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MTHM Draft
3/7/97
File No. 70-8979
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 3 To
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
________________________
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
Dallas, TX 75202
CENTRAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East Sixth Street
Tulsa, Oklahoma 74119-1212
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71156-0001
WEST TEXAS UTILITIES COMPANY
301 Cypress Street
Abilene, Texas 79601-5820
(Names of companies filing this statement and addresses
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 10005-1413
(Names and addresses of agents for service)
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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"), and its subsidiary companies Central Power and Light
Company ("CPL"), Public Service Company of Oklahoma ("PSO"), Southwestern
Electric Power Company ("SWEPCO"), and West Texas Utilities Company ("WTU"),
each referred to as an "Operating Subsidiary" and collectively referred to as
the "Operating Subsidiaries", hereby amends its Form U-1 Application-Declaration
in File No. 70-8979 in the following respects. In all other respects, the
Application-Declaration as previously filed will remain the same.
ITEM 1. DESCRIPTION OF THE PROPOSED TRANSACTIONS.
Item 1 will be amended from its first paragraph to, but not including, "C.
Issuance of Tax Deductible Securities" to read as follows and Item 1.E. will
be amended as described below:
CSW and/or the Operating Subsidiaries propose to issue tax deductible
preferred securities ("Preferred Securities") as part of a restructuring of the
existing preferred stock component of the Operating Subsidiaries' capitalization
(the "Preferred Restructuring") which consists of (i) eliminating provisions in
the Operating Subsidiaries' articles restricting the amount of unsecured debt,
and Preferred Securities which may be treated as unsecured debt, issuable by
each Operating Subsidiary, (ii) acquiring or calling all or a portion of the
Operating Subsidiaries' outstanding preferred stock, and (iii) issuing at the
CSW and/or the Operating Subsidiary level Preferred Securities, all as described
in the following introduction to Item 1 and in more detail in Item 1, Sections A
through F, below.
The Operating Subsidiaries propose to solicit proxies from the holders of
their outstanding shares of preferred stock and common stock ("Proxy
Solicitation") to approve a proposed amendment to CPL and WTU's Restated
Articles of Incorporation and PSO and SWEPCO's Restated Certificates of
Incorporation (collectively, the "Articles") that would eliminate a provision
restricting the amount of unsecured debt issuable by each Operating Subsidiary
(individually, a "Proposed Amendment" and collectively, the "Proposed
Amendments"). Proxies would be voted at special meetings of the Operating
Subsidiaries' respective stockholders to be held on April 7, 1997 for CPL and
April 16, 1997 for PSO, SWEPCO and WTU (the "Special Meetings") for the purpose
of voting on the Proposed Amendments. If the Proposed Amendments are adopted,
the Operating Subsidiaries propose to make a special cash payment as specified
below to each preferred stockholder who voted
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in favor of the applicable Proposed Amendment; provided that any such shares
were not tendered in a concurrent cash tender offer for such shares in the case
of SWEPCO, PSO and WTU (described below).
Concurrently with the Proxy Solicitation for SWEPCO, PSO and WTU, CSW
proposes to make a cash tender offer for any and all shares of outstanding
preferred stock of SWEPCO, PSO and WTU. CSW also proposes to make a cash
tender offer for the 4.00% and 4.20% Series of CPL's cumulative preferred
stock (together with the SWEPCO, WTU and PSO offers, the "Offers" and each an
"Offer") concurrently with CPL's seperate proxy solicitation. The CPL Offer
would coincide with the launch of the other Offers and with the CPL proxy
solicitation. However, unlike the combined proxy solicitations and tender
offers proposed by SWEPCO, PSO and WTU, the launch of and the documentation
for the CPL Offer will be entirely separate from CPL's proxy solicitation
materials. The CPL Offer will not be conditioned, in any way, upon the
results of, or a vote cast in, the CPL proxy solicitation. Additionally, CPL
proposes to call shares of its 8.72% and 7.12% Series of outstanding
cumulative preferred stock at the applicable call price (the "Redemption").
The Offer for each series of preferred stock will be independent of the Offer
for any other series. CSW plans to terminate the Offer for each series of
preferred stock, including CPL, at 5 P.M. (Central Time) on the date of the
applicable Special Meetings for SWEPCO, PSO and WTU ("Expiration Date") but
may extend the Expiration Date or terminate the Offer early under certain
circumstances. A condition to the Offers, other than the CPL Offer, will be
that preferred stockholders who tender their shares pursuant to the Offers
vote in favor of the applicable Proposed Amendment. Any shares not voted in
favor of the Proposed Amendment will be deemed withdrawn and not validly
tendered. Consummation of each Offer, other than the CPL Offer, will be
contingent upon the Proposed Amendment being approved and adopted at the
Special Meeting. CSW may, however, waive such condition as described below.
CSW and the Operating Subsidiaries request that the Securities and
Exchange Commission (the "Commission") issue a preliminary order authorizing
the Proxy Solicitation (collectively, "Preliminary Order") by not later than
March 17, 1997. CSW and the Operating Subsidiaries request that the
Commission reserve jurisdiction over all other authorizations requested in
this Form U-1 Application-Declaration in File No. 70-8979. CSW and the
Operating Subsidiaries further request that as soon as practicable after
issuance of the Preliminary Order, but not later than April 1, 1997, the
Commission issue an order authorizing: (i) the Proposed Amendments and the
proposed acquisition of the shares of the Operating Subsidiaries' preferred
stock pursuant to the Offers; (ii) the reacquisition, retirement and
cancellation by the Operating Subsidiaries of shares tendered to CSW pursuant
to the Offers; and (iii) the use by CSW of its general funds and/or funds
borrowed through its commercial paper program previously authorized by order
dated
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March 21, 1995 (HCAR No. 26254), on an interim basis, to finance its purchase of
shares tendered, accepted for payment and paid for pursuant to the Offers, until
such time as such shares are reacquired by the Operating Subsidiaries.
CSW and the Operating Subsidiaries also request authorization to deviate
from the preferred stock provisions of the Statement of Policy Regarding
Preferred Stock Subject to the Public Utility Holding Company Act of 1935, HCAR
No. 13106 (Feb. 16, 1956), to the extent applicable with respect to the Proposed
Amendments.
CSW and the Operating Subsidiaries also request that the order grant CSW
and the Operating Subsidiaries authority to issue securities similar to the
Preferred Securities currently in the marketplace (i.e., tax deductible
preferred securities such as QUIPS, TOPRS, etc.) for the purpose of retiring or
replacing outstanding first mortgage bonds and preferred stock at the Operating
Subsidiaries, or any combination thereof, for the payment of outstanding short-
term borrowings and for other general corporate purposes. In order to
effectuate the issuance of the preferred securities, CSW and the Operating
Subsidiaries propose to issue and sell from time to time in one or more series,
directly, or indirectly through a special purpose financing subsidiary (as
hereinafter defined) or affiliate of CSW or an Operating Subsidiary established
for that purpose, Junior Subordinated Debentures (the "Debentures") and/or
Preferred Securities. Each series of Debentures and/or Preferred Securities
will mature in not more than 49 years. The Proxy Solicitation, Redemption,
Proposed Amendments, Offer and issuance of Debentures and/or Preferred
Securities are discussed in more detail below.
In addition, CSW and the Operating Subsidiaries request authority to manage
interest rate risk, as appropriate, through the use of hedging products,
including interest rate swaps, forward swaps and caps and collars as described
in Item I.D. below. CSW and the Operating Subsidiaries request authority to
enter into the foregoing types of transactions from time to time in connection
with the issuance of Debentures and/or Preferred Securities.
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The preferred stock of each Operating Subsidiary, the number of shares
outstanding, their par value and dollar amount outstanding as of December 31,
1996 are listed below. None of the shares are listed on the New York Stock
Exchange ("NYSE") or any other exchange.
<TABLE>
<CAPTION>
CPL
<S> <C> <C> <C>
Money Market Preferred 750,000 shares $100 Par Value $ 75,000,000
Auction Rate Pref. Series A 425,000 shares $100 Par Value $ 42,500,000
Auction Rate Pref. Series B 425,000 shares $100 Par Value $ 42,500,000
8.72% Series 500,000 shares $100 Par Value $ 50,000,000
7.12% Series 260,000 Shares $100 Par Value $ 26,000,000
4.20% Series 75,000 Shares $100 Par Value $ 7,500,000
4.00% Series 100,000 Shares $100 Par Value $ 10,000,000
------------
Total $253,000,000
------------
<CAPTION>
PSO
<S> <C> <C> <C>
4.24% Series 100,000 Shares $100 Par Value $10,000,000
4.00% Series 97,900 Shares $100 Par Value $ 9,790,000
-----------
Total $19,790,000
-----------
<CAPTION>
SWEPCO
<S> <C> <C> <C>
6.95% Series 340,000 Shares $100 Par Value $34,000,000
5.00% Series 75,000 Shares $100 Par Value $ 7,500,000
4.65% Series 25,000 Shares $100 Par Value $ 2,500,000
4.28% Series 60,000 Shares $100 Par Value $ 6,000,000
-----------
Total $50,000,000
-----------
<CAPTION>
WTU
<S> <C> <C> <C>
4.40% Series 60,000 Shares $100 Par Value $ 6,000,000
</TABLE>
All of the outstanding common stock of each Operating Subsidiary is owned
by CSW. Each share of common stock and preferred stock of each series is
entitled to one vote per share for purposes of the Proposed Amendments. Each
Operating Subsidiary's outstanding common stock and preferred stock constitute
its only
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outstanding securities entitled to vote on the applicable Proposed Amendment.
None of the Operating Subsidiaries has any other authorized class of equity
securities.
A. PROXY SOLICITATION AND PROPOSED AMENDMENTS
1. Terms of Proxy Solicitation and Proposed Amendments
Each Operating Subsidiary's Articles currently provide that, without the
consent of the holders of at least a majority of the total number of such
Operating Subsidiary's shares of preferred stock of all series voting as one
class, it may not issue or assume any unsecured notes, debentures or other
securities representing unsecured indebtedness ("Unsecured Obligations"), for
any purpose other than (a) refunding or renewing outstanding Unsecured
Obligations resulting in later maturities or, (b) funding existing unsecured
indebtedness (not represented by Unsecured Obligations), if immediately after
such issue or assumption (1) the principal amount of all Unsecured Obligations
issued or assumed by the Operating Subsidiary and then outstanding would exceed
20% of the aggregate of (i) the principal amount of all bonds or other
securities representing secured indebtedness issued or assumed by the Operating
Subsidiary and then outstanding and (ii) the total capital stock and surplus of
the Operating Subsidiary as then recorded on its books (the "20% Provision"), or
(2) the principal amount of all Unsecured Obligations maturing in less than ten
years, issued or assumed by the Operating Subsidiary and then outstanding,
computed as herein provided, would exceed 10% of such aggregate amount (the "10%
Provision"). For purposes of subparagraph (2) of the previous sentence, the
principal amount of any Unsecured Obligations which had an original single
maturity of more than ten years from the date thereof, and the principal amount
of the final maturity of any serially-maturing Unsecured Obligations which had
one or more original maturities of more than ten years from the date thereof,
may not be regarded as Unsecured Obligations maturing in less than ten years
until such principal amount is due or required to be paid within three years.
The Proposed Amendments would eliminate the 10% and 20% Provisions by deleting
them in their entirety from the Articles of each Operating Subsidiary.
Approval and adoption of the applicable Proposed Amendment by each
Operating Subsidiary's shareholders requires the affirmative vote of the holders
of not less than two-thirds of the outstanding shares of (1) the preferred stock
of all series, voting together as one class, and (2) the common stock. CSW has
advised the Operating Subsidiaries that it will vote its shares of common stock
of each Operating Subsidiary in favor of
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the Proposed Amendments. Abstentions and broker non-votes in respect of the
Proposed Amendments will have the effect of voting against the Proposed
Amendments.
Duly appointed inspectors of election will definitively count and tabulate
the votes and determine and announce the results.
The Operating Subsidiaries have engaged D.F. King & Co. Inc. ("D.F. King")
to act as information agent in connection with the Proxy Solicitation. D.F.
King will be paid a fee totaling approximately $75,000 which includes
reimbursement for its reasonable out-of-pocket expenses.
If a Proposed Amendment is adopted, the applicable Operating Subsidiary
proposes to make a special cash payment of $1.00 per share in the case of
SWEPCO, PSO and WTU and $0.25 per share in the case of CPL out of its general
funds (each, a "Cash Payment") for each share of preferred stock not tendered
pursuant to the SWEPCO, PSO and WTU Offers that is properly voted in favor of
the applicable Proposed Amendment. Holder of CPL's 4.00% and 4.20% Series
cumulative preferred stock who vote in favor of the amendment will be entitled
to receive the Cash Payment regardless of whether they tender their shares. The
applicable Operating Subsidiary will disburse Cash Payments promptly after
adoption of the applicable Proposed Amendment.
2. Benefits of the Proposed Amendments
CSW and the Operating Subsidiaries believe that adoption of the Proposed
Amendments is critical to maximizing their respective financial flexibility and
minimizing their financing costs for the benefit of utility customers and,
indirectly, the Operating Subsidiaries' investors. CSW estimates that the
ongoing financing flexibility and cost savings to be gained through the
elimination of the 10% and 20% Provisions outweigh the one-time cost of the
special Cash Payments and the other costs of the Proxy Solicitation. CSW and
the Operating Subsidiaries further believe that the terms of the Offers will be
attractive to tendering preferred stockholders (given the proposed per share
purchase price) and will also benefit CSW's investors and system utility
customers by (1) contributing to the elimination of the onerous Articles
provisions concerning unsecured indebtedness and (2) creating flexibility in
planning and financing business activities and (3) resulting in the acquisition
and subsequent retirement of outstanding shares of the Operating Subsidiaries'
preferred stock and their replacement with less expensive financing
alternatives.
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Although historically the Operating Subsidiaries' debt financing has been
accomplished through the issuance of first mortgage bonds and short-term debt,
CSW and the Operating Subsidiaries believe that unsecured debt will increase in
importance over time as an option in financing construction programs,
refinancing first mortgage bonds and providing funds for other general corporate
purposes. The availability and flexibility of unsecured debt is necessary to
take full advantage of changing conditions in the securities markets and the
electric utility industry. For example, if the Operating Subsidiaries were ever
unable to meet the earnings coverage test in their respective Articles, they
would be unable to issue any additional preferred stock. Thus, it is possible
that the Operating Subsidiaries could face a situation where they would be able
to issue only first mortgage bonds (assuming that the applicable earnings
coverage test could be met) or additional common stock.
The Proposed Amendments will also allow the Operating Subsidiaries to take
greater advantage of Preferred Securities on which periodic payments are tax
deductible(which have a lower after-tax cost than traditional preferred stock),
the retail unsecured debt market, the institutional unsecured debt market and
the short-term unsecured debt market. Securities in each of these areas are
currently treated as unsecured debt for purposes of the 10% and 20% Provisions.
The Operating Subsidiaries believe that the 10% and 20% Provisions hamper
their flexibility in planning and financing business activities and that
eventually they may be at a competitive disadvantage if those restrictions are
not removed. New competitors such as power marketers, independent power
producers and owners of cogeneration facilities generally are not subject to
similar financing restrictions. In recent years, a number of utilities
encumbered with charter restrictions similar to the 10% and 20% Provisions have
eliminated or relaxed such provisions through successful proxy solicitations.
In short, many potential competitors of the Operating Subsidiaries are not
constrained by unsecured debt restrictions.
Reference is made to Exhibit 2 (forms of Offer to Purchase and Proxy
Statement) and Exhibit 3 (form of Notice of Special Meeting) for more detailed
information with respect to the Proxy Solicitation and Proposed Amendments.
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B. THE OFFER TO PURCHASE
1. Terms of Offer
Concurrently with the commencement of the Proxy Solicitation for SWEPCO,
PSO, WTU and CPL and subject to the terms and conditions stated in the Offer to
Purchase and Proxy Statement for SWEPCO, PSO and WTU and the Offer to Purchase
for CPL (each, an "Offer to Purchase") and the accompanying Letters of
Transmittal and Proxy for SWEPCO, PSO and WTU and the Letter of Transmittal for
CPL (each, a "Letter of Transmittal") (see Exhibits 2(a)-(d) and 5(a)-(d))
(collectively, the "Offer Documents"), CSW proposes to make the Offer, pursuant
to which it will offer to acquire from the holders of the preferred stock of all
series of SWEPCO, PSO and WTU and the 4.00% and 4.20% series of CPL (each a
"Series") any and all shares (the "Shares") of such Series at the following cash
purchase prices:
(i) SWEPCO - $___ per share, in the case of the 6.95% Series; $___
per share, in the case of the 5.00% Series; $___ per share, in the case of
the 4.65% Series and $___ per share, in the case of the 4.28% Series (each,
a "SWEPCO Purchase Price").
(ii) PSO - $___ per share, in the case of the 4.24% Series and $___
per share, in the case of the 4.00% Series (each, a "PSO Purchase Price").
(iii) WTU - $___ per share, in the case of the 4.40% Series (the "WTU
Purchase Price").
(iv) CPL - $___ per share, in the case of the 4.20% Series and $___
per share, in the case of the 4.00% Series (each, a "CPL Purchase Price"
and together with the SWEPCO Purchase Price, the PSO Purchase Price and the
WTU Purchase Price, the "Purchase Price").
A portion of the Purchase Price, except for the CPL Purchase Price, will be
treated as a Cash Payment for voting in favor of the Proposed Amendment. CSW
anticipates that the Offer for each Series of preferred stock, including CPL,
will be scheduled to expire at 5 P.M. (Central time) on the date of the
applicable Special Meeting for SWEPCO, PSO and WTU. The Offers may be extended
or terminated earlier under certain circumstances specified below.
The Offer for any one Series is independent of the Offer for any other
Series. The applicable Purchase Price and the other terms and conditions of the
Offers apply equally to all preferred stockholders of a respective Series. The
Offers are not conditioned upon any minimum number of Shares of the applicable
Series
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being tendered, but are conditioned, except for the CPL Offer, among other
things, on the Proposed Amendments being approved and adopted by the requisite
vote of the preferred stockholders.
To tender shares in accordance with the terms of the Offer Documents, the
tendering preferred stockholder must either (1) send to The Bank of New York, in
its capacity as depositary for the Offers ("Depositary"), a properly completed
and duly executed Letter of Transmittal or, if sent by an eligible institution,
a facsimile thereof for that Series, together with any required signature
guarantees and any other documents required by the Letter of Transmittal, and
either (a) certificates for the Shares to be tendered must be received by the
Depositary at one of its addresses specified in the Offer Documents, or (b) such
Shares must be delivered pursuant to the procedures for book-entry transfer
described in the Offer Documents (and a confirmation of such delivery must be
received by the Depositary), in each case by the Expiration Date; or (2) comply
with a guaranteed delivery procedure specified in the Notice of Guaranteed
Delivery and Proxy for SWEPCO, PSO and WTU, or the Notice of Guaranteed Delivery
for CPL. Tenders of Shares made pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. Thereafter, such tenders will be
irrevocable, subject to certain conditions identified in the Offer Documents.
CSW's obligation to proceed with the Offers and to accept for payment and
to pay for any Shares tendered is subject to various conditions enumerated in
the Offer Documents, which include the Commission issuing an order under the Act
authorizing the proposed transactions, and which also include, among other
conditions, except in the case of the CPL Offer, that the Proposed Amendments be
adopted and that all tendering preferred stockholders vote in favor of the
applicable Proposed Amendment. Any tendered shares as to which a vote in favor
of the Proposed Amendment is not validly cast may be deemed withdrawn and not
validly tendered. The CPL Offer is subject to certain conditions enumerated in
the Offer Documents, but is not conditioned upon the Proposed Amendments being
adopted or upon a tendering preferred stockholder voting in favor of the
Proposed Amendment.
At any time or from time to time, CSW may extend the Expiration Date
applicable to any Series by giving notice of such extension to the Depositary,
without extending the Expiration Date for any other Series. During any such
extension, all Shares of the applicable Series previously tendered will remain
subject to the Offer, and may be withdrawn at any time prior to the Expiration
Date, as extended. Conversely, CSW may elect
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in its sole discretion to terminate the Offer prior to the scheduled Expiration
Date and not accept for payment and pay for any Shares tendered. In either
case, CSW will comply with applicable provisions of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules promulgated thereunder,
which require CSW either to pay the consideration offered or to return the
tendered Shares promptly after the termination or withdrawal of the Offer and
after giving notice of such termination to the Depositary and making a public
announcement thereof.
Subject to compliance with applicable law, CSW further reserves the right
in the Offer Documents, in its sole discretion, to amend the Offers in any
respect by making a public announcement thereof. If CSW materially changes the
terms of an Offer or the information concerning an Offer, or if it waives a
material condition of an Offer (such as, if applicable, the condition that the
Proposed Amendments be adopted), CSW will extend the Expiration Date to the
extent required by the applicable provisions of the Exchange Act and the rules
promulgated thereunder. Those provisions generally require that the minimum
period during which an issuer tender offer must remain open following material
changes in the terms of the offeror information concerning the offer (other than
a change in price, or change in percentage of securities sought or change in the
dealer's soliciting fee) will depend on the facts and circumstances, including
the relative materiality of such terms or information. However, if CSW notifies
Operating Subsidiary preferred stockholders that it will (a) increase or
decrease the price it will pay for Shares, (b) increase or decrease the
percentage of Shares it seeks or (c) increase or decrease the dealer's
soliciting fee, then the Expiration Date will be extended, if necessary, so that
the expiration of the Offer occurs at least ten business days after the
announced change.
Shares validly tendered to the Depositary pursuant to the Offers and not
withdrawn in accordance with the procedures set forth in the Offer Documents
will be held by CSW until the Expiration Date (or returned promptly in the event
the Offer is terminated). Subject to the terms and conditions of the Offers, as
promptly as practicable after the Expiration Date, CSW will accept for payment
and pay for any and all Shares validly tendered and not withdrawn. CSW will pay
for Shares that it has purchased pursuant to the Offers by depositing the
applicable Purchase Price with the Depositary, which will act as agent for the
tendering preferred stockholders for the purpose of receiving payment from CSW
and transmitting payment to tendering preferred stockholders. CSW will pay all
stock transfer taxes, if any, payable on account of its acquisition of shares
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pursuant to the Offers, except in certain circumstances where special payment or
delivery procedures are utilized in conformance with the applicable Letters of
Transmittal.
With respect to Shares validly tendered and accepted for payment by CSW,
each tendering preferred stockholder of SWEPCO, PSO and WTU will be entitled
to receive as consideration from CSW only the applicable Purchase Price. Any
such tendering stockholder will not be entitled to receive any additional
consideration in the form of a Cash Payment, although a portion of the
applicable Purchase Price will be attributable to the amount of the Cash
Payment. As stated above in Item 1.A.1., the latter payment will be payable
by SWEPCO, PSO and WTU solely in respect of Shares properly voted by
preferred stockholders in favor of the Proposed Amendments, provided that (a)
such Shares have not been tendered pursuant to the Offer and (b) the Proposed
Amendments are adopted. Tendering preferred stockholders of CPL will be
entitled to the CPL Purchase Price. Further, assuming a preferred stockholder
of CPL votes for the Proposed Amendment pursuant to the separate CPL Proxy
Solicitation and the Proposed Amendment is approved and adopted at the
Special Meeting, the preferred stockholder of CPL will be entitled to a Cash
Payment.
As noted immediately above, subject to the terms and conditions of the
Offers, Shares validly tendered and not withdrawn will be accepted for payment
and paid for by CSW as promptly as practicable after the Expiration Date. If
the Proposed Amendments are adopted, the Operating Subsidiaries propose to
reacquire all shares acquired by CSW pursuant to the Offers after the
consummation of the Offers at the Purchase Price. Upon such reacquisition the
Operating Subsidiaries will retire and cancel such Shares. The Operating
Subsidiaries hereby request authorization for such reacquisition.
The Offers for SWEPCO, PSO and WTU are conditioned upon the Proposed
Amendments being adopted at the Special Meetings, however, CSW may elect to
waive such condition. In that case, as promptly as practicable after CSW's
purchase of any Shares validly tendered pursuant to the Offers, each of SWEPCO,
PSO and WTU may call another special meeting or commence a consent solicitation
of its common and preferred stockholders and solicit proxies or consents for the
purpose of securing the requisite two-thirds affirmative vote of stockholders to
amend the Articles to eliminate the 10% and 20% Provisions and CSW may make open
market purchases of the Shares in connection therewith. Further, if CPL's
Proposed Amendment is not approved and adopted pursuant to CPL's separate Proxy
Solicitation, CPL may also call another Special Meeting for the
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purpose of securing the requisite vote to amend the Articles and CSW may make
open market purchases of the Shares in connection therewith.
In any event, CSW has advised the Operating Subsidiaries that it intends to
vote any Shares acquired by it pursuant to the Offers or otherwise (as well as
all of its shares of common stock) in favor of the Proposed Amendments to
eliminate the 10% and 20% Provisions. If the Proposed Amendments are approved
and adopted, and in any event within one year from the Expiration Date
(including any extensions thereof), the Operating Subsidiaries will reacquire
all shares from CSW at the Purchase Price after such meetings or at the
expiration of such one-year period, as applicable, and the Operating
Subsidiaries will thereupon retire and cancel such Shares.
CSW requests authority to use its general funds and/or funds borrowed
through its commercial paper program previously authorized by order dated March
21, 1995 (HCAR No. 26254), on an interim basis, to finance its purchase of any
Shares tendered, accepted for payment and paid for pursuant to the Offers, until
such time as such shares are reacquired by the Operating Subsidiaries.
CSW has selected Goldman, Sachs & Co. and Smith Barney Inc. to act as
dealer managers in connection with the Offers (the "Dealer Managers"). The
Dealer Managers will be paid a combined fee of $0.50 per Share for any Shares
tendered, accepted for payment and paid for pursuant to the Offers. Each
Dealer Manager will also be reimbursed by CSW for its reasonable
out-of-pocket expenses, including attorney's fees, and will be indemnified
against certain liabilities, including certain liabilities under the federal
securities laws, in connection with the Offers. In addition, CSW will pay
soliciting brokers and dealers a separate fee of $1.50 per Share for Shares
tendered, that are accepted for payment and paid for pursuant to the Offer
(except that for transactions equal to or exceeding 2,500 Shares, CSW will
pay a solicitation fee of $1.00 per Share; provided that any fee payable
pursuant to this parenthetical shall be paid 80% to the Dealer Managers and
20% to any designated soliciting broker or dealer (which may be a Dealer
Manager)). As set forth in Item 2, CSW proposes to pay the Depositary a fee
of approximately $75,000.
2. Benefits of Offer; Utilization of CSW rather than the Operating
Subsidiaries as Offeror
The proposed acquisition by CSW of Shares pursuant to the Offers will
benefit CSW's utility system customers and shareholders and the Operating
Subsidiaries' preferred stockholders. The Offers allow preferred stockholders
who may not favor the elimination of the 10% and 20% Provisions an option to
tender
13
<PAGE>
their shares at a premium to the market price and without the usual transaction
costs associated with such a sale. System utility customers and CSW
shareholders will benefit from the Operating Subsidiaries' increased flexibility
and reduced financing costs in issuing Preferred Securities and unsecured debt.
Specifically, assuming that 50% of all the Shares are purchased in the
Offers, the estimated savings to the Operating Subsidiaries are expected to
approximate $2.5 million each year (based on a dollar-for-dollar replacement of
the Shares subject to the Offers with Preferred Securities at prevailing rates
on the date hereof), after taxes. Further, assuming (x) 50% of the Shares are
tendered in the Offers, (and that holders of 100% of CPL's Money Market
Preferred Series, Auction Rate Preferred Series A and Auction Rate Preferred
Series B and 30% of the outstanding preferred stock of all other series of the
Operating Subsidiaries vote in favor of the Proposed Amendment resulting in
approval of and adoption of such amendment), (y) refinancing of Shares acquired
and paid for pursuant to the Offers with tax deductible Preferred Securities
(and assuming such rates do not change throughout the period), and (z) a
discount rate equal to the Operating Subsidiaries' after-tax weighted average
cost of capital, CSW anticipates that the proposed transactions may yield total
after-tax, present value cash savings of approximately $22 million over the
next 30 years, net of cash expenditures incurred in respect of the Offers and
Proxy Solicitation. A higher success rate for the Offers potentially could
generate even greater cash savings. The preceding assumptions also assume CPL's
8.72% Series and 7.12% Series Preferred Securities will no longer be outstanding
at the time of the CPL Proxy Solicitation.
As stated above in Item 1.B.1, if the Offer and Proxy Solicitation do not
result in the Proposed Amendments being adopted, as promptly as practicable
after completion of the Proxy Solicitation, each Operating Subsidiary may call
another special meeting of its common and preferred stockholders and solicit
proxies to obtain the requisite two-thirds affirmative vote of preferred stock
to approve and adopt the Proposed Amendments and CSW may make open market
purchases of the Shares in connection therewith. CSW has advised the Operating
Subsidiaries that it would vote any Shares previously acquired by it pursuant to
the Offers or otherwise (together with all of its shares of common stock) in
favor of the Proposed Amendments. By contrast, if the Operating Subsidiaries,
rather than CSW, had acquired Shares pursuant to the Offers, upon acquisition
thereof by the Operating Subsidiaries any such Shares would be deemed treasury
shares under
14
<PAGE>
Delaware, Oklahoma and Texas law and, as such, the Operating Subsidiaries would
be precluded from voting those Shares under any circumstances.
E. REPURCHASE OF OLD SECURITIES
Item 1.E will be amended and restated to read as follows:
The Operating Subsidiaries may also acquire any or all of one or more
series of the Old Securities from time to time through December 31, 2001 in open
market and negotiated transactions. Any such acquisitions will be made with
internally generated funds or short-term borrowings. Acquisitions would only be
made if the Operating Subsidiary determined that it would be in the best
interest of the Operating Subsidiary to do so based on, among other things, the
interest rate or dividends payable on the securities, the Operating Subsidiary's
financing plans and capital structure and the Operating Subsidiary's then
current cash position. The Operating Subsidiary may make purchases of Old
Securities in light of opportunities which arise to make such purchases at a
time when the respective Operating Subsidiary is not engaged in a refinancing or
to purchase Old Securities which are not redeemable pursuant to terms of an
indenture. CPL requests authority to effect the Redemption.
ITEM 5. PROCEDURE.
The first paragraph of Item 5 will be amended to read as follows:
As stated in Item 1, CSW and the Operating Subsidiaries
respectfully request that the Commission issue a Preliminary Order by not
later than March 17, 1997. CSW and the Operating Subsidiaries request that
the Commission reserve jurisdiction over all other authorizations requested
in this Form U-1 Application-Declaration in File No. 70-8979. CSW and the
Operating Subsidiaries further request that as soon as practicable after
issuance of the Preliminary Order, but not later than April 1, 1997, the
Commission issue an order granting and permitting this
Application-Declaration to become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
Item 6 is amended to read as follows:
Exhibit 1(a) - Restated Articles of Incorporation, as
amended, of CPL (incorporated herein by
reference to Exhibit 4(a) to CPL's
Registration Statement No. 33-4897, Exhibits
5 and 7 to Form U-1, File No. 70-7171,
Exhibits 5, 8.1, 8.2 and 19 to Form U-1, File
No. 70-7472 and CPL's Form 10-Q for the
quarterly period ended September 30, 1992,
ITEM 6, Exhibit 1).
Exhibit 1(b) - Restated Certificate of Incorporation of PSO
(incorporated herein by reference to Exhibit
3 to PSO's 1987 Form 10-K, File No. 0-343).
15
<PAGE>
Exhibit 1(c) - Restated Certificate of Incorporation, as
amended, of SWEPCO (incorporated herein by
reference to Exhibit 3 to SWEPCO's 1980 Form
10-K, File No. 1-3146, Exhibit 2 to Form U-1,
File No. 70-6819, Exhibit 3 to Form U-1, File
No. 70-6924 and Exhibit 4 to Form U-1, File
No. 70-7360).
Exhibit 1(d) - Restated Articles of Incorporation, as
amended, of WTU (incorporated herein by
reference to Exhibit 3(e) 1 to WTU's 1994
Form 10-K, File No. 0-340).
Exhibit 2(a) - Form of Offer to Purchase and Proxy Statement
for SWEPCO.
Exhibit 2(b) - Form of Offer to Purchase and Proxy Statement
for PSO.
Exhibit 2(c) - Form of Offer to Purchase and Proxy Statement
for WTU.
Exhibit 2(d) - Form of Offer to Purchase for CPL
Exhibit 3 - Form of Notice of Special Meeting (attached
as part of Exhibit 2(a) (SWEPCO), 2(b) (PSO),
2(c) (WTU) and 4 (CPL)).
Exhibit 4 - Form of proxy solicitation materials for CPL.
Exhibit 5(a) - Form of Letter of Transmittal and Proxy for
SWEPCO.
Exhibit 5(b) - Form of Letter of Transmittal and Proxy for
PSO.
Exhibit 5(c) - Form of Letter of Transmittal and Proxy for WTU.
Exhibit 5(d) - Form of Letter of Transmittal for CPL.
Exhibit 6(a) - Form of Limited Partnership Agreement of
Special Purpose Subsidiary (to be filed by
amendment).
Exhibit 6(b) - Form of Trust Agreement of Special Purpose
Subsidiary (Incorporated by reference from
Registration Statement No. 333-21149, Exhibit
4(g)).
Exhibit 6(c) - Form of Limited Liability Company Agreement
of Special Purpose Subsidiary (to be filed by
amendment).
Exhibit 7 - Form of Action of General Partner (to be
filed by amendment).
Exhibit 8 - Form of Indenture (incorporated by reference
from Registration Statement No. 333-21149,
Exhibit 4(a)).
Exhibit 9 - Form of Supplemental Indenture including Form
of Debenture (incorporated by reference from
Registration Statement No. 333-21149, Exhibit
4(b) and Exhibit 4(c)).
Exhibit 10 - Form of Guarantee (incorporated by reference
from Registration Statement No. 333-21149,
Exhibit 4(i)).
Exhibit 11 - Form of Underwriting Agreement (incorporated
by reference from Registration Statement No.
333-21149, Exhibit 1(a) and Exhibit 1(b)).
16
<PAGE>
Exhibit 12(a) - Registration Statement filed by CSW under the
Securities Act of 1933, as amended, relating
to the various securities which are the
subject hereof (to be filed by amendment).
Exhibit 12(b) - Registration Statement filed by CPL under the
Securities Act of 1933, as amended, relating
to the various securities which are the
subject hereof (incorporated by reference to
Registration Statement No. 333-21149).
Exhibit 12(c) - Registration Statement filed by PSO under the
Securities Act of 1933, as amended, relating
to the various securities which are the
subject hereof (incorporated by reference to
Registration Statement No. 333-21153).
Exhibit 12(d) - Registration Statement filed by SWEPCO under
the Securities Act of 1933, as amended,
relating to the various securities which are
the subject hereof (incorporated by reference
to Registration Statement No. 333-21155).
Exhibit 12(e) - Registration Statement filed by WTU under the
Securities Act of 1933, as amended, relating
to the various securities which are the
subject hereof (to be filed by amendment).
Exhibit 13 - Preliminary Opinion of Milbank, Tweed, Hadley
& McCloy, counsel to the Operating
Subsidiaries (to be filed by amendment).
Exhibit 14 - Proposed Notice of Proceeding (previously filed).
Exhibit 15 - Financial Statements per books and pro forma
as of ___________ of CSW and Operating
Subsidiaries (to be filed by amendment).
Exhibit 16 - Final or "past tense" opinion of Milbank,
Tweed, Hadley & McCloy, Counsel to the
Operating Subsidiaries (to be filed with
Certificate of Notification).
Exhibit 17 - Application to the Corporation Commission of
the State of Oklahoma for authority to issue
and sell the debentures (to be filed by
amendment).
Exhibit 18 - Orders of State Commissions referred to in
Exhibit 17 (to be filed by amendment).
17
<PAGE>
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: March 14, 1997
CENTRAL AND SOUTH WEST CORPORATION
By:/s/ Wendy G. Hargus
-------------------
Wendy G. Hargus
Treasurer
CENTRAL POWER AND LIGHT COMPANY
By: /s/ Wendy G. Hargus
-------------------
Wendy G. Hargus
Treasurer
PUBLIC SERVICE COMPANY OF OKLAHOMA
By: /s/ Wendy G. Hargus
-------------------
Wendy G. Hargus
Treasurer
SOUTHWESTERN ELECTRIC POWER COMPANY
By: /s/ Wendy G. Hargus
-------------------
Wendy G. Hargus
Treasurer
WEST TEXAS UTILITIES COMPANY
By: /s/ Wendy G. Hargus
-------------------
Wendy G. Hargus
Treasurer
18
<PAGE>
INDEX OF EXHIBITS
The Index of Exhibits is amended as follows:
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
1(a) Restated Articles of Incorporation, as amended, Incorporated By
of CPL (incorporated herein by reference to Reference
Exhibit 4(a) to CPL's Registration Statement
No. 33-4897, Exhibits 5 and 7 to Form U-1,
File No. 70-7171, Exhibits 5, 8.1, 8.2 and 19 to
Form U-1, File No. 70-7472 and CPL's Form 10-Q for
the quarterly period ended September 30, 1992, ITEM 6,
Exhibit 1).
1(b) Restated Certificate of Incorporation of PSO Incorporated By
(incorporated herein by reference to Exhibit 3 to Reference
PSO's 1987 Form 10-K, File No.0-343)
1(c) Restated Certificate of Incorporation, as amended, Incorporated By
of SWEPCO (incorporated herein by reference to Reference
Exhibit 3 to SWEPCO's 1980 Form 10-K, File No. 1-3146,
Exhibit 2 to Form U-1, File No. 70-6819, Exhibit 3 to
Form U-1, File No. 70-6924 and Exhibit 4 to Form U-1,
File No. 70-73660).
1(d) Restated Articles of Incorporation, as amended, of Incorporated By
WTU (incorporated herein by reference to Exhibit 3(e) Reference
1 to WTU's 1994 Form 10-K, File No. 0-340).
2(a) Form of Offer to Purchase and Proxy Statement for Electronic
SWEPCO.
2(b) Form of Offer to Purchase and Proxy Statement for Electronic
PSO.
2(c) Form of Offer to Purchase and Proxy Statement for Electronic
WTU.
2(d) Form of Offer to Purchase for CPL Electronic
3 Form of Notice of Special Meeting (attached as Electronic
part of Exhibit 2(a) (SWEPCO), 2(b)(PSO), 2(c)(WTU)
and 4 (CPL)).
4 Form of proxy solicitation material for CPL. Electronic
5(a) Form of Letter of Transmittal and Proxy for SWEPCO. Electronic
5(b) Form of Letter of Transmittal and Proxy for PSO. Electronic
5(c) Form of Letter of Transmittal and Proxy for WTU. Electronic
5(d) Form Letter of Transmittal for CPL. Electronic
6(a) Form of Limited Partnership Agreement of Special
Purpose Subsidiary (to be filed by amendment). _____
6(b) Form of Trust Agreement of Special Purpose Subsidiary Incorporated By
(Incorporated by reference from Registration Reference
Statement No. 333-21149, Exhibit 4(g)).
6(c) Form of Limited Liability Company Agreement of
Special Purpose Subsidiary (to be filed by amendment). _____
19
<PAGE>
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
7 Form of Action of General Partner (to be filed by
amendment). _____
8 Form of Indenture (incorporated by reference Incorporated By
from Registration Statement No. 333-21149, Reference
Exhibit 4(a)).
9 Form of Supplemental Indenture including Form of Incorporated By
Debenture (incorporated by reference from Reference
Registration Statement No. 333-21149, Exhibit 4(b)
and Exhibit 4(c)).
10 Form of Guarantee (incorporated by reference Incorporated By
from Registration Statement No. 333-21149, Reference
Exhibit 4(i)).
11 Form of Underwriting Agreement (incorporated by Incorporated By
reference from Registration Statement No. 333-21149, Reference
Exhibit 1(a) and Exhibit 1(b)).
12(a) Registration Statement filed by CSW under the _____
Securities Act of 1933, as amended, relating to the
various securities which are the subject hereof (to
be filed by amendment).
12(b) Registration Statement filed by CPL under the Incorporated by
Securities Act of 1933, as amended, relating to the Reference
various securities which are the subject hereof
(incorporated by reference to Registration
Statement No. 333-21149).
12(c) Registration Statement filed by PSO under the Incorporated by
Securities Act of 1933, as amended, relating to the Reference
various securities which are the subject hereof
(incorporated by reference to Registration Statement
No. 333-21153).
12(d) Registration Statement filed by SWEPCO under the Incorporated by
Securities Act of 1933, as amended, relating to the Reference
various securities which are the subject hereof
(incorporated by reference to Registration
Statement No. 333-21155).
12(e) Registration Statement filed by WTU under the _____
Securities Act of 1933, as amended, relating to the
various securities which are the subject hereof (to
be filed by amendment).
13 Preliminary Opinion of Milbank, Tweed, Hadley & _____
McCloy, counsel to the Operating Subsidiaries (to
be filed by amendment).
14 Proposed Notice of Proceeding (previously filed). _____
15 Financial Statements per books and pro forma as _____
of ____________ of CSW and Operating Subsidiaries
(to be filed by amendment).
16 Final or "past tense" opinion of Milbank, Tweed, _____
Hadley & McCloy, Counsel to the Operating Subsidiaries
(to be filed with Certificate of Notification).
