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File No. 70-8057
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 7 (POST-EFFECTIVE) TO
FORM U-1
APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_________________________________________________________
WEST TEXAS UTILITIES COMPANY
301 Cypress Street
Abilene, Texas 79601-5820
(Name of company filing this statement and address
of principal executive office)
_________________________________________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
_________________________________________________________
Shirley S. Briones
Treasurer
West Texas Utilities Company
Williams Tower II
2 West Second Street
Tulsa, OK 74103-3102
Stephen J. McDonnell
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
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West Texas Utilities Company, a Texas corporation (the "Company"), a
wholly-owned electric utility subsidiary of Central and South West Corporation
("CSW"), a Delaware corporation and a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), hereby
amends its Application-Declaration in File No. 70-8057 in the following
respects. In all other respects, the Application-Declaration as previously
filed and amended will remain the same.
The following paragraphs have been inserted after the seventh
paragraph in Item 1.
"The New Bonds will be issued under the Company's Indenture dated
August 1, 1943, to Harris Trust and Savings Bank and J. Bartolini (successor
co-Trustee), as Trustees, as amended and supplemented by the indentures
supplemental thereto (collectively, the "Indenture") and secured by a first
lien on substantially all of the properties now owned and hereafter acquired,
except for properties specifically excepted from such liens. The New Bonds
will be issued under one or more new supplements to the Indenture (each a
"Supplemental Indenture") and will be authenticated against available unused
net expenditures for bondable property and/or previously retired first
mortgage bonds. The Supplemental Indenture will set forth the terms,
provisions and characteristics of the New Bonds, may amend the Indenture in
certain other respects and will confirm the lien of the Indenture on certain
"after-acquired property" constructed or otherwise acquired by the Company on
or subsequent to the date of the last previous supplemental indenture.
The Company requests authority to sell the New Bonds either pursuant
to competitive bidding or in negotiated transactions with underwriters or
agents.
If the interest rate and price of the New Bonds are to be determined
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by competitive bidding, the terms and conditions relating to bids for the New
Bonds will require each bid to specify the interest rate to be borne by the
New Bonds and the price to be paid to the Company for the New Bonds (exclusive
of any accrued interest which will be added to such price) which will not be
less than 98% nor more than 100% of the principal amount of the New Bonds.
The Company also requests authority to enter into negotiations with
potential underwriters with respect to the interest rate, redemption
provisions and other terms and conditions applicable to the New Bonds and to
set the terms of the New Bonds subject to the receipt of an order under the
Act.
The Company hereby seeks authorization from the Commission to issue
the New Bonds with terms which deviate from provisions contained in the
Commission's Statement of Policy Regarding First Mortgage Bonds, as amended,
HCAR No. 13105 and 16369 (the "Statement of Policy").
The Company requests authority to include in the terms of the New
Bonds provisions that they will either (i) not be redeemable at the Company's
option for a period of up to a maximum of 15 years or (ii) be issued with a
refunding restriction of up to 15 years. Pursuant to the refunding
restriction, the Company would not be permitted to refund the New Bonds with
lower cost debt securities for a specified period not exceeding 15 years. The
exact terms of any redemption or refunding restriction would be determined at
or about the time of sale of the New Bonds.
The Company also requests authority to issue the New Bonds with or
without a sinking or retirement fund. The Company has been advised by several
investment banking firms that a majority of recent utility bond offerings have
not included a sinking or retirement fund and that such provisions are no
longer considered by investors as adding value to bonds and may be considered
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as unattractive if the provisions could result in mandatory early redemption
of bonds. The Company would not expect to determine whether to include a
sinking or retirement fund as part of the terms of the New Bonds until at or
about the time of sale of the New Bonds.
The Company requests the Commission's approval to deviate from the
Statement of Policy as described above because it believes that the
flexibility to offer the New Bonds on the terms described above will make the
New Bonds, particularly if they are offered with short to intermediate
maturities, more attractive to prospective investors, thereby potentially
reducing the interest rate on the New Bonds. The Company believes that the
ability to offer the New Bonds as described will also permit it to respond to
rapidly changing conditions in the debt markets. The Company has been advised
by investment banking firms that the proposed terms could lower the coupon
rate of the New Bonds by as much as 10 to 20 basis point depending on the
maturity of the New Bonds.
