70-09107
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_________________________________________
CENTRAL AND SOUTH WEST CORPORATION PUBLIC SERVICE COMPANY OF OKLAHOMA
1616 Woodall Rodgers Freeway 212 East Sixth Street
Dallas, Texas 75202 Tulsa, Oklahoma 74119-1212
CENTRAL AND SOUTH WEST SERVICES, INC. SOUTHWESTERN ELECTRIC POWER COMPANY
1616 Woodall Rodgers Freeway 428 Travis Street
Dallas, Texas 75202 Shreveport, Louisiana 71156-0001
CENTRAL POWER AND LIGHT COMPANY WEST TEXAS UTILITIES COMPANY
539 North Carancahua Street 301 Cypress Street
Corpus Christi, Texas 78401-2802 Abilene, Texas 79601-5820
(Names of companies filing this statement and address
of principal executive offices)
_____________________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
____________________________________
Wendy G. Hargus, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Central and South West Corporation, a Delaware corporation and a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended, and its subsidiary companies Central Power and Light Company, Public
Service Company of Oklahoma (to the extent Rule 52 is not available),
Southwestern Electric Power Company, West Texas Utilities Company and Central
and South West Services, Inc., hereby file this Amendment No. 2 to the Form U-1
Application-Declaration in File No. 70-9107 (the "Application") to amend and
restate Item 1 of the Application in its entirety and to amend Item 6 to file an
exhibit. In all other respects, the Application as previously filed and amended
will remain the same.
Item 1. Description of Proposed Transaction
CSW and the Subsidiaries are seeking authorization for the period
beginning with the effective date of an order issued in this proceeding through
December 31, 2002 (the "Authorization Period") for the financing plan (the
"Financing Plan") described below. This application-declaration (the
"Application") is an omnibus type filing which seeks authority for CSW and the
Subsidiaries (the "Applicants") to issue the securities and engage in the
financing transactions pursuant to the authority requested herein in lieu of
filing separate applications for individual financing transactions.
Overview of Requested Authority
This Application seeks to consolidate in one filing a substantial
portion of the financing authorizations expected to be requested by the
Applicants over a five year period. The requested authority is similar in
concept to the authorization for shelf registration statements permitted under
Rule 415 promulgated under the Securities Act of 1933, as amended ("1933 Act").
The Application is for system-wide financing authority and therefore
2
does not set forth specific terms for the individual components of the Financing
Plan. Even though the terms of specific financings are not discussed in this
Application, the Applicants propose to continue to finance from time to time
based on capital budgets and estimates of other financing needs as they have in
the past. An underlying assumption of the Application is that as long as the
Applicants maintain a solid financial base, as demonstrated by ratings of a
nationally recognized statistical rating organization ("NRSRO"), they should be
allowed broad discretion with respect to financing activities. The Applicants
therefore propose to enter into financial transactions designed to maintain an
appropriate capital structure for investment grade long-term ratings as
established by an NRSRO. This flexibility would allow the Applicants to more
easily take advantage of favorable market conditions, making them more
competitive with companies that are not subject to the jurisdiction of the Act.
The authorization requested herein relates to issuances of common
stock, including common stock issued upon the exercise of convertible debt or
pursuant to rights, options, warrants or similar securities, preferred stock,
tax advantaged preferred securities, first mortgage bonds, pollution control
revenue bonds, debentures, notes (secured and unsecured), medium-term notes, and
borrowings pursuant to credit agreements ("Credit Agreements") with banks and
other financial institutions, in each case not subject to Rule 52. Each
Applicant requests authority to issue and sell these securities or enter into
Credit Agreements without additional prior Securities and Exchange Commission
("SEC") approval if the Applicant is within the parameters discussed below under
the heading "Parameters For Authorization." The provisions of the securities,
Credit Agreements and related instruments would be determined at the time of the
sale of securities or the execution of Credit Agreements and, with respect to
first mortgage bonds or preferred stock, would not be limited by any of the
SEC's "statements of policy" with respect thereto. See HCAR Nos. 13105 and
3
13106, dated February 16, 1956, as amended in HCAR Nos. 16369 and 16758, dated
June 22, 1970, in which the SEC adopted statements of policy with respect to
first mortgage bonds and preferred stock ("Statements of Policy"). To the extent
that the terms of any securities proposed to be issued and sold pursuant to an
authorization granted in this proceeding may conflict with the Statements of
Policy, request is hereby made for authority to deviate from the Statements of
Policy.