17 Application to the Corporation Commission of the _____
State of Oklahoma for authority to issue and sell
the debentures (to be filed by amendment).
18 Orders of State Commissions referred to in _____
Exhibit 17 (to be filed by amendment).
20
<PAGE>
OFFER TO PURCHASE AND PROXY STATEMENT
CENTRAL AND SOUTH WEST CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF
CUMULATIVE PREFERRED STOCK OF SOUTHWESTERN ELECTRIC POWER COMPANY
60,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.28% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
25,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.65% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
75,000 SHARES, CUMULATIVE PREFERRED STOCK, 5.00% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
340,000 SHARES, CUMULATIVE PREFERRED STOCK, 6.95% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
------------------------------
SOUTHWESTERN ELECTRIC POWER COMPANY
PROXY STATEMENT
WITH RESPECT TO ITS COMMON STOCK AND CUMULATIVE PREFERRED STOCK
------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, 1997, UNLESS THE OFFER IS EXTENDED.
Central and South West Corporation, a Delaware corporation ("CSW"), invites
the holders of each series of cumulative preferred stock listed above (each a
"Series of Preferred," and the holder thereof a "Preferred Shareholder") of
Southwestern Electric Power Company, a Delaware corporation and wholly-owned
utility subsidiary of CSW ("SWEPCO"), to tender any and all of their shares of a
Series of Preferred ("Shares") for purchase at the purchase price per Share
listed above for the Shares tendered, net to the seller in cash, upon the terms
and subject to the conditions set forth in this Offer to Purchase and Proxy
Statement and in the accompanying Letter of Transmittal and Proxy (the "Proxy")
(which together constitute the "Offer"). CSW will purchase all Shares validly
tendered and not withdrawn, upon the terms and subject to the conditions of the
Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of
the Offer--Extension of Tender Period; Termination; Amendments."
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT
OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. PREFERRED SHAREHOLDERS
(INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD
DATE (AS HEREINAFTER DEFINED)) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE
OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED BELOW. THE
OFFER IS ALSO CONDITIONED UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC") UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS
AMENDED (THE "1935 ACT"). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
"TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER."
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO
THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE (AS HEREINAFTER
DEFINED) MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND
VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE
TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES
OF PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT
OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF
PROXY FROM THE SELLER. SEE "TERMS OF THE OFFER-PROCEDURE FOR TENDERING SHARES."
FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT (AS HEREINAFTER DEFINED) OR
THE DEALER MANAGERS (AS HEREINAFTER DEFINED) OR CONSULT YOUR BROKER FOR
ASSISTANCE.
Concurrently with the Offer, the Board of Directors of SWEPCO is soliciting
proxies for use at the Special Meeting of Shareholders of SWEPCO to be held at
its principal office, 428 Travis Street, Shreveport, Louisiana 71156-0001, on
, 1997, or any adjournment or postponement of such meeting (the
"Special Meeting"). The Special Meeting is being held to consider an amendment
(the "Proposed Amendment") to SWEPCO's Restated Certificate of Incorporation
(the "Articles") which would remove a provision of the Articles that limits
SWEPCO's ability to issue unsecured debt. PREFERRED SHAREHOLDERS (INCLUDING
PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO
WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A DULY COMPLETED,
VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED
AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE
PROPOSED AMENDMENT AT THE SPECIAL MEETING. HOWEVER, PREFERRED SHAREHOLDERS HAVE
THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER
THEIR SHARES. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, SWEPCO WILL
MAKE A SPECIAL CASH PAYMENT IN THE AMOUNT OF $1.00 PER SHARE (THE "CASH
PAYMENT") TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED
AMENDMENT BUT WHO DID NOT TENDER HIS OR HER SHARES. THOSE PREFERRED SHAREHOLDERS
WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER
SHARE LISTED ABOVE BUT NOT THE CASH PAYMENT.
IMPORTANT
Any Preferred Shareholder desiring to accept the Offer and tender all or any
portion of his or her Shares should, in addition to voting in favor of the
Proposed Amendment either by executing and returning the enclosed Proxy or by
voting in person by ballot at the Special Meeting, either (i) if not the record
holder, request his or her broker, dealer, commercial bank, trust company or
nominee to effect the transaction for him or her, or (ii) if the record holder,
complete and sign the Letter of Transmittal and Proxy or facsimile thereof, in
accordance with the instructions in the Letter of Transmittal and Proxy, mail or
deliver it and any other required documents to The Bank of New York (the
"Depositary"), and deliver the certificates for such Shares to the Depositary,
along with the Letter of Transmittal and Proxy, or tender such Shares pursuant
to the procedure for book-entry transfer set forth below under "Terms of the
Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined
below). A Preferred Shareholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee if he or she desires
to tender such Shares. Any Preferred Shareholder who desires to tender Shares
and whose certificates for such Shares are not immediately available, or who
cannot comply in a timely manner with the procedure for book-entry transfer,
should tender such Shares by following the procedures for guaranteed delivery
set forth below under "Terms of the Offer--Procedure for Tendering Shares."
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR SUCH SERIES OF PREFERRED
OR A NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE
<PAGE>
USED TO TENDER SHARES OF SUCH SERIES OF PREFERRED. A LETTER OF TRANSMITTAL AND
PROXY MAY BE USED TO VOTE IN FAVOR OF THE PROPOSED AMENDMENT EVEN IF NO SHARES
ARE BEING TENDERED.
------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY
OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
------------------------------
NEITHER CSW, SWEPCO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
------------------------------
This Offer to Purchase and Proxy Statement and the accompanying proxy are
first being mailed to Preferred Shareholders on or about March , 1997 to
Preferred Shareholders of record on March , 1997.
------------------------------
Each Series of Preferred is traded in the over-the-counter market (the
"OTC") and is not listed on any national securities exchange. On ,
1997, the last reported sale prices and dates of sale as reported by the
National Quotation Bureau, Inc. were $ for the 4.28% Series of Preferred (on
, 1997), $ for the 4.65% Series of Preferred (on, 1997),
$ for the 5.00% Series of Preferred (on 1997) and $
for the 6.95% Series of Preferred (on , 1997). Preferred
Shareholders are urged to obtain a current market quotation, if available, for
the Shares. On , 1997, there were issued and outstanding 60,000 Shares of the
4.28% Series of Preferred, 25,000 Shares of the 4.65% Series of Preferred,
75,000 Shares of the 5.00% Series of Preferred and 340,000 Shares of the 6.95%
Series of Preferred.
------------------------------
Questions or requests for assistance or for additional copies of this Offer
to Purchase and Proxy Statement, the Letter of Transmittal and Proxy for a
Series of Preferred, or other tender offer or proxy solicitation materials may
be directed to D.F. King & Co., Inc. (the "Information Agent") or Goldman, Sachs
& Co. and Smith Barney Inc. (the "Dealer Managers") at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase and Proxy Statement.
------------------------------
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
------------------
The date of this Offer to Purchase and Proxy Statement is , 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR
SWEPCO AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY CSW, SWEPCO OR BY THE DEALER MANAGERS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY.................................................................................................... 1
TERMS OF THE OFFER......................................................................................... 4
Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 4
Procedure for Tendering Shares........................................................................... 5
Withdrawal Rights........................................................................................ 7
Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 8
Certain Conditions of the Offer.......................................................................... 9
Extension of Tender Period; Termination; Amendments...................................................... 10
PROPOSED AMENDMENT AND PROXY SOLICITATION.................................................................. 12
Introduction............................................................................................. 12
Voting Securities, Rights And Procedures................................................................. 12
Proxies.................................................................................................. 12
Cash Payments............................................................................................ 13
Security Ownership of Certain Beneficial Owners and Management........................................... 14
Business to Come Before the Special Meeting.............................................................. 14
Explanation of the Proposed Amendment.................................................................... 15
Reasons for the Proposed Amendment....................................................................... 15
Financial and Other Information Relating to SWEPCO....................................................... 17
Relationship with Independent Public Accountants......................................................... 17
PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 18
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 19
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 21
SOURCE AND AMOUNT OF FUNDS................................................................................. 22
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 22
FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 22
CERTAIN INFORMATION REGARDING CSW AND SWEPCO............................................................... 23
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 23
ADDITIONAL INFORMATION REGARDING CSW....................................................................... 24
MISCELLANEOUS.............................................................................................. 25
</TABLE>
i
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE
PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC
DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS
ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED
IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN
THIS OFFER TO PURCHASE AND PROXY STATEMENT.
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The Companies................ CSW is a Dallas-based public utility holding company
registered under the 1935 Act. Through its four electric
operating subsidiaries, SWEPCO, Central Power and Light
Company, Public Service Company of Oklahoma and West Texas
Utilities Company (collectively, the "Electric Operating
Companies"), CSW serves approximately 152,000 square miles
in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW
owns SEEBOARD plc, a regional electricity company in the
southeast of the United Kingdom. CSW also engages through
other subsidiaries in the following energy-related busi-
nesses: (i) CSW Energy, Inc. develops, owns and operates
non-utility power projects in the United States; (ii) CSW
International, Inc. participates in power generation,
transmission and distribution projects outside the United
States; (iii) CSW Communications, Inc. provides
communications services, including enhancement of services
through fiber optic and other telecommunications technolo-
gies, to CSW and its subsidiaries and to third parties; (iv)
CSW Credit, Inc. purchases, without recourse, the accounts
receivables of the Electric Operating Companies and
non-affiliated utilities; and (v) EnerShop Inc. was recently
formed to provide commercial, industrial, institutional and
governmental customers with energy management services
designed to control costs, enhance productivity and improve
convenience, safety and comfort.
The Shares................... SWEPCO 4.28% Cumulative Preferred Stock ($100 par value)
SWEPCO 4.65% Cumulative Preferred Stock ($100 par value)
SWEPCO 5.00% Cumulative Preferred Stock ($100 par value)
SWEPCO 6.95% Cumulative Preferred Stock ($100 par value)
The Offer.................... Offer to purchase any or all shares of each Series of
Preferred at the price per Share set forth below.
Purchase Price............... $ per 4.28% Share
$ per 4.65% Share
$ per 5.00% Share
$ per 6.95% Share
Independent Offer............ The Offer for one Series of Preferred is independent of the
Offer for any other series of Preferred. The Offer is not
conditioned upon any minimum number of Shares of the
applicable Series of Preferred being tendered, but is
conditioned upon the Proposed Amendment being approved and
adopted at the Special Meeting. The Offer is subject to
certain other conditions described herein.
SEC Approval................. The Offer is conditioned, among other things, upon the
approval of the SEC under the 1935 Act.
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Expiration Date of the
Offer...................... The Offer expires at 5:00 p.m., central time, ,
1997, unless extended (the "Expiration Date").
How to Tender Shares......... Preferred Shareholders (including Preferred Shareholders who
acquire Shares subsequent to the Record Date) who wish to
tender their Shares must vote in favor of the Proposed
Amendment. Preferred Shareholders who purchase or whose
purchase is registered after the Record Date and who wish to
tender their Shares must arrange with their seller to
receive an assignment of proxy from the holder of record on
the Record Date. In order to facilitate receipt of Proxies,
Shares shall, during the period which commenced March ,
1997 (two business days prior to the Record Date) and which
will end at the close of business on the Expiration Date
trade in the over-the-counter market with a proxy providing
the transferee with the right to vote such acquired Shares
in the Proxy Solicitation. Settlement of all trades during
the period described above should include an assignment of
proxy from the seller. See "Terms of the Offer--Procedure
for Tendering Shares." For further information, call the
Information Agent or the Dealer Managers or consult your
broker for assistance.
Withdrawal Rights............ Tendered Shares of any Series of Preferred may be withdrawn
at any time until the Expiration Date with respect to such
Series of Preferred and, unless theretofore accepted for
payment, may also be withdrawn after , 1997. See
"Terms of the Offer--Withdrawal Rights". The proxy
accompanying any tendered Shares that are withdrawn will not
be considered revoked unless the Preferred Shareholder
specifically revokes such proxy as described herein. See
"Proposed Amendment and Proxy Solicitation--Proxies."
Purpose of the Offer......... CSW is making the Offer because it believes that the
purchase of Shares is attractive to CSW, its shareholders
and SWEPCO. In addition, the Offer gives Preferred
Shareholders the opportunity to sell their Shares at a
premium over the market price and without the usual
transaction costs associated with a market sale. See
"Purpose of the Offer; Certain Effects of the Offer."
Dividends.................... A regular quarterly dividend has been declared on each
Series of Preferred, payable on April 1, 1997 to the owners
of record on March 14, 1997 (the "April 1997 Dividend"). A
tender and purchase of Shares pursuant to the Offer will not
deprive a Preferred Shareholder of his or her right to
receive the April 1997 Dividend on Shares held of record on
March 14, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any
dividends in respect of any later dividend periods (or any
portion thereof).
Brokerage Commissions........ Not payable by Preferred Shareholders.
Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a
solicitation fee of $1.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500
Shares and a solicitation fee of $1.00 per Share in
transactions for beneficial owners of 2,500 or more Shares,
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provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer
Managers and 20% to any Soliciting Dealers (which may be a
Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned
by such Soliciting Dealer.
Proposed Amendment........... Concurrently with the Offer, the Board of Directors of
SWEPCO is soliciting proxies for use at the Special Meeting
of Shareholders of SWEPCO. The Special Meeting is being held
to consider an amendment to SWEPCO's Articles which would
remove a provision that limits SWEPCO's ability to issue
unsecured debt.
Record Date.................. March , 1997
Special Cash Payment......... Preferred Shareholders have the right to vote for the
Proposed Amendment regardless of whether they tender their
Shares. If the Proposed Amendment is approved and adopted by
SWEPCO's shareholders, SWEPCO will make a special cash
payment of $1.00 per Share to each Preferred Shareholder who
voted in favor of the Proposed Amendment, provided that such
Shares have not been tendered pursuant to the Offer.
Preferred Shareholders who validly tender their Shares will
be entitled only to the purchase price per share listed on
the front cover of this Offer to Purchase and Proxy
Statement and not any Cash Payment.
Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes
with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. See Instruction 6 of the
applicable Letter of Transmittal and Proxy. See "Terms of
the Offer--Acceptance of Shares for Payment of Purchase
Price and Dividends."
Payment Date................. Promptly after the Expiration Date.
Further Information.......... Additional copies of this Offer to Purchase and Proxy
Statement and the applicable Letter of Transmittal and Proxy
may be obtained by D.F. King & Co., Inc., 77 Water Street,
New York, New York 10005, telephone (800) 755-3107
(toll-free) and (212) 269-5550 (brokers and dealers).
Questions about the Offer should be directed to Goldman,
Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800)
655-4811.
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TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal and Proxy, CSW will purchase any and all Shares
that are validly tendered on or prior to the applicable Expiration Date (and not
properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights")
at the purchase price per Share listed on the front cover of this Offer to
Purchase and Proxy Statement for the Shares tendered, net to the seller in cash.
See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the
Offer--Extension of Tender Period; Termination."
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT
OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS CONDITIONED ON THE
PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED
SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO
THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE
IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN. THE OFFER IS SUBJECT TO
CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE
OFFER."
The Offer is being sent to all persons in whose names Shares are registered
on the books of SWEPCO on the Record Date. Preferred Shareholders who purchase
or whose purchase is registered after the Record Date and who wish to tender in
the Offer must arrange with their seller to receive a Proxy from the holder of
record on the Record Date. In order to facilitate receipt of Proxies, Shares
shall, during the period which commenced [ ], 1997 (two business days
prior to the Record Date) and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired Shares in the proxy
solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. As
such, any person who is the beneficial owner but not the record holder of the
Shares must (i) arrange for the record transfer of Shares prior to tendering or
(ii) direct such record holder to tender the Shares and vote in favor of the
Proposed Amendment on behalf of such beneficial owner.
With respect to each Series of Preferred, the Expiration Date is the later
of 5:00 p.m., central time, on , , 1997 or the latest time
and date to which the Offer with respect to such Series of Preferred is
extended. CSW expressly reserves the right, in its sole discretion, and at any
time and/or from time to time, to extend the period of time during which the
Offer for any Series of Preferred is open, by giving oral or written notice of
such extension to the Depositary, without extending the period of time during
which the Offer for any other Series of Preferred is open. There is no assurance
whatsoever that CSW will exercise its right to extend the Offer for any Series
of Preferred. If CSW decides, in its sole discretion, to decrease the number of
Shares of any Series of Preferred being sought or to increase or decrease the
consideration offered in the Offer to holders of any Series of Preferred and, at
the time that notice of such increase or decrease is first published, sent or
given to holders of such Series of Preferred in the manner specified herein, the
Offer for such Series of Preferred is scheduled to expire at any time earlier
than the tenth business day from the date that such notice is first so
published, sent or given, such Offer will be extended until the expiration of
such ten-business-day period. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 a.m. through 12:00 midnight, eastern standard time.
NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO
TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A VOTE IN FAVOR OF THE
PROPOSED AMENDMENT HAS NOT BEEN CAST AT THE SPECIAL MEETING. SUCH VOTE MAY
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BE CAST BY PROPERLY COMPLETING THE FORM OF PROXY THAT IS A PART OF THE
APPLICABLE LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON BY BALLOT AT
THE SPECIAL MEETING.
The April 1997 Dividend has been declared on each Series of Preferred,
payable April 1, 1997 to owners of record on March 14, 1997. A tender and
purchase of Shares pursuant to the Offer will not deprive a Preferred
Shareholder of his or her right to receive the April 1997 Dividend on shares
held of record on March 14, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion thereof).
PROCEDURE FOR TENDERING SHARES
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO
THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN AN
ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR
OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING
THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES OF PREFERRED WILL TRADE
"WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE
PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER.
The Shares are trading, during the period which began two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbol " ", indicating that
such shares are trading "with proxy." A Preferred Shareholder who acquires
Shares during this period must obtain, or have its authorized representative
obtain, an assignment of proxy (which is included in the applicable Letter of
Transmittal) at settlement from the seller. The National Association of
Securities Dealers, Inc. (the "NASD") and The Depository Trust Company have
issued notices informing their members and participants that the Shares are
trading "with proxy" and that settlement of all trades during the period
described above should include an assignment of proxy from the seller.
FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT OR THE DEALER
MANAGERS OR CONSULT YOUR BROKER FOR ASSISTANCE.
Further, to tender Shares pursuant to the Offer, the tendering owner of
Shares must either:
(a) send to the Depositary (at one of its addresses set forth on the
back cover of this Offer to Purchase and Proxy Statement) a properly
completed and duly executed Letter of Transmittal and Proxy or facsimile
thereof (which will either deliver such owner's proxy or indicate such
owner's intention to vote at the Special Meeting in person by ballot),
together with any required signature guarantees and any other documents
required by the Letter of Transmittal and Proxy and either (i) certificates
for the Shares to be tendered must be received by the Depositary at one of
such addresses or (ii) such Shares must be delivered pursuant to the
procedures for book-entry transfer described herein (and a confirmation of
such delivery must be received by the Depositary), in each case by the
Expiration Date; or
(b) comply with the guaranteed delivery procedure described under
"Guaranteed Delivery Procedure" below.
The Depositary will establish an account with respect to the Shares at DTC
and the Philadelphia Depository Trust Company (collectively referred to as the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase and Proxy Statement and any
financial institution that is a participant in the system of any Book-Entry
Transfer Facility may make
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delivery of Shares by causing such Book-Entry Transfer Facility to transfer such
Shares into the Depositary's account in accordance with the procedures of such
Book-Entry Transfer Facility. Although delivery of Shares may be effected
through book-entry transfer, such delivery must be accompanied by either (i) a
properly completed and duly executed Letter of Transmittal and Proxy or
facsimile thereof, together with any required signature guarantees and any other
required documents or (ii) an Agent's Message (as hereinafter defined) and, in
any case, must be received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase and Proxy Statement at or prior to
5:00 p.m., central time, on the Expiration Date.
The term "Agent's Message" means a message, transmitted by one of the
Book-Entry Transfer Facilities, received by the Depositary and forming a part of
the book-entry transfer when a tender is initiated, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant tendering Shares that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that CSW may enforce such
agreement against such participant.
Except as otherwise provided below, all signatures on a Letter of
Transmittal and Proxy must be guaranteed by a firm that is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States that is a participant in an
approved Signature Guarantee Medallion Program (each of the foregoing being
referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal
and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is
signed by the holder of record of the shares tendered therewith and such owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy,
(b) such Shares are tendered for the account of an Eligible Institution or (c)
such Letter of Transmittal and Proxy is being used solely for the purpose of
voting Shares which are not being tendered pursuant to the Offer. See
Instructions 1 and 5 of the Letter of Transmittal and Proxy.
GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender
Shares pursuant to the Offer and such Preferred Shareholder's certificates are
not immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are complied
with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery and Proxy, substantially in the form provided by CSW and SWEPCO
herewith, is received (with any required signature guarantees) by the
Depositary as provided below at or prior to 5:00 p.m., central time, on the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
and Proxy (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal and Proxy, are received by the
Depositary no later than 5:00 p.m., central time, within three business days
after the date of execution of such Notice of Guaranteed Delivery and Proxy.
THE NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE DELIVERED BY HAND OR
TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST
INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH
NOTICE OF GUARANTEED DELIVERY AND PROXY.
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal and Proxy (or a manually
signed facsimile thereof) is received by the Depositary within the applicable
time limits and a vote in favor of the Proposed Amendment in respect of such
Shares has been cast at the Special Meeting either in person or by completion
and execution of the
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proxy (which proxy must be the form of proxy that is a part of the applicable
Letter of Transmittal and Proxy).
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or an Agent's Message with
respect to) such Shares, a Letter of Transmittal and Proxy or a manually signed
facsimile thereof, properly completed and duly executed, with any required
signature guarantees and all other documents required by the Letter of
Transmittal and Proxy.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES
WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME
SHOULD BE ALLOWED FOR DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE CASH PAYMENT, EACH
TENDERING UNITED STATES PREFERRED SHAREHOLDER OR A NON-TENDERING UNITED STATES
PREFERRED SHAREHOLDER WHO VOTES FOR THE PROPOSED AMENDMENT MUST NOTIFY THE
DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND
EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND
PROXY. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt) and acceptance for payment of any tender of
Shares will be determined by CSW, in its sole discretion, and its determination
will be final and binding. CSW reserves the absolute right to reject any or all
tenders of Shares that (i) it determines are not in proper form or (ii) the
acceptance for payment of or payment for which may, in the opinion of CSW's
counsel, be unlawful. CSW also reserves the absolute right to waive any defect
or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notice of any defect or irregularity in tenders, nor shall any of them
incur any liability for failure to give any such notice.
WITHDRAWAL RIGHTS
ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT
VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY
TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after , 1997, unless theretofore accepted
for payment as provided in this Offer to Purchase and Proxy Statement. If, with
respect to any Series of Preferred, CSW extends the period of time during which
the Offer is open, is delayed in accepting for payment or paying for Shares of
that Series of Preferred or is unable to accept for payment or pay for Shares
pursuant to the Offer for any reason, then, without prejudice to CSW's rights
under the Offer, the Depositary may, on behalf of CSW, retain all Shares of that
Series of Preferred tendered, and such Shares may not be withdrawn except as
otherwise provided in this "Terms of the Offer--Withdrawal Rights," subject to
Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making a
tender offer shall either pay the consideration offered, or return the tendered
securities, promptly after the termination or withdrawal of the tender offer.
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The proxy accompanying any tendered Shares that are withdrawn will not be
considered revoked unless the Preferred Shareholder specifically revokes such
proxy as described herein. See "Proposed Amendment and Proxy
Solicitation--Proxies."
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary, at one of its addresses set forth on
the back cover of this Offer to Purchase and Proxy Statement, and must specify
the name of the person who tendered the Shares to be withdrawn and the number of
Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the
Depositary, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution) must be submitted prior to the release of such Shares. In addition,
such notice must specify, in the case of Shares tendered by delivery of
certificates, the name of the registered owner (if different from that of the
tendering Preferred Shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and
the name of the registered holder (if different from the name of such account).
Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered by again following one of the procedures described in "Terms of the
Offer--Procedure for Tendering Shares" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by CSW, in its sole discretion, and its
determination will be final and binding. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal or
will incur any liability for failure to give any such notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Special Meeting, CSW will accept for payment (and
thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in "Terms of the Offer--Withdrawal Rights." In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made promptly but only
after timely receipt by the Depositary of certificates for such Shares (or of an
Agent's Message), a properly completed and duly executed Letter of Transmittal
and Proxy (or facsimile thereof) and any other required documents.
For purposes of the Offer, CSW will be deemed to have accepted for payment
(and thereby purchased) Shares that are validly tendered and not withdrawn as,
if and when it gives oral or written notice to the Depositary of its acceptance
for payment of such Shares. CSW will pay for Shares that it has purchased
pursuant to the Offer by depositing the purchase price therefor with the
Depositary, which will act as agent for tendering Preferred Shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
Preferred Shareholders. Under no circumstances will interest be paid on amounts
to be paid to tendering Preferred Shareholders, regardless of any delay in
making such payment.
Certificates for all Shares not validly tendered will be returned or, in the
case of Shares tendered by book-entry transfer, such Shares will be credited to
an account maintained with a Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
Payment for shares may be delayed in the event of difficulty in determing
the number of Shares properly tendered. In addition, if certain events occur
(including the Proposed Amendment not being approved and adopted at the Special
Meeting), CSW may not be obligated to purchase Shares pursuant to the Offer. See
"Terms of the Offer--Certain Conditions of the Offer."
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CSW will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to any person other
than the registered owner, or if tendered Shares are registered in the name of
any person other than the person signing the Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered owner,
such other person or otherwise) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes, or exemption therefrom, is submitted. See Instruction
6 of the applicable Letter of Transmittal and Proxy.
CERTAIN CONDITIONS OF THE OFFER
CSW WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES
TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL
MEETING. IN ORDER TO TENDER THEIR SHARES, PREFERRED SHAREHOLDERS (INCLUDING
PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) MUST
SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN
FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR
INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. PREFERRED
SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF
WHETHER THEY TENDER THEIR SHARES. ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE
PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED
WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER.
PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL ONLY BE ENTITLED TO THE
PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND
PROXY STATEMENT BUT NOT THE CASH PAYMENT.
Notwithstanding any other provision of the Offer, CSW will not be required
to accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer or may postpone (subject to the requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of
Shares) the acceptance for payment of, or payment for, Shares tendered, if at
any time after , 1997, and at or before acceptance for payment of or
payment for any Shares, any of the following shall have occurred:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, or before any court, authority, agency or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the sole judgment of
CSW, could materially and adversely affect the business, condition
(financial or otherwise), income, operations or prospects of CSW and its
subsidiaries taken as a whole or of SWEPCO individually, or otherwise
materially impair in any way the contemplated future conduct of the business
of CSW or any of its subsidiaries or materially impair the Offer's
contemplated benefits to CSW;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or CSW or any of
its subsidiaries, by any legislative body, court, authority, agency or
tribunal that, in CSW's sole judgment, would or might directly or indirectly
(i) make the acceptance for payment of, or payment for, some or all of the
Shares illegal or otherwise restrict or prohibit consummation of the Offer,
(ii) delay or restrict the ability of CSW, or render CSW unable, to accept
for payment or pay for some or all of the Shares, (iii) materially impair
the contemplated benefits of the Offer to CSW or
9
<PAGE>
(iv) materially affect the business, condition (financial or otherwise),
income, operations or prospects of CSW and its subsidiaries taken as a whole
or of SWEPCO individually, or otherwise materially impair in any way the
contemplated future conduct of the business of CSW or any of its
subsidiaries;
(c) there shall have occurred (i) any significant decrease in the market
price of the Shares or any change in the general political, market, economic
or financial conditions in the United States or abroad that could have a
material adverse effect on CSW's business, operations, prospects or ability
to obtain financing generally or the trading in the other equity securities
of CSW, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation on, or
any event that, in CSW's sole judgment, might affect the extension of credit
by lending institutions in the United States, (iii) the commencement of war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (v) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof or (vi) any decline in either
the Dow Jones Industrial Average or the Standard and Poor's Composite 500
Stock Index by an amount in excess of 15% measured from the close of
business on , 1997;
(d) any tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger, acquisition or other business
combination proposal for CSW, shall have been proposed, announced or made by
any person or entity;
(e) there shall have occurred any event or events that have resulted, or
may in the sole judgment of CSW result, in an actual or threatened change in
the business, condition (financial or otherwise), income, operations, stock
ownership or prospects of CSW and its subsidiaries; or
(f) the SEC shall have withheld approval, under the 1935 Act, of the
acquisition of the Shares by CSW pursuant to the Offer or the approval and
adoption of the Proposed Amendment at the Special Meeting;
and, in the sole judgment of CSW, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment or
payment. With respect to the approval of the SEC referenced in clause (f) above,
the SEC must find, among other things, that the acquisition of the Shares by CSW
is not detrimental to the public interest or the interest of the investors or
consumers, and that the consideration paid in connection with the acquisition
and the adoption of the Proposed Amendment, including fees, commissions and
other remuneration, is reasonable.
The foregoing conditions (including the condition that the Proposed
Amendment be approved and adopted at the Special Meeting) are for the sole
benefit of CSW and may be asserted by CSW regardless of the circumstances
(including any action or inaction by CSW) giving rise to any such condition, and
any such condition (including the condition related to the requirement that
Preferred Shareholders tendering their Shares vote in favor of the Proposed
Amendment at the Special Meeting) may be waived by CSW, in whole or in part, at
any time and from time to time in its sole discretion. The failure by CSW at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by CSW concerning
the events described above will be final and binding on all parties.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
CSW expressly reserves the right, in its sole discretion, and at any time
and/or from time to time, to extend the period of time during which the Offer
for any Series of Preferred is open by giving oral or
10
<PAGE>
written notice of such extension to the Depositary and making a public
announcement thereof, without extending the period of time during which the
Offer for any other Series of Preferred is open. There can be no assurance,
however, that CSW will exercise its right to extend the Offer for any Series of
Preferred. During any such extension, all Shares of the subject Series of
Preferred previously tendered will remain subject to the Offer, except to the
extent that such Shares may be withdrawn as set forth in "Terms of the
Offer--Withdrawal Rights." CSW also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act which
requires CSW either to pay the consideration offered or to return the Shares
tendered promptly after the termination or withdrawal of the Offer, upon the
occurrence of any of the conditions specified in "Terms of the Offer--Certain
Conditions of the Offer" by giving oral or written notice of such termination to
the Depositary, and making a public announcement thereof.
Subject to compliance with applicable law, CSW further reserves the right,
in its sole discretion, to amend the Offer in any respect. Amendments to the
Offer may be made at any time and/or from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., central time, on the next business day after the
previously scheduled Expiration Date. Any public announcement made pursuant to
the Offer will be disseminated promptly to Preferred Shareholders affected
thereby in a manner reasonably designed to inform such Preferred Shareholders of
such change. Without limiting the manner in which CSW may choose to make a
public announcement, except as required by applicable law, CSW shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If CSW materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, CSW
will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price
or change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
The SEC has stated that, in its view, an offer should remain open for a minimum
of five business days from the date that a notice of such a material change is
first published, sent or given. If the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that CSW publishes, sends or gives to Preferred
Shareholders a notice that it will (a) increase or decrease the price it will
pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will
be extended until the expiration of such period of ten business days.
THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. IF CSW EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO
ONE SERIES OF PREFERRED FOR ANY REASON, CSW WILL HAVE NO OBLIGATION TO EXTEND
THE OFFER FOR ANY OTHER SERIES OF PREFERRED.
11
<PAGE>
PROPOSED AMENDMENT AND PROXY SOLICITATION
INTRODUCTION
This Offer to Purchase and Proxy Statement is first being mailed on or about
, 1997 to the shareholders of SWEPCO in connection with the
solicitation of proxies by the Board of Directors (the "Board") of SWEPCO for
use at the Special Meeting. At the Special Meeting, the shareholders of SWEPCO
will vote upon the Proposed Amendment to the Articles.
Preferred Shareholders who wish to tender their Shares pursuant to the Offer
must vote in favor of the Proposed Amendment in person by ballot or by proxy at
the Special Meeting. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR
THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. The Offer
is conditional upon the Proposed Amendment being approved and adopted at the
Special Meeting. If the Proposed Amendment is approved and adopted by SWEPCO's
shareholders, SWEPCO will make a special cash payment in the amount of $1.00 per
Share to each Preferred Shareholder who voted in favor of the Proposed
Amendment, provided that such Shares have not been tendered pursuant to the
Offer. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR
ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT
(REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). Those
Preferred Shareholders who validly tender their Shares will be entitled only to
the purchase price per Share listed on the front cover of this Offer to Purchase
and Proxy Statement but not the Cash Payment.
VOTING SECURITIES, RIGHTS AND PROCEDURES
Only holders of record of SWEPCO's voting securities at the close of
business on the Record Date or persons obtaining a proxy from the holders of
record on the Record Date will be entitled to vote in person or by proxy at the
Special Meeting. The outstanding voting securities of SWEPCO for purposes of
voting on the Proposed Amendment are divided into two classes: common stock and
cumulative preferred stock. The class of cumulative preferred stock has been
issued in four Series of Preferred with the record holders of all Shares of the
cumulative preferred stock voting together as one class. The shares outstanding
on the date of the Special Meeting, and the vote to which each share is entitled
in consideration of the Proposed Amendment, are as follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING VOTES PER SHARE
- -------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Common Stock (Par Value $18 per share).................................... 7,536,640 1 vote
Cumulative Preferred Stock (Par Value $100 per Share)..................... 500,000 1 vote
</TABLE>
The affirmative vote of the holders of two-thirds of the outstanding shares
of each of SWEPCO's (i) common stock and (ii) cumulative preferred stock, all
series of the cumulative preferred stock voting together as one class, is
required to approve the Proposed Amendment to be presented at the Special
Meeting. Abstentions and broker non-votes will have the effect of votes against
the Proposed Amendment. CSW HAS ADVISED SWEPCO THAT IT INTENDS TO VOTE ALL OF
THE OUTSTANDING SHARES OF COMMON STOCK OF SWEPCO IN FAVOR OF THE PROPOSED
AMENDMENT.
Votes at the Special Meeting will be tabulated preliminarily by Central and
South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of
Election, duly appointed by the presiding officer of the Special Meeting, will
definitively count and tabulate the votes and determine and announce the results
at the meeting. SWEPCO has no established procedure for confidential voting.
There are no rights of appraisal in connection with the Proposed Amendment.
PROXIES
THE ENCLOSED PROXY, WHICH IS CONTAINED WITHIN THE LETTER OF TRANSMITTAL AND
PROXY (AND THE NOTICE OF GUARANTEED DELIVERY AND PROXY), IS SOLICITED BY
SWEPCO'S BOARD, WHICH RECOMMENDS
12
<PAGE>
VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF SWEPCO'S COMMON STOCK WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF SWEPCO'S BOARD. Preferred
Shareholders tendering their Shares pursuant to the Offer and voting at the
Special Meeting by proxy must use the proxy that is a part of the applicable
Letter of Transmittal and Proxy. Shares of SWEPCO's cumulative preferred stock
represented by properly executed proxies received at or prior to the Special
Meeting will be voted in accordance with the instructions thereon. If no
instructions are indicated, duly executed proxies will be voted in accordance
with the recommendation of the Board. It is not anticipated that any other
matters will be brought before the Special Meeting. However, the proxy that is a
part of each Letter of Transmittal and Proxy gives discretionary authority to
the proxy holders named therein should any other matters be presented at the
Special Meeting, and it is the intention of the proxy holders to act on any
other matters in accordance with their best judgment.
Execution of a proxy will not prevent a Preferred Shareholder from attending
the Special Meeting and voting in person. Any Preferred Shareholder giving a
proxy may revoke it at any time before it is voted by delivering to the
Secretary of SWEPCO written notice of revocation bearing a later date than the
proxy, by delivering a duly executed proxy bearing a later date, or by voting in
person by ballot at the Special Meeting.
SWEPCO will bear the cost of the solicitation of proxies by the Board.
SWEPCO has engaged D.F. King & Co., Inc. to act as Information Agent in
connection with the solicitation of proxies for a fee of $10,000 plus
reimbursement of reasonable out-of-pocket expenses. Proxies will be solicited by
mail or by telephone. In addition, officers and employees of SWEPCO may also
solicit proxies personally or by telephone; such persons will receive no
additional compensation for these services. The Information Agent has not been
retained to make, and will not make, solicitations or recommendations in
connection with the Proposed Amendment.
SWEPCO has requested that brokerage houses and other custodians, nominees
and fiduciaries forward solicitation materials to the beneficial owners of
shares of SWEPCO's cumulative preferred stock held of record by such persons and
will reimburse such brokers and other fiduciaries for their reasonable
out-of-pocket expenses incurred in connection therewith.
An application has been filed with the SEC under the 1935 Act requesting
approval of the Proposed Amendment and the acquisition of the Shares by CSW
pursuant to the Offer. As such, the adoption of the Proposed Amendment and the
purchase of the Shares pursuant to the Offer are subject to the receipt of such
approval from the SEC. SWEPCO has received a preliminary order, permitting the
solicitation of proxies, from the SEC under the 1935 Act.
CASH PAYMENTS
Subject to the terms and conditions set forth in this Offer to Purchase and
Proxy Statement, if (but only if) the Proposed Amendment is approved and adopted
by the shareholders of SWEPCO, SWEPCO will make a Cash Payment to each Preferred
Shareholder whose Shares are properly voted in favor of the Proposed Amendment,
in person by ballot or by proxy, at the Special Meeting in the amount of $1.00
for each Share held by such Preferred Shareholder which is so voted, provided
that such Shares have not been tendered pursuant to the Offer. The Company has
been advised that there is uncertainty under state law, due to the lack of
controlling precedent, as to the permissibility of making the Cash Payment.
While the Company cannot predict how a court would rule on the issue, the
Company believes that the Offer is fair to Preferred Shareholders and has
determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED
SHAREHOLDERS IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE
VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT; PROVIDED, HOWEVER, THAT THOSE
PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO
THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE
AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. If the Proposed Amendment is
approved and adopted, Cash Payments will be paid out of
13
<PAGE>
SWEPCO's general funds, promptly after the Proposed Amendment shall have become
effective. However, no accrued interest will be paid on the Cash Payment
regardless of any delay in making such payment.
Only Preferred Shareholders as of the Record Date (or their legal
representatives or attorneys-in-fact) are entitled to vote at the Special
Meeting and to receive Cash Payments from SWEPCO. Any beneficial holder of
Shares who is not the registered holder of such Shares as of the Record Date (as
would be the case for any beneficial owner whose Shares are registered in the
name of such holder's broker, dealer, commercial bank, trust company or other
nominee) must arrange with the record Preferred Shareholder to execute and
deliver a Proxy on such beneficial owner's behalf. If a beneficial holder of
Shares intends to attend the Special Meeting and vote in person, such beneficial
holder must obtain a legal proxy form from his or her broker, dealer, commercial
bank, trust company or other nominee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, CSW owns all the outstanding common stock of SWEPCO.
Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of SWEPCO to be the beneficial owner of more than 5% of SWEPCO's class of
cumulative preferred stock as of the Record Date.
SWEPCO's directors and executive officers do not beneficially own any Shares
as of the Record Date. The beneficial ownership of CSW's common stock held by
each director, as well as directors and executive officers as a group, as of
December 31, 1996, is set forth in the following table. Share amounts shown
include options exercisable within 60 days after year-end, restricted stock,
shares of CSW common stock credited to CSW Thrift Plus accounts and all other
shares of CSW common stock beneficially owned by the listed persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2)
- ------------------------------------------------------- -------------------------------------
<S> <C>
E.R. Brooks............................................ 113,690.32
Glenn Files............................................ 33,722.76
Maxine P. Sarpy........................................ 100.00
All directors and executive officers as a group........ 170,615.19
<CAPTION>
(representing .05% of the class)
</TABLE>
- ------------------------
(1) No individual listed beneficially owned more than .03% of the outstanding
shares of common stock of CSW.
(2) Includes shares of restricted stock in the following amounts: E.R.
Brooks--17,074 and Glenn Files--6,333; and all directors and officers as a
group--29,744. Includes shares which there is a right to acquire within 60
days pursuant to the exercise of stock options in the following amounts:
E.R. Brooks--54,315 and Glenn Files--19,067; and all directors and executive
officers as a group-- 100,062.
BUSINESS TO COME BEFORE THE SPECIAL MEETING
The following Proposed Amendment to SWEPCO's Articles is the only item of
business expected to be presented at the Special Meeting:
To remove in its entirety subparagraph (c) of paragraph 5 of Article Fourth,
limiting SWEPCO's ability to issue unsecured indebtedness.
14
<PAGE>
EXPLANATION OF THE PROPOSED AMENDMENT
Without the consent of the majority of the holders of SWEPCO's cumulative
preferred stock, the Articles currently prohibit the issuance or assumption of
any unsecured notes, debentures or other securities representing unsecured
indebtedness (other than for the purpose of refunding outstanding unsecured
indebtedness resulting in later maturities or for the redemption or retirement
of all outstanding shares of preferred stock) if, immediately after such
issuance or assumption, (a) the total outstanding principal amount of all
securities representing unsecured debt would exceed 20% of the aggregate of (1)
the total principal amount of all outstanding secured debt of SWEPCO and (2) the
capital and surplus of SWEPCO or (b) the total outstanding principal amount of
all securities representing unsecured debt maturing in less than ten years would
exceed 10% of such aggregate. The Proposed Amendment, if adopted, would
eliminate in its entirety subparagraph (c) of paragraph 5 of Article Fourth, as
set forth below, from the Articles.
