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): May 23, 1995
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-1443 Central and South West Corporation 51-0007707
(A Delaware Corporation)
1616 Woodall Rodgers Freeway
Dallas, TX 75202-1234
(214) 777-1000
ITEM 5. OTHER EVENTS
CENTRAL AND SOUTH WEST CORPORATION (CSW) AND EL PASO
ELECTRIC COMPANY (EL PASO) PROPOSED MERGER
Recent Developments
On May 23, 1995, CSW issued a press release with respect to
its proposed merger with El Paso. The press release is
attached as Exhibit 99.1. Additionally, on May 23, 1995,
CSW sent to El Paso two letters with respect to the proposed
merger. The letters are attached as Exhibits 99.2 and 99.3.
Background Information
For background information and earlier developments related
to the proposed merger with El Paso, reference is made to
CSW's 1994 Annual Report on Form 10-K and Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995 and the
documents referenced therein.
Other
El Paso is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in
accordance therewith files reports and other information
with the Securities and Exchange Commission. For additional
information concerning El Paso and the proposed merger, see
El Paso's Annual Report on Form 10-K for the year ended
December 31, 1994 and its Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995 and the documents
referenced therein or supplementary thereto.
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 hereunto duly
authorized.
CENTRAL AND SOUTH WEST CORPORATION
Date: May 23, 1995
By: /s/ Wendy G. Hargus
Wendy G. Hargus
Controller
EXHIBIT 99.1
Press Release
Issued 5/23/95
CSW
Central and South West Corporation
News Release
Central and South West Corporation reports
sending El Paso Electric Company breach letter,
receiving El Paso Electric request to extend merger
Dallas (May 23, 1995)--Central and South West
Corporation (NYSE: CSR) said it notified El Paso Electric
Company today in a letter that El Paso Electric is in breach
of the companies' proposed merger agreement.
Central and South West also said it had received on May
22, 1995, a request from El Paso Electric to extend the
merger agreement for six months until December 8, 1995, but
had not made a decision about the extension.
Central and South West said it was notifying El Paso
Electric to protect its rights and to give El Paso Electric
10 days to remedy the breaches, as required in the merger
agreement. The company said it was not terminating the
merger and was continuing to use its best efforts to fulfill
its obligations under the merger agreement.
"EPE's failure to remedy its breaches will be among the
factors CSW considers in deciding what action to take on or
after the Termination Date" of the merger agreement, which
is June 8, 1995, the company said in its letter to El Paso
Electric.
Central and South West cited a number of actions by El
Paso Electric that constitute breaches of the agreement.
On May 11, 1995, El Paso Electric made a filing in
federal bankruptcy court, seeking a temporary restraining
order to prevent the Public Utility Commission of Texas from
issuing an interim order in El Paso Electric's rate and
merger case pending before the commission (Docket 12700).
As a result, the Texas PUC on May 12, 1995, suspended
indefinitely a decision in the proceedings, "thereby
severely jeopardizing the prospects of timely and favorable
action by the PUCT," the company said.
On September 12, 1994, Central and South West had
advised El Paso Electric that adverse developments could
constitute material adverse effects unless resolved in a
timely manner by El Paso Electric. Central and South West
cited El Paso Electric's lack of timely remedy of these
adverse developments that could prevent closing of the
proposed merger agreement.
"Instead of undertaking to remedy the Material Adverse
Effects identified in the September 12, 1994, letter and
directing its efforts to satisfying the closing conditions
under the Merger Agreement," Central and South West said,
"EPE has pursued a course of conduct...to promote a stand-
alone plan in lieu of the proposed merger. In so doing, EPE
committed other breaches of the Merger Agreement."
Central and South West said El Paso Electric has
breached the merger agreement by participating in
discussions and spending large sums on a possible stand-
alone reorganization plan.
The proposed merger between Central and South West and
El Paso Electric was announced on May 4, 1993. El Paso
Electric's plan of reorganization was confirmed by the
federal bankruptcy court on December 8, 1993.
The proposed merger is contingent upon receiving
regulatory approvals or authorizations from state and
federal agencies as well as on other conditions. The merger
agreement provides that the proposed merger can be
terminated by either company if any required regulatory
approvals have not been obtained within 18 months after
confirmation by the federal bankruptcy court of a
reorganization plan for El Paso Electric.
Central and South West Corporation is a public utility
holding company based in Dallas. It owns Central Power and
Light Company, Public Service Company of Oklahoma,
Southwestern Electric Power Company and West Texas Utilities
Company. These four subsidiaries provide electric utility
service to 1.6 million customers in Texas, Oklahoma,
Louisiana and Arkansas. Central and South West also owns
Transok, Inc., an Oklahoma intrastate natural gas pipeline
company, and several other subsidiaries.
El Paso Electric Company is an electric utility serving
approximately 268,000 customers in El Paso, Texas, and an
area of the Rio Grande Valley in West Texas and southern New
Mexico as well as wholesale customers located in Southern
California and Mexico.
# # #
Media contact: Gerald R. Hunter, manager of external
communications for Central and South West Corporation, 214-777-1165.
Financial analyst contact: Sharon R. Peavy, director of
investor relations for Central and South West Corporation, 214-777-1277.
EXHIBIT 99.2
Letter from CSW to
El Paso dated 5/23/95
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164 - Dallas, Texas 75266-0164
214-777-1096
FERD. C. MEYER, JR.