The proceeds from external financing transactions, including the
issuance and sale of securities and borrowings under Credit Agreements, by the
Applicants will be added to their respective treasuries and subsequently used
principally (i) to finance capital expenditures, (ii) to acquire, retire, or
redeem securities of which CSW or the Subsidiaries are the issuer, (iii) to
repay outstanding short-term borrowings, (iv) to provide working capital and/or
(v) for other general corporate purposes, without the need for prior SEC
approval, pursuant to Rule 42 or a successor rule.
This Application is consistent with the recommendation of the staff of
the Division of Investment Management that the SEC modernize its administration
of the Act, particularly with respect to financing authorizations, in order to
"reduce significantly the number of applications requiring SEC approval and to
provide more flexibility for registered holding companies and their
subsidiaries" (Division of Investment Management, The Regulation of
Public-Utility Holding Companies (June 1995) (the "1995 Report") at 50) by
issuing "orders covering blocks of securities to be sold at one time or from
time to time over a period of up to five years." (1995 Report at 54). The shelf
approach is designed to give the Applicants flexibility that will allow them to
respond quickly and efficiently to financing needs and to changes in market
conditions, which, in turn, should make them more competitive with utility and
energy companies that are not subject to the jurisdiction of the Act. At the
same time,
4
the SEC will continue to have oversight over financings by the Applicants
through their regular disclosures under the 1933 Act and the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and through the notification system
established pursuant to this Application. Finally, this Application is
consistent with SEC precedent. See, e.g., Columbia Gas Systems, Inc., et al.,
File 70-8925 (HCAR No. 26634; 12/23/96); Consolidated Natural Gas Company,
File 70-8667 (HCAR No.26500; 3/28/96); Mississippi Power Company, File 70-8797
(HCAR No.26491; 3/13/96); Gulf States Utilities Company, File 70-8721 (HCAR
No.26451; 1/16/96).
Parameters of Authorization
The Applicants request authority to engage in financing transactions
for which the specific terms and conditions are not currently known, subject to
certain conditions concerning the financial condition of the Applicants. The
general conditions for financing without further prior approval are set forth
below.
CSW System Investment Grade Debt. With respect to financings at the
Subsidiary level only, the Subsidiaries seek authority to engage in financing
activities described herein as long as the long-term debt ratings of the
Subsidiary seeking to issue securities or enter into Credit Agreements are
investment grade as established by an NRSRO (as that term is used in Rule
15c3-1(c)(2)(vi)(F) under the 1934 Act). The Subsidiaries will at all times
during the Authorization Period strive to maintain a capital structure
sufficient to maintain investment grade long-term debt ratings.
Effective Cost of Money on Debt Securities and Borrowings under Credit
Agreements. The effective cost of money on debt securities issued pursuant
to this Application will not exceed the greater of (i) 300 basis points over
comparable term U.S.Treasury securities, or (ii) a gross spread over such
Treasury securities which is consistent with comparable
5
investment grade securities. The effective cost of money for borrowings
under Credit Agreements will not exceed the greater of (i) the prime rate plus
300 basis points, or (ii) the rate of interest for comparable investment grade
credits prevailing in the market on the date of borrowing.
Effective Cost of Money on Other Approved Securities. The effective
cost of money on preferred stock and other fixed income oriented securities
will not exceed the greater of (i) 500 basis points over 30 year term U.S.
Treasury securities, or (ii) a gross spread over such Treasury securities which
is consistent with comparable investment grade securities.
Maturity of Debt. The maturity of debt securities will not exceed
fifty years.
Issuance Expenses. The underwriting fees, commissions, or other
similar expenses paid in connection with the issue, sale or distribution of a
security pursuant to the Application will not exceed 5% of the principal or
total amount of the financing.