* * *
"(c) issue or assume any unsecured notes, debentures or other securities
representing unsecured indebtedness (herein referred to as "unsecured
obligations"), for any purpose other than refunding or renewing
outstanding unsecured obligations resulting in later maturities or
redeeming or otherwise retiring all outstanding shares of the Preferred
Stock, if immediately after such issue or assumption (1) the principal
amount of all unsecured obligations issued or assumed by the corporation
and then outstanding would exceed 20% of the aggregate of (i) the
principal amount of all bonds or other securities representing secured
indebtedness issued or assumed by the corporation and then outstanding
and (ii) the total capital stock and surplus of the corporation as then
recorded on its books, or (2) the principal amount of all unsecured
obligations maturing in less than ten years, issued or assumed by the
corporation and then outstanding computed as herein provided, would
exceed 10% of such aggregate. For the purposes of this subparagraph (c),
the principal amount of any unsecured obligations which had an original
single maturity of more than ten years from the date thereof, and the
principal amount of the final maturity of any serially-maturing
unsecured obligations which had one or more original maturities of more
than ten years from the date thereof, shall not be regarded as unsecured
obligations maturing in less than ten years until such principal amount
shall be due or required to be paid within three years."
REASONS FOR THE PROPOSED AMENDMENT
SWEPCO believes that regulatory, legislative and market developments are
leading to a more competitive environment in the electric utility industry. As
competition intensifies, flexibility and cost structure will be even more
crucial to success in the future. Given that the electric and gas industry is
extremely capital intensive, controlling and minimizing financing costs are
essential ingredients to operating effectively in the new competitive
environment. It is, therefore, for those two reasons, flexibility and cost
structure, that you are being asked to vote in favor of the Proposed Amendment.
SWEPCO believes that adoption of the Proposed Amendment is key to meeting
the objectives of flexibility and cost structure. If adopted, the amendment
would eliminate the current provision of SWEPCO's Articles that limits the total
amount of SWEPCO's unsecured indebtedness to 20% of the total amount of SWEPCO's
secured indebtedness, plus capital and surplus, and the amount of short-term
unsecured debt to 10% of such total amount. Historically, SWEPCO's debt
financing generally has been accomplished through the issuance of long-term
first mortgage bonds and a modest amount of unsecured short-term debt. First
mortgage bonds represent secured indebtedness because they place a first
priority lien on substantially all of SWEPCO's assets. The Indenture dated
February 1, 1940, as amended, between SWEPCO and Continental Bank, National
Association and M.J. Kruger, as Trustees (the "First Mortgage Bond Indenture"),
contains certain restrictive covenants with respect to, among
15
<PAGE>
other things, the disposition of assets and the ability to issue additional
first mortgage bonds. Short-term debt, usually the lowest cost debt available to
SWEPCO, represents one type of unsecured indebtedness. The Proposed Amendment
will not only allow SWEPCO to issue a greater amount of unsecured debt, it will
also allow SWEPCO to issue a greater amount of total debt. SWEPCO will consider
changing the mix of debt securities toward more issuances on a short-term and
unsecured basis. Additionally, SWEPCO may issue certain tax-deductible trust
preferred securities which would be classified as unsecured debt under SWEPCO's
current Articles. SWEPCO has filed a Registration Statement on Form S-3 with the
SEC for the issuance of tax-deductible trust preferred securities.
Inasmuch as the 10% and 20% provisions contained in the Articles limit
SWEPCO's flexibility in planning and financing its business activities, SWEPCO
believes it ultimately will be at a competitive disadvantage if the provision is
not eliminated. The industry's new competitors (for example, power marketers,
independent power producers and cogenerating facilities) generally are not
subject to the type of financing restrictions the Articles impose on SWEPCO.
Recently, several other utilities with the same or similar charter restrictions
have successfully eliminated such provisions by soliciting their shareholders
for the same or similar amendments. Therefore, many potential utility
competitors have no comparable provision restricting the use of unsecured debt.
While SWEPCO's current low-cost structure has been instrumental in reducing the
ability of other competitors to attract SWEPCO's large bulk power customers,
SWEPCO must continue to explore new ways of reducing costs and enhancing
flexibility. SWEPCO believes that the adoption of the Proposed Amendment will be
in the best long-term competitive interests of shareholders by enhancing its
ability to meet the two objectives described below.
FINANCIAL FLEXIBILITY
SWEPCO believes that in the long run, various types of unsecured debt
alternatives will increase in importance as an option in financing its
construction program and refinancing high-cost mortgage bonds. The availability
and flexibility of unsecured debt is necessary to take full advantage of
changing conditions in securities markets. SWEPCO presently intends to continue
to rely on unsecured debt up to the 10% or 20% maximum amounts currently
allowable under the Articles. SWEPCO's earnings currently are sufficient to meet
the earnings coverage test contained in its First Mortgage Bond Indenture that
must be satisfied in certain instances before issuing additional first mortgage
bonds. However, there could be periods, when, because of an inability to meet
the Articles test, SWEPCO would be unable to issue any additional preferred
stock. An inability to issue preferred stock in the future, combined with the
inability to issue additional unsecured debt, would limit SWEPCO's financing
options to either additional first mortgage bonds or additional common stock.
COST STRUCTURE
SWEPCO's use of unsecured short-term debt is subject to the 10% and 20%
provisions contained in the Articles. SWEPCO believes that the prudent use of
such debt in excess of this provision is vital to effective financial management
of the business. Not only is unsecured short-term debt generally the least
expensive form of capital, it also provides flexibility in meeting seasonal
fluctuations in cash requirements, acts as a bridge between issues of permanent
capital and can be used when unfavorable conditions prevail in the market for
long-term capital.
For purposes of the 10% and 20% provisions, tax-deductible trust preferred
securities are considered to be unsecured debt, thus the use of tax-deductible
trust preferred securities is limited by the 10% and 20% provisions. Tax
deductible trust preferred securities have a much lower after-tax cost than
traditional perpetual preferred stock.
FOR THE ABOVE REASONS, SWEPCO'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS
OF SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE
ADOPTION OF THE PROPOSED AMENDMENT.
16
<PAGE>
FINANCIAL AND OTHER INFORMATION RELATING TO SWEPCO
The financial statements of SWEPCO and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1996 as filed with
the SEC, is hereby incorporated by reference. SWEPCO will provide without
charge, upon the written or oral request of any person (including any beneficial
owner) to whom this Offer to Purchase and Proxy Statement is delivered, a copy
of such information (excluding certain exhibits). Such requests for information
should be directed to Stephen D. Wise, Director, Finance, Central and South West
Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for
SWEPCO, telephone (214) 777-1000.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of CSW's board of directors, such
board employed on April 18, 1996 Arthur Andersen LLP as independent public
accountants for CSW and its subsidiaries, including SWEPCO, for the year 1996.
Representatives of Arthur Andersen LLP are expected to be present at the Special
Meeting with the opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
17
<PAGE>
PRICE RANGE OF SHARES; DIVIDENDS
SWEPCO's Cumulative Preferred Stock 4.28% Series, 4.65% Series, 5.00% Series
and 6.95% Series are traded in the OTC under the symbols " ", " ",
" " and " ", respectively. The last reported sale price in the OTC, as
of the close of business on , 1997, for each of the Series of
Preferred is shown on the front cover of this Offer to Purchase and Proxy
Statement. However, Preferred Shareholders should be aware that there is no
established trading market for the Shares and that the Shares of each Series of
Preferred only trade sporadically and on a limited basis and, therefore, the
last reported sales prices may not necessarily reflect the current market value
of the Shares.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
The following table sets forth the high and low sales prices of each Series
of Preferred in the OTC as reported by the National Quotation Bureau, Inc. and
the cash dividends paid thereon for the fiscal quarters indicated.
DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK
BY QUARTERS (1996 AND 1995)
<TABLE>
<CAPTION>
1996--QUARTERS 1995--QUARTERS
------------------------------------------ ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1ST 2ND 3RD 4TH 1ST 2ND 3RD 4TH
--------- --------- --------- --------- --------- --------- --------- ---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.28% SERIES
Dividends Paid Per Share................. $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07 $ 1.07
Market Price--$ Per Share (OTC)
Ask--High/Low..........................
Bid--High..............................
--Low...............................
4.65% SERIES
Dividends Paid Per Share................. $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162 $ 1.162
Market Price--$ Per Share (OTC)
Ask--High..............................
--Low...............................
Bid--High..............................
--Low...............................
5.00% SERIES
Dividends Paid Per Share................. $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25 $ 1.25
Market Price--$ Per Share (OTC)
Ask--High..............................
--Low...............................
Bid--High..............................
--Low................................
6.95% SERIES
Dividends Paid Per Share................. $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737 $ 1.737
Market Price--$ Per Share (OTC)
Ask--High..............................
--Low...............................
Bid--High..............................
--Low................................
</TABLE>
18
<PAGE>
Dividends for a Series of Preferred are payable when, as and if declared by
SWEPCO's Board of Directors at the rate per annum included in such title of the
Series of Preferred listed on the front cover of this Offer to Purchase and
Proxy Statement. The April 1997 Dividend has been declared on each Series of
Preferred, payable April 1, 1997 to owners of record on March 14, 1997. A tender
and purchase of Shares pursuant to the Offer will not deprive a Preferred
Shareholder of his or her right to receive the April 1997 Dividend on shares
held of record on March 14, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion thereof).
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
CSW believes that the purchase of the Shares at this time represents an
attractive opportunity that will benefit CSW, its shareholders, and SWEPCO. In
addition, the Offer gives Preferred Shareholders the opportunity to sell their
Shares at a premium to the market price on the date of the announcement of the
Offer and without the usual transaction costs associated with a sale.
After the consummation of the Offer, CSW may determine to purchase
additional Shares on the open market, in privately negotiated transactions,
through one or more tender offers or otherwise. Any such purchases may be on the
same terms as, or on terms which are more or less favorable to holders of Shares
than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act
prohibits CSW and its affiliates (including SWEPCO) from purchasing any Shares
of a Series of Preferred, other than pursuant to the Offer until at least ten
business days after the Expiration Date with respect to the Series of Preferred.
Any future purchases of Shares by CSW would depend on many factors, including
the market price of the Shares, CSW's business and financial position,
restrictions on CSW's ability to purchase Shares imposed by law and general
economic and market conditions.
Preferred Shareholders are not under any obligation to tender Shares
pursuant to the Offer. The Offer does not constitute notice of redemption of any
Series of Preferred pursuant to SWEPCO's Articles, nor does CSW or SWEPCO intend
to effect any such redemption by making the Offer. The Offer does not constitute
a waiver by SWEPCO of any right it has to redeem Shares. The 6.95% Series of
Preferred is subject to a cumulative mandatory redemption in an amount
sufficient to retire, within the twelve-month period beginning each April 1,
12,000 Shares, at a price of $100 per Share, plus accrued dividends, and SWEPCO
has the noncumulative option to redeem up to 12,000 additional Shares in each
such twelve-month period. SWEPCO is required to redeem 12,000 Shares within the
twelve-month period beginning April 1, 1997. At the time of such redemption,
SWEPCO may exercise its option to redeem an additional 12,000 Shares. The 6.95%
Series of Preferred is currently redeemable, upon call at a price of $104.64 per
Share, plus accrued dividends and will be redeemable on April 1, 1997 upon call
at a price of $102.34 per Share, plus accrued dividends. The 5.00% Series of
Preferred is redeemable, upon call at a price of $109 per Share, plus accrued
dividends. The 4.65% Series of Preferred is redeemable, upon call at a price of
$102.75 per Share, plus accrued dividends. The 4.28% Series of Preferred is
redeemable, upon call at a price of $103.904 per Share, plus accrued dividends.
The Shares of each Series of Preferred have no preemptive or conversion rights.
Upon liquidation or dissolution of SWEPCO, owners of the Shares would be
entitled to receive an amount equal to the liquidation preference per share
($100) plus all accrued and unpaid dividends (whether or not earned or declared)
thereon to the date of payment, prior to the payment of any amounts to the
holders of SWEPCO's common stock.
Shares validly tendered to the Depositary pursuant to the Offer and not
withdrawn in accordance with the procedures set forth herein shall be held until
the Expiration Date (or returned to the extent the Offer is terminated in
accordance herewith). To the extent that the Proposed Amendment is approved and
Shares tendered are accepted for payment and paid for in accordance with the
terms hereof, CSW intends to sell at the purchase price per Share listed on the
front cover of this Offer to Purchase and Proxy Statement, or if such purchase
prices are increased or decreased by CSW, at such increased or
19
<PAGE>
decreased purchase prices, its Shares purchased pursuant to the Offer to SWEPCO
and, at that time, it is expected that SWEPCO will retire and cancel the Shares.
SWEPCO may obtain all or a portion of the purchase price for such Shares from
the proceeds of the sale of tax-deductible trust preferred securities which
qualify as unsecured debt for purposes of the 10% and 20% provisions contained
in the Articles. However, in the event the Proposed Amendment is not adopted at
the Special Meeting, CSW may elect, but is not obligated, to waive, subject to
applicable law, the condition to the Offer that the Proposed Amendment be
adopted at the Special Meeting, and purchase the Shares tendered pursuant to the
Offer. In that case, subsequent to CSW's waiver and purchase of the Shares,
SWEPCO anticipates, as promptly as practicable thereafter, that it would call
another special meeting of its shareholders and solicit proxies therefrom for an
amendment substantially similar to the Proposed Amendment. At that meeting, CSW
would vote any Shares acquired by it pursuant to the Offer or otherwise
(together with its shares of common stock) in favor of such amendment, thereby
maximizing the prospects for the adoption of the amendment. Therefore, it is
likely that the Offer will reduce the number of Shares of each of the Series of
Preferred that might otherwise trade publicly or become available for purchase
and/or sale and likely will reduce the number of owners of Shares of each of the
Series of Preferred, which could adversely affect the liquidity and sale value
of the Shares not purchased in the Offer. The extent of the public market for
such Shares and the availability of price quotations would typically depend upon
such factors as the number of stockholders remaining at such time, the interest
in maintaining a market in the Shares on the part of securities firms and other
factors. As of December 31, 1996, there were 51 registered holders of the 4.28%
Series, 30 registered holders of the 4.65% Series, 659 registered holders of the
5.00% Series and 4 registered holders of the 6.95% Series. In addition, the
Series of Preferred are currently registered under Section 12(g) of the Exchange
Act. Registration of the Shares under the Exchange Act may be terminated upon
the application by SWEPCO to the SEC if the Shares are neither listed on a
national securities exchange nor held by more than 300 holders of record.
Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished to Preferred
Shareholders and could make certain provisions of the Exchange Act no longer
applicable to SWEPCO. Further, if the Proposed Amendment becomes effective,
Preferred Shareholders of Shares that are not tendered and purchased pursuant to
the Offer will no longer be entitled to the benefits of the Articles provision
limiting the amount of unsecured debt SWEPCO may issue, which will have been
deleted by the Proposed Amendment. As discussed above, such provision places
restrictions on SWEPCO's ability to issue or assume unsecured indebtedness.
Although SWEPCO's debt instruments may contain certain restrictions on SWEPCO's
ability to issue or assume debt, any such restrictions may be waived and the
increased flexibility afforded SWEPCO by the deletion of the Articles provision
may permit SWEPCO to take certain actions that may increase the credit risks
with respect to SWEPCO, adversely affecting the market price and credit rating
of the remaining Shares or otherwise be materially adverse to the interests of
the remaining Preferred Shareholders. In addition, to the extent that SWEPCO
elects to fund its purchase of the Shares, in whole or in part, by issuing
additional unsecured debt, including tax-deductible trust preferred securities,
the remaining Preferred Shareholders' relative position in SWEPCO's capital
structure could be perceived to decline, which in turn could adversely affect
the market price and credit rating of the remaining Shares.
Except as disclosed in this Offer to Purchase and Proxy Statement, CSW and
SWEPCO have no plans or proposals that relate to or would result in: (a) the
acquisition by any person of additional securities of SWEPCO or the disposition
of securities of SWEPCO; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving SWEPCO or any of its
subsidiaries; (c) a sale or transfer of a material amount of assets of SWEPCO or
any of its subsidiaries; (d) any change in the present Board or management of
SWEPCO; (e) any material change in the present dividend rate or policy, or
indebtedness or capitalization of SWEPCO; (f) any other material change in
SWEPCO's corporate structure or business; (g) any change in SWEPCO's Articles or
bylaws or any actions that may impede the acquisition of control of SWEPCO by
any person; (h) a class of equity securities of SWEPCO becoming eligible for
termination of registration pursuant to Section 12(g)(4) of
20
<PAGE>
the Exchange Act; or (i) the suspension of SWEPCO's obligation to file reports
pursuant to Section 15(d) of the Exchange Act.
NEITHER CSW, SWEPCO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal United States federal
income tax consequences of the sale of Shares pursuant to the Offer, the receipt
of Cash Payments, and the adoption of the Proposed Amendment. This summary is
addressed only to Preferred Shareholders who are "United States Holders" (as
defined below) and who hold their Shares as capital assets within the meaning of
the Internal Revenue Code of 1986, as amended ("the Code"). This summary does
not address all aspects of federal income taxation that may be relevant to a
particular Preferred Shareholder in light of such Preferred Shareholder's
individual circumstances or to Preferred Shareholders subject to special
treatment under the federal income tax laws, such as Preferred Shareholders who
are not United States Holders, banks, insurance companies, thrift institutions,
regulated investment companies, real estate investment trusts, tax-exempt
organizations, dealers in securities and currencies, Preferred Shareholders who
received their Shares as part of a compensation arrangement with SWEPCO, and
Preferred Shareholders holding Shares as part of a position in a "straddle" or
as part of a "hedging," "conversion" or other integrated investment transaction
for federal income tax purposes.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Christy & Viener, special tax counsel to CSW and
SWEPCO. This summary is based upon the Code, Treasury Regulations, Internal
Revenue Service rulings and pronouncements, and judicial decisions now in
effect, all of which are subject to change at any time. Such a change could
adversely affect the tax consequences described herein, possibly on a
retroactive basis. In addition, the authorities on which this summary is based
are subject to various interpretations and it is therefore possible that the
United States federal income tax treatment of the payments made pursuant to the
Offer, the Cash Payments, and the approval and adoption of the Proposed
Amendment may differ from the treatment described below.
Preferred Shareholders should consult their own tax advisors in light of
their particular circumstances as to the application of United States federal
income tax laws, as well as the effect of any state, local, or foreign tax laws.
As used herein, the term "United States Holder" means a Preferred
Shareholder that is (i) for United States federal income tax purposes, a citizen
or resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, or (iii) an estate or trust specified as being a "United States
Person" in the Code.
SALE OF SHARES
A United States Holder will recognize gain or loss equal to the difference
between the tax basis of such holder's Shares and the amount of cash received in
exchange therefor. For federal income tax purposes, an amount equal to $1.00 per
Share will be treated by CSW and SWEPCO as payment for voting in favor of the
Proposed Amendment, rather than cash paid in exchange for Shares, and will
constitute ordinary income to recipient United States Holders, as described
below under "--Cash Payments/Modification." A United States Holder's gain or
loss will be long-term capital gain or loss if the holding period for the Shares
is more than one year as of the date of the sale of such Shares. The excess of
net long-term capital gains over net short-term capital losses is taxed at a
lower rate than ordinary income for certain non-corporate taxpayers. The
distinction between capital gain or loss and ordinary
21
<PAGE>
income or loss is also relevant for purposes of, among other things, limitations
on the deductibility of capital losses.
CASH PAYMENTS/MODIFICATION
United States Holders, whether or not they receive Cash Payments, will not
recognize any taxable income or loss with respect to their Shares as a result of
the modification of the Articles by the Proposed Amendment. The federal income
tax treatment of the Cash Payments is not entirely clear. SWEPCO will treat the
Cash Payments as ordinary non-dividend income to recipient United States
Holders.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of the Cash Payment paid to a United States Holder or the amount
of payment made to a United States Holder pursuant to the Offer will be reported
to such holder and to the Internal Revenue Service except in the case of
corporations and other holders exempt from information reporting and backup
withholding. Backup withholding at a rate of 31% will apply to any such payments
made to non-exempt United States Holders unless the holder provides its taxpayer
identification number and the certifications required to establish that it is
not subject to backup withholding. In order to prevent backup withholding, each
tendering United States Holder and each United States Holder voting in favor of
the Proposed Amendment must provide such holder's taxpayer identification number
and certify that such holder is not subject to backup withholding by completing
the substitute Form W-9 included herewith.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
SOURCE AND AMOUNT OF FUNDS
Assuming that CSW purchases all outstanding Shares pursuant to the Offer,
the total amount required by CSW to purchase such Shares will be approximately
$[ ] million, exclusive of the accrued and unpaid dividends payments, but
including fees and other expenses. CSW intends to fund the Offer through the use
of its general funds (which, in the ordinary course, include funds from SWEPCO)
and funds borrowed pursuant to CSW's commercial paper program.
CSW sells commercial paper directly to commercial paper dealers who reoffer
the commercial paper to investors. At December 31, 1996, CSW had two credit
facilities in place aggregating $1.2 billion to back up the commercial paper
program.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Each of CSW and SWEPCO has been advised by its directors and executive
officers that no directors or executive officers of the respective companies own
any Shares. Based upon the companies' records and upon information provided to
each company by its directors and executive officers, neither company nor, to
the knowledge of either company, any of their subsidiaries, directors, or
executive officers has engaged in any transactions involving Shares during the
40 business days preceding the date hereof. Neither company nor, to the
knowledge of either company, any of its directors or executive officers is a
party to any contract, arrangement, understanding or relationship relating
directly or indirectly to the Offer with any other person with respect to any
securities of SWEPCO.
FEES AND EXPENSES ASSOCIATED WITH THE OFFER
DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as
Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the
Dealer Managers a combined fee of $0.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer. Each Dealer Manager
will also be reimbursed by CSW for its reasonable out-of pocket expenses,
including attorneys' fees, and will be indemnified against certain liabilities,
including certain liabilities under the
22
<PAGE>
federal securities laws, in connection with the Offer. Each Dealer Manager has
rendered, is currently rendering and is expected to continue to render various
investment banking services to CSW and SWEPCO. Each Dealer Manager has received,
and will continue to receive, customary compensation from the companies for such
services. CSW has retained The Bank of New York as Depositary and D.F. King &
Co., Inc. as Information Agent in connection with the Offer. The Depositary and
Information Agent will receive reasonable and customary compensation for their
services and will also be reimbursed for certain out-of-pocket expenses. CSW has
agreed to indemnify the Depositary and Information Agent against certain
liabilities, including certain liabilities under the federal securities law, in
connection with the Offer. Neither the Depositary nor the Information Agent has
been retained to make solicitations or recommendations in connection with the
Offer.
SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered and accepted for payment and paid for pursuant to the
Offer in transactions for beneficial owners of fewer than 2,500 Shares and a
solicitation fee of $1.00 per Share in transactions for beneficial owners of
2,500 or more Shares, provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any
Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of
Transmittal and Proxy which designates, as having solicited and obtained the
tender, the name of (i) any broker or dealer in securities, including the Dealer
Managers in their capacity as a broker or dealer, who is a member of any
national securities exchange or of the NASD, (ii) any foreign broker or dealer
not eligible for membership in the NASD which agrees to conform to the NASD's
Rules of Fair Practice in soliciting tenders outside the United States to the
same extent as though it were an NASD member, or (iii) any bank or trust company
(each of which is referred to herein as a "Soliciting Dealer"). No such fee
shall be payable to a Soliciting Dealer if such Soliciting Dealer is required
for any reason to transfer the amount of such fee to a depositing holder (other
than itself). No such fee shall be payable to a Soliciting Dealer with respect
to Shares tendered for such Soliciting Dealers' own account. No broker, dealer,
bank, trust company or fiduciary shall be deemed to be an agent of CSW, the
Depositary, the Information Agent or the Dealer Managers for the purposes of the
Offer.
STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any,
payable on account of the acquisition of Shares by CSW pursuant to the Offer,
except in certain circumstances where special payment or delivery procedures are
utilized pursuant to Instruction 6 of the accompanying Letter of Transmittal and
Proxy.
CERTAIN INFORMATION REGARDING CSW AND SWEPCO
SWEPCO is an operating utility primarily engaged in the generation,
purchase, transmission, distribution and sale of electric power to approximately
414,000 retail customers in portions of northeastern Texas, northwestern
Louisiana and western Arkansas. All of the common stock of SWEPCO is owned,
directly or indirectly, by CSW, a registered holding company under the 1935 Act.
SWEPCO, and SWEPCO Capital I and SWEPCO Capital II, each a statutory business
trust formed under the laws of the State of Delaware, have filed a registration
statement on Form S-3 (the "Registration Statement") with the SEC with respect
to the proposed offering from time to time of up to $110,000,000 aggregate
liquidation preference of Trust Preferred Securities, guaranteed by SWEPCO to
the extent set forth in the Registration Statement (the "Trust Preferred
Securities"). Following the announcement of the Offer, and subject to market and
other conditions, SWEPCO intends that such trusts will effect one or more public
offerings of Trust Preferred Securities. Any such offering would be made only by
means of a prospectus which is included in the Registration Statement.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information of
SWEPCO. The historical financial information (other than the ratios of earnings
to fixed charges) was derived from the audited consolidated financial statements
included in SWEPCO's Annual Report on Form 10-K for the year
23
<PAGE>
ended December 31, 1996, which statements are hereby incorporated by reference.
More comprehensive financial information is included in such reports and the
financial information which follows is qualified in its entirety by reference to
such reports and all of the financial statements and related notes contained
therein, copies of which may be obtained as set forth herein.
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
(THOUSANDS, EXCEPT RATIOS)
Operating Revenues....................................................... $ 920,786 $ 836,705 $ 825,296
Operating Income......................................................... 138,083 162,776 145,922
Allowance for Equity Funds Used During Construction...................... 325 4,290 3,579
Net Income............................................................... 66,556 117,114 105,712
Preferred Dividend Requirement........................................... 3,053 3,244 3,361
Net Income Applicable to Common Stock.................................... 63,503 113,870 102,351
Ratio of Earnings to Fixed Charges....................................... 2.81 3.80 3.70
</TABLE>
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------- ------------- -------------
<CAPTION>
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
ASSETS:
Net Utility Plant................................................... $ 1,851,958 $ 1,879,656 $ 1,856,558
Cash and Temporary Cash Investments................................. 1,879 1,702 1,296
Other Current Assets................................................ 175,799 176,746 163,817
Other Assets........................................................ 69,520 58,615 57,536
------------- ------------- -------------
$ 2,099,156 $ 2,116,719 $ 2,079,207
------------- ------------- -------------
------------- ------------- -------------
LIABILITIES:
Common Equity....................................................... $ 702,461 $ 682,994 $ 678,122
Cumulative Preferred Stock.......................................... 48,496 49,660 50,860
Long-term Debt...................................................... 597,151 598,951 595,833
Current Liabilities................................................. 260,920 287,155 251,457
Other Liabilities................................................... 490,128 497,959 502,935
------------- ------------- -------------
$ 2,099,156 $ 2,116,719 $ 2,079,207
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
ADDITIONAL INFORMATION REGARDING CSW
CSW is subject to the informational requirements of the Exchange Act and in
accordance therewith files periodic reports, proxy statements and other
information with the SEC. CSW is required to disclose in such proxy statements
certain information, as of particular dates, concerning its directors and
officers, their remuneration, stock options granted to them, the principal
holders of its securities and any material interest of such persons in
transactions with CSW. In connection with the Offer, CSW has also filed an
Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes
certain additional information relating to the Offer.
Such material can be inspected and copied at the public reference facilities
of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its regional offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's
Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
maintains a Web site at
24
<PAGE>
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC,
including CSW and SWEPCO. CSW's Schedule 13E-4 will not be available at the
SEC's regional offices.
MISCELLANEOUS
The Offer is not being made to, nor will CSW accept tenders from, owners of
Shares in any jurisdiction in which the Offer or its acceptance would not be in
compliance with the laws of such jurisdiction. CSW is not aware of any
jurisdiction where the making of the Offer or the tender of Shares would not be
in compliance with applicable law. If CSW becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, CSW will make a good faith effort to comply with such law.
If, after such good faith effort, CSW cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
owners of Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
CENTRAL AND SOUTH WEST CORPORATION
SOUTHWESTERN ELECTRIC POWER COMPANY
25
<PAGE>
Facsimile copies of the Letter of Transmittal and Proxy will only be
accepted from Eligible Institutions. The Letter of Transmittal and Proxy and, if
applicable, certificates for Shares should be sent or delivered by each
tendering or voting Preferred Shareholder of SWEPCO or his or her broker,
dealer, bank or trust company to the Depositary at one of its addresses set
forth below.
The Depositary is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR INFORMATION, TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase and Proxy
Statement, the Letter of Transmittal and Proxy or other tender offer or proxy
materials may be directed to the Information Agent or the Dealer Managers, and
such copies will be furnished promptly at CSW's expense. Preferred Shareholders
may also contact their local broker, dealer, commercial bank or trust company
for assistance concerning the Offer.
<TABLE>
<S> <C> <C>
The Information Agent:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
The Dealer Managers:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
26
<PAGE>
OFFER TO PURCHASE AND PROXY STATEMENT
CENTRAL AND SOUTH WEST CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF
CUMULATIVE PREFERRED STOCK OF PUBLIC SERVICE COMPANY OF OKLAHOMA
100,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.24% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
97,900 SHARES, CUMULATIVE PREFERRED STOCK, 4.00% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
------------------------------
PUBLIC SERVICE COMPANY OF OKLAHOMA
PROXY STATEMENT
WITH RESPECT TO ITS COMMON STOCK AND CUMULATIVE PREFERRED STOCK
------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, 1997, UNLESS THE OFFER IS EXTENDED.
Central and South West Corporation, a Delaware corporation ("CSW"), invites
the holders of each series of cumulative preferred stock listed above (each a
"Series of Preferred," and the holder thereof a "Preferred Shareholder") of
Public Service Company of Oklahoma, an Oklahoma corporation and wholly-owned
utility subsidiary of CSW ("PSO"), to tender any and all of their shares of a
Series of Preferred ("Shares") for purchase at the purchase price per Share
listed above for the Shares tendered, net to the seller in cash, upon the terms
and subject to the conditions set forth in this Offer to Purchase and Proxy
Statement and in the accompanying Letter of Transmittal and Proxy (the "Proxy")
(which together constitute the "Offer"). CSW will purchase all Shares validly
tendered and not withdrawn, upon the terms and subject to the conditions of the
Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of
the Offer--Extension of Tender Period; Termination; Amendments."
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT
OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. PREFERRED SHAREHOLDERS
(INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD
DATE (AS HEREINAFTER DEFINED)) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE
OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED BELOW. THE
OFFER IS ALSO CONDITIONED UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC") UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS
AMENDED (THE "1935 ACT"). THE OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE
"TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER."
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO
THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE (AS HEREINAFTER
DEFINED) MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND
VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE
TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES
OF PREFERRED WILL TRADE "WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT
OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF
PROXY FROM THE SELLER. SEE "TERMS OF THE OFFER--PROCEDURE FOR TENDERING SHARES."
FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT (AS HEREINAFTER DEFINED) OR
THE DEALER MANAGERS (AS HEREINAFTER DEFINED) OR CONSULT YOUR BROKER FOR
ASSISTANCE.
Concurrently with the Offer, the Board of Directors of PSO is soliciting
proxies for use at the Special Meeting of Shareholders of PSO to be held at
PSO's principal office, 212 East Sixth Street, Tulsa, Okahoma 74119-1212 on
, 1997, or any adjournment or postponement of such meeting (the
"Special Meeting"). The Special Meeting is being held to consider an amendment
(the "Proposed Amendment") to PSO's Restated Certificate of Incorporation (the
"Articles") which would remove a provision of the Articles that limits PSO's
ability to issue unsecured debt. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A DULY COMPLETED, VALID
AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR
INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED
AMENDMENT AT THE SPECIAL MEETING. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT
TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR
SHARES. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, PSO WILL MAKE A
SPECIAL CASH PAYMENT IN THE AMOUNT OF $1.00 PER SHARE (THE "CASH PAYMENT") TO
EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT BUT WHO
DID NOT TENDER HIS OR HER SHARES. THOSE PREFERRED SHAREHOLDERS WHO VALIDLY
TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED
ABOVE BUT NOT THE CASH PAYMENT.
IMPORTANT
Any Preferred Shareholder desiring to accept the Offer and tender all or any
portion of his or her Shares should, in addition to voting in favor of the
Proposed Amendment either by executing and returning the enclosed Proxy or by
voting in person by ballot at the Special Meeting, either (i) if not the record
holder, request his or her broker, dealer, commercial bank, trust company or
nominee to effect the transaction for him or her, or (ii) if the record holder,
complete and sign the Letter of Transmittal and Proxy or facsimile thereof, in
accordance with the instructions in the Letter of Transmittal and Proxy, mail or
deliver it and any other required documents to The Bank of New York (the
"Depositary"), and deliver the certificates for such Shares to the Depositary,
along with the Letter of Transmittal and Proxy, or tender such Shares pursuant
to the procedure for book-entry transfer set forth below under "Terms of the
Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined
below). A Preferred Shareholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee if he or she desires
to tender such Shares. Any Preferred Shareholder who desires to tender Shares
and whose certificates for such Shares are not immediately available, or who
cannot comply in a timely manner with the procedure for book-entry transfer,
should tender such Shares by following the procedures for guaranteed delivery
set forth below under "Terms of the Offer--Procedure for Tendering Shares."
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL AND PROXY, AND
ONLY THE APPLICABLE LETTER OF TRANSMITTAL AND PROXY FOR SUCH SERIES OF PREFERRED
OR A NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE
<PAGE>
USED TO TENDER SHARES OF SUCH SERIES OF PREFERRED A LETTER OF TRANSMITTAL AND
PROXY MAY BE USED TO VOTE IN FAVOR OF THE PROPOSED AMENDMENT EVEN IF NO SHARES
ARE BEING TENDERED.
------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY
OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
------------------------------
NEITHER CSW, PSO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
------------------------------
This Offer to Purchase and Proxy Statement and the accompanying proxy are
first being mailed to Preferred Shareholders on or about March , 1997 to
Preferred Shareholders of record on March , 1997.
------------------------------
Each Series of Preferred is traded in the over-the-counter market (the
"OTC") and is not listed on any national securities exchange. On ,
1997, the last reported sale prices and dates of sale as reported by the
National Quotation Bureau, Inc. were $ for the 4.24% Series of Preferred (on
, 1997) and $ for the 4.00% Series of Preferred (on
, 1997). Preferred Shareholders are urged to obtain a current market
quotation, if available, for the Shares. On , 1997, there were
issued and outstanding 100,000 Shares of the 4.24% Series of Preferred and
97,900 Shares of the 4.00% Series of Preferred.
------------------------------
Questions or requests for assistance or for additional copies of this Offer
to Purchase and Proxy Statement, the Letter of Transmittal and Proxy for a
Series of Preferred, or other tender offer or proxy solicitation materials may
be directed to D.F. King & Co., Inc. (the "Information Agent") or Goldman, Sachs
& Co. and Smith Barney Inc. (the "Dealer Managers") at their respective
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase and Proxy Statement.
------------------------------
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
------------------
The date of this Offer to Purchase and Proxy Statement is , 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR
PSO AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY CSW, PSO OR BY THE DEALER MANAGERS.
TABLE OF CONTENTS
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SUMMARY.................................................................................................... 1
TERMS OF THE OFFER......................................................................................... 4
Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 4
Procedure for Tendering Shares........................................................................... 5
Withdrawal Rights........................................................................................ 7
Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 8
Certain Conditions of the Offer.......................................................................... 9
Extension of Tender Period; Termination; Amendments...................................................... 11
PROPOSED AMENDMENT AND PROXY SOLICITATION.................................................................. 11
Introduction............................................................................................. 11
Voting Securities, Rights And Procedures................................................................. 12
Proxies.................................................................................................. 13
Cash Payments............................................................................................ 14
Security Ownership of Certain Beneficial Owners and Management........................................... 14
Business to Come Before the Special Meeting.............................................................. 14
Explanation of the Proposed Amendment.................................................................... 15
Reasons for the Proposed Amendment....................................................................... 15
Financial and Other Information Relating to PSO.......................................................... 17
Relationship with Independent Public Accountants......................................................... 17
PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 17
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 18
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 20
SOURCE AND AMOUNT OF FUNDS................................................................................. 21
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 21
FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 22
CERTAIN INFORMATION REGARDING CSW AND PSO.................................................................. 22
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 23
ADDITIONAL INFORMATION REGARDING CSW....................................................................... 24
MISCELLANEOUS.............................................................................................. 24
</TABLE>
i
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SUMMARY
THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE
PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC
DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS
ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED
IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN
THIS OFFER TO PURCHASE AND PROXY STATEMENT.
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The Companies................ CSW is a Dallas-based public utility holding company
registered under the 1935 Act. Through its four electric
operating subsidiaries, PSO, Central Power and Light
Company, Southwestern Electric Power Company and West Texas
Utilities Company (collectively, the "Electric Operating
Companies"), CSW serves approximately 152,000 square miles
in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW
owns SEEBOARD plc, a regional electricity company in the
southeast of the United Kingdom. CSW also engages through
other subsidiaries in the following energy-related busi-
nesses: (i) CSW Energy, Inc. develops, owns and operates
non-utility power projects in the United States; (ii) CSW
International, Inc. participates in power generation,
transmission and distribution projects outside the United
States; (iii) CSW Communications, Inc. provides
communications services, including enhancement of services
through fiber optic and other telecommunications technolo-
gies, to CSW and its subsidiaries and to third parties; (iv)
CSW Credit, Inc. purchases, without recourse, the accounts
receivables of the Electric Operating Companies and
non-affiliated utilities; and (v) EnerShop Inc. was recently
formed to provide commercial, industrial, institutional and
governmental customers with energy management services
designed to control costs, enhance productivity and improve
convenience, safety and comfort.
The Shares................... PSO 4.24% Cumulative Preferred Stock ($100 par value)
PSO 4.00% Cumulative Preferred Stock ($100 par value)
The Offer.................... Offer to purchase any or all shares of each Series of
Preferred at the price per Share set forth below.
Purchase Price............... $ per 4.24% Share
$ per 4.00% Share
Independent Offer............ The Offer for one Series of Preferred is independent of the
Offer for any other series of Preferred. The Offer is not
conditioned upon any minimum number of Shares of the
applicable Series of Preferred being tendered, but is
conditioned upon the Proposed Amendment being approved and
adopted at the Special Meeting. The Offer is subject to
certain other conditions described herein.
SEC Approval................. The Offer is conditioned, among other things, upon the
approval of the SEC under the 1935 Act.
Expiration Date of the
Offer...................... The Offer expires at 5:00 p.m., central time, ,
1997, unless extended (the "Expiration Date").
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1
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How to Tender Shares......... Preferred Shareholders (including Preferred Shareholders who
acquire Shares subsequent to the Record Date) who wish to
tender their Shares must vote in favor of the Proposed
Amendment. Preferred Shareholders who purchase or whose
purchase is registered after the Record Date and who wish to
tender their Shares must arrange with their seller to
receive an assignment of proxy from the holder of record on
the Record Date. In order to facilitate receipt of Proxies,
Shares shall, during the period which commenced March ,
1997 (two business days prior to the Record Date) and which
will end at the close of business on the Expiration Date
trade in the over-the-counter market with a proxy providing
the transferee with the right to vote such acquired Shares
in the Proxy Solicitation. Settlement of all trades during
the period described above should include an assignment of
proxy from the seller. See "Terms of the Offer--Procedure
for Tendering Shares." For further information, call the
Information Agent or the Dealer Managers or consult your
broker for assistance.
Withdrawal Rights............ Tendered Shares of any Series of Preferred may be withdrawn
at any time until the Expiration Date with respect to such
Series of Preferred and, unless theretofore accepted for
payment, may also be withdrawn after , 1997. See
"Terms of the Offer--Withdrawal Rights". The proxy
accompanying any tendered Shares that are withdrawn will not
be considered revoked unless the Preferred Shareholder
specifically revokes such proxy as described herein. See
"Proposed Amendment and Proxy Solicitation--Proxies."
Purpose of the Offer......... CSW is making the Offer because it believes that the
purchase of Shares is attractive to CSW, its shareholders
and PSO. In addition, the Offer gives Preferred Shareholders
the opportunity to sell their Shares at a premium over the
market price and without the usual transaction costs
associated with a market sale. See "Purpose of the Offer;
Certain Effects of the Offer."
Dividends.................... A regular quarterly dividend has been declared on each
Series of Preferred, payable on April 1, 1997 to the owners
of record on March 15, 1997 (the "April 1997 Dividend"). A
tender and purchase of Shares pursuant to the Offer will not
deprive a Preferred Shareholder of his or her right to
receive the April 1997 Dividend on Shares held of record on
March 15, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any
dividends in respect of any later dividend periods (or any
portion thereof).
Brokerage Commissions........ Not payable by Preferred Shareholders.
Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a
solicitation fee of $1.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500
Shares and a solicitation fee of $1.00 per Share in
transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer
Managers and 20% to
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2
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<S> <C>
any Soliciting Dealers (which may be a Dealer Manager).
However, Soliciting Dealers will not be entitled to a
solicitation fee for Shares beneficially owned by such
Soliciting Dealer.
