, underwriters may receive compensation from the Company or from purchasers of Debt Securities for whom they may act as agents in the form of discounts, concessions or commissions. Underwriters may sell Debt Securities to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they may act as agents. Underwriters, dealers and agents that participate in the distribution of Debt Securities may be deemed to be underwriters, and any discounts or commissions received by them from the Company and any profit on the resale of Debt Securities by them may be deemed to be underwriting discounts and commissions, under the Securities Act. Any such underwriter or agent will be identified, and any such compensation received from the Company will be described, in the Prospectus Supplement. Under agreements which may be entered into by the Company, underwriters and agents who participate in the distribution of Debt Securities may be entitled to indemnification by the Company against certain liabilities, including liabilities under the Securities Act. 12 VALIDITY OF SECURITIES Unless otherwise provided in the Prospectus Supplement, the validity of the Debt Securities will be passed upon for the Company by Mayer, Brown & Platt, Chicago, Illinois, and for any underwriters or agents by Sullivan & Cromwell, New York, New York. Jerome F. Donohoe, a partner of the firm of Mayer, Brown & Platt, is Vice President--Law of the Company, and beneficially owns 1,117 shares of Common Stock and has options to purchase an additional 103,130 shares of Common Stock. EXPERTS The consolidated financial statements of Santa Fe Pacific Corporation incorporated in this Prospectus by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992, have been so incorporated in reliance on the report of Price Waterhouse, independent accountants, given on the authority of said firm as experts in auditing and accounting. The financial statements for the Business of Gold Fields Mining Company Subject to the Asset Exchange Agreement Between Hanson Natural Resources Company and Santa Fe Pacific Corporation incorporated by reference in the Company's Current Report on Form 8-K dated June 25, 1993 as amended by the Current Report on Form 8-K/A (Amendment No. 1) have been so incorporated in reliance upon the report of Ernst & Young, independent auditors, given upon the authority of said firm as experts in auditing and accounting. 13 [SANTA FE LOGO] -----END PRIVACY-ENHANCED MESSAGE-----