Aggregate Dollar Limit. The aggregate amount of outstanding external
financing effected by the Applicants pursuant to the authorization requested
hereunder during the Authorization Period, other than the refunding of
outstanding securities which will not be limited, will not exceed $2 billion.
Financings by each Applicant will be subject to the following limitations:
(a) issuance of Common Stock by CSW hereunder will not exceed $250
million;
(b) external financings by the Subsidiaries hereunder, other than the
refunding of outstanding securities which will not be limited, will not exceed
the following amounts:
CPL - $500 million,
PSO - $250 million,
SWEPCO - $300 million,
WTU - $150 million,
CSWS - $100 million;
6
(c) issuance of Common Stock by the Subsidiaries to CSW hereunder will
not exceed the following amounts:
CPL - $200 million,
PSO - $100 million,
SWEPCO - $100 million,
WTU - $ 50 million;
(d) repurchases by the Subsidiaries of their Common Stock from CSW h
hereunder will not exceed the following amounts:
CPL - $ 1 billion,
PSO - $150 million,
SWEPCO - $200 million,
WTU - $100 million; and
(e) credit enhancement and guarantees provided hereunder will only be
provided in connection with a financing that satisfies the requirements set
forth herein. Such credit enhancement and guarantees will be counted against the
$2 billion limit described above, but only to the extent that the underlying
security is not counted against such limit.
Description of Specific Types of Financing
I. External Financings
The Subsidiaries currently obtain, and seek authorization to obtain in
the future under the Financing Plan, funds externally through short-term debt
financing; long-term debt financing, such as first mortgage bonds, pollution
control revenue bonds, notes and debentures; sales of preferred stock, sales of
tax-advantaged preferred securities; and borrowings under Credit Agreements. The
only financing authority requested herein by CSW is to issue common stock. All
such debt and stock sales are at rates or prices and under conditions based
upon, or otherwise determined by, competitive capital markets.
The Applicants request authority to sell securities covered by this
Application in any of the following ways: (i) through underwriters or dealers;
(ii) directly to a limited number of
7
purchasers or to a single purchaser, or (iii) through agents or dealers. If
underwriters are used in the sale of the securities, such securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The securities may be offered to the public either through underwriting
syndicates (which may be represented by managing underwriters) or directly by
one or more underwriters acting alone. The securities may be sold directly by
CSW or a Subsidiary or through agents designated from time to time. If dealers
are used in the sale of any securities, such securities will be sold to the
dealers as principal. Any dealer may then resell such securities to the public
at varying prices to be determined by such dealer at the time of resale.
If common stock is being sold by CSW in an underwritten offering, CSW
may grant the underwriters a "green shoe" option permitting the purchase
from CSW of additional equity securities (an additional 15% under present
guidelines) at the same price as the original equity securities then being
offered, solely for the purpose of covering over-allotments.
If debt securities are being sold, they may be sold pursuant to
"delayed delivery contracts" which permit the underwriters to locate buyers who
will agree to buy the debt at the same price but at a later date than the date
of the closing of the sale to the underwriters. Debt securities may also be sold
through the use of medium-term note and similar programs, including in
transactions covered by Rule 144A under the 1933 Act. Pollution control revenue
bonds may be sold either currently or in forward refundings where the price of
the securities is established currently for delivery at a future date.