Proposed Amendment........... Concurrently with the Offer, the Board of Directors of PSO
is soliciting proxies for use at the Special Meeting of
Shareholders of PSO. The Special Meeting is being held to
consider an amendment to PSO's Articles which would remove a
provision that limits PSO's ability to issue unsecured debt.
Record Date.................. March , 1997
Special Cash Payment......... Preferred Shareholders have the right to vote for the
Proposed Amendment regardless of whether they tender their
Shares. If the Proposed Amendment is approved and adopted by
PSO's shareholders, PSO will make a special cash payment of
$1.00 per Share to each Preferred Shareholder who voted in
favor of the Proposed Amendment, provided that such Shares
have not been tendered pursuant to the Offer. Preferred
Shareholders who validly tender their Shares will be
entitled only to the purchase price per share listed on the
front cover of this Offer to Purchase and Proxy Statement
and not any Cash Payment.
Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes
with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. See Instruction 6 of the
applicable Letter of Transmittal and Proxy. See "Terms of
the Offer--Acceptance of Shares for Payment of Purchase
Price and Dividends."
Payment Date................. Promptly after the Expiration Date.
Further Information.......... Additional copies of this Offer to Purchase and Proxy
Statement and the applicable Letter of Transmittal and Proxy
may be obtained by D.F. King & Co., Inc., 77 Water Street,
New York, New York 10005, telephone (800) 755-3107
(toll-free) and (212) 269-5550 (brokers and dealers).
Questions about the Offer should be directed to Goldman,
Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800)
655-4811.
</TABLE>
3
<PAGE>
TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal and Proxy, CSW will purchase any and all Shares
that are validly tendered on or prior to the applicable Expiration Date (and not
properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights")
at the purchase price per Share listed on the front cover of this Offer to
Purchase and Proxy Statement for the Shares tendered, net to the seller in cash.
See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the
Offer--Extension of Tender Period; Termination."
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT
OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS CONDITIONED ON THE
PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED
SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO
THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE
IN FAVOR OF THE PROPOSED AMENDMENT, AS DESCRIBED HEREIN. THE OFFER IS SUBJECT TO
CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE
OFFER."
The Offer is being sent to all persons in whose names Shares are registered
on the books of PSO on the Record Date. Preferred purchase or whose purchase is
registered after the Record Date and who wish to tender in the Offer must
arrange with their seller to receive a Proxy from the holder of record on the
Record Date. In order to facilitate receipt of Proxies, Shares shall, during the
period which commenced [ ], 1997 (two business days prior to the
Record Date) and which will end at the close of business on the Expiration Date,
trade in the over-the-counter market with a proxy providing the transferee with
the right to vote such acquired Shares in the proxy solicitation. No record date
is fixed for determining which persons are permitted to tender Shares. However,
only the holders of record, or holders who acquire an assignment of proxy from
such holders, are permitted to vote for the Proposed Amendment and thereby
validly tender Shares pursuant to the Offer. As such, any person who is the
beneficial owner but not the record holder of the Shares must (i) arrange for
the record transfer of Shares prior to tendering or (ii) direct such record
holder to tender the Shares and vote in favor of the Proposed Amendment on
behalf of such beneficial owner.
With respect to each Series of Preferred, the Expiration Date is the later
of 5:00 p.m., central time, on , , 1997 or the latest time
and date to which the Offer with respect to such Series of Preferred is
extended. CSW expressly reserves the right, in its sole discretion, and at any
time and/or from time to time, to extend the period of time during which the
Offer for any Series of Preferred is open, by giving oral or written notice of
such extension to the Depositary, without extending the period of time during
which the Offer for any other Series of Preferred is open. There is no assurance
whatsoever that CSW will exercise its right to extend the Offer for any Series
of Preferred. If CSW decides, in its sole discretion, to decrease the number of
Shares of any Series of Preferred being sought or to increase or decrease the
consideration offered in the Offer to holders of any Series of Preferred and, at
the time that notice of such increase or decrease is first published, sent or
given to holders of such Series of Preferred in the manner specified herein, the
Offer for such Series of Preferred is scheduled to expire at any time earlier
than the tenth business day from the date that such notice is first so
published, sent or given, such Offer will be extended until the expiration of
such ten-business-day period. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 a.m. through 12:00 midnight, eastern standard time.
NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO
TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A VOTE IN FAVOR OF THE
4
<PAGE>
PROPOSED AMENDMENT HAS NOT BEEN CAST AT THE SPECIAL MEETING. SUCH VOTE MAY BE
CAST BY PROPERLY COMPLETING THE FORM OF PROXY THAT IS A PART OF THE APPLICABLE
LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON BY BALLOT AT THE SPECIAL
MEETING.
The April 1997 Dividend has been declared on each Series of Preferred,
payable April 1, 1997 to owners of record on March 15, 1997. A tender and
purchase of Shares pursuant to the Offer will not deprive a Preferred
Shareholder of his or her right to receive the April 1997 Dividend on shares
held of record on March 15, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion thereof).
PROCEDURE FOR TENDERING SHARES
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO
THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN AN
ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR
OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING
THE PERIOD DESCRIBED ABOVE, THE SHARES OF EACH SERIES OF PREFERRED WILL TRADE
"WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE
PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER.
The Shares are trading, during the period which began two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbol " ", indicating that such
shares are trading "with proxy." A Preferred Shareholder who acquires Shares
during this period must obtain, or have its authorized representative obtain, an
assignment of proxy (which is included in the applicable Letter of Transmittal)
at settlement from the seller. The National Association of Securities Dealers,
Inc. (the "NASD") and The Depository Trust Company have issued notices informing
their members and participants that the Shares are trading "with proxy" and that
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT OR THE DEALER MANAGERS
OR CONSULT YOUR BROKER FOR ASSISTANCE.
Further, to tender Shares pursuant to the Offer, the tendering owner of
Shares must either:
(a) send to the Depositary (at one of its addresses set forth on the
back cover of this Offer to Purchase and Proxy Statement) a properly
completed and duly executed Letter of Transmittal and Proxy or facsimile
thereof which will either deliver such owner's proxy or indicate such
owner's intention to vote at the Special Meeting in person by ballot),
together with any required signature guarantees and any other documents
required by the Letter of Transmittal and Proxy and either (i) certificates
for the Shares to be tendered must be received by the Depositary at one of
such addresses or (ii) such Shares must be delivered pursuant to the
procedures for book-entry transfer described herein (and a confirmation of
such delivery must be received by the Depositary), in each case by the
Expiration Date; or
(b) comply with the guaranteed delivery procedure described under
"Guaranteed Delivery Procedure" below.
The Depositary will establish an account with respect to the Shares at DTC
and the Philadelphia Depository Trust Company (collectively referred to as the
"Book-Entry Transfer Facilities") for purposes
5
<PAGE>
of the Offer within two business days after the date of this Offer to Purchase
and Proxy Statement and any financial institution that is a participant in the
system of any Book-Entry Transfer Facility may make delivery of Shares by
causing such Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the procedures of such Book-Entry
Transfer Facility. Although delivery of Shares may be effected through
book-entry transfer, such delivery must be accompanied by either (i) a properly
completed and duly executed Letter of Transmittal and Proxy or facsimile
thereof, together with any required signature guarantees and any other required
documents or (ii) an Agent's Message (as hereinafter defined) and, in any case,
must be received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase and Proxy Statement at or prior to 5:00 p.m.,
central time, on the Expiration Date.
The term "Agent's Message" means a message, transmitted by one of the
Book-Entry Transfer Facilities, received by the Depositary and forming a part of
the book-entry transfer when a tender is initiated, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant tendering Shares that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that CSW may enforce such
agreement against such participant.
Except as otherwise provided below, all signatures on a Letter of
Transmittal and Proxy must be guaranteed by a firm that is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States that is a participant in an
approved Signature Guarantee Medallion Program (each of the foregoing being
referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal
and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is
signed by the holder of record of the shares tendered therewith and such owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy,
(b) such Shares are tendered for the account of an Eligible Institution or (c)
such Letter of Transmittal and Proxy is being used solely for the purpose of
voting Shares which are not being tendered pursuant to the Offer. See
Instructions 1 and 5 of the Letter of Transmittal and Proxy.
GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender
Shares pursuant to the Offer and such Preferred Shareholder's certificates are
not immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are complied
with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery and Proxy, substantially in the form provided by CSW and PSO
herewith, is received (with any required signature guarantees) by the
Depositary as provided below at or prior to 5:00 p.m., central time, on the
Expiration Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
and Proxy (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal and Proxy, are received by the
Depositary no later than 5:00 p.m., central time, within three business days
after the date of execution of such Notice of Guaranteed Delivery and Proxy.
THE NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE DELIVERED BY HAND OR
TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST
INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH
NOTICE OF GUARANTEED DELIVERY AND PROXY.
6
<PAGE>
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal and Proxy (or a manually
signed facsimile thereof) is received by the Depositary within the applicable
time limits and a vote in favor of the Proposed Amendment in respect of such
Shares has been cast at the Special Meeting either in person or by completion
and execution of the proxy (which proxy must be the form of proxy that is a part
of the applicable Letter of Transmittal and Proxy).
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or an Agent's Message with
respect to) such Shares, a Letter of Transmittal and Proxy or a manually signed
facsimile thereof, properly completed and duly executed, with any required
signature guarantees and all other documents required by the Letter of
Transmittal and Proxy.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES
WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME
SHOULD BE ALLOWED FOR DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE CASH PAYMENTS, EACH
TENDERING UNITED STATES PREFERRED SHAREHOLDER OR A NON-TENDERING UNITED STATES
PREFERRED SHAREHOLDER WHO VOTES FOR THE PROPOSED AMENDMENT MUST NOTIFY THE
DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND
EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND
PROXY. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt) and acceptance for payment of any tender of
Shares will be determined by CSW, in its sole discretion, and its determination
will be final and binding. CSW reserves the absolute right to reject any or all
tenders of Shares that (i) it determines are not in proper form or (ii) the
acceptance for payment of or payment for which may, in the opinion of CSW's
counsel, be unlawful. CSW also reserves the absolute right to waive any defect
or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notice of any defect or irregularity in tenders, nor shall any of them
incur any liability for failure to give any such notice.
WITHDRAWAL RIGHTS
ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT
VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY
TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after , 1997, unless theretofore accepted
for payment as provided in this Offer to Purchase and Proxy Statement. If, with
respect to any Series of Preferred, CSW extends the period of time during which
the Offer is open, is delayed in accepting for payment or paying for Shares of
that Series of Preferred or is unable to accept for payment or pay for Shares
pursuant to the Offer for any reason, then, without prejudice to
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<PAGE>
CSW's rights under the Offer, the Depositary may, on behalf of CSW, retain all
Shares of that Series of Preferred tendered, and such Shares may not be
withdrawn except as otherwise provided in this "Terms of the Offer--Withdrawal
Rights," subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that
an issuer making a tender offer shall either pay the consideration offered, or
return the tendered securities, promptly after the termination or withdrawal of
the tender offer.
The proxy accompanying any tendered Shares that are withdrawn will not be
considered revoked unless the Preferred Shareholder specifically revokes such
proxy as described herein. See "Proposed Amendment and Proxy
Solicitation-Proxies."
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary, at one of its addresses set forth on
the back cover of this Offer to Purchase and Proxy Statement, and must specify
the name of the person who tendered the Shares to be withdrawn and the number of
Shares to be withdrawn. If the Shares to be withdrawn have been delivered to the
Depositary, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution (except in the case of Shares tendered by an Eligible
Institution) must be submitted prior to the release of such Shares. In addition,
such notice must specify, in the case of Shares tendered by delivery of
certificates, the name of the registered owner (if different from that of the
tendering Preferred Shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn Shares and
the name of the registered holder (if different from the name of such account).
Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered by again following one of the procedures described in "Terms of the
Offer--Procedure for Tendering Shares" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by CSW, in its sole discretion, and its
determination will be final and binding. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal or
will incur any liability for failure to give any such notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Special Meeting, CSW will accept for payment (and
thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in "Terms of the Offer--Withdrawal Rights." In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made promptly but only
after timely receipt by the Depositary of certificates for such Shares (or of an
Agent's Message), a properly completed and duly executed Letter of Transmittal
and Proxy (or facsimile thereof) and any other required documents.
For purposes of the Offer, CSW will be deemed to have accepted for payment
(and thereby purchased) Shares that are validly tendered and not withdrawn as,
if and when it gives oral or written notice to the Depositary of its acceptance
for payment of such Shares. CSW will pay for Shares that it has purchased
pursuant to the Offer by depositing the purchase price therefor with the
Depositary, which will act as agent for tendering Preferred Shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
Preferred Shareholders. Under no circumstances will interest be paid on amounts
to be paid to tendering Preferred Shareholders, regardless of any delay in
making such payment.
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<PAGE>
Certificates for all Shares not validly tendered will be returned or, in the
case of Shares tendered by book-entry transfer, such Shares will be credited to
an account maintained with a Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
Payment for shares may be delayed in the event of difficulty in determining
the number of shares properly tendered. In addition, if certain events occur
(including the Proposed Amendment not being approved and adopted at the Special
Meeting), CSW may not be obligated to purchase Shares pursuant to the Offer. See
"Terms of the Offer--Certain Conditions of the Offer."
CSW will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to any person other
than the registered owner, or if tendered Shares are registered in the name of
any person other than the person signing the Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered owner,
such other person or otherwise) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory evidence of
the payment of such taxes, or exemption therefrom, is submitted. See Instruction
6 of the applicable Letter of Transmittal and Proxy.
CERTAIN CONDITIONS OF THE OFFER
CSW WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES
TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL
MEETING. IN ORDER TO TENDER THEIR SHARES, PREFERRED SHAREHOLDERS (INCLUDING
PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) MUST
SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN
FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR
INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. PREFERRED
SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF
WHETHER THEY TENDER THEIR SHARES. ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE
PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED
WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER.
PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL ONLY BE ENTITLED TO THE
PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND
PROXY STATEMENT BUT NOT THE CASH PAYMENT.
Notwithstanding any other provision of the Offer, CSW will not be required
to accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer or may postpone (subject to the requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of
Shares) the acceptance for payment of, or payment for, Shares tendered, if at
any time after , 1997, and at or before acceptance for payment of or
payment for any Shares, any of the following shall have occurred:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, or before any court, authority, agency or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the sole judgment of
CSW, could materially and adversely affect the business, condition
(financial or otherwise), income, operations or prospects of CSW and its
subsidiaries taken as a whole or of PSO individually, or otherwise
materially impair in any way the contemplated future conduct of the business
of CSW or any of its subsidiaries or materially impair the Offer's
contemplated benefits to CSW;
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<PAGE>
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or CSW or any of
its subsidiaries, by any legislative body, court, authority, agency or
tribunal that, in CSW's sole judgment, would or might directly or indirectly
(i) make the acceptance for payment of, or payment for, some or all of the
Shares illegal or otherwise restrict or prohibit consummation of the Offer,
(ii) delay or restrict the ability of CSW, or render CSW unable, to accept
for payment or pay for some or all of the Shares, (iii) materially impair
the contemplated benefits of the Offer to CSW or (iv) materially affect the
business, condition (financial or otherwise), income, operations or
prospects of CSW and its subsidiaries taken as a whole or of PSO
individually, or otherwise materially impair in any way the contemplated
future conduct of the business of CSW or any of its subsidiaries;
(c) there shall have occurred (i) any significant decrease in the market
price of the Shares or any change in the general political, market, economic
or financial conditions in the United States or abroad that could have a
material adverse effect on CSW's business, operations, prospects or ability
to obtain financing generally or the trading in the other equity securities
of CSW, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation on, or
any event that, in CSW's sole judgment, might affect the extension of credit
by lending institutions in the United States, (iii) the commencement of war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (v) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof or (vi) any decline in either
the Dow Jones Industrial Average or the Standard and Poor's Composite 500
Stock Index by an amount in excess of 15% measured from the close of
business on , 1997;
(d) any tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger, acquisition or other business
combination proposal for CSW, shall have been proposed, announced or made by
any person or entity;
(e) there shall have occurred any event or events that have resulted, or
may in the sole judgment of CSW result, in an actual or threatened change in
the business, condition (financial or otherwise), income, operations, stock
ownership or prospects of CSW and its subsidiaries; or
(f) the SEC shall have withheld approval, under the 1935 Act, of the
acquisition of the Shares by CSW pursuant to the Offer or the approval and
adoption of the Proposed Amendment at the Special Meeting;
and, in the sole judgment of CSW, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment or
payment. With respect to the approval of the SEC referenced in clause (f) above,
the SEC must find, among other things, that the acquisition of the Shares by CSW
is not detrimental to the public interest or the interest of the investors or
consumers, and that the consideration paid in connection with the acquisition
and the adoption of the Proposed Amendment, including fees, commissions and
other remuneration, is reasonable.
The foregoing conditions (including the condition that the Proposed
Amendment be approved and adopted at the Special Meeting) are for the sole
benefit of CSW and may be asserted by CSW regardless of the circumstances
(including any action or inaction by CSW) giving rise to any such condition, and
any such condition (including the condition related to the requirement that
Preferred Shareholders tendering their Shares vote in favor of the Proposed
Amendment at the Special Meeting) may be waived by CSW, in whole or in part, at
any time and from time to time in its sole discretion. The failure by CSW at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
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<PAGE>
Any determination by CSW concerning the events described above will be final and
binding on all parties.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
CSW expressly reserves the right, in its sole discretion, and at any time
and/or from time to time, to extend the period of time during which the Offer
for any Series of Preferred is open by giving oral or written notice of such
extension to the Depositary and making a public announcement thereof, without
extending the period of time during which the Offer for any other Series of
Preferred is open. There can be no assurance, however, that CSW will exercise
its right to extend the Offer for any Series of Preferred. During any such
extension, all Shares of the subject Series of Preferred previously tendered
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in "Terms of the Offer--Withdrawal Rights." CSW also
expressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Shares tendered, subject to Rule
13e-4(f)(5) under the Exchange Act which requires CSW either to pay the
consideration offered or to return the Shares tendered promptly after the
termination or withdrawal of the Offer, upon the occurrence of any of the
conditions specified in "Terms of the Offer--Certain Conditions of the Offer" by
giving oral or written notice of such termination to the Depositary, and making
a public announcement thereof.
Subject to compliance with applicable law, CSW further reserves the right,
in its sole discretion, to amend the Offer in any respect. Amendments to the
Offer may be made at any time and/or from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., central time, on the next business day after the
previously scheduled Expiration Date. Any public announcement made pursuant to
the Offer will be disseminated promptly to Preferred Shareholders affected
thereby in a manner reasonably designed to inform such Preferred Shareholders of
such change. Without limiting the manner in which CSW may choose to make a
public announcement, except as required by applicable law, CSW shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If CSW materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, CSW
will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price
or change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
The SEC has stated that, in its view, an offer should remain open for a minimum
of five business days from the date that a notice of such a material change is
first published, sent or given. If the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that CSW publishes, sends or gives to Preferred
Shareholders a notice that it will (a) increase or decrease the price it will
pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will
be extended until the expiration of such period of ten business days.
THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. IF CSW EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO
ONE SERIES OF PREFERRED FOR ANY REASON, CSW WILL HAVE NO OBLIGATION TO EXTEND
THE OFFER FOR ANY OTHER SERIES OF PREFERRED.
PROPOSED AMENDMENT AND PROXY SOLICITATION
INTRODUCTION
This Offer to Purchase and Proxy Statement is first being mailed on or about
, 1997 to the shareholders of PSO in connection with the
solicitation of proxies by the Board of Directors (the
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"Board") of PSO for use at the Special Meeting. At the Special Meeting, the
shareholders of PSO will vote upon the Proposed Amendment to the Articles.
Preferred Shareholders who wish to tender their Shares pursuant to the Offer
must vote in favor of the Proposed Amendment in person by ballot or by proxy at
the Special Meeting. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR
THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. The Offer
is conditional upon the Proposed Amendment being approved and adopted at the
Special Meeting. If the Proposed Amendment is approved and adopted by PSO's
shareholders, PSO will make a special cash payment in the amount of $1.00 per
Share to each Preferred Shareholder who voted in favor of the Proposed
Amendment, provided that such Shares have not been tendered pursuant to the
Offer. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR
ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT
(REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). Those
Preferred Shareholders who validly tender their Shares will be entitled only to
the purchase price per Share listed on the front cover of this Offer to Purchase
and Proxy Statement but not the Cash Payment.
VOTING SECURITIES, RIGHTS AND PROCEDURES
Only holders of record of PSO's voting securities at the close of business
on the Record Date or persons obtaining a proxy from the holders of record on
the Record Date will be entitled to vote in person or by proxy at the Special
Meeting. The outstanding voting securities of PSO for purposes of voting on the
Proposed Amendment are divided into two classes: common stock and cumulative
preferred stock. The class of cumulative preferred stock has been issued in two
Series of Preferred with the record holders of all Shares of the cumulative
preferred stock voting together as one class. The shares outstanding on the date
of the Special Meeting, and the vote to which each share is entitled in
consideration of the Proposed Amendment, are as follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING VOTES PER SHARE
- -------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Common Stock (Par Value $15 per share).................................... 9,013,000 1 vote
Cumulative Preferred Stock (Par Value $100 per Share)..................... 197,900 1 vote
</TABLE>
The affirmative vote of the holders of two-thirds of the outstanding shares
of each of PSO's (i) common stock and (ii) cumulative preferred stock, all
series of the cumulative preferred stock voting together as one class, is
required to approve the Proposed Amendment to be presented at the Special
Meeting. Abstentions and broker non-votes will have the effect of votes against
the Proposed Amendment. CSW HAS ADVISED PSO THAT IT INTENDS TO VOTE ALL OF THE
OUTSTANDING SHARES OF COMMON STOCK OF PSO IN FAVOR OF THE PROPOSED AMENDMENT.
Votes at the Special Meeting will be tabulated preliminarily by Central and
South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of
Election, duly appointed by the presiding officer of the Special Meeting, will
definitively count and tabulate the votes and determine and announce the results
at the meeting. PSO has no established procedure for confidential voting. There
are no rights of appraisal in connection with the Proposed Amendment.
PROXIES
THE ENCLOSED PROXY, WHICH IS CONTAINED WITHIN THE LETTER OF TRANSMITTAL AND
PROXY (AND THE NOTICE OF GUARANTEED DELIVERY AND PROXY), IS SOLICITED BY PSO'S
BOARD, WHICH RECOMMENDS VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF PSO'S
COMMON STOCK WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF PSO'S BOARD.
Preferred Shareholders tendering their Shares pursuant to the Offer and voting
at the Special Meeting by proxy must use the proxy that is a part of the
applicable Letter of Transmittal and Proxy. Shares of PSO's cumulative preferred
stock represented by properly executed proxies received at or prior to the
Special Meeting will be voted in accordance with the
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<PAGE>
instructions thereon. If no instructions are indicated, duly executed proxies
will be voted in accordance with the recommendation of the Board. It is not
anticipated that any other matters will be brought before the Special Meeting.
However, the proxy that is a part of each Letter of Transmittal and Proxy gives
discretionary authority to the proxy holders named therein should any other
matters be presented at the Special Meeting, and it is the intention of the
proxy holders to act on any other matters in accordance with their best
judgment.
Execution of a proxy will not prevent a Preferred Shareholder from attending
the Special Meeting and voting in person. Any Preferred Shareholder giving a
proxy may revoke it at any time before it is voted by delivering to the
Secretary of PSO written notice of revocation bearing a later date than the
proxy, by delivering a duly executed proxy bearing a later date, or by voting in
person by ballot at the Special Meeting.
PSO will bear the cost of the solicitation of proxies by the Board. PSO has
engaged D.F. King & Co., Inc. to act as Information Agent in connection with the
solicitation of proxies for a fee of $10,000 plus reimbursement of reasonable
out-of-pocket expenses. Proxies will be solicited by mail or by telephone. In
addition, officers and employees of PSO may also solicit proxies personally or
by telephone; such persons will receive no additional compensation for these
services. The Information Agent has not been retained to make, and will not
make, solicitations or recommendations in connection with the Proposed
Amendment.
PSO has requested that brokerage houses and other custodians, nominees and
fiduciaries forward solicitation materials to the beneficial owners of shares of
PSO's cumulative preferred stock held of record by such persons and will
reimburse such brokers and other fiduciaries for their reasonable out-of-pocket
expenses incurred in connection therewith.
An application has been filed with the SEC under the 1935 Act requesting
approval of the Proposed Amendment and the acquisition of the Shares by CSW
pursuant to the Offer. As such, the adoption of the Proposed Amendment and the
purchase of the Shares pursuant to the Offer are subject to the receipt of such
approval from the SEC. PSO has received a preliminary order, permitting the
solicitation of proxies, from the SEC under the 1935 Act.
CASH PAYMENTS
Subject to the terms and conditions set forth in this Offer to Purchase and
Proxy Statement, if (but only if) the Proposed Amendment is approved and adopted
by the shareholders of PSO, PSO will make a Cash Payment to each Preferred
Shareholder whose Shares are properly voted in favor of the Proposed Amendment,
in person by ballot or by proxy, at the Special Meeting in the amount of $1.00
for each Share held by such Preferred Shareholder which is so voted, provided
that such Shares have not been tendered pursuant to the Offer. The Company has
been advised that there is uncertainty under state law, due to the lack of
controlling precedent, as to the permissibility of making the Cash Payment.
While the Company cannot predict how a court would rule on the issue, the
Company believes that the Offer is fair to Preferred Shareholders and has
determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED
SHAREHOLDERS IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE
VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT; PROVIDED, HOWEVER, THAT THOSE
PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO
THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE
AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. If the Proposed Amendment is
approved and adopted, Cash Payments will be paid out of PSO's general funds,
promptly after the Proposed Amendment shall have become effective. However, no
accrued interest will be paid on the Cash Payment regardless of any delay in
making such payment.
Only Preferred Shareholders as of the Record Date (or their legal
representatives or attorneys-in-fact) are entitled to vote at the Special
Meeting and to receive Cash Payments from PSO. Any beneficial holder of Shares
who is not the registered holder of such Shares as of the Record Date (as would
be the
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<PAGE>
case for any beneficial owner whose Shares are registered in the name of such
holder's broker, dealer, commercial bank, trust company or other nominee) must
arrange with the record Preferred Shareholder to execute and deliver a Proxy on
such beneficial owner's behalf. If a beneficial holder of Shares intends to
attend the Special Meeting and vote in person, such beneficial holder must
obtain a legal proxy form from his or her broker, dealer, commercial bank, trust
company or other nominee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, CSW owns all the outstanding common stock of PSO.
Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of PSO to be the beneficial owner of more than 5% of PSO's class of cumulative
preferred stock as of the Record Date.
PSO's directors and executive officers do not beneficially own any Shares as
of the Record Date. The beneficial ownership of CSW's common stock held by each
director, as well as directors and executive officers as a group, as of December
31, 1996, is set forth in the following table. Share amounts shown include
options exercisable within 60 days after year-end, restricted stock, shares of
CSW common stock credited to CSW Thrift Plus accounts and all other shares of
CSW common stock beneficially owned by the listed persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2)
- ---------------------------------------------- ----------------------------------------------
<S> <C>
E.R. Brooks................................... 113,690.32
T.D. Churchwell............................... 10,672.35
Glenn Files................................... 33,722.76
All directors and executive officers as a shares
group....................................... 188,105.06
<CAPTION>
(representing .05% of the class)
</TABLE>
- ------------------------
(1) No individual listed beneficially owned more than .03% of the outstanding
shares of common stock of CSW.
(2) Includes shares of restricted stock in the following amounts: E.R.
Brooks--17,074, T.D. Churchwell--1,608 and Glenn Files--6,333; and all
directors and officers as a group--26,515. Includes shares which there is a
right to acquire within 60 days pursuant to the exercise of stock options in
the following amounts: E.R. Brooks--54,315; T.D. Churchwell--7,223 and Glen
Files-- 19,067; and all directors and executive officers as a group--87,813.
BUSINESS TO COME BEFORE THE SPECIAL MEETING
The following Proposed Amendment to PSO's Articles is the only item of
business expected to be presented at the Special Meeting:
To remove in its entirety subparagraph (c) of paragraph 5 of Article VI,
limiting PSO's ability to issue unsecured indebtedness.
14
<PAGE>
EXPLANATION OF THE PROPOSED AMENDMENT
Without the consent of the majority of the holders of PSO's cumulative
preferred stock, the Articles currently prohibit the issuance or assumption of
any unsecured notes, debentures or other securities representing unsecured
indebtedness (other than for the purpose of refunding outstanding unsecured
indebtedness resulting in later maturities or for the redemption or retirement
of all outstanding shares of preferred stock) if, immediately after such
issuance or assumption, (a) the total outstanding principal amount of all
securities representing unsecured debt would exceed 20% of the aggregate of (1)
the total principal amount of all outstanding secured debt of PSO and (2) the
capital and surplus of PSO or (b) the total outstanding principal amount of all
securities representing unsecured debt maturing in less than ten years would
exceed 10% of such aggregate. The Proposed Amendment, if adopted, would
eliminate in its entirety subparagraph (c) of paragraph 5 of Article VI, as set
forth below, from the Articles.
* * *
"(c) issue or assume any unsecured notes, debentures or other securities
representing unsecured indebtedness (herein referred to as "unsecured
obligations"), for any purpose other than refunding or renewing outstanding
unsecured obligations resulting in later maturities or redeeming or
otherwise retiring all outstanding shares of the Preferred Stock, if (1)
immediately after such issue or assumption the total principal amount of all
unsecured obligations issued or assumed by the corporation and then
outstanding would exceed 20% of the aggregate of (i) the principal amount of
all bonds or other securities representing secured obligations issued or
assumed by the corporation and then outstanding and (ii) the total capital
stock and surplus of the corporation as then recorded on its books, or (2)
immediately after June 30, 1985, the principal amount of all unsecured
obligations maturing in less than ten years from that date, other than
short-term debt maturing prior to July 1, 1986, issued or assumed by the
corporation and then outstanding, computed as herein provided, would exceed
10% of such aggregate. For the purposes of this subparagraph (c), the
principal amount of any unsecured obligations which had an original single
maturity of more than ten years from the date thereof, and the principal
amount of the final maturity of any serially-maturing unsecured obligations
which had one or more original maturities of more than ten years from the
date thereof, shall not be regarded as unsecured obligations maturing in
less than ten years until such principal amount shall be due or required to
be paid within three years."
REASONS FOR THE PROPOSED AMENDMENT
PSO believes that regulatory, legislative and market developments are
leading to a more competitive environment in the electric utility industry. As
competition intensifies, flexibility and cost structure will be even more
crucial to success in the future. Given that the electric and gas industry is
extremely capital intensive, controlling and minimizing financing costs are
essential ingredients to operating effectively in the new competitive
environment. It is, therefore, for those two reasons, flexibility and cost
structure, that you are being asked to vote in favor of the Proposed Amendment.
PSO believes that adoption of the Proposed Amendment is key to meeting the
objectives of flexibility and cost structure. If adopted, the amendment would
eliminate the current provision of PSO's Articles that limits the total amount
of PSO's unsecured indebtedness to 20% of the total amount of PSO's secured
indebtedness, plus capital and surplus, and the amount of short-term unsecured
debt to 10% of such total amount. Historically, PSO's debt financing generally
has been accomplished through the issuance of long-term first mortgage bonds and
a modest amount of unsecured short-term debt. First mortgage bonds represent
secured indebtedness because they place a first priority lien on substantially
all of PSO's assets. The Indenture dated July 1, 1945, as amended, between
SWEPCO and Liberty Bank and Trust Company of Tulsa, National Association, as
Trustee, (the "First Mortgage Bond Indenture") contains certain restrictive
covenants with respect to, among other things, the disposition of assets and the
ability to issue additional first mortgage bonds. Short-term debt, usually the
lowest cost
15
<PAGE>
debt available to PSO, represents one type of unsecured indebtedness. The
Proposed Amendment will not only allow PSO to issue a greater amount of
unsecured debt, it will also allow PSO to issue a greater amount of total debt.
PSO will consider changing the mix of debt securities toward more issuances on a
short-term and unsecured basis. Additionally, PSO may issue certain
tax-deductible trust preferred securities which would be classified as unsecured
debt under PSO's current Articles. PSO has filed a Registration Statement on
Form S-3 with the SEC for the issuance of tax-deductible trust preferred
securities.
Inasmuch as the 10% and 20% provisions contained in the Articles limit PSO's
flexibility in planning and financing its business activities, PSO believes it
ultimately will be at a competitive disadvantage if the provision is not
eliminated. The industry's new competitors (for example, power marketers,
independent power producers and cogenerating facilities) generally are not
subject to the type of financing restrictions the Articles impose on PSO.
Recently, several other utilities with the same or similar charter restrictions
have successfully eliminated such provisions by soliciting their shareholders
for the same or similar amendments. Therefore, many potential utility
competitors have no comparable provision restricting the use of unsecured debt.
While PSO's current low-cost structure has been instrumental in reducing the
ability of other competitors to attract PSO's large bulk power customers, PSO
must continue to explore new ways of reducing costs and enhancing flexibility.
PSO believes that the adoption of the Proposed Amendment will be in the best
long-term competitive interests of shareholders by enhancing its ability to meet
the two objectives described below.
FINANCIAL FLEXIBILITY
PSO believes that in the long run, various types of unsecured debt
alternatives will increase in importance as an option in financing its
construction program and refinancing high-cost mortgage bonds. The availability
and flexibility of unsecured debt is necessary to take full advantage of
changing conditions in securities markets. PSO presently intends to continue to
rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable
under the Articles. PSO's earnings currently are sufficient to meet the earnings
coverage test contained in its First Mortgage Bond Indenture that must be
satisfied in certain instances before issuing additional first mortgage bonds.
However, there could be periods, when, because of an inability to meet the
Articles test, PSO would be unable to issue any additional preferred stock. An
inability to issue preferred stock in the future, combined with the inability to
issue additional unsecured debt, would limit PSO's financing options to either
additional first mortgage bonds or additional common stock.
COST STRUCTURE
PSO's use of unsecured short-term debt is subject to the 10% and 20%
provisions contained in the Articles. PSO believes that the prudent use of such
debt in excess of this provision is vital to effective financial management of
the business. Not only is unsecured short-term debt generally the least
expensive form of capital, it also provides flexibility in meeting seasonal
fluctuations in cash requirements, acts as a bridge between issues of permanent
capital and can be used when unfavorable conditions prevail in the market for
long-term capital.
For purposes of the 10% and 20% provisions, tax-deductible trust preferred
securities are considered to be unsecured debt, thus the use of tax-deductible
trust preferred securities is limited by the 10% and 20% provisions. Tax
deductible trust preferred securities have a much lower after-tax cost than
traditional perpetual preferred stock.
FOR THE ABOVE REASONS, PSO'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF
SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE
ADOPTION OF THE PROPOSED AMENDMENT.
16
<PAGE>
FINANCIAL AND OTHER INFORMATION RELATING TO PSO
The financial statements of PSO and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1996, as filed with
the SEC, is hereby incorporated by reference. PSO will provide without charge,
upon the written or oral request of any person (including any beneficial owner)
to whom this Offer to Purchase and Proxy Statement is delivered, a copy of such
information (excluding certain exhibits). Such requests for information should
be directed to Stephen D. Wise, Director, Finance, Central and South West
Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for PSO,
telephone (214) 777-1000.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of CSW's board of directors, such
board appointed on April 18, 1996, Arthur Andersen LLP as independent public
accountants for CSW and its subsidiaries, including PSO, for the year 1996.
Representatives of Arthur Andersen LLP are expected to be present at the Special
Meeting with the opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
PRICE RANGE OF SHARES; DIVIDENDS
PSO's Cumulative Preferred Stock 4.24% Series and 4.00% Series are traded in
the OTC under the symbols " " and " ", respectively. The last reported
sale price in the OTC, as of the close of business on , 1997, for each of the
Series of Preferred is shown on the front cover of this Offer to Purchase and
Proxy Statement. However, Preferred Shareholders should be aware that there is
no established trading market for the Shares and that the Shares of each Series
of Preferred only trade sporadically and on a limited basis and, therefore, the
last reported sales prices may not necessarily reflect the current market value
of the Shares.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
The following table sets forth the high and low sales prices of each Series
of Preferred in the OTC as reported by the National Quotation Bureau, Inc. and
the cash dividends paid thereon for the fiscal quarters indicated.
17
<PAGE>
DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK
BY QUARTERS (1996 AND 1995)
<TABLE>
<CAPTION>
1996--QUARTERS 1995--QUARTERS
------------------------------------------ -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1ST 2ND 3RD 4TH 1ST 2ND 3RD
--------- --------- --------- --------- --------- --------- ---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.24% SERIES
Dividends Paid Per Share.......................... $ 1.06 $ 1.06 $ 1.06 $ 1.06 $ 1.06 $ 1.06 $ 1.06
Market Price--$ Per Share (OTC)
Ask--High.........................................
--Low..........................................
Bid--High.........................................
--Low...........................................
4.00% SERIES
Dividends Paid Per Share............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Market Price--$ Per Share (OTC)
Ask--High.........................................
--Low..........................................
Bid--High.........................................
--Low...........................................
<CAPTION>
<S> <C>
4TH
---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.24% SERIES
Dividends Paid Per Share.......................... $ 1.06
Market Price--$ Per Share (OTC)
Ask--High.........................................
--Low..........................................
Bid--High.........................................
--Low...........................................
4.00% SERIES
Dividends Paid Per Share............................ $ 1.00
Market Price--$ Per Share (OTC)
Ask--High.........................................
--Low..........................................
Bid--High.........................................
--Low...........................................
</TABLE>
Dividends for a Series of Preferred are payable when, as and if declared by
PSO's Board of Directors at the rate per annum included in such title of the
Series of Preferred listed on the front cover of this Offer to Purchase and
Proxy Statement. The April 1997 Dividend has been declared on each Series of
Preferred, payable April 1, 1997 to owners of record on March 15, 1997. A tender
and purchase of Shares pursuant to the Offer will not deprive a Preferred
Shareholder of his or her right to receive the April 1997 Dividend on shares
held of record on March 15, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion thereof).
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
CSW believes that the purchase of the Shares at this time represents an
attractive opportunity that will benefit CSW, its shareholders, and PSO. In
addition, the Offer gives Preferred Shareholders the opportunity to sell their
Shares at a premium to the market price on the date of the announcement of the
Offer and without the usual transaction costs associated with a sale.
After the consummation of the Offer, CSW may determine to purchase
additional Shares on the open market, in privately negotiated transactions,
through one or more tender offers or otherwise. Any such purchases may be on the
same terms as, or on terms which are more or less favorable to holders of Shares
than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act
prohibits CSW and its affiliates (including PSO) from purchasing any Shares of a
Series of Preferred, other than pursuant to the Offer until at least ten
business days after the Expiration Date with respect to the Series of Preferred.
Any future purchases of Shares by CSW would depend on many factors, including
the market price of the Shares, CSW's business and financial position,
restrictions on CSW's ability to purchase Shares imposed by law and general
economic and market conditions.
Preferred Shareholders are not under any obligation to tender Shares
pursuant to the Offer. The Offer does not constitute notice of redemption of any
Series of Preferred pursuant to PSO's Articles, nor does CSW or PSO intend to
effect any such redemption by making the Offer. The Offer does not constitute a
waiver by PSO of any right it has to redeem Shares. The 4.24% Series of
Preferred is currently redeemable, upon call at a price of $103.19 per Share,
plus accrued dividends. The 4.00% Series of Preferred is currently redeemable,
upon call at a price of $105.75 per Share, plus accrued dividends. The Shares of
each Series of Preferred have no preemptive or conversion rights.
18
<PAGE>
Upon liquidation or dissolution of PSO, owners of the Shares would be
entitled to receive an amount equal to the liquidation preference per share
($100) plus all accrued and unpaid dividends (whether or not earned or declared)
thereon to the date of payment, prior to the payment of any amounts to the
holders of PSO's common stock.
Shares validly tendered to the Depositary pursuant to the Offer and not
withdrawn in accordance with the procedures set forth herein shall be held until
the Expiration Date (or returned to the extent the Offer is terminated in
accordance herewith). To the extent that the Proposed Amendment is approved and
Shares tendered are accepted for payment and paid for in accordance with the
terms hereof, CSW intends to sell at the purchase price per Share listed on the
front cover of this Offer to Purchase and Proxy Statement, or if such purchase
prices are increased or decreased by CSW, at such increased or decreased
purchase prices, its Shares purchased pursuant to the Offer to PSO and, at that
time, it is expected that PSO will retire and cancel the Shares. PSO may obtain
all or a portion of the purchase price for such shares from the proceeds of the
sale of tax-deductible trust preferred securities which qualify as unsecured
debt for purposes of the 10% and 20% provisions contained in the Articles.
