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File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_______________________________________________
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
(Names of companies filing this statement and
addresses of principal executive offices)
___________________________________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
___________________________________________________
Stephen J. McDonnell
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
M. Douglas Dunn, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Name and addresses of agents for service)
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Item 1. Description of Proposed Transaction.
Central and South West Corporation ("CSW"), a Delaware corporation,
is a registered holding company under the Public Utility Holding Company Act
of 1935, as amended (the "Act"). CSW proposes to issue and sell up to
11,000,000 shares of its authorized and unissued Common Stock, par value $3.50
per share (the "Additional Common Stock"), in one or more issues from time to
time through December 31, 1996. CSW will issue and sell shares of Additional
Common Stock under the competitive bidding procedures of Rule 50 of the Act,
as modified, if applicable, by the Statement of Policy dated September 2, 1982
(HCAR No. 22623) of the Securities and Exchange Commission (the
"Commission"), or in negotiated sales to underwriters pursuant to an exception
from the competitive bidding requirements of Rule 50 under subsection (a)(5)
thereof.
Background
CSW last made a public offering of its Common Stock (without regard
to issuances through Corporate Plans (as defined below)) pursuant to a shelf
offering of approximately 2,028,000 shares* in October 1983 through January
1984. As of December 31, 1983, CSW had common stock equity of $1.849 billion,
consolidated total capitalization of $4.108 billion and consolidated short-
term debt of $110.3 million. As of December 31, 1993, CSW had common stock
equity of $2.930 billion, consolidated total capitalization of $6.042 billion
and consolidated short-term debt of 769 million.
At December 31, 1993, CSW's consolidated capitalization ratios were
48.5% common stock equity; 5.8% preferred stock; and 45.7% long-term debt.
In order to keep its capital ratios at the appropriate levels to support its
__________________
* actual number of shares issued, without adjustment for two-for-one common
stock split effected with a 100% stock dividend paid on March 6, 1992.
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growth and to support the credit rating of its subsidiaries' outstanding
securities, CSW desires to issue the Additional Common Stock as set forth in
this Application-Declaration. Pro forma capitalization ratios, taking into
account the receipt of proceeds from the issuance of the Additional Common
Stock and application of those proceeds to reduce CSW's short-term debt, are
set forth as part of Exhibit 6 hereto. Moreover, CSW views current market
conditions as favorable for its offering of Additional Common Stock, and
desires to take advantage of such conditions.
Use of Proceeds
CSW intends to issue and sell such number of shares of Additional
Common Stock, up to 11,000,000, as will provide net proceeds to it of
approximately $300 million. CSW intends to apply the net proceeds from the
sale of the Additional Common Stock to reduce short-term debt. CSW believes
that the receipt of proceeds from the issuance of Additional Common Stock will
strengthen its capital structure and support its growth and support the credit
ratings of outstanding securities of its subsidiaries. Recently, the aggregate
short-term needs for cash of CSW and its subsidiaries have increased, and such
entities have found the CSW System money pool (HCAR Nos. 25777 and 25897) to
be a convenient and cost-effective resource to access such funds. Through the
money pool and other issuances of commercial paper, CSW and its subsidiaries
have been able to take advantage of extremely favorable short-term market
interest rates. CSW now believes that it is an equally favorable time to
raise equity capital for the purpose of repaying commercial paper issued to
support the money pool or issued for other general corporate purposes.
Although CSW's current intention is to apply all net proceeds to reduce its
short-term debt, any proceeds not used for such purposes would be used for
general corporate purposes, including but not limited to capital contributions
to its subsidiaries, subject to further authorization by the Commission.
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CSW will not, however, use such proceeds to acquire the securities of
or any interest in (i) any exempt wholesale generators (as such term is
defined in Section 32(e) of the Public Utility Holding Company Act of 1935
(the "Act") as amended by the Comprehensive Energy Policy Act of 1992) (an
"EWG") until such time as such investment shall be approved by order or
regulation of the Commission, or (ii) any foreign utility companies (as such
term is defined in Section 33(a) of the Act as amended by the Comprehensive
Energy Policy Act of 1992)(a "FUCO") until such time as such investment shall
be approved by order or regulation of the Commission. Neither CSW nor any of
its subsidiaries has an ownership interest in an EWG or FUCO, and neither CSW
nor any of its subsidiaries is a party to a service, sales or construction
agreement with an EWG or FUCO.