The Company also requests a waiver from the requirement in the
Statement of Policy for a limitation on dividends. The Company believes that
dividend limitations, if any, are a matter best left to the financial
marketplace and the state regulatory commissions. The limitation on dividends
provision in the Statement of Policy was adopted when accounting standards and
rate-making practices were very different from today. For example, rate-
making disallowances on grounds of alleged lack of prudence or alleged excess
capacity have become more prevalent today. Under today's accounting
requirements, disallowances might result in charges to the income statement
and current retained earnings, which could preclude the payment of dividends
on common stock.
The Company's bond series prior to Series P contains dividend
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restrictions in the supplemental indenture which will continue to limit the
Company's dividend payments until all such bonds mature or are retired. In
light of these dividends restrictions and provisions in the Company's Restated
Articles of Incorporation restricting the payment of dividends to a percentage
of net income available for dividends on common stock if the Company's common
stock equity is not maintained at a certain percentage of total
capitalization, the Company believes that the omission of the limitation on
dividends from any Supplemental Indenture for the New Bonds as contemplated by
the Statement of Policy will not materially and adversely affect the holders
of the New Bonds."
Item 1. Description of Proposed Transactions.
Item 1 is hereby restated in its entirety to read as follows:
By order of the Commission dated October 7, 1992 (HCAR No. 35-25649;
70-8057) (the "Order"), the Company was authorized, among other things, to
issue and sell up to an aggregate principal amount of $150 million of First
Mortgage Bonds ("New Bonds"), in one or more series, from time to time through
December 31, 1994. The Company was authorized to use the proceeds from the
sale of New Bonds (i) to redeem all or a portion of its then outstanding $75
million, 8-7/8% First Mortgage Bonds, Series N, due May 1, 2016 ("Series N
Bonds"), (ii) to purchase, through a tender offer, all or a portion of its
then outstanding $65 million, 9-1/4% First Mortgage Bonds, Series O, due
December 1, 2019 ("Series O Bonds" and together with the Series N Bonds,
the "Old Bonds") and (iii) to repay outstanding short-term borrowings or for
other general corporate purposes.
In October 1992, the Company issued $75 million of New Bonds pursuant
to the Order. The net proceeds from the sale of the New Bonds were used to
redeem the Series N Bonds.
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By order dated December 19, 1994 (HCAR No. 35-26194), the Commission
extended from December 31, 1994 to December 31, 1996, the authorization to
issue and sell the remaining $75 million of New Bonds.
In March 1995, the Company issued $40 million of New Bonds pursuant
to the Order. The net proceeds were used to repay a portion of the Company's
short-term debt and to reimburse the Company's treasury for reacquiring
approximately $10 million of its Series O Bonds.
To date, the Company has issued $115 million aggregate principal
amount of New Bonds pursuant to the original order. The Company has authority
remaining under the Original Order to issue and sell up to an additional $35
million of New Bonds.
The Company hereby requests authority to issue and sell, through
December 31, 1997, up to an additional $95 million of First Mortgage Bonds
which, together with the remaining $35 million authorized to be issued and
sold pursuant to the Original Order, would authorize the Company to issue and
sell up to an additional aggregate principal amount of $130 million of First
Mortgage Bonds (collectively, the "Bonds"). The Company proposes that all
previously granted authorities relating to the New Bonds also be granted in
connection with the issuance of the Bonds. In addition, the Company requests
authority to issue the Bonds with maturities not less than two nor more than
40 years.
The proceeds from the sale of the Bonds will be used to (i) redeem
all or a portion of the Company's outstanding $55.203 million, Series O Bonds
and/or (ii) to repay a portion of the Company's short-term debt, to provide
working capital and for other general corporate purposes.
The New Bonds will be issued under the Company's Indenture dated
August 1, 1943, to Harris Trust and Savings Bank and J. Bartolini (successor
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co-Trustee), as Trustees, as amended and supplemented by the indentures
supplemental thereto (collectively, the "Indenture") and secured by a first
lien on substantially all of the properties now owned and hereafter acquired,
except for properties specifically excepted from such liens. The New Bonds
will be issued under one or more new supplements to the Indenture (each a
"Supplemental Indenture") and will be authenticated against available unused
net expenditures for bondable property and/or previously retired first
mortgage bonds. The Supplemental Indenture will set forth the terms,
provisions and characteristics of the New Bonds, may amend the Indenture in
certain other respects and will confirm the lien of the Indenture on certain
"after-acquired property" constructed or otherwise acquired by the Company on
or subsequent to the date of the last previous supplemental indenture.