However, in the event the Proposed Amendment is not adopted at the Special
Meeting, CSW may elect, but is not obligated, to waive, subject to applicable
law, the condition to the Offer that the Proposed Amendment be adopted at the
Special Meeting, and purchase the shares tendered pursuant to the Offer. In that
case, subsequent to CSW's waiver and purchase of the Shares, PSO anticipates, as
promptly as practicable thereafter, that it would call another special meeting
of its shareholders and solicit proxies therefrom for an amendment substantially
similar to the Proposed Amendment. At that meeting, CSW would vote any Shares
acquired by it pursuant to the Offer or otherwise (together with its shares of
common stock) in favor of such amendment, thereby maximizing the prospects for
the adoption of the amendment. Therefore, it is likely that the Offer will
reduce the number of Shares of each of the Series of Preferred that might
otherwise trade publicly or become available for purchase and/or sale and likely
will reduce the number of owners of Shares of each of the Series of Preferred,
which could adversely affect the liquidity and sale value of the Shares not
purchased in the Offer. The extent of the public market for such Shares and the
availability of price quotations would, typically, depend upon such factors as
the number of stockholders remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms and other factors. As of
December 31, 1996, there were 43 registered holders of the 4.24% Series and 376
registered holders of the 4.00% Series. In addition, the Series of Preferred are
currently registered under Section 12(g) of the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon the application by PSO
to the SEC if the Shares are neither listed on a national securities exchange
nor held by more than 300 holders of record. Termination of registration of the
Shares under the Exchange Act would substantially reduce the information
required to be furnished to Preferred Shareholders and could make certain
provisions of the Exchange Act no longer applicable to PSO. Further, if the
Proposed Amendment becomes effective, Preferred Shareholders of Shares that are
not tendered and purchased pursuant to the Offer will no longer be entitled to
the benefits of the Articles provision limiting the amount of unsecured debt PSO
may issue, which will have been deleted by the Proposed Amendment. As discussed
above, such provision places restrictions on PSO's ability to issue or assume
unsecured indebtedness. Although PSO's debt instruments may contain certain
restrictions on PSO's ability to issue or assume debt, any such restrictions may
be waived and the increased flexibility afforded PSO by the deletion of the
Articles provision may permit PSO to take certain actions that may increase the
credit risks with respect to PSO, adversely affecting the market price and
credit rating of the remaining Shares or otherwise be materially adverse to the
interests of the remaining Preferred Shareholders. In addition, to the extent
that PSO elects to fund its purchase of the Shares, in whole or in part, by
issuing additional unsecured debt, including tax-deductible trust preferred
securities, the remaining Preferred Shareholders' relative position in PSO's
capital structure could be perceived to decline, which in turn could adversely
affect the market price and credit rating of the remaining Shares.
19
<PAGE>
Except as disclosed in this Offer to Purchase and Proxy Statement, CSW and
PSO have no plans or proposals that relate to or would result in: (a) the
acquisition by any person of additional securities of PSO or the disposition of
securities of PSO; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving PSO or any of its subsidiaries; (c) a
sale or transfer of a material amount of assets of PSO or any of its
subsidiaries; (d) any change in the present Board or management of PSO; (e) any
material change in the present dividend rate or policy, or indebtedness or
capitalization of PSO; (f) any other material change in PSO's corporate
structure or business; (g) any change in PSO's Articles or bylaws or any actions
that may impede the acquisition of control of PSO by any person; (h) a class of
equity securities of PSO becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; or (i) the suspension of PSO's
obligation to file reports pursuant to Section 15(d) of the Exchange Act.
NEITHER CSW, PSO, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal United States federal
income tax consequences of the sale of Shares pursuant to the Offer, the receipt
of Cash Payments, and the adoption of the Proposed Amendment. This summary is
addressed only to Preferred Shareholders who are "United States Holders" (as
defined below) and who hold their Shares as capital assets within the meaning of
the Internal Revenue Code of 1986, as amended ("the Code"). This summary does
not address all aspects of federal income taxation that may be relevant to a
particular Preferred Shareholder in light of such Preferred Shareholder's
individual circumstances or to Preferred Shareholders subject to special
treatment under the federal income tax laws, such as Preferred Shareholders who
are not United States Holders, banks, insurance companies, thrift institutions,
regulated investment companies, real estate investment trusts, tax-exempt
organizations, dealers in securities and currencies, Preferred Shareholders who
received their Shares as part of a compensation arrangement with PSO, and
Preferred Shareholders holding Shares as part of a position in a "straddle" or
as part of a "hedging," "conversion" or other integrated investment transaction
for federal income tax purposes.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Christy & Viener, special tax counsel to CSW and PSO.
This summary is based upon the Code, Treasury Regulations, Internal Revenue
Service rulings and pronouncements, and judicial decisions now in effect, all of
which are subject to change at any time. Such a change could adversely affect
the tax consequences described herein, possibly on a retroactive basis. In
addition, the authorities on which this summary is based are subject to various
interpretations and it is therefore possible that the United States federal
income tax treatment of the payments made pursuant to the Offer, the Cash
Payments, and the approval and adoption of the Proposed Amendment may differ
from the treatment described below.
Preferred Shareholders should consult their own tax advisors in light of
their particular circumstances as to the application of United States federal
income tax laws, as well as the effect of any state, local, or foreign tax laws.
As used herein, the term "United States Holder" means a Preferred
Shareholder that is (i) for United States federal income tax purposes, a citizen
or resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, or (iii) an estate or trust specified as being a "United States
Person" in the Code.
20
<PAGE>
SALE OF SHARES
A United States Holder will recognize gain or loss equal to the difference
between the tax basis of such holder's Shares and the amount of cash received in
exchange therefor. For federal income tax purposes, an amount equal to $1.00 per
Share will be treated by CSW and PSO as payment for voting in favor of the
Proposed Amendment, rather than cash paid in exchange for Shares, and will
constitute ordinary income to recipient United States Holders, as described
below under "--Cash Payments/ Modification." A United States Holder's gain or
loss will be long-term capital gain or loss if the holding period for the Shares
is more than one year as of the date of the sale of such Shares. The excess of
net long-term capital gains over net short-term capital losses is taxed at a
lower rate than ordinary income for certain non-corporate taxpayers. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
CASH PAYMENTS/MODIFICATION
United States Holders, whether or not they receive Cash Payments, will not
recognize any taxable income or loss with respect to their Shares as a result of
the modification of the Articles by the Proposed Amendment. The federal income
tax treatment of the Cash Payments is not entirely clear. PSO will treat the
Cash Payments as ordinary non-dividend income to recipient United States
Holders.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of the Cash Payment paid to a United States Holder or the amount
of payment made to a United States Holder pursuant to the Offer will be reported
to such holder and to the Internal Revenue Service except in the case of
corporations and other holders exempt from information reporting and backup
withholding. Backup withholding at a rate of 31% will apply to any such payments
made to non-exempt United States Holders unless the holder provides its taxpayer
identification number and the certifications required to establish that it is
not subject to backup withholding. In order to prevent backup withholding, each
tendering United States Holder and each United States Holder voting in favor of
the Proposed Amendment must provide such holder's taxpayer identification number
and certify that such holder is not subject to backup withholding by completing
the substitute Form W-9 included herewith.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
SOURCE AND AMOUNT OF FUNDS
Assuming that CSW purchases all outstanding Shares pursuant to the Offer,
the total amount required by CSW to purchase such Shares will be approximately
$[ ] million, exclusive of the accrued and unpaid dividends payments, but
including fees and other expenses. CSW intends to fund the Offer through the use
of its general funds (which, in the ordinary course, include funds from PSO) and
funds borrowed pursuant to CSW's commercial paper program.
CSW sells commercial paper directly to commercial paper dealers who reoffer
the commercial paper to investors. At December 31, 1996, CSW had two credit
facilities in place aggregating $1.2 billion to back up the commercial paper
program.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Each of CSW and PSO has been advised by its directors and executive officers
that no directors or executive officers of the respective companies own any
Shares. Based upon the companies' records and upon information provided to each
company by its directors and executive officers, neither company nor, to the
knowledge of either company, any of their subsidiaries, directors, or executive
officers
21
<PAGE>
has engaged in any transactions involving Shares during the 40 business days
preceding the date hereof. Neither company nor, to the knowledge of either
company, any of its directors or executive officers is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Offer with any other person with respect to any securities of PSO.
FEES AND EXPENSES ASSOCIATED WITH THE OFFER
DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as
Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the
Dealer Managers a combined fee of $0.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer. Each Dealer Manager
will also be reimbursed by CSW for its reasonable out-of pocket expenses,
including attorneys' fees, and will be indemnified against certain liabilities,
including certain liabilities under the federal securities laws, in connection
with the Offer. Each Dealer Manager has rendered, is currently rendering and is
expected to continue to render various investment banking services to CSW and
PSO. Each Dealer Manager has received, and will continue to receive, customary
compensation from the companies for such services. CSW has retained The Bank of
New York as Depositary and D.F. King & Co., Inc. as Information Agent in
connection with the Offer. The Depositary and Information Agent will receive
reasonable and customary compensation for their services and will also be
reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the
Depositary and Information Agent against certain liabilities, including certain
liabilities under the federal securities law, in connection with the Offer.
Neither the Depositary nor the Information Agent has been retained to make
solicitations or recommendations in connection with the Offer.
SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered and accepted for payment and paid for pursuant to the
Offer in transactions for beneficial owners of fewer than 2,500 Shares and a
solicitation fee of $1.00 per Share in transactions for beneficial owners of
2,500 or more Shares, provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any
Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of
Transmittal and Proxy which designates, as having solicited and obtained the
tender, the name of (i) any broker or dealer in securities, including the Dealer
Managers in their capacity as a broker or dealer, who is a member of any
national securities exchange or of the NASD, (ii) any foreign broker or dealer
not eligible for membership in the NASD which agrees to conform to the NASD's
Rules of Fair Practice in soliciting tenders outside the United States to the
same extent as though it were an NASD member, or (iii) any bank or trust company
(each of which is referred to herein as a "Soliciting Dealer"). No such fee
shall be payable to a Soliciting Dealer if such Soliciting Dealer is required
for any reason to transfer the amount of such fee to a depositing holder (other
than itself). No such fee shall be payable to a Soliciting Dealer with respect
to Shares tendered for such Soliciting Dealers' own account. No broker, dealer,
bank, trust company or fiduciary shall be deemed to be an agent of CSW, the
Depositary, the Information Agent or the Dealer Managers for the purposes of the
Offer.
STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any,
payable on account of the acquisition of Shares by CSW pursuant to the Offer,
except in certain circumstances where special payment or delivery procedures are
utilized pursuant to Instruction 6 of the accompanying Letter of Transmittal and
Proxy.
CERTAIN INFORMATION REGARDING CSW AND PSO
PSO is an operating utility primarily engaged in the generation, purchase,
transmission, distribution and sale of electric power to approximately 479,000
retail customers in Oklahoma. All of the common stock of PSO is owned, directly
or indirectly, by CSW, a registered holding company under the 1935 Act. PSO, and
PSO Capital I and PSO Capital II, each a statutory business trust formed under
the laws of the
22
<PAGE>
State of Delaware, have filed a registration statement on Form S-3 (the
"Registration Statement") with the SEC with respect to the proposed offering
from time to time of up to $75,000,000 aggregate liquidation preference of Trust
Originated Preferred Securities, guaranteed by PSO to the extent set forth in
the Registration Statement (the "Trust Originated Preferred Securities").
Following the announcement of the Offer, and subject to market and other
conditions, PSO intends that such trusts will effect one or more public
offerings of Trust Originated Preferred Securities. Any such offering would be
made only by means of a prospectus which is included in the Registration
Statement.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information of
PSO. The historical financial information (other than the ratios of earnings to
fixed charges) was derived from the audited consolidated financial statements
included in PSO's Annual Report on Form 10-K for the year ended December 31,
1996, which statements are hereby incorporated by reference. More comprehensive
financial information is included in such reports and the financial information
which follows is qualified in its entirety by reference to such reports and all
of the financial statements and related notes contained therein, copies of which
may be obtained as set forth herein.
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
1996 1995 1994
----------- ----------- -----------
<CAPTION>
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
Operating Revenues......................................................... 735,266 $ 690,823 $ 740,496
Operating Income........................................................... 101,737 111,769 98,258
Allowance for Equity Funds Used During Construction........................ 292 1,270 1,094
Net Income................................................................. 31,478 81,828 68,266
Preferred Dividend Requirement............................................. 816 816 816
Net Income Applicable to Common Stock...................................... 30,662 81,012 67,450
Ratio of Earnings to Fixed Charges......................................... 2.45 4.32 4.03
</TABLE>
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------- ------------- -------------
<CAPTION>
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
ASSETS:
Net Utility Plant................................................... 1,302,843 $ 1,330,376 $ 1,304,518
Cash and Temporary Cash Investments................................. 1,474 744 5,453
Other Current Assets................................................ 65,221 87,740 93,798
Other Assets........................................................ 62,004 61,956 61,345
------------- ------------- -------------
1,431,597 $ 1,480,816 $ 1,465,114
------------- ------------- -------------
------------- ------------- -------------
LIABILITIES:
Common Equity....................................................... 483,173 $ 487,511 $ 461,499
Cumulative Preferred Stock.......................................... 19,826 19,826 19,826
Long-term Debt...................................................... 420,301 379,250 402,752
Current Liabilities................................................. 161,145 236,212 223,461
Other Liabilities................................................... 347,152 358,017 357,576
------------- ------------- -------------
1,431,597 $ 1,480,816 $ 1,465,114
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
23
<PAGE>
ADDITIONAL INFORMATION REGARDING CSW
CSW is subject to the informational requirements of the Exchange Act and in
accordance therewith files periodic reports, proxy statements and other
information with the SEC. CSW is required to disclose in such proxy statements
certain information, as of particular dates, concerning its directors and
officers, their remuneration, stock options granted to them, the principal
holders of its securities and any material interest of such persons in
transactions with CSW. In connection with the Offer, CSW has also filed an
Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes
certain additional information relating to the Offer.
Such material can be inspected and copied at the public reference facilities
of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its regional offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's
Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC, including CSW and PSO. CSW's Schedule 13E-4 will
not be available at the SEC's regional offices.
MISCELLANEOUS
The Offer is not being made to, nor will CSW accept tenders from, owners of
Shares in any jurisdiction in which the Offer or its acceptance would not be in
compliance with the laws of such jurisdiction. CSW is not aware of any
jurisdiction where the making of the Offer or the tender of Shares would not be
in compliance with applicable law. If CSW becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, CSW will make a good faith effort to comply with such law.
If, after such good faith effort, CSW cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
owners of Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
CENTRAL AND SOUTH WEST CORPORATION
PUBLIC SERVICE COMPANY OF OKLAHOMA
24
<PAGE>
Facsimile copies of the Letter of Transmittal and Proxy will only be
accepted from Eligible Institutions. The Letter of Transmittal and Proxy and, if
applicable, certificates for Shares should be sent or delivered by each
tendering or voting Preferred Shareholder of PSO or his or her broker, dealer,
bank or trust company to the Depositary at one of its addresses set forth below.
The Depositary is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR INFORMATION, TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase and Proxy
Statement, the Letter of Transmittal and Proxy or other tender offer or proxy
materials may be directed to the Information Agent or the Dealer Managers, and
such copies will be furnished promptly at CSW's expense. Preferred Shareholders
may also contact their local broker, dealer, commercial bank or trust company
for assistance concerning the Offer.
<TABLE>
<S> <C> <C>
The Information Agent:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
The Dealer Managers:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
25
<PAGE>
OFFER TO PURCHASE AND PROXY STATEMENT
CENTRAL AND SOUTH WEST CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF
CUMULATIVE PREFERRED STOCK OF WEST TEXAS UTILITIES COMPANY
60,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.40% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
------------------------------
WEST TEXAS UTILITIES COMPANY
PROXY STATEMENT
WITH RESPECT TO ITS COMMON STOCK AND CUMULATIVE PREFERRED STOCK
------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, 1997, UNLESS THE OFFER IS EXTENDED.
Central and South West Corporation, a Delaware corporation ("CSW"), invites
the holders of the series of cumulative preferred stock listed above (the holder
thereof a "Preferred Shareholder") of West Texas Utilities Company, a Texas
corporation and wholly-owned utility subsidiary of CSW ("WTU"), to tender any
and all of their shares ("Shares") for purchase at the purchase price per Share
listed above for the Shares tendered, net to the seller in cash, upon the terms
and subject to the conditions set forth in this Offer to Purchase and Proxy
Statement and in the accompanying Letter of Transmittal and Proxy (the "Proxy")
(which together constitute the "Offer"). CSW will purchase all Shares validly
tendered and not withdrawn, upon the terms and subject to the conditions of the
Offer. See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of
the Offer--Extension of Tender Period; Termination; Amendments."
THE OFFER FOR THE SHARES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES BEING TENDERED. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS
WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE (AS HEREINAFTER DEFINED)) WHO
WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE
PROPOSED AMENDMENT, AS DESCRIBED BELOW. THE OFFER IS ALSO CONDITIONED UPON THE
APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER THE PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED (THE "1935 ACT"). THE OFFER IS
SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS
OF THE OFFER."
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO
THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE (AS HEREINAFTER
DEFINED) MUST OBTAIN AN ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND
VOTE SUCH PROXY IN FAVOR OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE
TRANSFER OF SHARES DURING THE PERIOD DESCRIBED ABOVE, THE SHARES WILL TRADE
"WITH PROXY" IN THE OVER-THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE
PERIOD DESCRIBED ABOVE SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER.
SEE "TERMS OF THE OFFER-PROCEDURE FOR TENDERING SHARES." FOR FURTHER
INFORMATION, CALL THE INFORMATION AGENT (AS HEREINAFTER DEFINED) OR THE DEALER
MANAGERS (AS HEREINAFTER DEFINED) OR CONSULT YOUR BROKER FOR ASSISTANCE.
Concurrently with the Offer, the Board of Directors of WTU is soliciting
proxies for use at the Special Meeting of Shareholders of WTU to be held at
WTU's principal office, 301 Cypress Street, Abilene, Texas 79601-5820 on
, 1997, or any adjournment or postponement of such meeting (the "Special
Meeting"). The Special Meeting is being held to consider an amendment (the
"Proposed Amendment") to WTU's Restated Articles of Incorporation (the
"Articles") which would remove a provision of the Articles that limits WTU's
ability to issue unsecured debt. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO
TENDER THEIR SHARES PURSUANT TO THE OFFER MUST SUBMIT A DULY COMPLETED, VALID
AND UNREVOKED PROXY INDICATING THEIR VOTE IN FAVOR OF THE PROPOSED AMENDMENT OR
INDICATE IN THE ACCOMPANYING PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED
AMENDMENT AT THE SPECIAL MEETING. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT
TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR
SHARES. IF THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED, WTU WILL MAKE A
SPECIAL CASH PAYMENT IN THE AMOUNT OF $1.00 PER SHARE (THE "CASH PAYMENT") TO
EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF THE PROPOSED AMENDMENT BUT WHO
DID NOT TENDER HIS OR HER SHARES. THOSE PREFERRED SHAREHOLDERS WHO VALIDLY
TENDER THEIR SHARES WILL BE ENTITLED ONLY TO THE PURCHASE PRICE PER SHARE LISTED
ABOVE BUT NOT THE CASH PAYMENT.
IMPORTANT
Any Preferred Shareholder desiring to accept the Offer and tender all or any
portion of his or her Shares should, in addition to voting in favor of the
Proposed Amendment either by executing and returning the enclosed Proxy or by
voting in person by ballot at the Special Meeting, either (i) if not the record
holder, request his or her broker, dealer, commercial bank, trust company or
nominee to effect the transaction for him or her, or (ii) if the record holder,
complete and sign the Letter of Transmittal and Proxy or facsimile thereof, in
accordance with the instructions in the Letter of Transmittal and Proxy, mail or
deliver it and any other required documents to The Bank of New York (the
"Depositary"), and deliver the certificates for such Shares to the Depositary,
along with the Letter of Transmittal and Proxy, or tender such Shares pursuant
to the procedure for book-entry transfer set forth below under "Terms of the
Offer--Procedure for Tendering Shares," prior to the Expiration Date (as defined
below). A Preferred Shareholder whose Shares are registered in the name of a
broker, dealer, commercial bank, trust company or nominee must contact such
broker, dealer, commercial bank, trust company or nominee if he or she desires
to tender such Shares. Any Preferred Shareholder who desires to tender Shares
and whose certificates for such Shares are not immediately available, or who
cannot comply in a timely manner with the procedure for book-entry transfer,
should tender such Shares by following the procedures for guaranteed delivery
set forth below under "Terms of the Offer--Procedure for Tendering Shares."
<PAGE>
ONLY THE LETTER OF TRANSMITTAL AND PROXY OR A NOTICE OF GUARANTEED DELIVERY
AND PROXY MAY BE USED TO TENDER SHARES. A LETTER OF TRANSMITTAL AND PROXY MAY BE
USED TO VOTE IN FAVOR OF THE PROPOSED AMENDMENT EVEN IF NO SHARES ARE BEING
TENDERED.
------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY
OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
------------------------------
NEITHER CSW, WTU, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
------------------------------
This Offer to Purchase and Proxy Statement and the accompanying proxy are
first being mailed to Preferred Shareholders on or about March , 1997 to
Preferred Shareholders of record on March , 1997.
------------------------------
The Shares are traded in the over-the-counter market (the "OTC") and are not
listed on any national securities exchange. On , 1997, the last
reported sale price and date of sale as reported by the National Quotation
Bureau, Inc. was $ . Preferred Shareholders are urged to obtain a
current market quotation, if available, for the Shares. On , 1997,
there were issued and outstanding 60,000 Shares.
------------------------------
Questions or requests for assistance or for additional copies of this Offer
to Purchase and Proxy Statement, the Letter of Transmittal and Proxy or other
tender offer or proxy solicitation materials may be directed to D.F. King & Co.,
Inc. (the "Information Agent") or Goldman, Sachs & Co. and Smith Barney Inc.
(the "Dealer Managers") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase and Proxy Statement.
------------------------------
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
------------------
The date of this Offer to Purchase and Proxy Statement is , 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR
WTU AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL AND PROXY. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY CSW, WTU OR BY THE DEALER MANAGERS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY.................................................................................................... 1
TERMS OF THE OFFER......................................................................................... 4
Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 4
Procedure for Tendering Shares........................................................................... 5
Withdrawal Rights........................................................................................ 7
Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 8
Certain Conditions of the Offer.......................................................................... 9
Extension of Tender Period; Termination; Amendments...................................................... 10
PROPOSED AMENDMENT AND PROXY SOLICITATION.................................................................. 12
Introduction............................................................................................. 12
Voting Securities, Rights And Procedures................................................................. 12
Proxies.................................................................................................. 12
Cash Payments............................................................................................ 13
Security Ownership of Certain Beneficial Owners and Management........................................... 14
Business to Come Before the Special Meeting.............................................................. 14
Explanation of the Proposed Amendment.................................................................... 14
Reasons for the Proposed Amendment....................................................................... 15
Financial and Other Information Relating to WTU.......................................................... 17
Relationship with Independent Public Accountants......................................................... 17
PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 17
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 18
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 20
SOURCE AND AMOUNT OF FUNDS................................................................................. 21
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 21
FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 21
CERTAIN INFORMATION REGARDING CSW AND WTU.................................................................. 22
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 22
ADDITIONAL INFORMATION REGARDING CSW....................................................................... 23
MISCELLANEOUS.............................................................................................. 24
</TABLE>
i
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE
PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC
DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS
ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED
IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN
THIS OFFER TO PURCHASE AND PROXY STATEMENT.
<TABLE>
<S> <C>
The Companies................ CSW is a Dallas-based public utility holding company
registered under the 1935 Act. Through its four electric
operating subsidiaries, WTU, Central Power and Light
Company, Southwestern Electric Power Company and Public
Service Company of Oklahoma (collectively, the "Electric
Operating Companies"), CSW serves approximately 152,000
square miles in portions of Texas, Oklahoma, Louisiana and
Arkansas. CSW owns SEEBOARD plc, a regional electricity
company in the southeast of the United Kingdom. CSW also
engages through other subsidiaries in the following
energy-related businesses: (i) CSW Energy, Inc. develops,
owns and operates non-utility power projects in the United
States; (ii) CSW International, Inc. participates in power
generation, transmission and distribution projects outside
the United States; (iii) CSW Communications, Inc. provides
communications services, including enhancement of services
through fiber optic and other telecommunications technolo-
gies, to CSW and its subsidiaries and to third parties; (iv)
CSW Credit, Inc. purchases, without recourse, the accounts
receivables of the Electric Operating Companies and
non-affiliated utilities; and (v) EnerShop Inc. was recently
formed to provide commercial, industrial, institutional and
governmental customers with energy management services
designed to control costs, enhance productivity and improve
convenience, safety and comfort.
The Shares................... WTU 4.40% Cumulative Preferred Stock ($100 par value)
The Offer.................... Offer to purchase any or all Shares at the price per Share
set forth below.
Purchase Price............... $ per Share
Conditions of the Offer...... The Offer is not conditioned upon any minimum number of
Shares being tendered, but is conditioned upon the Proposed
Amendment being approved and adopted at the Special Meeting.
The Offer is subject to certain other conditions described
herein.
SEC Approval................. The Offer is conditioned, among other things, upon the
approval of the SEC under the 1935 Act.
Expiration Date of the
Offer...................... The Offer expires at 5:00 p.m., central time, ,
1997, unless extended (the "Expiration Date").
How to Tender Shares......... Preferred Shareholders (including Preferred Shareholders who
acquire Shares subsequent to the Record Date) who wish to
tender their Shares must vote in favor of the Proposed
Amendment. Preferred Shareholders who purchase or whose
purchase is registered after the Record Date and who wish to
tender their Shares must
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
arrange with their seller to receive an assignment of proxy
from the holder of record on the Record Date. In order to
facilitate receipt of Proxies, Shares shall, during the
period which commenced March , 1997 (two business days
prior to the Record Date) and which will end at the close of
business on the Expiration Date trade in the over-
the-counter market with a proxy providing the transferee
with the right to vote such acquired Shares in the Proxy
Solicitation. Settlement of all trades during the period
described above should include an assignment of proxy from
the seller. See "Terms of the Offer-- Procedure for
Tendering Shares." For further information, call the
Information Agent or the Dealer Managers or consult your
broker for assistance.
Withdrawal Rights............ Tendered Shares may be withdrawn at any time until the
Expiration Date and, unless theretofore accepted for
payment, may also be withdrawn after , 1997. See
"Terms of the Offer-- Withdrawal Rights". The proxy
accompanying any tendered Shares that are withdrawn will not
be considered revoked unless the Preferred Shareholder
specifically revokes such proxy as described herein. See
"Proposed Amendment and Proxy Solicitation--Proxies."
Purpose of the Offer......... CSW is making the Offer because it believes that the
purchase of Shares is attractive to CSW, its shareholders
and WTU. In addition, the Offer gives Preferred Shareholders
the opportunity to sell their Shares at a premium over the
market price and without the usual transaction costs
associated with a market sale. See "Purpose of the Offer;
Certain Effects of the Offer."
Dividends.................... A regular quarterly dividend has been declared on the
Shares, payable on April 1, 1997 to the owners of record on
March 14, 1997 (the "April 1997 Dividend"). A tender and
purchase of Shares pursuant to the Offer will not deprive a
Preferred Shareholder of his or her right to receive the
April 1997 Dividend on Shares held of record on March 14,
1997, regardless of when such tender is made. Tendering Pre-
ferred Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion
thereof).
Brokerage Commissions........ Not payable by Preferred Shareholders.
Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a
solicitation fee of $1.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500
Shares and a solicitation fee of $1.00 per Share in
transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer
Managers and 20% to any Soliciting Dealers (which may be a
Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned
by such Soliciting Dealer.
Proposed Amendment........... Concurrently with the Offer, the Board of Directors of WTU
is soliciting proxies for use at the Special Meeting of
Shareholders of WTU. The Special Meeting is being held to
consider an amendment to
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
WTU's Articles which would remove a provision that limits
WTU's ability to issue unsecured debt.
Record Date.................. March ,1997
Special Cash Payment......... Preferred Shareholders have the right to vote for the
Proposed Amendment regardless of whether they tender their
Shares. If the Proposed Amendment is approved and adopted by
WTU's shareholders, WTU will make a special cash payment of
$1.00 per Share to each Preferred Shareholder who voted in
favor of the Proposed Amendment, provided that such Shares
have not been tendered pursuant to the Offer. Preferred
Shareholders who validly tender their Shares will be
entitled only to the purchase price per share listed on the
front cover of this Offer to Purchase and Proxy Statement
and not any Cash Payment.
Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes
with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. See Instruction 6 of the
applicable Letter of Transmittal and Proxy. See "Terms of
the Offer--Acceptance of Shares for Payment of Purchase
Price and Dividends."
Payment Date................. Promptly after the Expiration Date.
Further Information.......... Additional copies of this Offer to Purchase and Proxy
Statement and the applicable Letter of Transmittal and Proxy
may be obtained by D.F. King & Co., Inc., 77 Water Street,
New York, New York 10005, telephone (800) 755-3107
(toll-free) and (212) 269-5550 (brokers and dealers).
Questions about the Offer should be directed to Goldman,
Sachs & Co. (800) 828-3182 or Smith Barney Inc. at (800)
655-4811.
</TABLE>
3
<PAGE>
TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal and Proxy, CSW will purchase any and all Shares
that are validly tendered on or prior to the applicable Expiration Date (and not
properly withdrawn in accordance with "Terms of the Offer-- Withdrawal Rights")
at the purchase price per Share listed on the front cover of this Offer to
Purchase and Proxy Statement for the Shares tendered, net to the seller in cash.
See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the
Offer -Extension of Tender Period; Termination."
THE OFFER FOR THE SHARES IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF
SHARES BEING TENDERED. THE OFFER IS CONDITIONED ON THE PROPOSED AMENDMENT BEING
APPROVED AND ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS (INCLUDING
PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO
WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE
PROPOSED AMENDMENT, AS DESCRIBED HEREIN. THE OFFER IS SUBJECT TO CERTAIN OTHER
CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER."
The Offer is being sent to all persons in whose names Shares are registered
on the books of WTU on the Record Date. Preferred Shareholders who purchase or
whose purchase is registered after the Record Date and who wish to tender in the
Offer must arrange with their seller to receive a Proxy from the holder of
record on the Record Date. In order to facilitate receipt of Proxies, Shares
shall, during the period which commenced [ ], 1997 (two business days prior
to the Record Date) and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired Shares in the proxy
solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. As
such, any person who is the beneficial owner but not the record holder of the
Shares must (i) arrange for the record transfer of Shares prior to tendering or
(ii) direct such record holder to tender the Shares and vote in favor of the
Proposed Amendment on behalf of such beneficial owner.
The Expiration Date is the later of 5:00 p.m., central time, on ,
, 1997 or the latest time and date to which the Offer is extended. CSW
expressly reserves the right, in its sole discretion, and at any time and/or
from time to time, to extend the period of time during which the Offer is open,
by giving oral or written notice of such extension to the Depositary. There is
no assurance whatsoever that CSW will exercise its right to extend the Offer. If
CSW decides, in its sole discretion, to decrease the number of Shares being
sought or to increase or decrease the consideration offered in the Offer to
holders of the Shares and, at the time that notice of such increase or decrease
is first published, sent or given to holders of such Shares in the manner
specified herein, the Offer for such Shares is scheduled to expire at any time
earlier than the tenth business day from the date that such notice is first so
published, sent or given, such Offer will be extended until the expiration of
such ten-business-day period. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday or federal holiday and consists of the
time period from 12:01 a.m. through 12:00 midnight, eastern standard time.
NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED AND NO
TENDERS WILL BE ACCEPTED IN RESPECT OF SHARES FOR WHICH A VOTE IN FAVOR OF THE
PROPOSED AMENDMENT HAS NOT BEEN CAST AT THE SPECIAL MEETING. SUCH VOTE MAY BE
CAST BY PROPERLY COMPLETING THE FORM OF PROXY THAT IS A PART OF THE APPLICABLE
LETTER OF TRANSMITTAL AND PROXY OR BY VOTING IN PERSON BY BALLOT AT THE SPECIAL
MEETING.
4
<PAGE>
The April 1997 Dividend has been declared on the Shares, payable April 1,
1997 to owners of record on March 14, 1997. A tender and purchase of Shares
pursuant to the Offer will not deprive a Preferred Shareholder of his or her
right to receive the April 1997 Dividend on shares held of record on March 14,
1997, regardless of when such tender is made. Tendering Preferred Shareholders
will not be entitled to any dividends in respect of any later dividend periods
(or any portion thereof).
PROCEDURE FOR TENDERING SHARES
IN ORDER TO VALIDLY TENDER SHARES PURSUANT TO THE OFFER, PREFERRED
SHAREHOLDERS WHO ACQUIRE SHARES DURING THE PERIOD BEGINNING TWO DAYS PRIOR TO
THE RECORD DATE AND UP TO AND INCLUDING THE EXPIRATION DATE MUST OBTAIN AN
ASSIGNMENT OF PROXY FROM THE SELLER OF SUCH SHARES AND VOTE SUCH PROXY IN FAVOR
OF THE PROPOSED AMENDMENT. IN ORDER TO FACILITATE THE TRANSFER OF SHARES DURING
THE PERIOD DESCRIBED ABOVE, THE SHARES OF WILL TRADE "WITH PROXY" IN THE OVER-
THE-COUNTER MARKET. SETTLEMENT OF ALL TRADES DURING THE PERIOD DESCRIBED ABOVE
SHOULD INCLUDE AN ASSIGNMENT OF PROXY FROM THE SELLER.
The Shares are trading, during the period which began two days prior to the
Record Date and which will end at the close of business on the Expiration Date,
in the over-the-counter market under the symbol " ", indicating that such
shares are trading "with proxy." A Preferred Shareholder who acquires Shares
during this period must obtain, or have its authorized representative obtain, an
assignment of proxy (which is included in the applicable Letter of Transmittal)
at settlement from the seller. The National Association of Securities Dealers,
Inc. (the "NASD") and The Depository Trust Company have issued notices informing
their members and participants that the Shares are trading "with proxy" and that
settlement of all trades during the period described above should include an
assignment of proxy from the seller.
FOR FURTHER INFORMATION, CALL THE INFORMATION AGENT OR THE DEALER
MANAGERS OR CONSULT YOUR BROKER FOR ASSISTANCE.
Further, to tender Shares pursuant to the Offer, the tendering owner of
Shares must either:
(a) send to the Depositary (at one of its addresses set forth on the
back cover of this Offer to Purchase and Proxy Statement) a properly
completed and duly executed Letter of Transmittal and Proxy or facsimile
thereof (which will either deliver such owner's proxy or indicate such
owner's intention to vote at the Special Meeting in person by ballot),
together with any required signature guarantees and any other documents
required by the Letter of Transmittal and Proxy and either (i) certificates
for the Shares to be tendered must be received by the Depositary at one of
such addresses or (ii) such Shares must be delivered pursuant to the
procedures for book-entry transfer described herein (and a confirmation of
such delivery must be received by the Depositary), in each case by the
Expiration Date; or
(b) comply with the guaranteed delivery procedure described under
"Guaranteed Delivery Procedure" below.
The Depositary will establish an account with respect to the Shares at DTC
and the Philadelphia Depository Trust Company (collectively referred to as the
"Book-Entry Transfer Facilities") for purposes of the Offer within two business
days after the date of this Offer to Purchase and Proxy Statement and any
financial institution that is a participant in the system of any Book-Entry
Transfer Facility may make delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account in
accordance with the procedures of such Book-Entry Transfer Facility. Although
delivery of Shares may be effected through book-entry transfer, such delivery
must be accompanied by either (i) a properly completed and duly executed Letter
of Transmittal and Proxy or facsimile thereof, together with any required
signature guarantees and any other required documents or (ii) an Agent's Message
5
<PAGE>
(as hereinafter defined) and, in any case, must be received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
Proxy Statement at or prior to 5:00 p.m., central time, on the Expiration Date.
The term "Agent's Message" means a message, transmitted by one of the
Book-Entry Transfer Facilities, received by the Depositary and forming a part of
the book-entry transfer when a tender is initiated, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant tendering Shares that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that CSW may enforce such
agreement against such participant.
Except as otherwise provided below, all signatures on a Letter of
Transmittal and Proxy must be guaranteed by a firm that is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States that is a participant in an
approved Signature Guarantee Medallion Program (each of the foregoing being
referred to as an "Eligible Institution"). Signatures on a Letter of Transmittal
and Proxy need not be guaranteed if (a) the Letter of Transmittal and Proxy is
signed by the holder of record of the shares tendered therewith and such owner
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal and Proxy,
(b) such Shares are tendered for the account of an Eligible Institution or (c)
such Letter of Transmittal and Proxy is being used solely for the purpose of
voting Shares which are not being tendered pursuant to the Offer. See
Instructions 1 and 5 of the Letter of Transmittal and Proxy.
Guaranteed Delivery Procedure. If a Preferred Shareholder desires to tender
Shares pursuant to the Offer and such Preferred Shareholder's certificates are
not immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are complied
with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery
and Proxy, substantially in the form provided by CSW and WTU herewith, is
received (with any required signature guarantees) by the Depositary as
provided below at or prior to 5:00 p.m., central time, on the Expiration
Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
and Proxy (or a manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal and Proxy, are received by the
Depositary no later than 5:00 p.m., central time, within three business days
after the date of execution of such Notice of Guaranteed Delivery and Proxy.
THE NOTICE OF GUARANTEED DELIVERY AND PROXY MAY BE DELIVERED BY HAND OR
TRANSMITTED BY FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST
INCLUDE AN ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH
NOTICE OF GUARANTEED DELIVERY AND PROXY.
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal and Proxy (or a manually
signed facsimile thereof) is received by the Depositary within the applicable
time limits and a vote in favor of the Proposed Amendment in respect of such
Shares has been cast at the Special Meeting either in person or by completion
and execution of the proxy (which proxy must be the form of proxy that is a part
of the Letter of Transmittal and Proxy).
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or an Agent's Message with
respect to) such Shares, a Letter of Transmittal and Proxy or a manually signed
6
<PAGE>
facsimile thereof, properly completed and duly executed, with any required
signature guarantees and all other documents required by the Letter of
Transmittal and Proxy.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES
WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME
SHOULD BE ALLOWED FOR DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER OR, ALTERNATIVELY, THE CASH PAYMENT, EACH
TENDERING UNITED STATES PREFERRED SHAREHOLDER OR A NON-TENDERING UNITED STATES
PREFERRED SHAREHOLDER WHO VOTES FOR THE PROPOSED AMENDMENT MUST NOTIFY THE
DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION
NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY COMPLETING AND
EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL AND
PROXY. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt) and acceptance for payment of any tender of
Shares will be determined by CSW, in its sole discretion, and its determination
will be final and binding. CSW reserves the absolute right to reject any or all
tenders of Shares that (i) it determines are not in proper form or (ii) the
acceptance for payment of or payment for which may, in the opinion of CSW's
counsel, be unlawful. CSW also reserves the absolute right to waive any defect
or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notice of any defect or irregularity in tenders, nor shall any of them
incur any liability for failure to give any such notice.
WITHDRAWAL RIGHTS
ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE PROPOSED AMENDMENT WAS NOT
VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED WITHDRAWN AND NOT VALIDLY
TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER.
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after , 1997, unless theretofore accepted
for payment as provided in this Offer to Purchase and Proxy Statement. If, with
respect to any Shares, CSW extends the period of time during which the Offer is
open, is delayed in accepting for payment or paying for Shares or is unable to
accept for payment or pay for Shares pursuant to the Offer for any reason, then,
without prejudice to CSW's rights under the Offer, the Depositary may, on behalf
of CSW, retain all Shares tendered, and such Shares may not be withdrawn except
as otherwise provided in this "Terms of the Offer--Withdrawal Rights," subject
to Rule 13e-4(f)(5) under the Exchange Act, which provides that an issuer making
a tender offer shall either pay the consideration offered, or return the
tendered securities, promptly after the termination or withdrawal of the tender
offer.
The proxy accompanying any tendered Shares that are withdrawn will not be
considered revoked unless the Preferred Shareholder specifically revokes such
proxy as described herein, See "Proposed Amendment and Proxy
Solicitation--Proxies."
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary, at one of its addresses set forth on
the back cover of this Offer to Purchase and Proxy
7
<PAGE>
Statement, and must specify the name of the person who tendered the Shares to be
withdrawn and the number of Shares to be withdrawn. If the Shares to be
withdrawn have been delivered to the Depositary, a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution (except in the case of
Shares tendered by an Eligible Institution) must be submitted prior to the
release of such Shares. In addition, such notice must specify, in the case of
Shares tendered by delivery of certificates, the name of the registered owner
(if different from that of the tendering Preferred Shareholder) and the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facilities to be
credited with the withdrawn Shares and the name of the registered holder (if
different from the name of such account). Withdrawals may not be rescinded, and
Shares withdrawn will thereafter be deemed not validly tendered for purposes of
the Offer. However, withdrawn Shares may be re-tendered by again following one
of the procedures described in "Terms of the Offer--Procedure for Tendering
Shares" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by CSW, in its sole discretion, and its
determination will be final and binding. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal or
will incur any liability for failure to give any such notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Special Meeting, CSW will accept for payment (and
thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in "Terms of the Offer--Withdrawal Rights." In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made promptly but only
after timely receipt by the Depositary of certificates for such Shares (or of an
Agent's Message), a properly completed and duly executed Letter of Transmittal
and Proxy (or facsimile thereof) and any other required documents.
For purposes of the Offer, CSW will be deemed to have accepted for payment
(and thereby purchased) Shares that are validly tendered and not withdrawn as,
if and when it gives oral or written notice to the Depositary of its acceptance
for payment of such Shares. CSW will pay for Shares that it has purchased
pursuant to the Offer by depositing the purchase price therefor with the
Depositary, which will act as agent for tendering Preferred Shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
Preferred Shareholders. Under no circumstances will interest be paid on amounts
to be paid to tendering Preferred Shareholders, regardless of any delay in
making such payment.