Senior Vice
President
and
General Counsel
May 23, l995
Mr. Curtis L. Hoskins
President
El Paso Electric Company
303 North Oregon
El Paso, Texas 79901
Dear Mr. Hoskins:
Pursuant to Section 9.1(b)(ii) of the Agreement and
Plan of Merger among El Paso Electric Company ("EPE"),
Central and South West Corporation ("CSW") and CSW Sub, Inc.
("CSW Sub") dated as of May 5, l993, as amended (the "Merger
Agreement"), CSW gives written notice of material breaches
of representations, warranties, covenants, and agreements of
EPE under the Merger Agreement and requests that the
breaches be remedied within ten (10) days after receipt of
this notice.
On September 12, 1994, CSW notified EPE of its concern
over certain adverse developments, including the actions
taken by the City of Las Cruces, New Mexico to condemn EPE's
Las Cruces distribution system, which, if not timely and
favorably resolved, constitute Material Adverse Effects that
would preclude closing the proposed merger. The Termination
Date under the Merger Agreement is quickly approaching, and,
even though CSW expressed its concerns more than eight
months ago, EPE has not remedied the Material Adverse
Effects identified in the September 12, l994 letter. EPE is
therefore in breach of its representations and warranties
under Sections 3.6 and 8.3(b) and its covenants and
agreements under Sections 5.2(o) and (p) and 6.8 of the
Merger Agreement.
Instead of undertaking to remedy the Material Adverse
Effects identified in the September 12, l994 letter and
directing its efforts to satisfying the closing conditions
under the Merger Agreement, EPE has pursued a course of
conduct to further reward its own management and to promote
a stand-alone plan in lieu of the proposed merger. In so
doing, EPE committed other breaches of the Merger Agreement.
EPE's recent filing in Bankruptcy Court only serves to
confirm EPE's determination to take any action necessary to
effect a stand-alone plan even if those actions adversely
affect satisfaction of the closing conditions under the
Merger Agreement. EPE's action seeking to enjoin the PUCT
caused the PUCT to postpone indefinitely its consideration
of the merits of Docket No. 12700,
Central Power and Light Company - Public Service Company of
Oklahoma - Southwestern Electric Power Company
West Texas Utilities Company - Transok, Inc. - Central and
South West Services, Inc.
Mr. Curtis L. Hoskins
May 23, l995
Page 2
thereby severely jeopardizing the prospects of timely and
favorable action by the PUCT. Although EPE's filings
unquestionably affected consummation of the transactions
contemplated by the Merger Agreement, EPE did not even give
CSW the opportunity to see, let alone comment on, the
pleadings before EPE filed them in the Bankruptcy Court. In
pursuit of a stand-alone plan, EPE has breached its
agreements and covenants under Sections 5.2(o), 6.8, and 7.1
of the Merger Agreement.
Instead of fulfilling its obligations under the Merger
Agreement, EPE has been actively promoting an alternative
stand-alone reorganization plan. In breach of Sections
5.3(b) and 6.8 of the Merger Agreement, EPE has participated
in discussions with and has otherwise assisted, facilitated,
and encouraged other persons, including representatives of
EPE's creditors and shareholders, in connection with
possible proposals regarding reorganization of EPE. In
addition, considerable sums have been expended by EPE in its
pursuit of a stand-alone proposal, diminishing EPE's value
to CSW.
Further, CSW has only recently discovered that on
September 14, 1994 EPE granted 840,395 stock options to
Messrs. Wiggs, Hoskins, Rodriguez, Gibson, and Hedrick, as
well as certain other members of EPE's senior management, in
breach of Sections 5.2(g) and 5.2(m) of the Merger
Agreement. As stated in the Compensation/Benefits Committee
Report on Executive Compensation contained in EPE's 1995
proxy statement, these options were not issued consistent
with EPE's prior practice. Rather, the criteria employed
under EPE's prior practice were deliberately abandoned, and
the options were issued to ensure the services of executive
officers and senior management in pursuing EPE's alternative
plan of reorganization.
CSW gives EPE written notice of these material breaches
pursuant to Section 9.1(b)(ii) of the Merger Agreement and
requests that they be remedied within ten days of receipt of
this notice. CSW continues to use its best efforts to
fulfill its obligations under the Merger Agreement. EPE's
failure to remedy its breaches will be among the factors CSW
considers in deciding what action to take on or after the
Termination Date.
Yours truly,
Ferd. C. Meyer, Jr.
FCM/ml
cc: Allen P. Miller, P.C.
Mr. Eduardo Rodriguez
EXHIBIT 99.3
Letter from CSW to
El Paso dated 5/23/95
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164 - Dallas, Texas 75266-0164
214-777-1096
FERD. C. MEYER, JR.
Senior Vice
President
and
General Counsel
May 23, l995
Mr. David H. Wiggs, Jr.
Chairman & Chief Executive Officer
El Paso Electric Company
303 North Oregon
El Paso, Texas 79960
Dear Mr. Wiggs:
This letter acknowledges the receipt by Central and
South West Corporation (CSW) of El Paso Electric Company's
(EPE) formal written request to extend the Termination Date
under the Merger Agreement to December 8, l995. CSW will
notify you promptly after its Board of Directors has made a
decision concerning your request at its next meeting which
will be held on or after the Termination Date.
Yours truly,
Ferd. C. Meyer, Jr.
FCM/ml
cc: Allen P. Miller, P.C.
Eduardo Rodriguez, Esq.
Central Power and Light Company - Public Service Company of
Oklahoma - Southwestern Electric Power Company
West Texas Utilities Company - Transok, Inc. - Central and
South West Services, Inc.