8
A. Long-Term Financing Authority
CPL was authorized to issue and sell up to $475 million of pollution
control revenue bonds by SEC order in file No. 70-8597 (HCAR No. 35-26309;
6/15/95). CPL has since issued $160.635 million of pollution control revenue
bonds, thus leaving $314.365 million of such authorization available for future
use. CPL was authorized to issue and sell up to $95 million of pollution control
revenue bonds by SEC order in file No. 70-8677 (HCAR No.35-26019; 10/13/95). To
date, CPL has since issued $40.89 million of pollution control revenue bonds,
thus leaving $54.11 million of such authorization available for future use. CPL
was authorized to issue and sell up to $100 million of preferred stock by
SEC order in file No. 70-8359 (HCAR No. 35-26019; 4/6/94). To date, CPL has not
issued any preferred stock under this order. WTU was authorized to issue and
sell up to $130 million of first mortgage bonds by SEC supplemental order in
file No. 70-8057 (HCAR No. 35-26340; 7/26/95). WTU has since issued $80 million
of first mortgage bonds, thus leaving $50 million of such authorization
available for future use. WTU was authorized to issue and sell up to $45 million
of first mortgage bonds by SEC order in file No. 70-8265 (HCAR No. 35-25928;
11/19/93). WTU has since issued $40 million of first mortgage bonds, thus
leaving $5 million of such authorization available for future use. SWEPCO was
authorized to issue and sell up to $131.7 million of pollution control revenue
bonds by SEC order in file No. 70-8847 (HCAR No. 35-26531; 6/12/96). SWEPCO has
since issued $81.7 million of pollution control revenue bonds, thus leaving $50
million of such authorization available for future use. WTU, PSO and CPL were
authorized to issue and sell up to $113.3 millon of pollution control revenue
bonds by SEC order in file No. 70-8869 (HCAR No. 35-26548). WTU, PSO and CPL
have since issued $63.3 million of pollution control revenue bonds, thus leaving
$50 million of such authorization available for future use.
9
CPL, PSO, SWEPCO and WTU were authorized to issue and sell up to $350
million, $100 million, $150 million and $80 million, respectively, of junior
subordinated debentures and tax advantaged preferred securities by SEC order in
file No. 70-8979 (HCAR No. 35-26703; 4/10/97). CPL, PSO and SWEPCO have since
issued $150 million, $75 million and $110 million of tax advantaged preferred
securities, respectively, thus leaving $200 million, $25 million, $40 million
and $80 million of such authorization available for CPL, PSO, SWEPCO and WTU,
respectively. CSW was authorized to issue and sell up to 11million shares of
common stock by SEC order file No. 70-8357 (HCAR No. 35-26045; 5/2/94). To date,
CSW has not issued any common stock under this order.
The Applicants are proposing that the authorization to engage in external
financings requested herein supersede the prior authorizations described above
(the "Prior Authorizations"). If this proposal is approved, the Applicants would
engage in long-term financing in the context of their needs and financial market
conditions at the time of issuance, subject to the terms and conditions set
forth herein and in any order in this file, and without reference to the terms
and restrictions set forth in the Prior Authorizations. Any long-term debt or
other security would have such designations, aggregate principal amount,
maturity, interest rate(s) or methods of determining the same, interest payment
terms redemption provisions, non-refunding provisions, sinking fund terms,
conversion or put terms and other terms and conditions as the Applicants may at
the time of issuance determine, unless this filing specifically provides
otherwise.
B. Stock Financing
CSW requests authorization hereunder to issue common stock, including
issuances of common stock upon the exercise of convertible debt or pursuant to
rights, options, warrants and similar securities. CSW also requests
authorization to purchase common stock from the
10
Subsidiaries and to sell such common stock back to the Subsidiaries. The
Subsidiaries request authorization hereunder to issue and sell preferred stock,
including tax advantaged preferred securities. The Subsidiaries also request
authorization to issue common stock to CSW and to repurchase their common stock
from CSW.
C. Bank Borrowings
The Subsidiaries propose to make borrowings from banks or other lending
institutions from time to time through the end of the Authorization Period. Such
borrowings will be evidenced by promissory notes issued to the applicable
lender, to be dated as of the date of the first borrowing thereunder, with each
such borrowing maturing in not more than fifty years. Notes may or may not be
prepayable, in whole or in part, with or without a premium in the event of
prepayment.
D. Credit Enhancement
Applicants may obtain credit enhancement for the securities covered by this
Application, which could include insurance, a letter of credit or a liquidity
facility. The Applicants anticipate they may be required to provide credit
enhancement if they were to issue floating rate securities, whereas credit
enhancement would be a purely economic decision for fixed rate securities. The
Applicants anticipate that even though they would be required to pay a premium
or fee to obtain the credit enhancement, they would realize a net benefit
through a reduced interest rate on the new securities. Applicants will obtain
credit enhancement only if it is economically beneficial to do so.