Certificates for all Shares not validly tendered will be returned or, in the
case of Shares tendered by book-entry transfer, such Shares will be credited to
an account maintained with a Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
Payment for shares may be delayed in the event of difficulty in determining
the number of Shares properly tendered. In addition, if certain events occur
(including the Proposed Amendment not being approved and adopted at the Special
Meeting), CSW may not be obligated to purchase Shares pursuant to the Offer. See
"Terms of the Offer--Certain Conditions of the Offer."
CSW will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to any person other
than the registered owner, or if tendered Shares are registered in the name of
any person other than the person signing the Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered owner,
such other person or otherwise) payable on account of the transfer to such
person will be deducted from the purchase price unless satisfactory
8
<PAGE>
evidence of the payment of such taxes, or exemption therefrom, is submitted. See
Instruction 6 of the Letter of Transmittal and Proxy.
CERTAIN CONDITIONS OF THE OFFER
CSW WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR PAY FOR ANY SHARES
TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND ADOPTED AT THE SPECIAL
MEETING. IN ORDER TO TENDER THEIR SHARES, PREFERRED SHAREHOLDERS (INCLUDING
PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) MUST
SUBMIT A DULY COMPLETED, VALID AND UNREVOKED PROXY INDICATING THEIR VOTE IN
FAVOR OF THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING PROXY THEIR
INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING. PREFERRED
SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR THE PROPOSED AMENDMENT REGARDLESS OF
WHETHER THEY TENDER THEIR SHARES. ANY SHARES FOR WHICH A VOTE IN FAVOR OF THE
PROPOSED AMENDMENT WAS NOT VALIDLY CAST AT THE SPECIAL MEETING WILL BE DEEMED
WITHDRAWN AND NOT VALIDLY TENDERED BY THE APPLICABLE PREFERRED SHAREHOLDER.
PREFERRED SHAREHOLDERS WHO TENDER THEIR SHARES WILL ONLY BE ENTITLED TO THE
PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE AND
PROXY STATEMENT BUT NOT THE CASH PAYMENT.
Notwithstanding any other provision of the Offer, CSW will not be required
to accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer or may postpone (subject to the requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of
Shares) the acceptance for payment of, or payment for, Shares tendered, if at
any time after , 1997, and at or before acceptance for payment of or
payment for any Shares, any of the following shall have occurred:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, or before any court, authority, agency or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the sole judgment of
CSW, could materially and adversely affect the business, condition
(financial or otherwise), income, operations or prospects of CSW and its
subsidiaries taken as a whole or of WTU individually, or otherwise
materially impair in any way the contemplated future conduct of the business
of CSW or any of its subsidiaries or materially impair the Offer's
contemplated benefits to CSW;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or CSW or any of
its subsidiaries, by any legislative body, court, authority, agency or
tribunal that, in CSW's sole judgment, would or might directly or indirectly
(i) make the acceptance for payment of, or payment for, some or all of the
Shares illegal or otherwise restrict or prohibit consummation of the Offer,
(ii) delay or restrict the ability of CSW, or render CSW unable, to accept
for payment or pay for some or all of the Shares, (iii) materially impair
the contemplated benefits of the Offer to CSW or (iv) materially affect the
business, condition (financial or otherwise), income, operations or
prospects of CSW and its subsidiaries taken as a whole or of WTU
individually, or otherwise materially impair in any way the contemplated
future conduct of the business of CSW or any of its subsidiaries;
(c) there shall have occurred (i) any significant decrease in the market
price of the Shares or any change in the general political, market, economic
or financial conditions in the United States or abroad that could have a
material adverse effect on CSW's business, operations, prospects or
9
<PAGE>
ability to obtain financing generally or the trading in the other equity
securities of CSW, (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event that, in CSW's sole judgment, might affect the
extension of credit by lending institutions in the United States, (iii) the
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States, (iv) any
general suspension of trading in, or limitation on prices for, securities on
any national securities exchange or in the over-the-counter market, (v) in
the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof or (vi) any decline
in either the Dow Jones Industrial Average or the Standard and Poor's
Composite 500 Stock Index by an amount in excess of 15% measured from the
close of business on , 1997;
(d) any tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger, acquisition or other business
combination proposal for CSW, shall have been proposed, announced or made by
any person or entity;
(e) there shall have occurred any event or events that have resulted, or
may in the sole judgment of CSW result, in an actual or threatened change in
the business, condition (financial or otherwise), income, operations, stock
ownership or prospects of CSW and its subsidiaries; or
(f) the SEC shall have withheld approval, under the 1935 Act, of the
acquisition of the Shares by CSW pursuant to the Offer or the approval and
adoption of the Proposed Amendment at the Special Meeting;
and, in the sole judgment of CSW, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment or
payment. With respect to the approval of the SEC referenced in clause (f) above,
the SEC must find, among other things, that the acquisition of the Shares by CSW
is not detrimental to the public interest or the interest of the investors or
consumers, and that the consideration paid in connection with the acquisition
and the adoption of the Proposed Amendment, including fees, commissions and
other remuneration, is reasonable.
The foregoing conditions (including the condition that the Proposed
Amendment be approved and adopted at the Special Meeting) are for the sole
benefit of CSW and may be asserted by CSW regardless of the circumstances
(including any action or inaction by CSW) giving rise to any such condition, and
any such condition (including the condition related to the requirement that
Preferred Shareholders tendering their Shares vote in favor of the Proposed
Amendment at the Special Meeting) may be waived by CSW, in whole or in part, at
any time and from time to time in its sole discretion. The failure by CSW at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time. Any determination by CSW concerning
the events described above will be final and binding on all parties.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
CSW expressly reserves the right, in its sole discretion, and at any time
and/or from time to time, to extend the period of time during which the Offer is
open by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. There can be no assurance, however, that
CSW will exercise its right to extend the Offer. During any such extension, all
Shares previously tendered will remain subject to the Offer, except to the
extent that such Shares may be withdrawn as set forth in "Terms of the Offer -
Withdrawal Rights." CSW also expressly reserves the right, in its sole
discretion, to terminate the Offer and not accept for payment or pay for any
Shares tendered, subject to Rule 13e-4(f)(5) under the Exchange Act which
requires CSW either to pay the consideration offered or to return the Shares
tendered promptly after the termination or withdrawal of the Offer upon the
occurrence of any of the conditions specified in "Terms of the Offer--Certain
Conditions of the Offer" by
10
<PAGE>
giving oral or written notice of such termination to the Depositary, and making
a public announcement thereof.
Subject to compliance with applicable law, CSW further reserves the right,
in its sole discretion, to amend the Offer in any respect. Amendments to the
Offer may be made at any time and/or from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., central time, on the next business day after the
previously scheduled Expiration Date. Any public announcement made pursuant to
the Offer will be disseminated promptly to Preferred Shareholders affected
thereby in a manner reasonably designed to inform such Preferred Shareholders of
such change. Without limiting the manner in which CSW may choose to make a
public announcement, except as required by applicable law, CSW shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If CSW materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, CSW
will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price
or change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
The SEC has stated that, in its view, an offer should remain open for a minimum
of five business days from the date that a notice of such a material change is
first published, sent or given. If the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that CSW publishes, sends or gives to Preferred
Shareholders a notice that it will (a) increase or decrease the price it will
pay for Shares or (b) decrease the percentage of Shares it seeks, the Offer will
be extended until the expiration of such period of ten business days.
11
<PAGE>
PROPOSED AMENDMENT AND PROXY SOLICITATION
INTRODUCTION
This Offer to Purchase and Proxy Statement is first being mailed on or about
, 1997 to the shareholders of WTU in connection with the
solicitation of proxies by the Board of Directors (the "Board") of WTU for use
at the Special Meeting. At the Special Meeting, the shareholders of WTU will
vote upon the Proposed Amendment to the Articles.
Preferred Shareholders who wish to tender their Shares pursuant to the Offer
must vote in favor of the Proposed Amendment in person by ballot or by proxy at
the Special Meeting. HOWEVER, PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE FOR
THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES. The Offer
is conditional upon the Proposed Amendment being approved and adopted at the
Special Meeting. If the Proposed Amendment is approved and adopted by WTU's
shareholders, WTU will make a special cash payment in the amount of $1.00 per
Share to each Preferred Shareholder who voted in favor of the Proposed
Amendment, provided that such Shares have not been tendered pursuant to the
Offer. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR
ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT
(REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED). Those
Preferred Shareholders who validly tender their Shares will be entitled only to
the purchase price per Share listed on the front cover of this Offer to Purchase
and Proxy Statement but not the Cash Payment.
VOTING SECURITIES, RIGHTS AND PROCEDURES
Only holders of record of WTU's voting securities at the close of business
on the Record Date or persons obtaining a proxy from the holders of record on
the Record Date will be entitled to vote in person or by proxy at the Special
Meeting. The outstanding voting securities of WTU for purposes of voting on the
Proposed Amendment are divided into two classes: common stock and cumulative
preferred stock. The class of cumulative preferred stock has been issued in one
series of Preferred Stock with the record holders of all Shares of the
cumulative preferred stock voting together as one class. The shares outstanding
on the date of the Special Meeting, and the vote to which each share is entitled
in consideration of the Proposed Amendment, are as follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING VOTES PER SHARE
- -------------------------------------------------------------------------- ------------------- -----------------
<S> <C> <C>
Common Stock (Par Value $25 per share).................................... 5,488,560 1 vote
Cumulative Preferred Stock (Par Value $100 per Share)..................... 60,000 1 vote
</TABLE>
The affirmative vote of the holders of two-thirds of the outstanding shares
of each of WTU's (i) common stock and (ii) cumulative preferred stock is
required to approve the Proposed Amendment to be presented at the Special
Meeting. Abstentions and broker non-votes will have the effect of votes against
the Proposed Amendment. CSW HAS ADVISED WTU THAT IT INTENDS TO VOTE ALL OF THE
OUTSTANDING SHARES OF COMMON STOCK OF WTU IN FAVOR OF THE PROPOSED AMENDMENT.
Votes at the Special Meeting will be tabulated preliminarily by Central and
South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of
Election, duly appointed by the presiding officer of the Special Meeting, will
definitively count and tabulate the votes and determine and announce the results
at the meeting. WTU has no established procedure for confidential voting. There
are no rights of appraisal in connection with the Proposed Amendment.
PROXIES
THE ENCLOSED PROXY, WHICH IS CONTAINED WITHIN THE LETTER OF TRANSMITTAL AND
PROXY (AND THE NOTICE OF GUARANTEED DELIVERY AND PROXY), IS SOLICITED BY WTU'S
BOARD, WHICH RECOMMENDS VOTING FOR THE PROPOSED AMENDMENT. ALL SHARES OF WTU'S
COMMON STOCK WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF WTU'S BOARD.
Preferred Shareholders tendering their Shares pursuant to the Offer and voting
at the Special Meeting by proxy must use the proxy that is a part of the Letter
of Transmittal and Proxy. Shares of WTU's cumulative preferred stock represented
by properly executed
12
<PAGE>
proxies received at or prior to the Special Meeting will be voted in accordance
with the instructions thereon. If no instructions are indicated, duly executed
proxies will be voted in accordance with the recommendation of the Board. It is
not anticipated that any other matters will be brought before the Special
Meeting. However, the proxy that is a part of the Letter of Transmittal and
Proxy gives discretionary authority to the proxy holders named therein should
any other matters be presented at the Special Meeting, and it is the intention
of the proxy holders to act on any other matters in accordance with their best
judgment.
Execution of a proxy will not prevent a Preferred Shareholder from attending
the Special Meeting and voting in person. Any Preferred Shareholder giving a
proxy may revoke it at any time before it is voted by delivering to the
Secretary of WTU written notice of revocation bearing a later date than the
proxy, by delivering a duly executed proxy bearing a later date, or by voting in
person by ballot at the Special Meeting.
WTU will bear the cost of the solicitation of proxies by the Board. WTU has
engaged D.F. King & Co., Inc. to act as Information Agent in connection with the
solicitation of proxies for a fee of $10,000 plus reimbursement of reasonable
out-of-pocket expenses. Proxies will be solicited by mail or by telephone. In
addition, officers and employees of WTU may also solicit proxies personally or
by telephone; such persons will receive no additional compensation for these
services. The Information Agent has not been retained to make, and will not
make, solicitations or recommendations in connection with the Proposed
Amendment.
WTU has requested that brokerage houses and other custodians, nominees and
fiduciaries forward solicitation materials to the beneficial owners of shares of
WTU's cumulative preferred stock held of record by such persons and will
reimburse such brokers and other fiduciaries for their reasonable out-of
pocket-expenses incurred in connection therewith.
An application has been filed with the SEC under the 1935 Act requesting
approval of the Proposed Amendment and the acquisition of the Shares by CSW
pursuant to the Offer. As such, the adoption of the Proposed Amendment and the
purchase of the Shares pursuant to the Offer are subject to the receipt of such
approval from the SEC. WTU has received a preliminary order, permitting the
solicitation of proxies, from the SEC under the 1935 Act.
CASH PAYMENTS
Subject to the terms and conditions set forth in this Offer to Purchase and
Proxy Statement, if (but only if) the Proposed Amendment is approved and adopted
by the shareholders of WTU, WTU will make a Cash Payment to each Preferred
Shareholder whose Shares are properly voted in favor of the Proposed Amendment,
in person by ballot or by proxy, at the Special Meeting in the amount of $1.00
for each Share held by such Preferred Shareholder which is so voted, provided
that such Shares have not been tendered pursuant to the Offer. The Company has
been advised that there is uncertainty under state law, due to the lack of
controlling precedent, as to the permissibility of making the Cash Payment.
While the Company cannot predict how a court would rule on the issue, the
Company believes that the Offer is fair to Preferred Shareholders and has
determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED
SHAREHOLDERS IN RESPECT OF EACH SHARE WHICH IS SO VOTED ONLY IF SUCH SHARES ARE
VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT; PROVIDED, HOWEVER, THAT THOSE
PREFERRED SHAREHOLDERS WHO VALIDLY TENDER THEIR SHARES WILL BE ENTITLED ONLY TO
THE PURCHASE PRICE PER SHARE LISTED ON THE FRONT COVER OF THIS OFFER TO PURCHASE
AND PROXY STATEMENT BUT NOT THE CASH PAYMENT. If the Proposed Amendment is
approved and adopted, Cash Payments will be paid out of WTU's general funds,
promptly after the Proposed Amendment shall have become effective. However, no
accrued interest will be paid on the Cash Payment regardless of any delay in
making such payment.
Only Preferred Shareholders as of the Record Date (or their legal
representatives or attorneys-in-fact) are entitled to vote at the Special
Meeting and to receive Cash Payments from WTU. Any beneficial holder of Shares
who is not the registered holder of such Shares as of the Record Date (as would
be the case for any beneficial owner whose Shares are registered in the name of
such holder's broker, dealer,
13
<PAGE>
commercial bank, trust company or other nominee) must arrange with the record
Preferred Shareholder to execute and deliver a Proxy on such beneficial owner's
behalf. If a beneficial holder of Shares intends to attend the Special Meeting
and vote in person, such beneficial holder must obtain a legal proxy form from
his or her broker, dealer, commercial bank, trust company or other nominee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, CSW owns all the outstanding common stock of WTU.
Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of WTU to be the beneficial owner of more than 5% of WTU's class of cumulative
preferred stock as of the Record Date.
WTU's directors and executive officers do not beneficially own any Shares as
of the Record Date. The beneficial ownership of CSW's common stock held by each
director, as well as directors and executive officers as a group, as of December
31, 1996, is set forth in the following table. Share amounts shown include
options exercisable within 60 days after year-end, restricted stock, shares of
CSW common stock credited to CSW Thrift Plus accounts and all other shares of
CSW common stock beneficially owned by the listed persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2)
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>
Richard F. Bacon........................................ 2,568.31
E.R. Brooks............................................. 113,690.32
Glenn Files............................................. 33,722.76
Thomas Morris........................................... 2,000.00
Dian G. Owen............................................ 100.00
James M. Parker......................................... 5,000.00
F.L. Stephens........................................... 2,800.00
All directors and executive officers as a group......... 189,216.44shares
(representing .05% of the class)
</TABLE>
- ------------------------
(1) No individual listed beneficially owned more than .03% of the outstanding
shares of common stock of CSW.
(2) Includes shares of restricted stock in the following amounts: E.R.
Brooks--17,074 and Glen Files-- 6,333; and all directors and officers as a
group--28,018. Includes shares which there is a right to acquire within 60
days pursuant to the exercise of stock options in the following amounts:
E.R. Brooks--54,315 and Glenn Files--19,067; and all directors and executive
officers as a group-- 90,351.
BUSINESS TO COME BEFORE THE SPECIAL MEETING
The following Proposed Amendment to WTU's Articles is the only item of
business expected to be presented at the Special Meeting:
To remove in its entirety subparagraph (B) of paragraph 5 of Article VI,
limiting WTU's ability to issue unsecured indebtedness.
EXPLANATION OF THE PROPOSED AMENDMENT
Without the consent of the majority of the holders of WTU's cumulative
preferred stock, the Articles currently prohibit the issuance or assumption of
any unsecured notes, debentures or other securities representing unsecured
indebtedness (other than for the purpose of refunding outstanding unsecured
indebtedness resulting in later maturities or for the redemption or retirement
of all outstanding shares of preferred stock) if, immediately after such
issuance or assumption, (a) the total outstanding principal
14
<PAGE>
amount of all securities representing unsecured debt would exceed 20% of the
aggregate of (1) the total principal amount of all outstanding secured debt of
WTU and (2) the capital and surplus of WTU or (b) the total outstanding
principal amount of all securities representing unsecured debt maturing in less
than ten years would exceed 10% of such aggregate. The Proposed Amendment, if
adopted, would eliminate in its entirety subparagraph (B) of paragraph 5 of
Article VI, as set forth below, from the Articles.
* * *
(B) issue or assume any unsecured notes, debentures or other securities
representing unsecured indebtedness (herein referred to as "unsecured
obligations"), for any purpose other than (i) the refunding of outstanding
unsecured indebtedness or unsecured obligations theretofore incurred, issued
or assumed by the corporation, or (ii) the reacquisition, redemption or
other retirement of any indebtedness, if such transaction has been ordered,
approved or permitted by the Securities and Exchange Commission under the
Public Utility Holding Company Act of 1935 or by any successor commission or
other regulatory authority of the United States of America then having
jurisdiction in the premises, or (iii) the reacquisition, redemption or
other retirement of all outstanding shares of the Preferred Stock or of
stock ranking prior to or on a parity with the Preferred Stock, if:
(1) immediately after such issue or assumption, the total principal
amount of all unsecured obligations issued or assumed by the corporation and
then outstanding would exceed (a) 25% of the sum of the total principal
amount of all bonds or other securities representing secured indebtedness
issued or assumed by the corporation and then outstanding and the aggregate
amount of the capital and surplus of the corporation as then stated on the
books of account of the corporation (such sum being hereinafter referred to
as "total secured debt and capital"), or (b) the principal amount of all
unsecured obligations maturing in less than ten years (herein referred to as
"short-term indebtedness"), issued or assumed by the corporation and then
outstanding, computed as herein provided, would exceed 20% of the total
secured debt and capital; or
(2) immediately after such issue or assumption, the total principal
amount of unsecured obligations would exceed 20% of total secured debt and
capital and either (a) the total secured debt and capital of the corporation
would exceed $750,000,000, or (b) the sum of the capital and surplus of the
corporation as then stated on the books of account of the corporation would
be less than 40% of the sum of the corporation's total secured debt and
capital and short-term indebtedness; or
(3) with respect to the period commencing on the earlier of (a) the date
one year after the first day of commercial operation of the Company's
Oklaunion generating station or (b) January 1, 1989 (the earlier of such
dates being hereinafter referred to as the "Termination Date"), immediately
after such issue or assumption, the principal amount of all unsecured
obligations of the corporation then outstanding would exceed 20% of total
secured debt and capital or the principal amount of all short-term
indebtedness of the corporation then outstanding would exceed 10% of total
secured debt and capital.
For purposes of this subparagraph (B), (i) with respect to any unsecured
obligation originally having a single maturity of more than ten years, the
principal amount of such obligation shall not be regarded as short-term
indebtedness until such principal amount shall be due or required to be paid
within three years and (ii) with respect to unsecured obligations having serial
maturities or having sinking, purchase or similar periodic debt retirement
provisions, the principal amount of the final maturity, any serial maturity or
any periodic debt retirement maturity which originally was more than ten years
shall not be regarded as short-term debt until such principal amount shall be
due or required to be paid within three years.
REASONS FOR THE PROPOSED AMENDMENT
WTU believes that regulatory, legislative and market developments are
leading to a more competitive environment in the electric utility industry. As
competition intensifies, flexibility and cost structure will be even more
crucial to success in the future. Given that the electric and gas industry is
extremely capital
15
<PAGE>
intensive, controlling and minimizing financing costs are essential ingredients
to operating effectively in the new competitive environment. It is, therefore,
for those two reasons, flexibility and cost structure, that you are being asked
to vote in favor of the Proposed Amendment.
WTU believes that adoption of the Proposed Amendment is key to meeting the
objectives of flexibility and cost structure. If adopted, the amendment would
eliminate the current provision of WTU's Articles that limits the total amount
of WTU's unsecured indebtedness to 20% of the total amount of WTU's secured
indebtedness, plus capital and surplus, and the amount of short-term unsecured
debt to 10% of such total amount. Historically, WTU's debt financing generally
has been accomplished through the issuance of long-term first mortgage bonds and
a modest amount of unsecured short-term debt. First mortgage bonds represent
secured indebtedness because they place a first priority lien on substantially
all of WTU's assets. The Indenture dated August 1, 1943, as amended, between
SWEPCO and Harris Trust and Savings Bank and J. Bartolini, as Trustees (the
"First Mortgage Bond Indenture"), contains certain restrictive covenants with
respect to, among other things, the disposition of assets and the ability to
issue additional first mortgage bonds. Short-term debt, usually the lowest cost
debt available to WTU, represents one type of unsecured indebtedness. The
Proposed Amendment will not only allow WTU to issue a greater amount of
unsecured debt, it will also allow WTU to issue a greater amount of total debt.
WTU will consider changing the mix of debt securities toward more issuances on a
short-term and unsecured basis. Additionally, WTU may issue certain
tax-deductible trust preferred securities which would be classified as unsecured
debt under WTU's current Articles.
Inasmuch as the 10% and 20% provisions contained in the Articles limit WTU's
flexibility in planning and financing its business activities, WTU believes it
ultimately will be at a competitive disadvantage if the provision is not
eliminated. The industry's new competitors (for example, power marketers,
independent power producers and cogenerating facilities) generally are not
subject to the type of financing restrictions the Articles impose on WTU.
Recently, several other utilities with the same or similar charter restrictions
have successfully eliminated such provisions by soliciting their shareholders
for the same or similar amendments. Therefore, many potential utility
competitors have no comparable provision restricting the use of unsecured debt.
While WTU's current low-cost structure has been instrumental in reducing the
ability of other competitors to attract WTU's large bulk power customers, WTU
must continue to explore new ways of reducing costs and enhancing flexibility.
WTU believes that the adoption of the Proposed Amendment will be in the best
long-term competitive interests of shareholders by enhancing its ability to meet
the two objectives described below.
FINANCIAL FLEXIBILITY
WTU believes that in the long run, various types of unsecured debt
alternatives will increase in importance as an option in financing its
construction program and refinancing high-cost mortgage bonds. The availability
and flexibility of unsecured debt is necessary to take full advantage of
changing conditions in securities markets. WTU presently intends to continue to
rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable
under the Articles. WTU's earnings currently are sufficient to meet the earnings
coverage test contained in its First Mortgage Bond Indenture that must be
satisfied in certain instances before issuing additional first mortgage bonds.
However, there could be periods, when, because of an inability to meet the
Articles test, WTU would be unable to issue any additional preferred stock. An
inability to issue preferred stock in the future, combined with the inability to
issue additional unsecured debt, would limit WTU's financing options to either
additional first mortgage bonds or additional common stock.
COST STRUCTURE
WTU's use of unsecured short-term debt is subject to the 10% and 20%
provisions contained in the Articles. WTU believes that the prudent use of such
debt in excess of this provision is vital to effective financial management of
the business. Not only is unsecured short-term debt generally the least
expensive form of capital, it also provides flexibility in meeting seasonal
fluctuations in cash requirements, acts as a bridge between issues of permanent
capital and can be used when unfavorable conditions prevail in the market for
long-term capital.
16
<PAGE>
For purposes of the 10% and 20% provisions, tax-deductible trust preferred
securities are considered to be unsecured debt, thus the use of tax-deductible
trust preferred securities is limited by the 10% and 20% provisions. Tax
deductible trust preferred securities have a much lower after-tax cost than
traditional perpetual preferred stock.
FOR THE ABOVE REASONS, WTU'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF
SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE
ADOPTION OF THE PROPOSED AMENDMENT.
FINANCIAL AND OTHER INFORMATION RELATING TO WTU
The financial statements of WTU and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1996 as filed with
the SEC, is hereby incorporated by reference. WTU will provide without charge,
upon the written or oral request of any person (including any beneficial owner)
to whom this Offer to Purchase and Proxy Statement is delivered, a copy of such
information (excluding certain exhibits). Such requests for information should
be directed to Stephen D. Wise, Director, Finance, Central and South West
Corporation, 1616 Woodall Rodgers Freeway, Dallas, TX 75202, as agent for WTU,
telephone (214) 777-1000.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of CSW's board of directors, such
board employed on April 18, 1996 Arthur Andersen LLP as independent public
accountants for CSW and its subsidiaries, including WTU, for the year 1996.
Representatives of Arthur Andersen LLP are expected to be present at the Special
Meeting with the opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
PRICE RANGE OF SHARES; DIVIDENDS
WTU's Cumulative Preferred Stock is traded in the OTC under the symbol
" ". The last reported sale price in the OTC, as of the close of business
on , 1997, for the Shares is shown on the front cover of this Offer
to Purchase and Proxy Statement. However, Preferred Shareholders should be aware
that there is no established trading market for the Shares and that the Shares
only trade sporadically and on a limited basis and, therefore, the last reported
sales prices may not necessarily reflect the current market value of the Shares.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
The following table sets forth the high and low sales prices of the Shares
in the OTC as reported by the National Quotation Bureau, Inc. and the cash
dividends paid thereon for the fiscal quarters indicated.
DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK
BY QUARTERS (1996 AND 1995)
<TABLE>
<CAPTION>
1996--QUARTERS 1995--QUARTERS
------------------------------------------ -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1ST 2ND 3RD 4TH 1ST 2ND 3RD
--------- --------- --------- --------- --------- --------- ---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.40% SERIES
Dividends Paid Per Share.......................... $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10 $ 1.10
Market Price--$ Per Share (OTC)
Ask--High.........................................
--Low..........................................
Bid --Low.........................................
--Low..........................................
<CAPTION>
<S> <C>
4TH
---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.40% SERIES
Dividends Paid Per Share.......................... $ 1.10
Market Price--$ Per Share (OTC)
Ask--High.........................................
--Low..........................................
Bid --Low.........................................
--Low..........................................
</TABLE>
17
<PAGE>
Dividends for the Shares are payable when, as and if declared by WTU's Board
of Directors at the rate per annum included listed on the front cover of this
Offer to Purchase and Proxy Statement. The April 1997 Dividend has been declared
on the Shares, payable April 1, 1997 to owners of record on March 14, 1997. A
tender and purchase of Shares pursuant to the Offer will not deprive a Preferred
Shareholder of his or her right to receive the April 1997 Dividend on shares
held of record on March 14, 1997, regardless of when such tender is made.
Tendering Preferred Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion thereof).
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
CSW believes that the purchase of the Shares at this time represents an
attractive opportunity that will benefit CSW, its shareholders, and WTU. In
addition, the Offer gives Preferred Shareholders the opportunity to sell their
Shares at a premium to the market price on the date of the announcement of the
Offer and without the usual transaction costs associated with a sale.
After the consummation of the Offer, CSW may determine to purchase
additional Shares on the open market, in privately negotiated transactions,
through one or more tender offers or otherwise. Any such purchases may be on the
same terms as, or on terms which are more or less favorable to holders of Shares
than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act
prohibits CSW and its affiliates (including WTU) from purchasing any Shares,
other than pursuant to the Offer until at least ten business days after the
Expiration Date. Any future purchases of Shares by CSW would depend on many
factors, including the market price of the Shares, CSW's business and financial
position, restrictions on CSW's ability to purchase Shares imposed by law and
general economic and market conditions.
Preferred Shareholders are not under any obligation to tender Shares
pursuant to the Offer. The Offer does not constitute notice of redemption of any
Shares pursuant to WTU's Articles, nor does CSW or WTU intend to effect any such
redemption by making the Offer. The Offer does not constitute a waiver by WTU of
any right it has to redeem Shares. The Shares are currently redeemable, upon
call at a price of $107 per Share, plus accrued dividends. The Shares have no
preemptive or conversion rights.
Upon liquidation or dissolution of WTU, owners of the Shares would be
entitled to receive an amount equal to the liquidation preference per share
($100) plus all accrued and unpaid dividends (whether or not earned or declared)
thereon to the date of payment, prior to the payment of any amounts to the
holders of WTU's common stock.
Shares validly tendered to the Depositary pursuant to the Offer and not
withdrawn in accordance with the procedures set forth herein shall be held until
the Expiration Date (or returned to the extent the Offer is terminated in
accordance herewith). To the extent that the Proposed Amendment is approved and
Shares tendered are accepted for payment and paid for in accordance with the
terms hereof, CSW intends to sell at the purchase price per Share listed on the
front cover of this Offer to Purchase and Proxy Statement, or if such purchase
price is increased or decreased by CSW, at such increased or decreased purchase
price, its Shares purchased pursuant to the Offer to WTU and, at that time, it
is expected that WTU will retire and cancel the Shares. WTU may replace such
Shares with tax deductible trust preferred securities which qualify as unsecured
debt for purposes of the 10% and 20% provisions contained in the Articles.
However, in the event the Proposed Amendment is not adopted at the Special
Meeting, CSW may elect, but is not obligated, to waive, subject to applicable
law, the condition to the Offer that the Proposed Amendment be adopted at the
Special Meeting, and purchase the Shares tendered pursuant to the Offer. In that
case, subsequent to CSW's waiver and purchase of the Shares, WTU anticipates, as
promptly as practicable thereafter, that it would call another special meeting
of its shareholders and solicit proxies therefrom for an amendment substantially
similar to the Proposed Amendment. At that meeting, CSW would vote any Shares
acquired by it pursuant to the Offer or otherwise (together with its shares of
common stock) in favor of such amendment, thereby maximizing the prospects for
the adoption of the amendment. Therefore, it is likely that the Offer will
reduce the number of Shares that might otherwise trade publicly or become
available for purchase and/or sale and
18
<PAGE>
likely will reduce the number of owners of Shares, which could adversely affect
the liquidity and sale value of the Shares not purchased in the Offer. The
extent of the public market for such Shares and the availability of price
quotations would typically depend upon such factors as the number of
stockholders remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms and other factors. As of December 31,
1996, there were 384 registered holders of the 4.40% Series. In addition, Shares
are currently registered under Section 12(g) of the Exchange Act. Registration
of the Shares under the Exchange Act may be terminated upon the application by
WTU to the SEC if the Shares are neither listed on a national securities
exchange nor held by more than 300 holders of record. Termination of
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished to Preferred Shareholders and could make
certain provisions of the Exchange Act no longer applicable to WTU. Further, if
the Proposed Amendment becomes effective, Preferred Shareholders of Shares that
are not tendered and purchased pursuant to the Offer will no longer be entitled
to the benefits of the Articles provision limiting the amount of unsecured debt
WTU may issue, which will have been deleted by the Proposed Amendment. As
discussed above, such provision places restrictions on WTU's ability to issue or
assume unsecured indebtedness. Although WTU's debt instruments may contain
certain restrictions on WTU's ability to issue or assume debt, any such
restrictions may be waived and the increased flexibility afforded WTU by the
deletion of the Articles provision may permit WTU to take certain actions that
may increase the credit risks with respect to WTU, adversely affecting the
market price and credit rating of the remaining Shares or otherwise be
materially adverse to the interests of the remaining Preferred Shareholders. In
addition, to the extent that WTU elects to fund its purchase of the Shares, in
whole or in part, by issuing additional unsecured debt, including tax-deductible
trust preferred securities, the remaining Preferred Shareholders' relative
position in WTU's capital structure could be perceived to decline, which in turn
could adversely affect the market price and credit rating of the remaining
Shares.
Except as disclosed in this Offer to Purchase and Proxy Statement, CSW and
WTU have no plans or proposals that relate to or would result in: (a) the
acquisition by any person of additional securities of WTU or the disposition of
securities of WTU; (b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving WTU or any of its subsidiaries; (c) a
sale or transfer of a material amount of assets of WTU or any of its
subsidiaries; (d) any change in the present Board or management of WTU; (e) any
material change in the present dividend rate or policy, or indebtedness or
capitalization of WTU; (f) any other material change in WTU's corporate
structure or business; (g) any change in WTU's Articles or bylaws or any actions
that may impede the acquisition of control of WTU by any person; (h) a class of
equity securities of WTU becoming eligible for termination of registration
pursuant to Section 12(g)(4) of the Exchange Act; or (i) the suspension of WTU's
obligation to file reports pursuant to Section 15(d) of the Exchange Act.
NEITHER CSW, WTU, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
19
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal United States federal
income tax consequences of the sale of Shares pursuant to the Offer, the receipt
of Cash Payments, and the adoption of the Proposed Amendment. This summary is
addressed only to Preferred Shareholders who are "United States Holders" (as
defined below) and who hold their Shares as capital assets within the meaning of
the Internal Revenue Code of 1986, as amended ("the Code"). This summary does
not address all aspects of federal income taxation that may be relevant to a
particular Preferred Shareholder in light of such Preferred Shareholder's
individual circumstances or to Preferred Shareholders subject to special
treatment under the federal income tax laws, such as Preferred Shareholders who
are not United States Holders, banks, insurance companies, thrift institutions,
regulated investment companies, real estate investment trusts, tax-exempt
organizations, dealers in securities and currencies, Preferred Shareholders who
received their Shares as part of a compensation arrangement with WTU, and
Preferred Shareholders holding Shares as part of a position in a "straddle" or
as part of a "hedging," "conversion" or other integrated investment transaction
for federal income tax purposes.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Christy & Viener, special tax counsel to CSW and WTU.
This summary is based upon the Code, Treasury Regulations, Internal Revenue
Service rulings and pronouncements, and judicial decisions now in effect, all of
which are subject to change at any time. Such a change could adversely affect
the tax consequences described herein, possibly on a retroactive basis. In
addition, the authorities on which this summary is based are subject to various
interpretations and it is therefore possible that the United States federal
income tax treatment of the payments made pursuant to the Offer, the Cash
Payments, and the approval and adoption of the Proposed Amendment may differ
from the treatment described below.
Preferred Shareholders should consult their own tax advisors in light of
their particular circumstances as to the application of United States federal
income tax laws, as well as the effect of any state, local, or foreign tax laws.
As used herein, the term "United States Holder" means a Preferred
Shareholder that is (i) for United States federal income tax purposes, a citizen
or resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, or (iii) an estate or trust specified as being a "United States
Person" in the Code.
SALE OF SHARES
A United States Holder will recognize gain or loss equal to the difference
between the tax basis of such holder's Shares and the amount of cash received in
exchange therefor. For federal income tax purposes, an amount equal to $1.00 per
Share will be treated by CSW and WTU as payment for voting in favor of the
Proposed Amendment, rather than cash paid in exchange for Shares, and will
constitute ordinary income to recipient United States Holders, as described
below under "--Cash Payments/ Modification." A United States Holder's gain or
loss will be long-term capital gain or loss if the holding period for the Shares
is more than one year as of the date of the sale of such Shares. The excess of
net long-term capital gains over net short-term capital losses is taxed at a
lower rate than ordinary income for certain non-corporate taxpayers. The
distinction between capital gain or loss and ordinary income or loss is also
relevant for purposes of, among other things, limitations on the deductibility
of capital losses.
CASH PAYMENTS/MODIFICATION
United States Holders, whether or not they receive Cash Payments, will not
recognize any taxable income or loss with respect to their Shares as a result of
the modification of the Articles by the Proposed Amendment. The federal income
tax treatment of the Cash Payments is not entirely clear. WTU will treat the
Cash Payments as ordinary non-dividend income to recipient United States
Holders.
20
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of the Cash Payment paid to a United States Holder or the amount
of payment made to a United States Holder pursuant to the Offer will be reported
to such holder and to the Internal Revenue Service except in the case of
corporations and other holders exempt from information reporting and backup
withholding. Backup withholding at a rate of 31% will apply to any such payments
made to non-exempt United States Holders unless the holder provides its taxpayer
identification number and the certifications required to establish that it is
not subject to backup withholding. In order to prevent backup withholding, each
tendering United States Holder and each United States Holder voting in favor of
the Proposed Amendment must provide such holder's taxpayer identification number
and certify that such holder is not subject to backup withholding by completing
the substitute Form W-9 included herewith.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
SOURCE AND AMOUNT OF FUNDS
Assuming that CSW purchases all outstanding Shares pursuant to the Offer,
the total amount required by CSW to purchase such Shares will be approximately
$[ ] million, exclusive of the accrued and unpaid dividends payments, but
including fees and other expenses. CSW intends to fund the Offer through the use
of its general funds (which, in the ordinary course, include funds from WTU) and
funds borrowed pursuant to CSW's commercial paper program.
CSW sells commercial paper directly to commercial paper dealers who reoffer
the commercial paper to investors. At December 31, 1996, CSW had two credit
facilities in place aggregating $1.2 billion to back up the commercial paper
program.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Each of CSW and WTU has been advised by its directors and executive officers
that no directors or executive officers of the respective companies own any
Shares. Based upon the companies' records and upon information provided to each
company by its directors and executive officers, neither company nor, to the
knowledge of either company, any of their subsidiaries, directors, or executive
officers has engaged in any transactions involving Shares during the 40 business
days preceding the date hereof. Neither company nor, to the knowledge of either
company, any of its directors or executive officers is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Offer with any other person with respect to any securities of WTU.
FEES AND EXPENSES ASSOCIATED WITH THE OFFER
DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as
Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the
Dealer Managers a combined fee of $0.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer. Each Dealer Manager
will also be reimbursed by CSW for its reasonable out-of pocket expenses,
including attorneys' fees, and will be indemnified against certain liabilities,
including certain liabilities under the federal securities laws, in connection
with the Offer. Each Dealer Manager has rendered, is currently rendering and is
expected to continue to render various investment banking services to CSW and
WTU. Each Dealer Manager has received, and will continue to receive, customary
compensation from the companies for such services. CSW has retained The Bank of
New York as Depositary and D.F. King & Co., Inc. as Information Agent in
connection with the Offer. The Depositary and Information Agent will receive
reasonable and customary compensation for their services and will also be
reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the
Depositary and Information Agent
21
<PAGE>
against certain liabilities, including certain liabilities under the federal
securities law, in connection with the Offer. Neither the Depositary nor the
Information Agent has been retained to make solicitations or recommendations in
connection with the Offer.
SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered and accepted for payment and paid for pursuant to the
Offer in transactions for beneficial owners of fewer than 2,500 Shares and a
solicitation fee of $1.00 per Share in transactions for beneficial owners of
2,500 or more Shares, provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any
Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of
Transmittal and Proxy which designates, as having solicited and obtained the
tender, the name of (i) any broker or dealer in securities, including the Dealer
Managers in their capacity as a broker or dealer, who is a member of any
national securities exchange or of the NASD, (ii) any foreign broker or dealer
not eligible for membership in the NASD which agrees to conform to the NASD's
Rules of Fair Practice in soliciting tenders outside the United States to the
same extent as though it were an NASD member, or (iii) any bank or trust company
(each of which is referred to herein as a "Soliciting Dealer"). No such fee
shall be payable to a Soliciting Dealer if such Soliciting Dealer is required
for any reason to transfer the amount of such fee to a depositing holder (other
than itself). No such fee shall be payable to a Soliciting Dealer with respect
to Shares tendered for such Soliciting Dealers' own account. No broker, dealer,
bank, trust company or fiduciary shall be deemed to be an agent of CSW, the
Depositary, the Information Agent or the Dealer Managers for the purposes of the
Offer.
STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any,
payable on account of the acquisition of Shares by CSW pursuant to the Offer,
except in certain circumstances where special payment or delivery procedures are
utilized pursuant to Instruction 6 of the accompanying Letter of Transmittal and
Proxy.
CERTAIN INFORMATION REGARDING CSW AND WTU
WTU is an operating utility primarily engaged in the generation, purchase,
transmission, distribution and sale of electric power to approximately 186,000
retail customers in central west Texas. All of the common stock of WTU is owned,
directly or indirectly, by CSW, a registered holding company under the 1935 Act.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information of
WTU. The historical financial information (other than the ratios of earnings to
fixed charges) was derived from the audited consolidated financial statements
included in WTU's Annual Report on Form 10-K for the year ended December 31,
1996, which statements are hereby incorporated by reference. More comprehensive
financial information is included in such reports and the financial information
which follows is qualified in its entirety by reference to such reports and all
of the financial statements and related notes contained therein, copies of which
may be obtained as set forth herein.