The Company also requests authority to sell the New Bonds either
pursuant to competitive bidding or in negotiated transactions with
underwriters or agents.
If the interest rate and price of the New Bonds are to be determined
by competitive bidding, the terms and conditions relating to bids for the New
Bonds will require each bid to specify the interest rate to be borne by the
New Bonds and the price to be paid to the Company for the New Bonds (exclusive
of any accrued interest which will be added to such price) which will not be
less than 98% nor more than 100% of the principal amount of the New Bonds.
The Company also requests authority to enter into negotiations with
potential underwriters with respect to the interest rate, redemption
provisions and other terms and conditions applicable to the New Bonds and to
set the terms of the New Bonds subject to the receipt of an order under the
Act.
The Company hereby seeks authorization from the Commission to issue
the New Bonds with terms which deviate from provisions contained in the
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Commission's Statement of Policy Regarding First Mortgage Bonds, as amended,
HCAR No. 13105 and 16369 (the "Statement of Policy").
The Company requests authority to include in the terms of the New
Bonds provisions that they will either (i) not be redeemable at the Company's
option for a period of up to a maximum of 15 years or (ii) be issued with a
refunding restriction of up to 15 years. Pursuant to the refunding
restriction, the Company would not be permitted to refund the New Bonds with
lower cost debt securities for a specified period not exceeding 15 years. The
exact terms of any redemption or refunding restriction would be determined at
or about the time of sale of the New Bonds.
The Company also requests authority to issue the New Bonds with or
without a sinking or retirement fund. The Company has been advised by several
investment banking firms that a majority of recent utility bond offerings have
not included a sinking or retirement fund and that such provisions are no
longer considered by investors as adding value to bonds and may be considered
as unattractive if the provisions could result in mandatory early redemption
of bonds. The Company would not expect to determine whether to include a
sinking or retirement fund as part of the terms of the New Bonds until at or
about the time of sale of the New Bonds.
The Company requests the Commission's approval to deviate from the
Statement of Policy as described above because it believes that the
flexibility to offer the New Bonds on the terms described above will make the
New Bonds, particularly if they are offered with short to intermediate
maturities, more attractive to prospective investors, thereby potentially
reducing the interest rate on the New Bonds. The Company believes that the
ability to offer the New Bonds as described will also permit it to respond to
rapidly changing conditions in the debt markets. The Company has been advised
by investment banking firms that the proposed terms could lower the coupon
<PAGE> 9
rate of the New Bonds by as much as 10 to 20 basis point depending on the
maturity of the New Bonds.
The Company also requests a waiver from the requirement in the
Statement of Policy for a limitation on dividends. The Company believes that
dividend limitations, if any, are a matter best left to the financial
marketplace and the state regulatory commissions. The limitation on dividends
provision in the Statement of Policy was adopted when accounting standards and
rate-making practices were very different from today. For example, rate-
making disallowances on grounds of alleged lack of prudence or alleged excess
capacity have become more prevalent today. Under today's accounting
requirements, disallowances might result in charges to the income statement
and current retained earnings, which could preclude the payment of dividends
on common stock.
The Company's bond series prior to Series P contains dividend
restrictions in the supplemental indenture which will continue to limit the
Company's dividend payments until all such bonds mature or are retired. In
light of these dividends restrictions and provisions in the Company's Restated
Articles of Incorporation restricting the payment of dividends to a percentage
of net income available for dividends on common stock if the Company's common
stock equity is not maintained at a certain percentage of total
capitalization, the Company believes that the omission of the limitation on
dividends from any Supplemental Indenture for the New Bonds as contemplated by
the Statement of Policy will not materially and adversely affect the holders
of the New Bonds.
The Company will not issue the Bonds to redeem all or a portion of
its Series O Bonds unless the estimated present value savings (derived from
the net difference between interest payments on any Bonds to be issued for
redemption purposes and the Series O Bonds) is, on an after-tax basis, greater
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than the present value of all redemption costs and premiums, if any, and
issuance costs, assuming an appropriate discount rate.
Item 2. Fees, Commissions and Expenses.
Item 2 is hereby amended as follows:
Holding Company Act filing fee......................$ 2,000.00*
_______________
*Actual Amount
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S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the undersigned company has duly caused this document
to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: May 22, 1995
WEST TEXAS UTILITIES COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