If insurance is obtained, the Applicants may be required to enter into an
agreement with the insurer and an escrow agent pursuant to which the Applicants
would be obligated to make payments of certain amounts into an escrow fund upon
a failure to maintain certain financial ratios and on the occurrence of certain
other events. Amounts held in such an
11
escrow fund would be payable to the insurer as an indemnity for any amounts
paid by the insurer with respect to principal or interest on the new securities.
E. Other Securities
In addition to the types of securities for which authorization is sought
herein, the Applicants also propose to issue other types of securities that they
deem appropriate during the Authorization Period. Applicants request that the
SEC reserve jurisdiction over the issuance of additional types of securities.
Applicants also undertake to file a post-effective amendment in this proceeding
which will describe the general terms of each such security and request a
supplemental order of the SEC authorizing the issuance thereof by the
Applicants. Applicants further request that each supplemental order be issued by
the SEC without further time-consuming public notice.
II. Financing Entities
The Subsidiaries seek authority to organize new corporations, trusts,
partnerships or other entities to be created for the purpose of facilitating
certain types of financings such as the issuance of tax advantaged preferred
securities. Request is also made for these financing entities to issue such
securities to third parties. Additionally, request is made for authorization
with respect to (i) the issuance of debentures or other evidences of
indebtedness by the Subsidiaries to a financing entity in return for the
proceeds of the financing and (ii) the acquisition by a Subsidiary of voting
interests or equity securities issued by the financing entity to establish the
Subsidiary's ownership of the financing entity (the equity portion of the entity
generally being created through a capital contribution or the purchase of equity
securities, such as shares of stock or partnership interests, involving an
amount usually ranging from 1 to 25 percent of the capitalization of the
financing entity). The Subsidiaries
12
also request authorization to enter into expense agreements with their
respective financing entities, pursuant to which they would agree to pay all
expenses of such entity.
The Subsidiaries may also guarantee (i) payment of interest, dividends or
distributions on the securities issued by their subsidiary financing entities if
and to the extent such financing entities declare dividends or distributions or
pay interest out of funds legally available therefor; (ii)payments to the
holders of the securities issued by such entities of amounts due upon
liquidation of such entities or redemption of the securities of such entities;
and (iii)certain additional amounts that may be payable in respect of such
securities.
Tender Offers
In connection with any refinancing by CSW or a Subsidiary pursuant to the
authority requested hereunder, CSW and the Subsidiaries may determine to acquire
outstanding securities (the "Outstanding Securities") through tender offers to
the holders of such Outstanding Securities. Tender offers may be conditioned
upon receipt of a certain percentage of the Outstanding Securities. The tender
offer price would be based on a number of factors, including the coupon rate of
the Outstanding Securities, the date of expiration of the refunding protection
of the Outstanding Securities, the redemption price on such expiration date and
the then current market rates for similar securities, all of which are relevant
to the decision of an informed holder as to whether to hold or sell Outstanding
Securities. Holders of Outstanding Securities may be offered a fixed price for
their Outstanding Securities, or the tender offer may be a "fixed spread" offer
pursuant to which the Applicants will offer a price based upon a fixed spread
over comparable U.S. Treasury securities. Any tender offer will be conducted in
accordance with standard market practice, i.e., the length of time the offer
will be held open, the method of solicitation, etc., at the time of the tender
offer.
13
The Applicant would, in connection with any tender offer, retain one or
more investment banking firms experienced in such matters to act as tender agent
and dealer- manager. The dealer-manager will act as the Applicant's agent in
disseminating the tender offer and receiving responses thereto. As a
dealer-manager, the investment banking firm will not itself become obligated to
purchase or sell any of the Outstanding Securities. The dealer- manager's fee
will be determined following negotiation and investigation of fees in similar
transactions and will include reasonable out-of-pocket expenses and attorney's
fees. It is expected that the Applicant will be required, as is customary, to
indemnify the dealer-manager for certain liabilities. The Applicant may also
retain a depositary to hold the tendered Outstanding Securities pending the
purchase thereof and/or an information agent to assist in the tender offer.