22
<PAGE>
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
1996 1995 1994
----------- ----------- -----------
<CAPTION>
(UNAUDITED)
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
Operating Revenues......................................................... $ 377,057 $ 319,835 $ 342,991
Operating Income........................................................... 51,734 59,486 54,763
Allowance for Equity Funds Used
During Construction...................................................... 423 378 150
Net Income................................................................. 16,571 34,530 37,366
Preferred Dividend Requirement............................................. 264 264 452
Net Income Applicable to Common Stock...................................... 16,307 34,266 36,914
Ratio of Earnings to Fixed Charges......................................... 2.05 2.63 3.37
</TABLE>
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
<S> <C> <C> <C>
1996 1995 1994
----------- ----------- -----------
<CAPTION>
(UNAUDITED)
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
ASSETS:
Net Utility Plant.......................................................... $ 673,364 $ 680,572 $ 663,855
Cash and Temporary Cash Investments........................................ 664 717 2,501
Other Current Assets....................................................... 68,134 65,779 59,514
Other Assets............................................................... 68,217 68,546 46,107
----------- ----------- -----------
$ 810,379 $ 815,614 $ 771,977
----------- ----------- -----------
----------- ----------- -----------
LIABILITIES:
Common Equity.............................................................. $ 262,527 $ 265,220 $ 271,954
Cumulative Preferred Stock................................................. 6,291 6,291 6,291
Long-term Debt............................................................. 275,070 273,245 210,047
Current Liabilities........................................................ 71,070 76,931 91,629
Other Liabilities.......................................................... 195,421 193,927 192,056
----------- ----------- -----------
$ 810,379 $ 815,614 $ 771,977
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
ADDITIONAL INFORMATION REGARDING CSW
CSW is subject to the informational requirements of the Exchange Act and in
accordance therewith files periodic reports, proxy statements and other
information with the SEC. CSW is required to disclose in such proxy statements
certain information, as of particular dates, concerning its directors and
officers, their remuneration, stock options granted to them, the principal
holders of its securities and any material interest of such persons in
transactions with CSW. In connection with the Offer, CSW has also filed an
Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes
certain additional information relating to the Offer.
Such material can be inspected and copied at the public reference facilities
of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its regional offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's
Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
maintains a Web site at
23
<PAGE>
http://www.sec.gov containing reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC,
including CSW and WTU. CSW's Schedule 13E-4 will not be available at the SEC's
regional offices.
MISCELLANEOUS
The Offer is not being made to, nor will CSW accept tenders from, owners of
Shares in any jurisdiction in which the Offer or its acceptance would not be in
compliance with the laws of such jurisdiction. CSW is not aware of any
jurisdiction where the making of the Offer or the tender of Shares would not be
in compliance with applicable law. If CSW becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, CSW will make a good faith effort to comply with such law.
If, after such good faith effort, CSW cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
owners of Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
CENTRAL AND SOUTH WEST CORPORATION
WEST TEXAS UTILITIES COMPANY
24
<PAGE>
Facsimile copies of the Letter of Transmittal and Proxy will only be
accepted from Eligible Institutions. The Letter of Transmittal and Proxy and, if
applicable, certificates for Shares should be sent or delivered by each
tendering or voting Preferred Shareholder of WTU or his or her broker, dealer,
bank or trust company to the Depositary at one of its addresses set forth below.
The Depositary is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (212) 815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR INFORMATION, TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase and Proxy
Statement, the Letter of Transmittal and Proxy or other tender offer or proxy
materials may be directed to the Information Agent or the Dealer Managers, and
such copies will be furnished promptly at CSW's expense. Preferred Shareholders
may also contact their local broker, dealer, commercial bank or trust company
for assistance concerning the Offer.
<TABLE>
<S> <C> <C>
The Information Agent:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
The Dealer Managers:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
25
<PAGE>
OFFER TO PURCHASE
CENTRAL AND SOUTH WEST CORPORATION
OFFER TO PURCHASE FOR CASH
ANY AND ALL OUTSTANDING SHARES OF THE FOLLOWING SERIES OF
CUMULATIVE PREFERRED STOCK OF CENTRAL POWER AND LIGHT COMPANY
75,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.20% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
100,000 SHARES, CUMULATIVE PREFERRED STOCK, 4.00% SERIES AT A PURCHASE PRICE OF
$ PER SHARE
------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, 1997, UNLESS THE OFFER IS EXTENDED.
------------------------------
Central and South West Corporation, a Delaware corporation ("CSW"), invites
the holders of each series of cumulative preferred stock listed above (each a
"Series of Preferred," and the holder thereof a "Preferred Shareholder") of
Central Power and Light Company, a Texas corporation with its principal office
at 539 North Carancahua Street, Corpus Christi, Texas 78401-2802, and
wholly-owned utility subsidiary of CSW ("CPL"), to tender any and all of their
shares of a Series of Preferred ("Shares") for purchase at the purchase price
per Share listed above for the Shares tendered, net to the seller in cash, upon
the terms and subject to the conditions set forth in this Offer to Purchase and
in the accompanying Letter of Transmittal (the "Letter of Transmittal") (which
together constitute the "Offer"). CSW will purchase all Shares validly tendered
and not withdrawn, upon the terms and subject to the conditions of the Offer.
See "Terms of the Offer--Certain Conditions of the Offer" and "Terms of the
Offer--Extension of Tender Period; Termination; Amendments."
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT
OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS ALSO CONDITIONED
UPON THE APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, AS AMENDED (THE "1935 ACT"). THE
OFFER IS SUBJECT TO CERTAIN OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN
CONDITIONS OF THE OFFER."
The Board of Directors of CPL is currently contemplating soliciting proxies
to amend a provision of CPL's Restated Articles of Incorporation (the
"Articles") which limits the amount of unsecured debt CPL may issue. If proxies
are solicited, and such amendment is approved and adopted, CPL may make a
special cash payment to shareholders who voted in favor of such amendment.
Preferred Shareholders of record who vote for such amendment would be entitled
to such cash payment regardless of whether they had tendered Shares pursuant to
the Offer.
IMPORTANT
Any Preferred Shareholder desiring to accept the Offer and tender all or any
portion of his or her Shares should either (i) if not the record holder, request
his or her broker, dealer, commercial bank, trust company or nominee to effect
the transaction for him or her, or (ii) if the record holder, complete and sign
the Letter of Transmittal or facsimile thereof, in accordance with the
instructions in the Letter of Transmittal, mail or deliver it and any other
required documents to The Bank of New York (the "Depositary"), and deliver the
certificates for such Shares to the Depositary, along with the Letter of
Transmittal, or tender such Shares pursuant to the procedure for book-entry
transfer set forth below under "Terms of the Offer--Procedure for Tendering
Shares," prior to the Expiration Date (as defined below). A Preferred
Shareholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or nominee must contact such broker, dealer,
commercial bank, trust company or nominee if he or she desires to tender such
Shares. Any Preferred Shareholder who desires to tender Shares and whose
certificates for such Shares are not immediately available, or who cannot comply
in a timely manner with the procedure for book-entry transfer, should tender
such Shares by following the procedures for guaranteed delivery set forth below
under "Terms of the Offer--Procedure for Tendering Shares."
EACH SERIES OF PREFERRED HAS ITS OWN LETTER OF TRANSMITTAL, AND ONLY THE
APPLICABLE LETTER OF TRANSMITTAL FOR SUCH SERIES OF PREFERRED OR A NOTICE OF
GUARANTEED DELIVERY MAY BE USED TO TENDER SHARES OF SUCH SERIES OF PREFERRED.
------------------------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SEC NOR HAS THE
SEC PASSED UPON THE FAIRNESS OR MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY
OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
------------------------------
NEITHER CSW, CPL, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ANY OR ALL SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
------------------------------
This Offer to Purchase is first being mailed to Preferred Shareholders on or
about March , 1997 to Preferred Shareholders of record on , 1997.
------------------------------
Each Series of Preferred is traded in the over-the-counter market (the
"OTC") and is not listed on any national securities exchange. On ,
1997, the last reported sale prices and dates of sale as reported by the
National Quotation Bureau, Inc. were $ for the 4.20% Series of Preferred
(on , 1997) and $ for the 4.00% Series of Preferred (on
, 1997). Preferred Shareholders are urged to obtain a current market
quotation, if available, for the Shares. On , 1997, there were issued
and outstanding 75,000 Shares of the 4.20% Series of Preferred and 100,000
Shares of the 4.00% Series of Preferred.
------------------------------
Questions or requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal for a Series of Preferred, or other
tender offer materials may be directed to D.F. King & Co., Inc. (the
"Information Agent") or Goldman, Sachs & Co. and Smith Barney Inc. (the "Dealer
Managers") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase.
------------------------------
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
----------------
The date of this Offer to Purchase is , 1997.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY RECOMMENDATION ON BEHALF OF CSW OR
CPL AS TO WHETHER PREFERRED SHAREHOLDERS SHOULD TENDER SHARES PURSUANT TO THE
OFFER. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN
OR IN THE RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH RECOMMENDATION
AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY CSW, CPL OR BY THE DEALER MANAGERS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
SUMMARY.................................................................................................... 1
TERMS OF THE OFFER......................................................................................... 3
Number of Shares; Purchase Prices; Expiration Date; Dividends............................................ 3
Procedure for Tendering Shares........................................................................... 3
Withdrawal Rights........................................................................................ 5
Acceptance of Shares for Payment and Payment of Purchase Price and Dividends............................. 6
Certain Conditions of the Offer.......................................................................... 7
Extension of Tender Period; Termination; Amendments...................................................... 8
Financial and Other Information Relating to CPL.......................................................... 9
PRICE RANGE OF SHARES; DIVIDENDS........................................................................... 10
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER......................................................... 10
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... 12
SOURCE AND AMOUNT OF FUNDS................................................................................. 13
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES.......................................................... 13
FEES AND EXPENSES ASSOCIATED WITH THE OFFER................................................................ 13
CERTAIN INFORMATION REGARDING CSW AND CPL.................................................................. 14
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION.............................................................. 15
ADDITIONAL INFORMATION REGARDING CSW....................................................................... 16
MISCELLANEOUS.............................................................................................. 16
</TABLE>
i
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS PROVIDED SOLELY FOR THE CONVENIENCE OF THE
PREFERRED SHAREHOLDERS. THIS SUMMARY IS NOT INTENDED TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT AND MORE SPECIFIC
DETAILS CONTAINED IN THE OFFER AND ANY AMENDMENTS HERETO. PREFERRED SHAREHOLDERS
ARE URGED TO READ THIS OFFER IN ITS ENTIRETY. EACH OF THE CAPITALIZED TERMS USED
IN THIS SUMMARY AND NOT DEFINED HEREIN HAS THE MEANING SET FORTH ELSEWHERE IN
THIS OFFER TO PURCHASE.
<TABLE>
<S> <C>
The Companies................ CSW is a Dallas-based public utility holding company
registered under the 1935 Act. Through its four electric
operating subsidiaries, CPL, Southwestern Electric Power
Company, Public Service Company of Oklahoma and West Texas
Utilities Company (collectively, the "Electric Operating
Companies"), CSW serves approximately 152,000 square miles
in portions of Texas, Oklahoma, Louisiana and Arkansas. CSW
owns SEEBOARD plc, a regional electricity company in the
southeast of the United Kingdom. CSW also engages through
other subsidiaries in the following energy- related
businesses: (i) CSW Energy, Inc. develops, owns and operates
non-utility power projects in the United States; (ii) CSW
International, Inc. participates in power generation,
transmission and distribution projects outside the United
States; (iii) CSW Communications, Inc. provides
communications services, including enhancement of services
through fiber optic and other telecommunications
technologies, to CSW and its subsidiaries and to third
parties; (iv) CSW Credit, Inc. purchases, without recourse,
the accounts receivables of the Electric Operating Companies
and non-affiliated utilities; and (v) EnerShop Inc. was
recently formed to provide commercial, industrial,
institutional and governmental customers with energy
management services designed to control costs, enhance
productivity and improve convenience, safety and comfort.
The Shares................... CPL 4.20% Cumulative Preferred Stock ($100 par value)
CPL 4.00% Cumulative Preferred Stock ($100 par value)
The Offer.................... Offer to purchase any or all shares of each Series of
Preferred at the price per Share set forth below.
Purchase Price............... $ per 4.20% Share
$ per 4.00% Share
Independent Offer............ The Offer for one Series of Preferred is independent of the
Offer for any other series of Preferred. The Offer is not
conditioned upon any minimum number of Shares of the
applicable Series of Preferred being tendered. The Offer is
subject to certain other conditions described herein.
SEC Approval................. The Offer is conditioned, among other things, upon the
approval of the SEC under the 1935 Act.
Expiration Date of the
Offer...................... The Offer expires at 5:00 p.m., central time, ,
1997, unless extended (the "Expiration Date").
How to Tender Shares......... See "Terms of the Offer--Procedure for Tendering Shares."
For further information, call the Information Agent or the
Dealer Managers or consult your broker for assistance.
Withdrawal Rights............ Tendered Shares of any Series of Preferred may be withdrawn
at any time until the Expiration Date with respect to such
Series of Preferred
</TABLE>
1
<PAGE>
<TABLE>
<S> <C>
and, unless theretofore accepted for payment, may also be
withdrawn after , 1997. See "Terms of the
Offer-- Withdrawal Rights".
Purpose of the Offer......... CSW is making the Offer because it believes that the
purchase of Shares is attractive to CSW, its shareholders
and CPL. In addition, the Offer gives Preferred Shareholders
the opportunity to sell their Shares at a premium over the
market price and without the usual transaction costs
associated with a market sale. See "Purpose of the Offer;
Certain Effects of the Offer."
Potential Proxy
Solicitation............... The Board of Directors of CPL is currently contemplating
soliciting proxies to amend a provision of CPL's Articles
which limits the amount of unsecured debt CPL may issue. If
proxies are solicited, and such amendment is approved and
adopted, CPL may make a special cash payment to shareholders
who voted in favor of such amendment. Preferred Shareholders
of record who vote for such amendment would be entitled to
such cash payment regardless of whether they had tendered
Shares pursuant to the Offer.
Dividends.................... [A regular quarterly dividend has been declared on each
Series of Preferred, payable on May 1, 1997 to the owners of
record on [ ] (the "May 1997 Dividend"). A tender and
purchase of Shares pursuant to the Offer will not deprive a
Preferred Shareholder of his or her right to receive the May
1997 Dividend on Shares held of record on [ ],
regardless of when such tender is made. Tendering Preferred
Shareholders will not be entitled to any dividends in
respect of any later dividend periods (or any portion
thereof).]
Brokerage Commissions........ Not payable by Preferred Shareholders.
Solicitation Fee............. CSW will pay to each designated Soliciting Dealer a
solicitation fee of $1.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500
Shares and a solicitation fee of $1.00 per Share in
transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer
Managers and 20% to any Soliciting Dealers (which may be a
Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned
by such Soliciting Dealer.
Stock Transfer Tax........... CSW will pay or cause to be paid any stock transfer taxes
with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. See Instruction 5 of the
applicable Letter of Transmittal. See "Terms of the
Offer--Acceptance of Shares for Payment of Purchase Price
and Dividends."
Payment Date................. Promptly after the Expiration Date.
Further Information.......... Additional copies of this Offer to Purchase and the
applicable Letter of Transmittal may be obtained by D.F.
King & Co., Inc., 77 Water Street, New York, New York 10005,
telephone (800) 755-3107 (toll-free) and (212) 269-5550
(brokers and dealers). Questions about the Offer should be
directed to Goldman, Sachs & Co. (800) 828-3182 or Smith
Barney Inc. at (800) 655-4811.
</TABLE>
2
<PAGE>
TERMS OF THE OFFER
NUMBER OF SHARES; PURCHASE PRICES; EXPIRATION DATE; DIVIDENDS
Upon the terms and subject to the conditions described herein and in the
applicable Letter of Transmittal, CSW will purchase any and all Shares that are
validly tendered on or prior to the applicable Expiration Date (and not properly
withdrawn in accordance with "Terms of the Offer--Withdrawal Rights") at the
purchase price per Share listed on the front cover of this Offer to Purchase for
the Shares tendered, net to the seller in cash. See "Terms of the Offer--Certain
Conditions of the Offer" and "Terms of the Offer--Extension of Tender Period;
Termination."
THE OFFER FOR EACH SERIES OF PREFERRED IS NOT CONDITIONED UPON ANY MINIMUM
NUMBER OF SHARES OF SUCH SERIES OF PREFERRED BEING TENDERED AND IS INDEPENDENT
OF THE OFFER FOR ANY OTHER SERIES OF PREFERRED. THE OFFER IS SUBJECT TO CERTAIN
OTHER CONDITIONS. SEE "TERMS OF THE OFFER--CERTAIN CONDITIONS OF THE OFFER."
The Offer is being sent to all persons in whose names Shares are registered
on the books of CPL on , 1997. With respect to each Series of Preferred,
the Expiration Date is the later of 5:00 p.m., central time, on ,
, 1997 or the latest time and date to which the Offer with respect to
such Series of Preferred is extended. CSW expressly reserves the right, in its
sole discretion, and at any time and/or from time to time, to extend the period
of time during which the Offer for any Series of Preferred is open, by giving
oral or written notice of such extension to the Depositary, without extending
the period of time during which the Offer for any other Series of Preferred is
open. There is no assurance whatsoever that CSW will exercise its right to
extend the Offer for any Series of Preferred. If CSW decides, in its sole
discretion, to decrease the number of Shares of any Series of Preferred being
sought or to increase or decrease the consideration offered in the Offer to
holders of any Series of Preferred and, at the time that notice of such increase
or decrease is first published, sent or given to holders of such Series of
Preferred in the manner specified herein, the Offer for such Series of Preferred
is scheduled to expire at any time earlier than the tenth business day from the
date that such notice is first so published, sent or given, such Offer will be
extended until the expiration of such ten-business-day period. For purposes of
the Offer, a "business day" means any day other than a Saturday, Sunday or
federal holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, eastern standard time.
NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS WILL BE ACCEPTED.
[The May 1997 Dividend has been declared on each Series of Preferred,
payable May 1, 1997 to owners of record on [ ]. A tender and purchase of
Shares pursuant to the Offer will not deprive a Preferred Shareholder of his or
her right to receive the May 1997 Dividend on shares held of record on [ ],
regardless of when such tender is made. Tendering Preferred Shareholders will
not be entitled to any dividends in respect of any later dividend periods (or
any portion thereof).]
PROCEDURE FOR TENDERING SHARES
To tender Shares pursuant to the Offer, the tendering owner of Shares must
either:
(a) send to the Depositary (at one of its addresses set forth on the
back cover of this Offer to Purchase) a properly completed and duly executed
Letter of Transmittal or facsimile thereof, together with any required
signature guarantees and any other documents required by the Letter of
Transmittal and either (i) certificates for the Shares to be tendered must
be received by the Depositary at one of such addresses or (ii) such Shares
must be delivered pursuant to the procedures for book-entry transfer
described herein (and a confirmation of such delivery must be received by
the Depositary), in each case by the Expiration Date; or
3
<PAGE>
(b) comply with the guaranteed delivery procedure described under
"Guaranteed Delivery Procedure" below.
The Depositary will establish an account with respect to the Shares at The
Depository Trust Company and Philadelphia Depository Trust Company (collectively
referred to as the "Book-Entry Transfer Facilities") for purposes of the Offer
within two business days after the date of this Offer to Purchase and any
financial institution that is a participant in the system of any Book-Entry
Transfer Facility may make delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account in
accordance with the procedures of such Book-Entry Transfer Facility. Although
delivery of Shares may be effected through book-entry transfer, such delivery
must be accompanied by either (i) a properly completed and duly executed Letter
of Transmittal or facsimile thereof, together with any required signature
guarantees and any other required documents or (ii) an Agent's Message (as
hereinafter defined) and, in any case, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase at or
prior to 5:00 p.m., central time, on the Expiration Date.
The term "Agent's Message" means a message, transmitted by one of the
Book-Entry Transfer Facilities, received by the Depositary and forming a part of
the book-entry transfer when a tender is initiated, which states that the
Book-Entry Transfer Facility has received an express acknowledgment from a
participant tendering Shares that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that CSW may enforce such
agreement against such participant.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a firm that is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., or by a commercial bank or trust company having an office or correspondent
in the United States that is a participant in an approved Signature Guarantee
Medallion Program (each of the foregoing being referred to as an "Eligible
Institution"). Signatures on a Letter of Transmittal need not be guaranteed if
(a) the Letter of Transmittal is signed by the holder of record of the shares
tendered therewith and such owner has not completed the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
Letter of Transmittal or (b) such Shares are tendered for the account of an
Eligible Institution. See Instructions 1 and 4 of the Letter of Transmittal.
GUARANTEED DELIVERY PROCEDURE. If a Preferred Shareholder desires to tender
Shares pursuant to the Offer and such Preferred Shareholder's certificates are
not immediately available or the procedures for book-entry transfer cannot be
completed on a timely basis or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may nevertheless
be tendered if all of the following guaranteed delivery procedures are complied
with:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by CSW and CPL herewith, is
received (with any required signature guarantees) by the Depositary as
provided below at or prior to 5:00 p.m., central time, on the Expiration
Date; and
(iii) the certificates for all tendered Shares in proper form for
transfer or a Book-Entry Confirmation with respect to all tendered Shares,
together with a properly completed and duly executed Letter of Transmittal
(or a manually signed facsimile thereof) and any other documents required by
the Letter of Transmittal, are received by the Depositary no later than 5:00
p.m., central time, within three business days after the date of execution
of such Notice of Guaranteed Delivery.
THE NOTICE OF GUARANTEED DELIVERY MAY BE DELIVERED BY HAND OR TRANSMITTED BY
FACSIMILE TRANSMISSION OR MAILED TO THE DEPOSITARY AND MUST INCLUDE AN
ENDORSEMENT BY AN ELIGIBLE INSTITUTION IN THE FORM SET FORTH IN SUCH NOTICE OF
GUARANTEED DELIVERY.
4
<PAGE>
In all cases, Shares shall not be deemed validly tendered unless a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof) is received by the Depositary within the applicable time
limits.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer in all cases will be made only after timely
receipt by the Depositary of certificates for (or an Agent's Message with
respect to) such Shares, a Letter of Transmittal or a manually signed facsimile
thereof, properly completed and duly executed, with any required signature
guarantees and all other documents required by the Letter of Transmittal.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHARE HOLDER. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
BECAUSE IT IS THE TIME OF RECEIPT, NOT THE TIME OF MAILING, WHICH DETERMINES
WHETHER A TENDER HAS BEEN MADE PRIOR TO THE EXPIRATION DATE, SUFFICIENT TIME
SHOULD BE ALLOWED FOR DELIVERY.
TO AVOID FEDERAL INCOME TAX BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS
PAYMENTS MADE PURSUANT TO THE OFFER, EACH TENDERING UNITED STATES PREFERRED
SHAREHOLDER MUST NOTIFY THE DEPOSITARY OF SUCH PREFERRED SHAREHOLDER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY PROPERLY
COMPLETING AND EXECUTING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF
TRANSMITTAL. SEE "CERTAIN FEDERAL INCOME TAX CONSEQUENCES."
EACH PREFERRED SHAREHOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX
ADVISOR REGARDING THE TAX CONSEQUENCES OF THE OFFER.
All questions as to the form of documents and the validity, eligibility
(including the time of receipt) and acceptance for payment of any tender of
Shares will be determined by CSW, in its sole discretion, and its determination
will be final and binding. CSW reserves the absolute right to reject any or all
tenders of Shares that (i) it determines are not in proper form or (ii) the
acceptance for payment of or payment for which may, in the opinion of CSW's
counsel, be unlawful. CSW also reserves the absolute right to waive any defect
or irregularity in any tender of Shares. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notice of any defect or irregularity in tenders, nor shall any of them
incur any liability for failure to give any such notice.
WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date. Thereafter, such tenders are irrevocable, except
that they may be withdrawn after , 1997, unless theretofore accepted
for payment as provided in this Offer to Purchase. If, with respect to any
Series of Preferred, CSW extends the period of time during which the Offer is
open, is delayed in accepting for payment or paying for Shares of that Series of
Preferred or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to CSW's rights under the Offer,
the Depositary may, on behalf of CSW, retain all Shares of that Series of
Preferred tendered, and such Shares may not be withdrawn except as otherwise
provided in this "Terms of the Offer-Withdrawal Rights", subject to Rule
13e-4(f)(5) under the Exchange Act, which provides that an issuer making a
tender offer shall either pay the consideration offered, or return the tendered
securities, promptly after the termination or withdrawal of the tender offer.
To be effective, a written or facsimile transmission notice of withdrawal
must be timely received by the Depositary, at one of its addresses set forth on
the back cover of this Offer to Purchase, and must specify the name of the
person who tendered the Shares to be withdrawn and the number of Shares to be
withdrawn. If the Shares to be withdrawn have been delivered to the Depositary,
a signed notice of
5
<PAGE>
withdrawal with signatures guaranteed by an Eligible Institution (except in the
case of Shares tendered by an Eligible Institution) must be submitted prior to
the release of such Shares. In addition, such notice must specify, in the case
of Shares tendered by delivery of certificates, the name of the registered owner
(if different from that of the tendering Preferred Shareholder) and the serial
numbers shown on the particular certificates evidencing the Shares to be
withdrawn or, in the case of Shares tendered by book-entry transfer, the name
and number of the account at one of the Book-Entry Transfer Facilities to be
credited with the withdrawn Shares and the name of the registered holder (if
different from the name of such account). Withdrawals may not be rescinded, and
Shares withdrawn will thereafter be deemed not validly tendered for purposes of
the Offer. However, withdrawn Shares may be re-tendered by again following one
of the procedures described in "Terms of the Offer-- Procedure for Tendering
Shares" at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by CSW, in its sole discretion, and its
determination will be final and binding. None of CSW, the Dealer Managers, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal or
will incur any liability for failure to give any such notification.
ACCEPTANCE OF SHARES FOR PAYMENT AND PAYMENT OF PURCHASE PRICE AND DIVIDENDS
Upon the terms and subject to the conditions of the Offer, and as promptly
as practicable after the Expiration Date, CSW will accept for payment (and
thereby purchase) and pay for Shares validly tendered and not withdrawn as
permitted in "Terms of the Offer-- Withdrawal Rights." In all cases, payment for
Shares accepted for payment pursuant to the Offer will be made promptly but only
after timely receipt by the Depositary of certificates for such Shares (or of an
Agent's Message), a properly completed and duly executed Letter of Transmittal
(or facsimile thereof) and any other required documents.
For purposes of the Offer, CSW will be deemed to have accepted for payment
(and thereby purchased) Shares that are validly tendered and not withdrawn as,
if and when it gives oral or written notice to the Depositary of its acceptance
for payment of such Shares. CSW will pay for Shares that it has purchased
pursuant to the Offer by depositing the purchase price therefor with the
Depositary, which will act as agent for tendering Preferred Shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
Preferred Shareholders. Under no circumstances will interest be paid on amounts
to be paid to tendering Preferred Shareholders, regardless of any delay in
making such payment.
Certificates for all Shares not validly tendered will be returned or, in the
case of Shares tendered by book-entry transfer, such Shares will be credited to
an account maintained with a Book-Entry Transfer Facility, as promptly as
practicable, without expense to the tendering Preferred Shareholder.
Payment for shares may be delayed in the event of difficulty in determining
the number of Shares properly tendered. In addition, if certain events occur,
CSW may not be obligated to purchase Shares pursuant to the Offer. See "Terms of
the Offer--Certain Conditions of the Offer."
CSW will pay or cause to be paid any stock transfer taxes with respect to
the sale and transfer of any Shares to it or its order pursuant to the Offer.
If, however, payment of the purchase price is to be made to any person other
than the registered owner, or if tendered Shares are registered in the name of
any person other than the person signing the Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered owner, such other
person or otherwise) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment of
such taxes, or exemption therefrom, is submitted. See Instruction 5 of the
applicable Letter of Transmittal.
6
<PAGE>
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provision of the Offer, CSW will not be required
to accept for payment or pay for any Shares tendered, and may terminate or amend
the Offer or may postpone (subject to the requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") for prompt payment for or return of
Shares) the acceptance for payment of, or payment for, Shares tendered, if at
any time after , 1997, and at or before acceptance for payment of or
payment for any Shares, any of the following shall have occurred:
(a) there shall have been threatened, instituted or pending any action
or proceeding by any government or governmental, regulatory or
administrative agency, authority or tribunal or any other person, domestic
or foreign, or before any court, authority, agency or tribunal that (i)
challenges the acquisition of Shares pursuant to the Offer or otherwise in
any manner relates to or affects the Offer or (ii) in the sole judgment of
CSW, could materially and adversely affect the business, condition
(financial or otherwise), income, operations or prospects of CSW and its
subsidiaries taken as a whole or of CPL individually, or otherwise
materially impair in any way the contemplated future conduct of the business
of CSW or any of its subsidiaries or materially impair the Offer's
contemplated benefits to CSW;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer or CSW or any of
its subsidiaries, by any legislative body, court, authority, agency or
tribunal that, in CSW's sole judgment, would or might directly or indirectly
(i) make the acceptance for payment of, or payment for, some or all of the
Shares illegal or otherwise restrict or prohibit consummation of the Offer,
(ii) delay or restrict the ability of CSW, or render CSW unable, to accept
for payment or pay for some or all of the Shares, (iii) materially impair
the contemplated benefits of the Offer to CSW or (iv) materially affect the
business, condition (financial or otherwise), income, operations or
prospects of CSW and its subsidiaries taken as a whole or of CPL
individually, or otherwise materially impair in any way the contemplated
future conduct of the business of CSW or any of its subsidiaries;
(c) there shall have occurred (i) any significant decrease in the market
price of the Shares or any change in the general political, market, economic
or financial conditions in the United States or abroad that could have a
material adverse effect on CSW's business, operations, prospects or ability
to obtain financing generally or the trading in the other equity securities
of CSW, (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any limitation on, or
any event that, in CSW's sole judgment, might affect the extension of credit
by lending institutions in the United States, (iii) the commencement of war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States, (iv) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market, (v) in the case of
any of the foregoing existing at the time of the commencement of the Offer,
a material acceleration or worsening thereof or (vi) any decline in either
the Dow Jones Industrial Average or the Standard and Poor's Composite 500
Stock Index by an amount in excess of 15% measured from the close of
business on , 1997;
(d) any tender or exchange offer with respect to some or all of the
Shares (other than the Offer), or a merger, acquisition or other business
combination proposal for CSW, shall have been proposed, announced or made by
any person or entity;
(e) there shall have occurred any event or events that have resulted, or
may in the sole judgment of CSW result, in an actual or threatened change in
the business, condition (financial or otherwise), income, operations, stock
ownership or prospects of CSW and its subsidiaries; or
7
<PAGE>
(f) the SEC shall have withheld approval, under the 1935 Act, of the
acquisition of the Shares by CSW pursuant to the Offer;
and, in the sole judgment of CSW, such event or events make it undesirable or
inadvisable to proceed with the Offer or with such acceptance for payment or
payment. With respect to the approval of the SEC referenced in clause (f) above,
the SEC must find, among other things, that the acquisition of the Shares by CSW
is not detrimental to the public interest or the interest of the investors or
consumers, and that the consideration paid in connection with the acquisition,
including fees, commissions and other remuneration, is reasonable.
The foregoing conditions are for the sole benefit of CSW and may be asserted
by CSW regardless of the circumstances (including any action or inaction by CSW)
giving rise to any such condition, and any such condition may be waived by CSW,
in whole or in part, at any time and from time to time in its sole discretion.
The failure by CSW at any time to exercise any of the foregoing rights shall not
be deemed a waiver of any such right and each such right shall be deemed an
ongoing right which may be asserted at any time and from time to time. Any
determination by CSW concerning the events described above will be final and
binding on all parties.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
CSW expressly reserves the right, in its sole discretion, and at any time
and/or from time to time, to extend the period of time during which the Offer
for any Series of Preferred is open by giving oral or written notice of such
extension to the Depositary and making a public announcement thereof, without
extending the period of time during which the Offer for any other Series of
Preferred is open. There can be no assurance, however, that CSW will exercise
its right to extend the Offer for any Series of Preferred. During any such
extension, all Shares of the subject Series of Preferred previously tendered
will remain subject to the Offer, except to the extent that such Shares may be
withdrawn as set forth in "Terms of the Offer--Withdrawal Rights." CSW also
expressly reserves the right, in its sole discretion, to terminate the Offer and
not accept for payment or pay for any Shares tendered, subject to Rule
13e-4(f)(5) under the Exchange Act which requires CSW either to pay the
consideration offered or to return the Shares tendered promptly after the
termination or withdrawal of the Offer, upon the occurrence of any of the
conditions specified in "Terms of the Offer--Certain Conditions of the Offer" by
giving oral or written notice of such termination to the Depositary, and making
a public announcement thereof.
Subject to compliance with applicable law, CSW further reserves the right,
in its sole discretion, to amend the Offer in any respect. Amendments to the
Offer may be made at any time and/or from time to time effected by public
announcement thereof, such announcement, in the case of an extension, to be
issued no later than 9:00 a.m., central time, on the next business day after the
previously scheduled Expiration Date. Any public announcement made pursuant to
the Offer will be disseminated promptly to Preferred Shareholders affected
thereby in a manner reasonably designed to inform such Preferred Shareholders of
such change. Without limiting the manner in which CSW may choose to make a
public announcement, except as required by applicable law, CSW shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement other than by making a release to the Dow Jones News Service.
If CSW materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, CSW
will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) under the Exchange Act. Those rules require that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price
or change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or information.
The SEC has stated that, in its view, an offer should remain open for a minimum
of five business days from the date that a notice of such a material change is
first published, sent or given. If the Offer is
8
<PAGE>
scheduled to expire at any time earlier than the expiration of a period ending
on the tenth business day from, and including, the date that CSW publishes,
sends or gives to Preferred Shareholders a notice that it will (a) increase or
decrease the price it will pay for Shares or (b) decrease the percentage of
Shares it seeks, the Offer will be extended until the expiration of such period
of ten business days.
THE OFFER FOR EACH SERIES OF PREFERRED IS INDEPENDENT OF THE OFFER FOR ANY
OTHER SERIES OF PREFERRED. IF CSW EXTENDS OR AMENDS ANY OFFER WITH RESPECT TO
ONE SERIES OF PREFERRED FOR ANY REASON, CSW WILL HAVE NO OBLIGATION TO EXTEND
THE OFFER FOR ANY OTHER SERIES OF PREFERRED.
FINANCIAL AND OTHER INFORMATION RELATING TO CPL
The financial statements of CPL and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1996 as filed with
the SEC, is hereby incorporated by reference. CPL will provide without charge,
upon the written or oral request of any person (including any beneficial owner)
to whom this Offer to Purchase is delivered, a copy of such information
(excluding certain exhibits). Such requests for information should be directed
to Stephen D. Wise, Director, Finance, Central and South West Corporation, 1616
Woodall Rodgers Freeway, Dallas, TX 75202, as agent for CPL, telephone (214)
777-1000.
9
<PAGE>
PRICE RANGE OF SHARES; DIVIDENDS
CPL's Cumulative Preferred Stock 4.20% Series and 4.00% Series are traded in
the OTC under the symbols " " and " ", respectively. The last reported
sale price in the OTC, as of the close of business on , 1997, for
each of the Series of Preferred is shown on the front cover of this Offer to
Purchase. However, Preferred Shareholders should be aware that there is no
established trading market for the Shares and that the Shares of each Series of
Preferred only trade sporadically and on a limited basis and, therefore, the
last reported sales prices may not necessarily reflect the current market value
of the Shares.
PREFERRED SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS, IF
AVAILABLE, FOR THE SHARES.
The following table sets forth the high and low sales prices of each Series
of Preferred in the OTC as reported by the National Quotation Bureau, Inc. and
the cash dividends paid thereon for the fiscal quarters indicated.
DIVIDENDS AND PRICE RANGES OF CUMULATIVE PREFERRED STOCK
BY QUARTERS (1996 AND 1995)
<TABLE>
<CAPTION>
1996--QUARTERS 1995--QUARTERS
------------------------------------------ -------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1ST 2ND 3RD 4TH 1ST 2ND 3RD
--------- --------- --------- --------- --------- --------- ---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.20% SERIES
Dividends Paid Per Share.......................... $ 1.05 $ 1.05 $ 1.05 $ 1.05 $ 1.05 $ 1.05 $ 1.05
Market Price--$ Per Share (OTC)
Ask--High.......................................
--Low........................................
Bid--High.......................................
--Low.........................................
4.00% SERIES
Dividends Paid Per Share.......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Market Price--$ Per Share (OTC)
Ask--High.......................................
--Low........................................
Bid--High.......................................
--Low.........................................
<CAPTION>
<S> <C>
4TH
---------
CUMULATIVE PREFERRED STOCK
($100 Par Value)
4.20% SERIES
Dividends Paid Per Share.......................... $ 1.05
Market Price--$ Per Share (OTC)
Ask--High.......................................
--Low........................................
Bid--High.......................................
--Low.........................................
4.00% SERIES
Dividends Paid Per Share.......................... $ 1.00
Market Price--$ Per Share (OTC)
Ask--High.......................................
--Low........................................
Bid--High.......................................
--Low.........................................
</TABLE>
Dividends for a Series of Preferred are payable when, as and if declared by
CPL's Board of Directors at the rate per annum included in such title of the
Series of Preferred listed on the front cover of this Offer to Purchase. [The
May 1997 Dividend has been declared on each Series of Preferred, payable May 1,
1997 to owners of record on [ ]. A tender and purchase of Shares pursuant
to the Offer will not deprive a Preferred Shareholder of his or her right to
receive the May 1997 Dividend on shares held of record on [ ], regardless
of when such tender is made. Tendering Preferred Shareholders will not be
entitled to any dividends in respect of any later dividend periods (or any
portion thereof).]
PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
CSW believes that the purchase of the Shares at this time represents an
attractive opportunity that will benefit CSW, its shareholders, and CPL. In
addition, the Offer gives Preferred Shareholders the opportunity to sell their
Shares at a premium to the market price on the date of the announcement of the
Offer and without the usual transaction costs associated with a sale.
10
<PAGE>
After the consummation of the Offer, CSW may determine to purchase
additional Shares on the open market, in privately negotiated transactions,
through one or more tender offers or otherwise. Any such purchases may be on the
same terms as, or on terms which are more or less favorable to holders of Shares
than, the terms of the Offer. However, Rule 13e-4(f)(6) under the Exchange Act
prohibits CSW and its affiliates (including CPL) from purchasing any Shares of a
Series of Preferred, other than pursuant to the Offer until at least ten
business days after the Expiration Date with respect to the Series of Preferred.
Any future purchases of Shares by CSW would depend on many factors, including
the market price of the Shares, CSW's business and financial position,
restrictions on CSW's ability to purchase Shares imposed by law and general
economic and market conditions.
Preferred Shareholders are not under any obligation to tender Shares
pursuant to the Offer. The Offer does not constitute notice of redemption of any
Series of Preferred pursuant to CPL's Articles, nor does CSW or CPL intend to
effect any such redemption by making the Offer. The Offer does not constitute a
waiver by CPL of any right it has to redeem Shares. The 4.20% Series of
Preferred is currently redeemable, upon call at a price of $103.75 per Share,
plus accrued dividends. The 4.00% Series of Preferred is currently redeemable,
upon call at a price of $105.75 per Share, plus accrued dividends. The Shares of
each Series of Preferred have no preemptive or conversion rights.
Upon liquidation or dissolution of CPL, owners of the Shares would be
entitled to receive an amount equal to the liquidation preference per share
($100) plus all accrued and unpaid dividends (whether or not earned or declared)
thereon to the date of payment, prior to the payment of any amounts to the
holders of CPL's common stock.
Shares validly tendered to the Depositary pursuant to the Offer and not
withdrawn in accordance with the procedures set forth herein shall be held until
the Expiration Date (or returned to the extent the Offer is terminated in
accordance herewith). To the extent that Shares tendered are accepted for
payment and paid for in accordance with the terms hereof, CSW intends to sell at
the purchase price per Share listed on the front cover of this Offer to
Purchase, or if such purchase prices are increased or decreased by CSW, at such
increased or decreased purchase prices, its Shares to CPL and, at that time, it
is expected that CPL will retire and cancel the Shares. CPL may obtain all or a
portion of the purchase price for such Shares from the proceeds of the sale of
tax-deductible trust preferred securities which qualify as unsecured debt for
purposes of the 10% and 20% provisions contained in the Articles. A provision in
CPL's Articles (as defined herein) restricts the amount of unsecured debt that
CPL may issue. CPL's Board of Directors is currently contemplating soliciting
proxies to amend such provision. If proxies are solicited, and if such amendment
is approved and adopted, a cash payment may be made to shareholders who voted in
favor of such amendment. A Preferred Shareholder of record who votes for such
amendment would be entitled to such cash payment regardless of whether they had
tendered Shares pursuant to the Offer. It is likely that the Offer will reduce
the number of Shares of each of the Series of Preferred that might otherwise
trade publicly or become available for purchase and/or sale and likely will
reduce the number of owners of Shares of each of the Series of Preferred, which
could adversely affect the liquidity and sale value of the Shares not purchased
in the Offer. The extent of the public market for such Shares and the
availability of price quotations would typically depend upon such factors as the
number of shareholders remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms and other factors. As of
December 31, 1996, there were 32 registered holders of the 4.20% Series and 628
registered holders of the 4.00% Series. In addition, the Series of Preferred are
currently registered under Section 12(g) of the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon the application by CPL
to the SEC if the Shares are neither listed on a national securities exchange
nor held by more than 300 holders of record. Termination of registration of the
Shares under the Exchange Act would substantially reduce the information
required to be furnished to Preferred Shareholders and could make certain
provisions of the Exchange Act no longer applicable to CPL. In addition, to the
extent that CPL elects to fund its purchase of the Shares, in whole or in part,
by issuing additional unsecured debt, including tax-deductible trust
11
<PAGE>
preferred securities, the remaining Preferred Shareholders' relative position in
CPL's capital structure could be perceived to decline, which in turn could
adversely affect the market price and credit rating of the remaining Shares.