Exception from Competitive Bidding
CSW requests authority to sell the Additional Common Stock either
pursuant to competitive bidding or in negotiated transactions with
underwriters or agents. In a competitive bidding, CSW intends to invite bids
for the purchase of shares of the Additional Common Stock either in accordance
with Rule 50 under the Act, or, in the case of a delayed or continuous
offering and sale pursuant to Rule 415 under the Securities Act of 1933,
as amended, the alternative bidding procedures as permitted by Release No.
35-22623 (September 2, 1982).
CSW also requests authority to sell the Additional Common Stock in
one or more negotiated offerings rather than competitive bidding under the
Act. CSW believes that, under current market conditions, the ability to sell
the Additional Common Stock on a negotiated basis will provide CSW with the
flexibility to respond to changing market conditions and choose the best
method for selling the Additional Common Stock to achieve the most favorable
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pricing. In stable market conditions, CSW may achieve the best price through
competitive bidding; however, in volatile markets, the ability to effect an
offering on a negotiated basis permits CSW and a potential underwriter to
monitor market conditions and coordinate the most favorable market timing,
with a high likelihood of achieving lowest cost funding and achieving other
benefits. Relative to other periods, the current market for electric utility
stocks including CSW Common Stock is volatile, CSW believes, primarily because
of high investor sensitivity to fluctuations in interest rates and yields on
alternative investments, and because of changing investor perceptions of risk
in utility investments as have been brought on by competitive and regulatory
changes in the electric utility industry. It has not been uncommon recently
for CSW Common Stock to fluctuate by up to $1 per share in a single trading
day, or for stock prices of other utilities to experience similar
fluctuations.
Besides favorable pricing, CSW believes that one or more negotiated
offerings would provide other benefits. First, a negotiated offering would
permit CSW to select one or more investment banking firms, whose strengths
would complement strengths of the others, to manage the offering --forming the
underwriting syndicate and negotiating the terms on which CSW would sell the
shares of Additional Common Stock to such underwriters. Second, since CSW
desires retail investors to purchase a significant portion of its Additional
Common Stock, special retail sales efforts are necessary, for which an
investment banking firm may be specially selected by CSW in a negotiated
transaction. Third, CSW believes that it would benefit from the extra time
and effort which a group of underwriters can commit to a negotiated
underwriting, including the extra time accorded for widespread dissemination
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to the investing public of CSW's unique corporate identity and strategy, and
the effort to provide continued support in the market in the post-selling
period. Fourth, purchasers of Additional Common Stock will be interested in
issues related to CSW's pending Merger (as defined below) and CSW's corporate
strategies, of which investment banking firms with long-term relationships
with CSW will be in the best position to inform such purchasers. Finally, the
Commission itself has recognized that mandated competitive bidding is not
necessarily sound policy, as described in Release No. 35-25668 (November 16,
1992), its proposal to rescind Rule 50.
CSW therefore hereby requests an exception from the competitive
bidding requirements of Rule 50 under subsection (a)(5) thereunder, and also
hereby requests authority to enter into negotiations with potential
underwriters with respect to the timing, pricing and other terms and
conditions applicable to the Additional Common Stock, subject to receipt of
the order of the commission requested hereby authorizing the issuance and sale
of the Additional Common Stock.
Other Offerings
CSW entered into an Agreement and Plan of Merger dated May 4, 1993
(as amended, the "EPEC Merger Agreement") with El Paso Electric Company
("EPEC"), pursuant to which EPEC would become a wholly owned subsidiary of
CSW. The merger pursuant to the EPEC Merger Agreement ("Merger") is subject to
several conditions, including without limitation the approval of the
Commission and certain other regulatory agencies. The Merger is the subject
of a separate Application-Declaration that has been filed with the Commission
(File No. 70-8339). The issuance of Additional Common Stock for which
authority is requested in this Application-Declaration however, is independent
of and is in no way conditioned upon the Merger.
