<PAGE> 1
File No. 70-8357
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5 TO
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
George J. Forsyth, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Name and addresses of agents for service)
<PAGE> 2
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 files this Amendment No. 5 to the Form
U-1 Application-Declaration in this File No. 70-8357 for the purpose of
amending Item 1 thereof, and as so amended, restating Item 1 in its entirety.
In all other respects, the Application-Declaration as previously filed and as
heretofore amended will remain the same.
1. In Item 1 ("Description of Proposed Transaction"):
(a) the last sentence of the first paragraph of the subsection
headed "Background" (beginning with the words "As of December 31, 1993") is
hereby amended to insert "$" before "769 million";
(b) the first paragraph of the subsection headed "Use of Proceeds"
is divided into three paragraphs as follows: the second paragraph will begin
with the current third sentence (beginning with the words "CSW believes that")
and the third paragraph will begin with the current sixth sentence (beginning
with the words "CSW now believes");
(c) the new first paragraph of the subsection headed "Use of
Proceeds" is amended to add the following four sentences after the second
sentence (beginning with the words "CSW intends to apply"): "As of April 13,
1994, CSW had outstanding short-term debt of approximately $781 million.
Of that amount approximately $419 million represented borrowings by CSW's
subsidiaries through the CSW Money Pool, as authorized by the Commission by
order dated March 31, 1993 (HCAR No. 35-25777; 70-8157), in the following
amounts: Central Power and Light Company -- $218 million; Public Service
Company of Oklahoma -- $59 million; Southwestern Electric Power Company --
$23 million; West Texas Utilities Company -- $23 million; Transok, Inc. --
$16 million; and Central and South West Services, Inc. -- $80 million.
<PAGE> 3
The remaining $362 million of short-term borrowings included the following:
equity investment in Transok, Inc. -- $130 million; equity investment in CSW
Energy, Inc. -- $28 million; and loans to CSW Energy, Inc. projects -- $142
million. The balance of CSW's short-term borrowings, approximately $62
million, arise out of working capital needs, including timing differences on
the payment of dividends to shareholders and receipt of dividends from the
operating companies in the CSW system."; and
(d) the new second paragraph of the subsection headed "Use of
Proceeds" is amended to add the following three sentences after the third
sentence (beginning with the words " Through the Money Pool"): "The interest
rate applicable on any day to the then outstanding loans through the Money
Pool is the composite weighted average daily effective cost incurred by CSW
for short-term borrowings from external sources. When borrowing from external
sources for the Money Pool, CSW does not invest such borrowings and earn on
such investments. All funds borrowed to fund the Money Pool are used for such
purpose and are not invested for the benefit of CSW."
Item 1. Description of Proposed Transaction.
Item 1 is hereby restated in its entirety to read as follows:
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.
<PAGE> 4
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
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. As of April
13, 1994, CSW had outstanding short-term debt of approximately $781 million.
__________________
* 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.
<PAGE> 5
Of that amount approximately $419 million represented borrowings by CSW's
subsidiaries through the CSW Money Pool, as authorized by the Commission by
order dated March 31, 1993 (HCAR No. 35-25777; 70-8157), in the following
amounts: Central Power and Light Company -- $218 million; Public Service
Company of Oklahoma -- $59 million; Southwestern Electric Power Company --
$23 million; West Texas Utilities Company -- $23 million; Transok, Inc. --
$16 million; and Central and South West Services, Inc. -- $80 million.
The remaining $362 million of short-term borrowings included the following:
equity investment in Transok, Inc. -- $130 million; equity investment in CSW
Energy, Inc. -- $28 million; and loans to CSW Energy, Inc. projects -- $142
million. The balance of CSW's short-term borrowings, approximately $62
million, arise out of working capital needs, including timing differences on
the payment of dividends to shareholders and receipt of dividends from the
operating companies in the CSW system.
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 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. The interest rate applicable on any day to the
then outstanding loans through the Money Pool is the composite weighted
average daily effective cost incurred by CSW for short-term borrowings from
external sources. When borrowing from external sources for the Money Pool,
CSW does not invest such borrowings and earn on such investments. All funds
<PAGE> 6
borrowed to fund the Money Pool are used for such purpose and are not invested
for the benefit of CSW.
CSW now believes that it is a 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.
CSW will not, however, use such proceeds, or any short-term borrowing
availability created by the repayment of short-term debt with 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
<PAGE> 7
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
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
<PAGE> 8
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
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.
<PAGE> 9
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.
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.
<PAGE> 10
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: April 27, 1994
CENTRAL AND SOUTH WEST CORPORATION
By: /s/ STEPHEN J. MCDONNELL
Stephen J. McDonnell
Treasurer