Filing of Certificates of Notification
It is proposed that, with respect to the CSW System, the reporting system
of the 1933 Act and the 1934 Act be integrated with the reporting system under
the Act. This would eliminate duplication of filings with the SEC that cover
essentially the same subject matters, resulting in a reduction of expense for
both the SEC and the Applicants. To effect such integration, the disclosures of
transactions occurring pursuant to the authorization granted in this proceeding
would be incorporated by reference into this proceeding through Rule 24
certificates of notification. Such certificates of notification would be filed
within 60 days after the end of the calendar quarter in which the transaction
occurs.
The Rule 24 certificates will contain the following information:
(a) If sales of common stock by CSW are reported, the purchase price per
share and the market price per share at the date of the agreement of
sale;
14
(b) If purchases by Subsidiaries of their securities from CSW are
reported, the purchase price and the basis on which it is determined;
(c) CSW balance sheets as of the end of the quarter, and separate balance
sheets as of the end of the quarter for each company, including CSW,
that has engaged in financing transactions during the quarter; and
(d) Future registration statements filed under the 1933 Act with respect
to securities that are the subject of the Application will be filed
(or incorporated by reference) as exhibits to the next certificate
filed pursuant to Rule 24.
Rule 54
No proceeds from the financings for which authority is requested hereunder
will be used by CSW or any Subsidiary for the direct or indirect acquisition of
an interest in an exempt wholesale generator ("EWG"), as defined in Section 32
of the Act, or a foreign utility company ("FUCO"), as defined in Section 33 of
the Act. Rule 54 promulgated under the Act states that in determining whether to
approve the issue or sale of a security by a registered holding company for
purposes other than the acquisition of an EWG or a FUCO, or other transactions
by such registered holding company or its subsidiaries other than with respect
to EWGs or FUCOs, the SEC shall not consider the effect of the capitalization or
earnings of any subsidiary which is an EWG or a FUCO upon the registered holding
company system if Rules 53(a), (b) and (c) are satisfied. As set forth below,
all applicable conditions set forth in Rule 53(a) are currently satisfied and
none of the conditions set forth in Rule 53(b) exist or will exist as a result
of the transactions proposed herein, thereby satisfying such provision and
making Rule 53(c) inapplicable.
CSW's "aggregate investment" (as defined under Rule 53(a) of the Act) in
EWGs and FUCOs as of September 11, 1997 was approximately $923 million, or about
47% of $1,970
15
million, CSW's average consolidated retained earnings for the four
quarterly periods ended June 30, 1997. CSW thus satisfies Rule 53(a)(1). CSW
will maintain and make available the books and records required by Rule
53(a)(2). No more than 2% of the employees of CSW's operating subsidiaries will,
at any one time, directly or indirectly, render services to an EWG or FUCO in
which CSW directly or indirectly owns an interest, satisfying Rule 53(a)(3).
Lastly, CSW will submit a copy of Item 9 and Exhibits G and H of CSW's Form U5S
to each of the public service commissions having jurisdiction over the retail
rates of CSW's operating utility subsidiaries, satisfying Rule 53(a)(4).
CSW was authorized to invest up to 100% of its consolidated retained
earnings in EWGs and FUCOs by SEC order (the "100% Order") in file No. 70-8809
(HCAR No. 35- 26653; 1/24/97). In connection with its consideration of CSW's
application for the 100% Order, the SEC reviewed CSW's procedures for evaluating
EWG or FUCO investments. Based on projected financial ratios and on procedures
and conditions established to limit the risks to CSW involved with investments
in EWGs and FUCOs, the SEC determined that permitting CSW to invest up to 100%
of its consolidated retained earnings in EWGs and FUCOs would not have a
substantial adverse impact upon the financial integrity of the CSW system, nor
would it have an adverse impact on any of the Subsidiaries or their customers,
or on the ability of State commissions to protect the Subsidiaries or their
customers. Since similar considerations are involved hereunder with respect to
Rule 54, Applicants should not be required to make subsequent Rule 54 filings
once CSW's aggregate investment in EWGs and FUCOs exceeds 50% of its
consolidated retained earnings.