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CSW does not have pending or in progress any other transactions
involving a distribution of Common Stock or of any rights to purchase Common
Stock, except certain distributions of Common Stock under CSW's Dividend
Reinvestment and Stock Purchase Plan ("DRSPP"), "Thrift Plus" thrift plan,
Restricted Stock Plan, Directors Restricted Stock Plan, Stock Option Plan, and
1992 Long-term Incentive Plan (collectively, the "Corporate Plans"). By early
1994, each of the Corporate Plans except Thrift Plus is expected to be
satisfying its requirements with newly issued shares of Common Stock. In
addition, CSW has applied for and received orders under the Act (HCAR Nos.
25173, 25187, 25442, 25712, and 25934; 70-7767) permitting the establishment
of an Employee Stock Ownership Plan (the "ESOP"), but has not made a final
determination whether and when it may adopt the ESOP.
Item 2. Fees, Commissions and Expenses.
Assuming an issue of up to 11,000,000 shares of Additional Common
Stock, an estimate of the fees and expenses, other than underwriting discounts
and commissions, to be paid or incurred by CSW in connection with the proposed
transactions is set forth below:
Holding Company Act filing fee .................. $ 2,000*
Securities Act Registration fee ................. **
Financial Printing Expenses ..................... **
Stock Exchange Listing Fees ..................... **
Blue Sky fees and expenses ...................... **
Expenses of Central and South West
Services, Inc. ................................ **
Fees of Public Accountants ...................... **
Counsel Fees:
Milbank, Tweed, Hadley & McCloy
New York, New York ............................ **
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Miscellaneous and incidental expenses
including travel, telephone, postage,
copying, etc. ................................. **
---------
Total $ **
=========
_______________
* Actual Amount.
** To be filed by amendment.
The fees and expenses include those charges incurred for the services
of Central and South West Services, Inc. ("CSWS"), an affiliated service
company of CSW operating pursuant to Section 13 of the Act and the rules
thereunder. The services of CSWS will consist principally of services
performed by the Treasury Department and the Accounting Departments.
Item 3. Applicable Statutory Provisions.
Sections 6(a) and 7 of the Act and Rule 50 under the Act are or may
be applicable with respect to the issuance and sale of the Additional Common
Stock described in Item 1 above.
CSW requests that any such issuance of Additional Common Stock by CSW
be excepted from the competitive bidding requirements of Rule 50 since
compliance with subparagraphs (b) and (c) of Rule 50 with respect to such
transactions is not appropriate to aid the Commission to determine whether the
fees, commissions or other remuneration to be paid directly or indirectly in
connection with such transactions is reasonable, or whether any term or
condition of any issuance of Additional Common Stock is detrimental to the
public interest or the interest of investors or consumers, or necessary or
appropriate in the public interest or for the protection of investors or
consumers to ensure the maintenance of competitive conditions or the receipt
of adequate consideration.
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To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section
of the Act or provision of the rules or regulations other than those
specifically referred to herein, request for such authorization, approval or
exemption is hereby made.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, have jurisdiction over the proposed
transactions for which approval is sought under this Application-Declaration.
Item 5. Procedure.
A registration statement on Form S-3 under the 1933 Act will be filed
with the Commission in connection with the issue and sale by CSW of Additional
Common Stock.
CSW requests that the Commission issue and publish no later than
February 18, 1994, the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date as soon
as possible, but in any case not later than March 14, 1994, as the date after
which an order granting and permitting this Application-Declaration to become
effective may be entered by the Commission and the Commission enter as soon as
possible, but in any case not later than March 15, 1994, an appropriate order
granting and permitting this Application-Declaration to become effective.
CSW respectfully requests that appropriate and timely action be taken
by the Commission in this matter in order to permit consummation of the
proposed transactions at the earliest possible date.
No recommended decision by a hearing officer or any other responsible
officer of the Commission is necessary or required in this matter. The
Division of Investment Management of the Commission may assist in the
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preparation of the Commission's decision in this matter. There should be no
30-day waiting period between the issuance and the effective date or any order
issued by the Commission in this matter; and it is respectfully requested that
any such order be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements.
Exhibit 1 - Second Restated Certificate of Incorporation, of CSW,
as amended, (incorporated herein by reference to
Exhibit 3(a) to CSW's 1990 Form 10-K in File No. 1-
1443).
Exhibit 2 - Bylaws, as amended, of CSW (incorporated herein by
reference to Exhibit 3 (b) to CSW's 1990 Form 10-K in
File No. 1-1443).
