UNITED STATES
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): November 19, 1997
TUCSON ELECTRIC POWER COMPANY
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(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)
(520) 571-4000
(Registrant's telephone number, including area code)
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Item 5. Other Events
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Holding Company Application
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On November 19, 1997, the Arizona Corporation Commission (ACC)
voted unanimously in favor of Tucson Electric Power Company's
(TEP) Notice of Intent to Organize a Public Utility Holding
Company, filed with the ACC in April 1997. It is expected that
the new holding company, UniSource Energy Corporation
(UniSource), will become the parent company of TEP, through a one-
for-one statutory share exchange on January 1, 1998 or as soon
thereafter as practicable. In May 1995, TEP's shareholders
approved the formation of a holding company and the related one-
for-one share exchange. In September 1997, the Federal Energy
Regulatory Commission approved TEP's application to form a
holding company. No further approvals are necessary. On the
effective date of the statutory share exchange, outstanding
shares of TEP common stock will be exchanged, on a share-for-
share basis for shares of UniSource common stock and certificates
for TEP common stock will automatically represent shares of
UniSource common stock. UniSource will trade on the New York
Stock Exchange and the Pacific Stock Exchange under the ticker
symbol "UNS".
The ACC Order contains a number of conditions. These include:
- The holding company and its subsidiaries will only conduct
business activities that are part of the electric energy
business.
- For five years from commencement of operations of the
holding company, the following proceeds will be used to reduce
TEP's debt or added to TEP's equity accounts: a) 60% of any
public equity issuance by UniSource; and b) 2% of the net after-
tax profits attributable to the holding company's equity interest
in TEP's sister companies.
- Until such time as TEP's equity ratio equals 37.5% of total
capital (excluding capital lease obligations), TEP may not pay
dividends to UniSource in excess of 75% of its earnings.
- TEP will target attainment of a 37.5% equity ratio in its
capitalization structure by December 31, 2000. If that capital
structure goal is not attained, the ACC may set rates based on
TEP's actual capital structure for regulatory purposes, rather
than the hypothetical 37.5% equity ratio currently reflected in
rates.
- The capitalization of TEP's sister companies (debt and
equity) may not exceed 30% of TEP's capitalization unless
otherwise approved by the ACC.
Financing Application
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On November 19, 1997, the ACC also approved in a 3-0 vote, TEP's
financing application filed in July 1997. The decision
authorizes TEP to implement several components of its previously
disclosed financial strategy:
- Replacing TEP's current bank credit facilities with one or
more new credit facilities.
- Issuing securities to refinance up to $184 million in first
mortgage bonds, which are currently scheduled to mature
between 1999 and 2003.
- Establishing and implementing a direct stock purchase plan.
The ACC previously approved the refinancing of up to $450 million
of tax-exempt variable rate debt obligations, which allowed TEP
to complete the refinance of $245 million of tax-exempt variable
rate debt obligations on October 1, 1997, as previously disclosed
in the Company's Quarterly Report on Form 10-Q for the quarter
ending September 30, 1997. Pursuant to this authorization, TEP
intends to replace the current bank credit facilities under the
Master Restructuring Agreement with new bank credit facilities
during the fourth quarter of 1997 and intends to pursue the
negotiation and consummation of the remaining transactions over
the next two years. There can be no assurance that any of the
contemplated transactions will be consummated.
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
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(Registrant)
Date: November 24, 1997 Ira R. Adler
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Ira R. Adler
Senior Vice President and
Principal Financial Officer