16
Items Subject to Further SEC Approval
I. Stock Financing
The Applicants propose that they be allowed to (i) increase their
authorized capital as deemed necessary and appropriate by CSW for proper
corporate purposes, (ii) amend their articles of incorporation and (iii) solicit
proxies through a proxy statement, filed under and meeting the standards of the
1934 Act, requesting shareholder approval of any amendment to their articles of
incorporation.
Proxy solicitation material relating to amendments to the articles of
incorporation will meet the requirements of Schedule 14A under the 1934
Act, and will, to the extent required, be reviewed for compliance with such
regulation by the SEC before the proxy material is sent to shareholders.
Such proxy solicitation material will be incorporated by reference into
this Application when it is filed with the SEC under the 1934 Act. Copies
of any such solicitation materials will be concurrently filed with the
Office of Public Utility Regulation. The Applicants request reservation of
jurisdiction over any solicitation and the implementation of amendments to
the articles of incorporation pending completion of the record. The
Applicants further request that any supplemental order authorizing
amendments to the articles of incorporation be issued by the SEC without
further public notice
II. Other Securities
In addition to the specific securities for which authorization is
sought herein, the Applicants also propose to issue other types of
securities that they deem appropriate during the period ending December 31,
2002. The Applicants request that the SEC reserve jurisdiction over the
issuance of additional types of securities. The Applicants also undertake
to file a post-effective amendment in this proceeding which will describe
the general terms of each such security and will request a supplemental
order of the SEC authorizing the issuance
17
thereof by an Applicant. The Applicants request that each supplemental order be
issued by the SEC without further public notice.
Summary of Requested Authority
The Applicants seek authority to engage in financing transactions
during the Authorization Period, subject to satisfaction of certain
parameters, without needing to file separate applications for each
individual financing transaction. Applicants seek to consolidate existing
financing authority equaling approximately $0.95 billion with the
additional authority requested hereunder equaling approximately $1.05
billion for a total of $2.0 billion of financing authority during the
Authorization Period. While the Applicants seek authority to issue various
types of securities described herein, CSW shall limit its financing
activity hereunder to the issuance of common stock.
Item 6. Exhibits and Financial Statements
Item 6 of the Application is hereby amended to file the following
exhibit:
Exhibit 1: Preliminary Opinion of Milbank, Tweed, Hadley& McCloy,
counsel to the Company.
18
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 companies have duly caused this
document to be signed on their behalf by the undersigned thereunto duly
authorized.
Dated: December 19, 1997
CENTRAL AND SOUTH WEST CENTRAL POWER AND LIGHT
CORPORATION COMPANY
By/s/WENDY G. HARGUS By/s/WENDY G. HARGUS
Wendy G. Hargus Wendy G. Hargus
Treasurer Treasurer
PUBLIC SERVICE COMPANY OF SOUTHWESTERN ELECTRIC POWER
OKLAHOMA COMPANY
ByJ/s/WENDY G. HARGUS By/s/WENDY G. HARGUS
Wendy G. Hargus Wendy G. Hargus
Treasurer Treasurer
WEST TEXAS UTILITIES COMPANY CENTRAL AND SOUTH WEST
SERVICES, INC.
By/s/WENDY G. HARGUS By /s/WENDY G. HARGUS
Wendy G. Hargus Wendy G. Hargus
Treasurer Treasurer
19
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
Exhibit 1 Preliminary Opinion of Milbank, Electronic
Tweed, Hadley & McCloy, counsel
to the Company.
Exhibit 2 Final or "Past Tense" opinion of -----
Milbank, Tweed, Hadley & McCloy,
counsel to the Company (to be filed
with Certificate of Notification).
Exhibit 3 Proposed Notice of Proceeding -----
(previously filed).
Exhibit 4 Financial Statements of Central -----
and South West Corporation and its
subsidiaries as of June 30, 1997
(previously filed).