Exhibit 3 - Specimen Certificate of Common Stock $3.50 par value
per share, of CSW (incorporated herein by reference to
Exhibit 3 to the Application-Declaration in File No.
70-8087).
Exhibit 4 - Preliminary opinion of Milbank, Tweed, Hadley & McCloy,
counsel to CSW (to be filed by amendment).
Exhibit 5 - Final or "past tense" opinion of Milbank, Tweed, Hadley
& McCloy, counsel to CSW (to be filed with Certificate
of Notification).
Exhibit 6 - Financial Statements per books and pro forma as of
December 31, 1993 (to be filed by amendment).
Exhibit 7 - Proposed Notice of Proceeding.
Exhibit 8 - Form S-3 Registration Statement of CSW under the
Securities Act of 1933 relating to the Additional
Common Stock (to be filed by amendment).
Exhibit 9 - Form of Underwriting Agreement (to be filed by
amendment).
Exhibit 10 - Form of Invitation for Bids (to be filed by
amendment,if used).
Item 7. Information as to Environmental Effects.
The proposed transactions do not involve major federal action having
a significant effect on the human environment. To the best of CSW's
knowledge, no federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transactions.
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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: February 11, 1994
CENTRAL AND SOUTH WEST CORPORATION
By: /s/ STEPHEN J. MCDONNELL
Stephen J. McDonnell
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
- ------- ------- ------------
1 Second Restated Certificate of ---
Incorporation, of CSW, as amended,
(incorporated herein by reference to
Exhibit 3(a) to CSW's 1990 Form 10-K
in File No. 1-1443).
2 Bylaws, as amended, of CSW (incorporated ---
herein by reference to Exhibit 3 (b) to
CSW's 1990 Form 10-K in File No. 1-1443).
3 Specimen Certificate of Common Stock ---
$3.50 par value per share, of CSW
(incorporated herein by reference to
Exhibit 3 to the Application-Declaration
in File No. 70-8087).
4 Preliminary opinion of Milbank, Tweed, ---
Hadley & McCloy, counsel to CSW (to be
filed by amendment).
5 Final or "past tense" opinion of Milbank, ---
Tweed, Hadley & McCloy, counsel to CSW
(to be filed with Certificate of
Notification).
6 Financial Statements per books and pro ---
forma as of December 31, 1993 (to be
filed by amendment).
7 Proposed Notice of Proceeding. Electronic
8 Form S-3 Registration Statement of CSW ---
under the Securities Act of 1933
relating to the Additional Common Stock
(to be filed by amendment).
9 Form of Underwriting Agreement (to be ---
filed by amendment).
10 Form of Invitation for Bids (to be filed ---
by amendment,if used).
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EXHIBIT 7
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SECURITIES AND EXCHANGE COMMISSION
(Release No. 35 - )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
___________, 1994
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the proposed
transaction(s) summarized below. The application(s) and/or declaration(s) and
any amendment(s) thereto is/are available for public inspection through the
Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
_____________, 1994 to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the address(es) specified below. Proof of service (by
affidavit or, in case of an attorney at law, by certificate) should be filed
with the request. Any request for hearing shall identify specifically the
issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the manner. After said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted to
become effective.
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Central and South West Corporation (File No. 70- )
Central and South West Corporation ("CSW"), 1616 Woodall Rodgers
Freeway, Dallas, Texas 75202, a registered public utility holding company, has
filed an Application-Declaration under Sections 6(a) and 7 of the Act and Rule
50 thereunder.
Central and South West Corporation ("CSW"), a Delaware corporation,
is a registered holding company under the Public Utility Holding Company Act
of 1935, as amended (the "Act"). CSW proposes to issue and sell up to
11,000,000 shares of its authorized and unissued Common Stock, par value $3.50
per share (the "Additional Common Stock"), in one or more issues from time to
time through December 31, 1996. CSW will issue and sell shares of Additional
Common Stock under the competitive bidding procedures of Rule 50 of the Act,
as modified, if applicable, by the Statement of Policy dated September 2, 1982
(HCAR No. 22623) of the Securities and Exchange Commission ("the Commission"),
or in negotiated sales to underwriters pursuant to an exception from the
competitive bidding requirements of Rule 50 under subsection (a)(5) thereof.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
