SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): July 11, 1997
TUCSON ELECTRIC POWER COMPANY
-----------------------------
(Exact name of registrant as specified in its charter)
Arizona 1-5924 86-0062700
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
220 West Sixth Street, Tucson, Arizona 85701
(Address of principal executive office) (Zip Code)
(602) 571-4000
(Registrant's telephone number, including area code)
Item 5. Other Events
On July 11, 1997, the Company filed with the Arizona
Corporation Commission ("ACC") an application for an order
authorizing the Company to enter into certain financing
transactions. These proposed financing transactions are
intended to extend debt maturities and letter of credit
expiration dates, gain additional financial and operating
flexibility through the replacement or modification of
certain credit agreements, reduce exposure to variable
interest rates, reduce dependence on bank provided letters
of credit and strengthen the Company's balance sheet by
raising additional equity capital.
The application contains four components. The first seeks
authority to refinance up to $450 million of existing tax-
exempt variable rate debt obligations which are currently
backed by letters of credit. It is contemplated that such
refinancings would be on a fixed rate, unsecured basis.
Upon completion of such refinancings, the Company's exposure
to changes in short-term interest rates would be reduced,
and letters of credit, which would otherwise need to be
extended or replaced during the period 1999-2002, would be
eliminated.
The second component seeks authority to replace the
Company's current bank credit facility, which was
established under the Master Restructuring Agreement (MRA)
in 1992, with one or more new bank credit facilities. The
MRA facility currently provides the Company with a renewable
term loan commitment of $134 million, a revolving credit
commitment of $50 million, as well as $698 million in
letters of credit supporting the Company's tax-exempt
variable rate debt obligations. The MRA loan commitments
mature on December 31, 1999 while the MRA letters of credit
have expiration dates ranging from 2000-2002. It is
contemplated that the proposed new bank facilities would be
reduced in size, due in part to the refinancing activity
described in the preceding paragraph, and would extend
remaining letter of credit expiration dates. The Company
would also seek less restrictive covenants relative to those
specified in the MRA, thereby providing the Company with
increased financial and operating flexibility.
The third component requests authority to refinance up to
$184 million in aggregate principal amount of first mortgage
bonds. These bonds, which mature during the period 1999-
2003, contain covenants that currently prohibit the
restoration of common dividend payments. The application
seeks authority to accomplish this refinancing through the
issuance of new securities consisting of debt and/or equity
securities.
The fourth component seeks authority to establish a direct
stock purchase plan, known as the "Investment Plus Plan",
pursuant to which the Company would issue from time to time
up to 1,000,000 shares of Common Stock, without par value.
The financial transactions contemplated by the application
represent the Company's current plan to meet such
objectives. Subject to the receipt of ACC authorization,
the company intends to pursue the negotiation and
consummation of such transactions over the next two years.
Even if the requested ACC authorization is granted, there
can be no assurance that any of the contemplated
transactions will be consummated or that the terms of any
transactions which are consummated will result in the
realization of such objectives.
The Company expects to incur increased financing costs as a
result of the completion of the proposed financing. The
Company believes, however, that such costs are outweighed by
the related benefits, including the extension of maturities,
reduction in volatility of capital costs, elimination of
certain restrictions on dividends and increases in equity.
The Company has requested consideration and approval of this
application by the ACC without a hearing However, it is
unknown at this time whether the ACC will approve this
application in whole or in part, nor can the Company predict
the timing of such a ruling.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
TUCSON ELECTRIC POWER COMPANY
(Registrant)
Date: July 16, 1997 Ira R. Adler
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Ira R. Adler
Senior Vice President and
Principal Financial Officer