EXHIBIT 1
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
December 19, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Central and South West Corporation, et al.
Application-Declaration on Form U-1
File No. 70-9107
Dear Sirs:
We refer to the Application-Declaration on Form U-1, File No. 70-9107,
as amended (the "Application"), filed under the Public Utility Holding
Company Act of 1935, as amended (the "Act"), by Central and South West
Corporation ("CSW"), a Delaware corporation and a registered holding
company, and its subsidiary companies Central Power and Light Company,
Public Service Company of Oklahoma, Southwestern Electric Power Company,
West Texas Utilities Company and Central and South West Services, Inc.
(collectively, the "Subsidiaries"). In the Application, CSW and the
Subsidiaries request authority under the Act to engage in various financing
and related transactions (the "Proposed Transactions") through December 31,
2002. If Preferred Securities are issued, they would be issued by one or
more special purpose entities ("SPEs"), the common interests of which would
be acquired by the respective Subsidiary. We have acted as special counsel
for CSW and the Subsidiaries in connection with the filing of the
Application and, as such counsel, we are familiar with the corporate
proceedings taken by CSW and the Subsidiaries in connection with the filing
of the Application.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of CSW and the Subsidiaries, certificates of
public officials, certificates of officers and representatives of CSW and
the Subsidiaries and other documents as we have deemed necessary to require
as a basis for the opinions hereinafter expressed. In such examination we
have assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. As to various
questions of fact material to such opinions we have, when relevant facts
were not independently established, relied upon certificates by officers of
CSW and other appropriate persons and statements contained in the
Application.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that, in the event that the
Proposed Transactions are consummated in accordance with the Application,
and subject to the assumptions and conditions set forth below:
1. CSW, the Subsidiaries and the SPEs are or will be validly
organized and duly existing under the laws of its state of
incorporation.
2. All state laws applicable to the Proposed Transactions as
described in the Application (other than so-called "blue-sky" or
state securities laws as to which we express no opinion) will
have been complied with.
3. Any debt securities and any guarantees issued as contemplated in
the Application will be valid and binding obligations of the
respective Subsidiary in accordance with their terms, subject, as
to enforcement, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights
generally and to the effects of general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law), including without limitation (a)
the possible unavailability of specific performance, injunctive
relief or any other equitable remedies and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
4. Any preferred securities issued as contemplated in the
Application will be valid and binding obligations of the issuing
SPE in accordance with their terms, subject to the qualifications
stated in paragraph 3 above.
5. Any shares of common stock issued or sold by CSW or any shares of
common stock or preferred stock issued or sold by the
Subsidiaries as contemplated in the Application will be validly
issued, fully paid and non-assessable and the holders thereof
will be entitled to the rights and privileges appertaining
thereto set forth in the charter or other documents defining such
rights and privileges.
6. The consummation by CSW and the Subsidiares of the Proposed
Transactions will not violate the legal rights of the holders of
any securities issued by CSW or the Subsidiaries or any
"associate" company, as such term is defined in the Act, of CSW
or the Subsidiaries.
The opinions expressed above in respect of the Proposed Transactions
described in the Application are subject to the following assumptions or
conditions:
a. The Proposed Transactions shall have been duly authorized and
approved to the extent required by state law by the Board of
Directors of CSW and the Subsidiaries.
b. The Securities and Exchange Commission shall have duly entered an
appropriate order or orders granting and permitting the
Application to become effective.
c. The Proposed Transactions shall be consummated in accordance with
any required approvals, authorizations, consents, certificates
and orders of any state commission or
regulatory authority and all such required approvals,
authorizations, consents, certificates and orders shall have
been obtained and remain in effect.
d. No act or event other than as described herein shall have
occurred subsequent to the date hereof which would change the
opinions expressed above.
e. All legal matters incident to the Proposed Transactions shall be
satisfactory to us, including the receipt in satisfactory form of
opinions of other counsel qualified to practice in jurisdictions
pertaining to the Proposed Transactions in which we are not
admitted to practice.
We hereby consent to the use of this opinion as an exhibit to the
Application.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
RBW/JMH