Except as disclosed in this Offer to Purchase, CSW and CPL have no plans or
proposals that relate to or would result in: (a) the acquisition by any person
of additional securities of CPL or the disposition of securities of CPL; (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving CPL or any of its subsidiaries; (c) a sale or transfer of
a material amount of assets of CPL or any of its subsidiaries; (d) any change in
the present Board or management of CPL; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of CPL; (f) any other
material change in CPL's corporate structure or business; (g) any change in
CPL's Articles or bylaws or any actions that may impede the acquisition of
control of CPL by any person; (h) a class of equity securities of CPL becoming
eligible for termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or (i) the suspension of CPL's obligation to file reports pursuant
to Section 15(d) of the Exchange Act.
NEITHER CSW, CPL, THEIR RESPECTIVE BOARDS OF DIRECTORS, NOR ANY OF THEIR
RESPECTIVE OFFICERS MAKES ANY RECOMMENDATION TO ANY PREFERRED SHAREHOLDER AS TO
WHETHER TO TENDER ALL OR ANY SHARES. EACH PREFERRED SHAREHOLDER MUST MAKE HIS OR
HER OWN DECISION AS TO WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO
TENDER.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal United States federal
income tax consequences of the sale of Shares pursuant to the Offer. This
summary is addressed only to Preferred Shareholders who are "United States
Holders" (as defined below) and who hold their Shares as capital assets within
the meaning of the Internal Revenue Code of 1986, as amended ("the Code"). This
summary does not address all aspects of federal income taxation that may be
relevant to a particular Preferred Shareholder in light of such Preferred
Shareholder's individual circumstances or to Preferred Shareholders subject to
special treatment under the federal income tax laws, such as Preferred
Shareholders who are not United States Holders, banks, insurance companies,
thrift institutions, regulated investment companies, real estate investment
trusts, tax-exempt organizations, dealers in securities and currencies,
Preferred Shareholders who received their Shares as part of a compensation
arrangement with CPL, and Preferred Shareholders holding Shares as part of a
position in a "straddle" or as part of a "hedging," "conversion" or other
integrated investment transaction for federal income tax purposes.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Christy & Viener, special tax counsel to CSW and CPL.
This summary is based upon the Code, Treasury Regulations, Internal Revenue
Service rulings and pronouncements, and judicial decisions now in effect, all of
which are subject to change at any time. Such a change could adversely affect
the tax consequences described herein, possibly on a retroactive basis. In
addition, the authorities on which this summary is based are subject to various
interpretations and it is therefore possible that the United States federal
income tax treatment of the payments made pursuant to the Offer may differ from
the treatment described below.
Preferred Shareholders should consult their own tax advisors in light of
their particular circumstances as to the application of United States federal
income tax laws, as well as the effect of any state, local, or foreign tax laws.
As used herein, the term "United States Holder" means a Preferred
Shareholder that is (i) for United States federal income tax purposes, a citizen
or resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, or (iii) an estate or trust specified as being a "United States
Person" in the Code.
12
<PAGE>
SALE OF SHARES
A United States Holder will recognize gain or loss equal to the difference
between the tax basis of such holder's Shares and the amount of cash received in
exchange therefor. A United States Holder's gain or loss will be long-term
capital gain or loss if the holding period for the Shares is more than one year
as of the date of the sale of such Shares. The excess of net long-term capital
gains over net short-term capital losses is taxed at a lower rate than ordinary
income for certain non-corporate taxpayers. The distinction between capital gain
or loss and ordinary income or loss is also relevant for purposes of, among
other things, limitations on the deductibility of capital losses.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of payment made to a United States Holder pursuant to the Offer
will be reported to such holder and to the Internal Revenue Service except in
the case of corporations and other holders exempt from information reporting and
backup withholding. Backup withholding at a rate of 31% will apply to any such
payments made to non-exempt United States Holders unless the holder provides its
taxpayer identification number and the certifications required to establish that
it is not subject to backup withholding. In order to prevent backup withholding,
each tendering United States Holder must provide such holder's taxpayer
identification number and certify that such holder is not subject to backup
withholding by completing the substitute Form W-9 included herewith.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
SOURCE AND AMOUNT OF FUNDS
Assuming that CSW purchases all outstanding Shares pursuant to the Offer,
the total amount required by CSW to purchase such Shares will be approximately
$[ ] million, exclusive of the accrued and unpaid dividends payments, but
including fees and other expenses. CSW intends to fund the Offer through the use
of its general funds (which, in the ordinary course, include funds from CPL) and
funds borrowed pursuant to CSW's commercial paper program.
CSW sells commercial paper directly to commercial paper dealers who reoffer
the commercial paper to investors. At December 31, 1996, CSW had two credit
facilities in place aggregating $1.2 billion to back up the commercial paper
program.
TRANSACTIONS AND AGREEMENTS CONCERNING THE SHARES
Each of CSW and CPL has been advised by its directors and executive officers
that no directors or executive officers of the respective companies own any
Shares. Based upon the companies' records and upon information provided to each
company by its directors and executive officers, neither company nor, to the
knowledge of either company, any of their subsidiaries, directors, or executive
officers has engaged in any transactions involving Shares during the 40 business
days preceding the date hereof. Neither company nor, to the knowledge of either
company, any of its directors or executive officers is a party to any contract,
arrangement, understanding or relationship relating directly or indirectly to
the Offer with any other person with respect to any securities of CPL.
FEES AND EXPENSES ASSOCIATED WITH THE OFFER
DEALER MANAGER FEES. Goldman, Sachs & Co. and Smith Barney Inc. will act as
Dealer Managers for CSW in connection with the Offer. CSW has agreed to pay the
Dealer Managers a combined fee of $0.50 per Share for any Shares tendered,
accepted for payment and paid for pursuant to the Offer. Each Dealer Manager
will also be reimbursed by CSW for its reasonable out-of pocket expenses,
including
13
<PAGE>
attorneys' fees, and will be indemnified against certain liabilities, including
certain liabilities under the federal securities laws, in connection with the
Offer. Each Dealer Manager has rendered, is currently rendering and is expected
to continue to render various investment banking services to CSW and CPL. Each
Dealer Manager has received, and will continue to receive, customary
compensation from the companies for such services. CSW has retained The Bank of
New York as Depositary and D.F. King & Co., Inc. as Information Agent in
connection with the Offer. The Depositary and Information Agent will receive
reasonable and customary compensation for their services and will also be
reimbursed for certain out-of-pocket expenses. CSW has agreed to indemnify the
Depositary and Information Agent against certain liabilities, including certain
liabilities under the federal securities law, in connection with the Offer.
Neither the Depositary nor the Information Agent has been retained to make
solicitations or recommendations in connection with the Offer.
SOLICITED TENDER FEES. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered and accepted for payment and paid for pursuant to the
Offer in transactions for beneficial owners of fewer than 2,500 Shares and a
solicitation fee of $1.00 per Share in transactions for beneficial owners of
2,500 or more Shares, provided that fees payable in transactions equal to or
exceeding 2,500 Shares shall be paid 80% to the Dealer Managers and 20% to any
Soliciting Dealers (which may be a Dealer Manager), covered by a Letter of
Transmittal which designates, as having solicited and obtained the tender, the
name of (i) any broker or dealer in securities, including the Dealer Managers in
their capacity as a broker or dealer, who is a member of any national securities
exchange or of the National Association of Securities Dealers, Inc. (the
"NASD"), (ii) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as though it were an NASD
member, or (iii) any bank or trust company (each of which is referred to herein
as a "Soliciting Dealer"). No such fee shall be payable to a Soliciting Dealer
if such Soliciting Dealer is required for any reason to transfer the amount of
such fee to a depositing holder (other than itself). No such fee shall be
payable to a Soliciting Dealer with respect to Shares tendered for such
Soliciting Dealers' own account. No broker, dealer, bank, trust company or
fiduciary shall be deemed to be an agent of CSW, the Depositary, the Information
Agent or the Dealer Managers for the purposes of the Offer.
STOCK TRANSFER TAXES. CSW will pay all stock transfer taxes, if any,
payable on account of the acquisition of Shares by CSW pursuant to the Offer,
except in certain circumstances where special payment or delivery procedures are
utilized pursuant to Instruction 5 of the accompanying Letter of Transmittal.
CERTAIN INFORMATION REGARDING CSW AND CPL
CPL is an operating utility primarily engaged in the generation, purchase,
transmission, distribution and sale of electric power to approximately 625,000
retail customers in the South Texas area. All of the common stock of CPL is
owned, directly or indirectly, by CSW, a registered holding company under the
1935 Act.
CPL, and CPL Capital I and CPL Capital II, each a statutory business trust
formed under the laws of the State of Delaware, have filed a registration
statement on Form S-3 (the "Registration Statement") with the SEC with respect
to the proposed offering from time to time of up to $150,000,000 aggregate
liquidation preference of Quarterly Income Preferred Securities, guaranteed by
CPL to the extent set forth in the Registration Statement (the "Quarterly Income
Preferred Securities"). Following the announcement of the Offer, and subject to
market and other conditions, CPL intends that such trusts will effect one or
more public offerings of Quarterly Income Preferred Securities. Any such
offering would be made only by means of a prospectus which is included in the
Registration Statement.
The Board of Directors of CPL is currently contemplating soliciting proxies
from the holders of its common and preferred stock for use at a special meeting
to consider an amendment to CPL's Articles.
14
<PAGE>
The amendment would remove a provision of the Articles that limits CPL's ability
to issue unsecured debt. If proxies are solicited, and such amendment is
approved and adopted, a special cash payment may be made to shareholders who
voted in favor of such amendment. Preferred Shareholders of record who vote for
such amendment would be entitled to such cash payment regardless of whether they
had tendered Shares pursuant to the Offer.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
Set forth below is certain consolidated historical financial information of
CPL. The historical financial information (other than the ratios of earnings to
fixed charges) was derived from the audited consolidated financial statements
included in CPL's Annual Report on Form 10-K for the year ended December 31,
1996 which statements are hereby incorporated by reference. More comprehensive
financial information is included in such reports and the financial information
which follows is qualified in its entirety by reference to such reports and all
of the financial statements and related notes contained therein, copies of which
may be obtained as set forth herein.
CONDENSED INCOME STATEMENT DATA:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------- ------------- -------------
<CAPTION>
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
Operating Revenues.................................................. $ 1,300,688 $ 1,073,469 $ 1,217,979
Operating Income.................................................... 285,647 282,184 256,251
Allowance for Equity Funds Used During Construction................. 427 442 1,215
Net Income.......................................................... 147,051 206,447 205,439
Preferred Dividend Requirement...................................... 13,563 14,469 13,804
Net Income Applicable to Common Stock............................... 133,488 191,978 191,635
Ratio of Earnings to Fixed Charges.................................. 2.86 2.63 3.24
</TABLE>
CONDENSED BALANCE SHEET DATA (AT END OF PERIOD):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
<S> <C> <C> <C>
1996 1995 1994
------------- ------------- -------------
<CAPTION>
(THOUSANDS, EXCEPT RATIOS)
<S> <C> <C> <C>
ASSETS:
Net Utility Plant................................................... $ 3,419,018 $ 3,469,945 $ 3,469,826
Cash and Temporary Cash Investments................................. 3,299 2,883 642
Other Current Assets................................................ 175,013 167,477 176,100
Other Assets........................................................ 1,230,933 1,240,831 176,742
------------- ------------- -------------
4,828,263 $ 4,881,136 $ 4,822,699
------------- ------------- -------------
------------- ------------- -------------
LIABILITIES:
Common Equity....................................................... $ 1,442,820 $ 1,437,332 $ 1,431,354
Cumulative Preferred Stock.......................................... 250,351 250,351 250,351
Long-term Debt...................................................... 1,323,054 1,517,347 1,466,393
Current Liabilities................................................. 487,863 357,772 376,006
Other Liabilities................................................... 1,324,175 1,318,334 1,298,595
------------- ------------- -------------
$ 4,828,263 $ 4,881,136 $ 4,822,699
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
15
<PAGE>
ADDITIONAL INFORMATION REGARDING CSW
CSW is subject to the informational requirements of the Exchange Act and in
accordance therewith files periodic reports, proxy statements and other
information with the SEC. In connection with the Offer, CSW has also filed an
Issuer Tender Offer Statement on Schedule 13E-4 with the SEC that includes
certain additional information relating to the Offer.
Such material can be inspected and copied at the public reference facilities
of the SEC, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
its regional offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies may also be obtained by mail from the SEC's
Public Reference Branch, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC
maintains a Web site at http://www.sec.gov containing reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC, including CSW and CPL. CSW's Schedule 13E-4 will
not be available at the SEC's regional offices.
MISCELLANEOUS
The Offer is not being made to, nor will CSW accept tenders from, owners of
Shares in any jurisdiction in which the Offer or its acceptance would not be in
compliance with the laws of such jurisdiction. CSW is not aware of any
jurisdiction where the making of the Offer or the tender of Shares would not be
in compliance with applicable law. If CSW becomes aware of any jurisdiction
where the making of the Offer or the tender of Shares is not in compliance with
any applicable law, CSW will make a good faith effort to comply with such law.
If, after such good faith effort, CSW cannot comply with such law, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
owners of Shares residing in such jurisdiction. In any jurisdiction in which the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer will be deemed to be made on CSW's behalf by one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
CENTRAL AND SOUTH WEST CORPORATION
16
<PAGE>
Facsimile copies of the Letter of Transmittal will only be accepted from
Eligible Institutions. The Letter of Transmittal and, if applicable,
certificates for Shares should be sent or delivered by each tendering Preferred
Shareholder of CPL or his or her broker, dealer, bank or trust company to the
Depositary at one of its addresses set forth below.
The Depositary is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS
BY MAIL: ONLY) BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (212)815-6213 Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
FOR INFORMATION, TELEPHONE:
(800) 507-9357
</TABLE>
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective telephone numbers and addresses
listed below. Requests for additional copies of this Offer to Purchase, the
Letter of Transmittal, or other tender offer materials may be directed to the
Information Agent or the Dealer Managers, and such copies will be furnished
promptly at CSW's expense. Preferred Shareholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
<TABLE>
<S> <C> <C>
The Information Agent:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
The Dealer Managers:
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
17
<PAGE>
[LOGO]
Central Power and Light Company
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
March , 1997
Dear Shareholder:
Please find enclosed important information pertaining to a proposed
amendment to the Restated Articles of Incorporation (the "Articles") of Central
Power and Light Company ("CPL") which will be considered at a Special Meeting of
its Shareholders. We would greatly appreciate your giving prompt attention to
the enclosed material which you are urged to read in its entirety.
The Articles presently limit CPL's ability to issue securities representing
(i) unsecured indebtedness to no more than 20% of the aggregate of its capital,
surplus and secured debt and (ii) unsecured indebtedness maturing in less than
ten years to 10% of such aggregate. These 20% and 10% restrictions limit CPL's
flexibility in planning and financing its business activities. With flexibility
and cost structure being crucial factors to success in a competitive utility
environment, CPL ultimately may be placed at a competitive disadvantage if these
restrictions are not removed from the Articles. The proposed amendment, as set
forth and explained in the enclosed Proxy Statement, would remove the 20% and
10% restrictions.
If you vote in favor of the proposed amendment and it passes, you will be
entitled to receive a special cash payment in the amount of $.50 per share for
each share that you vote in favor of the proposed amendment. Information
pertaining to the special cash payment is included with the enclosed material.
Central and South West Corporation ("CSW") is currently making an offer to
purchase all shares of CPL's 4.20% and 4.00% cumulative preferred stock.
Shareholders of the 4.20% and 4.00% series are entitled to vote for the proposed
amendment, and to receive the special cash payment, regardless of whether they
tender shares pursuant to CSW's offer.
It is important to your interests that all shareholders, regardless of the
number of shares owned, vote at the Special Meeting. Even if you plan to attend
the Special Meeting, WE URGE YOU TO MARK, SIGN AND DATE THE ENCLOSED PROXY,
WHICH IS INCLUDED WITHIN, AND RETURN IT, BY MAIL OR FACSIMILE, PRIOR TO THE DATE
OF THE SPECIAL MEETING TO CENTRAL AND SOUTH WEST SERVICES, INC., GOLDMAN, SACHS
& CO., OR SMITH BARNEY INC. AT THE ADDRESS OR FACSIMILE NUMBER LISTED IN THE
ENCLOSED PROXY STATEMENT. By signing and returning your proxy promptly, you are
assuring that your shares will be voted.
You are cordially invited to attend the Special Meeting which will be held
at CPL's principal office, 539 North Carancahua Street, Corpus Christi, Texas,
on , , 1997 at 4:45 p.m., central time.
If you have any questions regarding the proposed amendment or the Special
Meeting, please call [ ] of CPL at [ ], D.F. King &
Co., Inc., the Information Agent, at
(800) 755-3107, Goldman, Sachs & Co., at (800) 828-3182, Smith Barney Inc. at
(800) 655-4811, Lehman Brothers at [ ] or your Broker-Dealer.
Thank you for your continued interest in CPL.
Sincerely yours,
<TABLE>
<S> <C>
[/S/] [/S/]
M. Bruce Evans Glenn Files
Director and President Director
Goldman, Sachs & Co. Smith Barney Inc.
</TABLE>
<PAGE>
NOTICE AND PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD , 1997
------------------------
CENTRAL POWER AND LIGHT COMPANY
539 NORTH CARANCAHUA STREET
CORPUS CHRISTI, TEXAS 78401-2802
[LOGO]
3
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
539 NORTH CARANCAHUA STREET
CORPUS CHRISTI, TEXAS 78401-2802
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1997
------------------------
TO THE SHAREHOLDERS OF
CENTRAL POWER AND LIGHT COMPANY:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Central
Power and Light Company ("CPL") will be held at CPL's principal office, 539
North Carancahua Street, Corpus Christi, Texas 78401-2802, on ,
, 1997 at 4:45 p.m., central time, for purposes of considering the
removal from the Restated Articles of Incorporation subparagraph (c) of
paragraph 6 of Article VI, which limits CPL's ability to issue unsecured
indebtedness and transacting such other business as may legally come before the
meeting.
Only shareholders of record at the close of business on ,
, 1997, will be entitled to vote at the meeting and at any
adjournment thereof. Holders of cumulative preferred stock ("Preferred
Shareholders"), whether or not they now expect to be present at the meeting, are
requested to mark, date and sign the enclosed proxy, and return it prior to the
date of the Special Meeting. An addressed envelope, on which no postage stamp is
necessary if mailed in the United States, is enclosed for use in returning the
proxy. Preferred Shareholders who execute and deliver the enclosed proxy have
the power to revoke such proxy at any time before the authority granted by the
proxy is exercised.
CENTRAL POWER AND LIGHT COMPANY
BY [ ], SECRETARY
Dated: March , 1997
<PAGE>
CENTRAL POWER AND LIGHT COMPANY
PROXY STATEMENT
With respect to its Common Stock and Cumulative Preferred Stock
INTRODUCTION
This Proxy Statement is first being mailed on or about ,
1997 to the shareholders of Central Power and Light Company, a Texas corporation
("CPL"), in connection with the solicitation of proxies by the Board of
Directors (the "Board") of CPL for use at the Special Meeting of shareholders to
be held on , 1997, or any adjournment or postponement of such
meeting (the "Special Meeting"). At the Special Meeting, the shareholders of CPL
will vote upon a proposed amendment to CPL's Restated Articles of Incorporation
("Articles").
If the proposed amendment is approved and adopted by CPL's shareholders, CPL
will make a special cash payment in the amount of $.50 per share (the "Cash
Payment") to each preferred shareholder who voted in favor of the proposed
amendment. IF A PREFERRED SHAREHOLDER VOTES AGAINST THE PROPOSED AMENDMENT OR
ABSTAINS, SUCH PREFERRED SHAREHOLDER SHALL NOT BE ENTITLED TO THE CASH PAYMENT
(REGARDLESS OF WHETHER THE PROPOSED AMENDMENT IS APPROVED AND ADOPTED).
CENTRAL AND SOUTH WEST CORPORATION ("CSW") IS CURRENTLY MAKING AN OFFER TO
PURCHASE ALL SHARES OF CPL'S 4.20% (THE "4.20% SERIES") AND 4.00% (THE "4.00%
SERIES") CUMULATIVE PREFERRED STOCK (THE "OFFER"). SHAREHOLDERS OF THE 4.20% AND
4.00% SERIES ARE ENTITLED TO VOTE FOR THE PROPOSED AMENDMENT, AND TO RECEIVE THE
CASH PAYMENT, REGARDLESS OF WHETHER THEY TENDER SHARES PURSUANT TO THE OFFER.
VOTING SECURITIES, RIGHTS AND PROCEDURES
Only holders of record of CPL's voting securities at the close of business
on , 1997 (the "Record Date") will be entitled to vote in person or
by proxy at the Special Meeting. The outstanding voting securities of CPL for
purposes of voting on the proposed amendment are divided into two classes:
common stock and cumulative preferred stock. The class of cumulative preferred
stock has been issued in five series of preferred with the record holders of all
shares of the cumulative preferred stock voting together as one class. The
shares outstanding on the date of the Special Meeting, and the vote to which
each share is entitled in consideration of the proposed amendment, are as
follows:
<TABLE>
<CAPTION>
CLASS SHARES OUTSTANDING VOTES PER SHARE
- ------------------------------------------------------ ------------------- -----------------
<S> <C> <C>
Common Stock (Par Value $25 per share)................ 6,755,535 1 vote
Cumulative Preferred Stock (Par Value $100 per
Share).............................................. 1,775,000 1 vote
</TABLE>
The affirmative vote of the holders of two-thirds of the outstanding shares
of each of CPL's (i) common stock and (ii) cumulative preferred stock, all
series of the cumulative preferred stock voting together as one class, is
required to approve the proposed amendment to be presented at the Special
Meeting. Abstentions and broker non-votes will have the effect of votes against
the proposed amendment. CSW, which owns all of the outstanding common stock of
CPL, has advised CPL that it intends to vote all of the outstanding shares of
common stock of CPL in favor of the proposed amendment.
Votes at the Special Meeting will be tabulated preliminarily by Central and
South West Services, Inc., a wholly owned subsidiary of CSW. Inspectors of
Election, duly appointed by the presiding officer of the Special Meeting, will
definitively count and tabulate the votes and determine and announce the results
at the meeting. CPL has no established procedure for confidential voting. There
are no rights of appraisal in connection with the proposed amendment.
<PAGE>
PROXIES
THE ENCLOSED PROXY IS SOLICITED BY CPL'S BOARD, WHICH RECOMMENDS VOTING FOR
THE PROPOSED AMENDMENT. ALL SHARES OF CPL'S COMMON STOCK WILL BE VOTED IN
ACCORDANCE WITH THE RECOMMENDATION OF CPL'S BOARD. Shares of CPL's cumulative
preferred stock represented by properly executed proxies received, by mail or
facsimile, at or prior to the Special Meeting will be voted in accordance with
the instructions thereon. If no instructions are indicated, duly executed
proxies will be voted in accordance with the recommendation of the Board. It is
not anticipated that any other matters will be brought before the Special
Meeting. However, the enclosed proxy gives discretionary authority to the proxy
holders named therein should any other matters be presented at the Special
Meeting, and it is the intention of the proxy holders to act on any other
matters in accordance with their best judgment.
Execution of a proxy will not prevent a shareholder from attending the
Special Meeting and voting in person. Any shareholder giving a proxy may revoke
it at any time before it is voted by delivering to the Secretary of CPL written
notice of revocation bearing a later date than the proxy, by delivering a duly
executed proxy bearing a later date, or by voting in person by ballot at the
Special Meeting.
CPL will bear the cost of the solicitation of proxies by the Board. CPL has
engaged D.F. King, Inc. to assist in the solicitation of proxies for an
estimated fee of $10,000 plus reimbursement of reasonable out-of-pocket
expenses. Proxies will be solicited by mail or by telephone. In addition,
officers and employees of CPL may also solicit proxies personally or by
telephone; such persons will receive no additional compensation for these
services.
CPL has requested that brokerage houses and other custodians, nominees and
fiduciaries forward solicitation materials to the beneficial owners of shares of
CPL's cumulative preferred stock held of record by such persons and will
reimburse such brokers and other fiduciaries for their reasonable out-of-pocket
expenses incurred in connection therewith.
An application has been filed with the Securities and Exchange Commission
("SEC") under the Public Utility Holding Company Act of 1935, as amended
("Holding Company Act") requesting approval of the proposed amendment. CPL has
received a preliminary order, permitting the solicitation of proxies, from the
SEC under the Holding Company Act.
CASH PAYMENTS
Subject to the terms and conditions set forth in this Proxy Statement, if
(but only if) the proposed amendment is approved and adopted by the shareholders
of CPL, CPL will make a Cash Payment to each preferred shareholder whose shares
are properly voted in favor of the proposed amendment, in person by ballot or by
proxy, at the Special Meeting in the amount of $.50 for each share held by such
preferred shareholder on the Record Date which is so voted. The Company has been
advised that there is uncertainty under state law, due to the lack of
controlling precedent, as to the permissibility of making the Cash Payment.
While the Company cannot predict how a court would rule on the issue, the
Company believes that the Offer is fair to Preferred Shareholders and has
determined to make the Cash Payment. CASH PAYMENTS WILL BE MADE TO PREFERRED
SHAREHOLDERS AS OF THE RECORD DATE IN RESPECT OF EACH SHARE WHICH IS SO VOTED
ONLY IF SUCH SHARES ARE VOTED FOR THE ADOPTION OF THE PROPOSED AMENDMENT. If the
Proposed Amendment is approved and adopted, Cash Payments will be paid out of
CPL's general funds, promptly after the proposed amendment shall have become
effective. However, no accrued interest will be paid on the Cash Payments
regardless of any delay in making payments.
Only preferred shareholders on the Record Date (or their legal
representatives or attorneys-in-fact) are entitled to vote at the Special
Meeting and to receive Cash Payments from CPL. Any beneficial holder of shares
who is not the registered holder of such shares as of the Record Date (as would
be the case for
2
<PAGE>
any beneficial owner whose shares are registered in the name of such holder's
broker, dealer, commercial bank, trust company or other nominee) must arrange
with the record preferred shareholder to execute and deliver a proxy form on
such beneficial owner's behalf. If a beneficial holder of shares intends to
attend the Special Meeting and vote in person, such beneficial holder must
obtain a legal proxy form from his or her broker, dealer, commercial bank, trust
company or other nominee. CPL will make Cash Payments only to record preferred
shareholders. Any beneficial holder of shares who is not the registered holder
of such shares as of the Record Date must arrange with the record preferred
shareholder to receive his proportionate interest in the Cash Payments made to
such record preferred shareholder. CPL will have no responsibility or liability
for any aspect of the records relating to or payments made on account of any
beneficial holder's interest in the Cash Payments made to a record preferred
shareholder.
PREFERRED SHAREHOLDERS OF THE 4.20% SERIES AND THE 4.00% SERIES ARE ENTITLED
TO VOTE FOR THE PROPOSED AMENDMENT, AND TO RECEIVE THE CASH PAYMENT, REGARDLESS
OF WHETHER THEY TENDER SHARES PURSUANT TO THE OFFER.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As noted above, CSW owns all the outstanding common stock of CPL.
Pursuant to Section 13(d) of the Exchange Act, a beneficial owner of a
security is any person who directly or indirectly has or shares voting or
investment power over such security. No person or group is known by management
of CPL to be the beneficial owner of more than 5% of CPL's class of cumulative
preferred stock as of the Record Date.
CPL's directors and executive officers do not beneficially own any shares of
any series of CPL's cumulative preferred stock as of the Record Date. The
beneficial ownership of CSW's common stock held by each director, as well as
directors and executive officers as a group, as of December 31, 1996, is set
forth in the following table. Share amounts shown include options exercisable
within 60 days after year-end, restricted stock, shares of CSW common stock
credited to CSW Thrift Plus accounts and all other shares of CSW common stock
beneficially owned by the listed persons.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNER(1) OF BENEFICIAL OWNERSHIP(2)
- ------------------------------------------------------- -------------------------------------
<S> <C>
John F. Brimberry...................................... 359.77
E.R. Brooks............................................ 113,690.32
M. Bruce Evans......................................... 13,223.00
Glenn Files............................................ 33,722.76
Robert A. McAllen...................................... 1,500.00
Loyd S. Neal, Jr....................................... 1,197.00
H. Lee Richards........................................ 1,400.00
J. Gonzalo Sandoval.................................... 14,011.00
Gerald E. Vaughn....................................... 3,162.37
All directors and executive officers as a group........ 188,809.89shares
<CAPTION>
(representing .05% of the class)
</TABLE>
- ------------------------
(1) No individual listed beneficially owned more than .03% of the outstanding
shares of common stock of CSW.
(2) Includes shares of restricted stock in the following amounts: E.R.
Brooks--17,074, M. Bruce Evans--3,574, Glenn Files--6,333, Gonzalo
Sandoval--1,605 and Gerald E. Vaughn--1,500; and all directors and officers
as a group--31,586. Includes shares which there is a right to acquire within
3
<PAGE>
60 days pursuant to the exercise of stock options in the following amounts:
E.R. Brooks--54,315; M. Bruce Evans--8,928; Glenn Files--19,067; Gonzalo
Sandoval--5,592; and all directors and executive officers as a
group--95,110.
BUSINESS TO COME BEFORE THE SPECIAL MEETING
The following proposed amendment to CPL's Articles is the only item of
business expected to be presented at the Special Meeting:
To remove in its entirety subparagraph (c) of paragraph 6 of Article VI,
limiting CPL's ability to issue unsecured indebtedness.
EXPLANATION OF THE PROPOSED AMENDMENT
Without the consent of the majority of the holders of CPL's cumulative
preferred stock, the Articles currently prohibit the issuance or assumption of
any unsecured notes, debentures or other securities representing unsecured
indebtedness (other than for the purpose of refunding outstanding unsecured
indebtedness resulting in later maturities or for funding existing unsecured
indebtedness (not represented by unsecured obligations)) if, immediately after
such issuance or assumption, (a) the total outstanding principal amount of all
securities representing unsecured debt would exceed 20% of the aggregate of (1)
the total principal amount of all outstanding secured debt of CPL and (2) the
capital and surplus of CPL or (b) the total outstanding principal amount of all
securities representing unsecured debt maturing in less than ten years would
exceed 10% of such aggregate. The proposed amendment, if adopted, would
eliminate in its entirety subparagraph (c) of paragraph 6 of Article VI, as set
forth below, from the Articles.
* * *
"(c) issue or assume any unsecured notes, debentures or other securities
representing unsecured indebtedness (herein referred to as "unsecured
obligations"), for any purpose other than refunding or renewing outstanding
unsecured obligations resulting in later maturities or funding existing
unsecured indebtedness (not represented by unsecured obligations), if
immediately after such issue or assumption (1) the principal amount of all
unsecured obligations issued or assumed by the corporation and then
outstanding would exceed 20% of the aggregate of (i) the principal amount of
all bonds or other securities representing secured indebtedness issued or
assumed by the corporation and then outstanding and (ii) the total capital
stock and surplus of the corporation as then recorded on its books, or (2)
the principal amount of all unsecured obligations maturing in less than ten
years, issued or assumed by the corporation and then outstanding, computed
as herein provided, would exceed 10% of such aggregate. For the purposes of
this subparagraph (c), the principal amount of any unsecured obligations
which had an original single maturity of more than ten years from the date
thereof, and the principal amount of the final maturity of any serially-
maturing unsecured obligations which had one or more original maturities of
more than ten years from the date thereof, shall not be regarded as
unsecured obligations maturing in less than ten years until such principal
amount shall be due or required to be paid within three years."
REASONS FOR THE PROPOSED AMENDMENT
CPL believes that regulatory, legislative and market developments are
leading to a more competitive environment in the electric utility industry. As
competition intensifies, flexibility and cost structure will be even more
crucial to success in the future. Given that the electric industry is extremely
capital intensive, controlling and minimizing financing costs are essential
ingredients to operating effectively in the new competitive environment. It is,
therefore, for those two reasons, flexibility and cost structure, that you are
being asked to vote in favor of the proposed amendment.
4
<PAGE>
CPL believes that adoption of the proposed amendment is key to meeting the
objectives of flexibility and cost structure. If adopted, the amendment would
eliminate the current provision of CPL's Articles that limits the total amount
of CPL's unsecured indebtedness to 20% of the total amount of CPL's secured
indebtedness, plus capital and surplus, and the amount of short-term unsecured
debt to 10% of such total amount. Historically, CPL's debt financing generally
has been accomplished through the issuance of long-term first mortgage bonds and
a modest amount of unsecured short-term debt. First mortgage bonds represent
secured indebtedness because they place a first priority lien on substantially
all of CPL's assets. The Indenture dated January 1, 1943, as amended, between
CPL and The First National Bank of Chicago and R.D. Manella, as Trustees, (the
"First Mortgage Bond Indenture") contains certain restrictive covenants with
respect to, among other things, the disposition of assets and the ability to
issue additional first mortgage bonds. Short-term debt, usually the lowest cost
debt available to CPL, represents one type of unsecured indebtedness. The
proposed amendment will not only allow CPL to issue a greater amount of
unsecured debt, it will also allow CPL to issue a greater amount of total debt.
CPL will consider changing the mix of debt securities toward more issuances on a
short-term and unsecured basis. Additionally, CPL may issue certain tax
deductible trust preferred securities which would be classified as unsecured
debt under CPL's current Articles. CPL has filed a Registration Statement on
Form S-3 with the SEC for the issuance of tax-deductible trust preferred
securities.
Inasmuch as the 10% and 20% provisions contained in the Articles limit CPL's
flexibility in planning and financing its business activities, CPL believes it
ultimately will be at a competitive disadvantage if the provision is not
eliminated. The industry's new competitors (for example, power marketers,
independent power producers and cogenerating facilities) generally are not
subject to the type of financing restrictions the Articles impose on CPL.
Recently, several other utilities with the same or similar charter restrictions
have successfully eliminated such provisions by soliciting their shareholders
for the same or similar amendments. Therefore, many potential utility
competitors have no comparable provision restricting the use of unsecured debt.
While CPL's current low-cost structure has been instrumental in reducing the
ability of other competitors to attract CPL's large bulk power customers, CPL
must continue to explore new ways of reducing costs and enhancing flexibility.
CPL believes that the adoption of the proposed amendment will be in the best
long-term competitive interests of shareholders by enhancing its ability to meet
the two objectives described below.
FINANCIAL FLEXIBILITY
CPL believes that in the long run, various types of unsecured debt
alternatives will increase in importance as an option in financing its
construction program and refinancing high-cost mortgage bonds. The availability
and flexibility of unsecured debt is necessary to take full advantage of
changing conditions in securities markets. CPL presently intends to continue to
rely on unsecured debt up to the 10% or 20% maximum amounts currently allowable
under the Articles. In addition, although CPL's earnings currently are
sufficient to meet the earnings coverage tests contained in its First Mortgage
Bond Indenture that must be satisfied in certain instances before issuing
additional first mortgage bonds, there could be periods, when, because of an
inability to meet the Articles test, CPL would be unable to issue any additional
preferred stock. An inability to issue preferred stock in the future, combined
with the inability to issue additional unsecured debt, would limit CPL's
financing options to either additional first mortgage bonds (assuming that the
earnings coverage test could be met) or additional common stock.
COST STRUCTURE
CPL's use of unsecured short-term debt is subject to the 10% and 20%
provisions contained in the Articles. CPL believes that the prudent use of such
debt in excess of this provision is vital to effective financial management of
the business. Not only is unsecured short-term debt generally the least
5
<PAGE>
expensive form of capital, it also provides flexibility in meeting seasonal
fluctuations in cash requirements, acts as a bridge between issues of permanent
capital and can be used when unfavorable conditions prevail in the market for
long-term capital.
For purposes of the 10% and 20% provisions, tax-deductible trust preferred
securities are considered to be unsecured debt, and accordingly the use of
tax-deductible trust preferred securities is limited by the 10% and 20%
provisions. Tax-deductible trust preferred securities generally have a lower
after-tax cost than traditional perpetual preferred stock.
FOR THE ABOVE REASONS, CPL'S BOARD BELIEVES THE BEST LONG-TERM INTERESTS OF
SHAREHOLDERS ARE SERVED BY, AND ENCOURAGES SHAREHOLDERS TO VOTE FOR, THE
ADOPTION OF THE PROPOSED AMENDMENT.
CERTAIN EFFECTS OF THE PROPOSED AMENDMENT
If the proposed amendment becomes effective, preferred shareholders will no
longer be entitled to the benefits of the Articles provision limiting the amount
of unsecured debt CPL may issue, which will have been deleted by the proposed
amendment. As discussed above, such provision places restrictions on CPL's
ability to issue or assume unsecured indebtedness. Although CPL's debt
instruments may contain certain restrictions on CPL's ability to issue or assume
debt, any such restrictions may be waived and the increased flexibility afforded
CPL by the deletion of the Articles provision may permit CPL to take certain
actions that may increase the credit risks with respect to CPL, adversely
affecting the market price and credit rating of the shares of preferred stock or
otherwise be materially adverse to the interests of the preferred shareholders.
In addition, to the extent that CPL elects to issue additional unsecured debt,
including trust preferred securities, the preferred shareholders' relative
position in CPL's capital structure could be perceived to decline, which in turn
could adversely affect the market price and credit rating of the shares of
preferred stock.
RATING AGENCIES
Moody's Investors Service, Inc., Duff & Phelps Credit Rating Co. and
Standard & Poor's Rating Services (the "Rating Agencies") have been advised of
the proposed amendment. The Rating Agencies have advised CPL that the adoption
of the proposed amendment will not result in a reduction of the preferred
stock's current ratings.
Ratings are not recommendations to purchase, hold or sell shares of the
preferred stock inasmuch as the ratings do not comment as to market price or
suitability for a particular investor. The ratings are based on current
information furnished to the Rating Agencies by CPL and obtained from other
sources. The ratings may be changed, suspended or withdrawn as a result of
changes in, or the unavailability of, such information.
FINANCIAL AND OTHER INFORMATION RELATING TO CPL
The financial statements of CPL and related information included in its
Annual Report on Form 10-K for the year ended December 31, 1996, as filed with
the SEC, is hereby incorporated by reference. CPL will provide without charge,
upon the written or oral request of any person (including any beneficial owner)
to whom this Proxy Statement is delivered, a copy of such information (excluding
certain exhibits). Such requests for information should be directed to Stephen
D. Wise, Director, Finance, Central and South West Corporation, 1616 Woodall
Rodgers Freeway, Dallas, TX 75202, as agent for CPL, telephone (214) 777-1000.
6
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Upon recommendation of the Audit Committee of CSW's board of directors, such
board employed on April 18, 1996 Arthur Andersen LLP as independent public
accountants for CSW and its subsidiaries, including CPL, for the year 1996.
Representatives of Arthur Andersen LLP are expected to be present at the Special
Meeting with the opportunity to make a statement if they desire to do so, and
will be available to respond to appropriate questions.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the principal United States federal
income tax consequences of the receipt of Cash Payments and the adoption of the
proposed amendment. This summary is addressed only to preferred shareholders who
are "United States Holders" as defined below. This summary does not address all
aspects of federal income taxation that may be relevant to a particular
preferred shareholder in light of such preferred shareholder's individual
circumstances or to preferred shareholders subject to special treatment under
the federal income tax laws, such as preferred shareholders who are not United
States Holders, banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt organizations,
dealers in securities and currencies, preferred shareholders who received their
shares as part of a compensation arrangement with CPL, preferred shareholders
who do not hold their shares as capital assets and preferred shareholders
holding shares as part of a position in a "straddle" or as part of a "hedging,"
"conversion" or other integrated investment transaction for federal income tax
purposes.
The statements of law or legal conclusion set forth in this summary
constitute the opinion of Christy & Viener, special tax counsel to CSW and CPL.
This summary is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury Regulations, Internal Revenue Service rulings and
pronouncements, and judicial decisions now in effect, all of which are subject
to change at any time. Such a change could adversely affect the tax consequences
described herein, possibly on a retroactive basis. In addition, the authorities
on which this summary is based are subject to various interpretations and it is
therefore possible that the United States federal income tax treatment of the
Cash Payments and the adoption of the proposed amendment may differ from the
treatment described below.
Preferred shareholders should consult their own tax advisors in light of
their particular circumstances as to the application of United States federal
income tax laws, as well as the effect of any state, local, or foreign tax laws.
As used herein, the term "United States Holder" means a preferred
shareholder that is (i) for United States federal income tax purposes, a citizen
or resident of the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any state thereof or the District of
Columbia, or (iii) an estate or trust specified as being a "United States
Person" in the Code.
CASH PAYMENTS/MODIFICATION
United States Holders, whether or not they receive Cash Payments, will not
recognize any taxable income or loss with respect to their shares as a result of
the modification of the Articles by the proposed amendment. The federal income
tax treatment of the Cash Payments is not entirely clear. CPL will treat the
Cash Payment as ordinary non-dividend income to recipient United States Holders.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The amount of the Cash Payment paid to a United States Holder will be
reported to such holder and to the Internal Revenue Service except in the case
of corporations and other holders exempt from information reporting and backup
withholding. Backup withholding at a rate of 31% will apply to any such payments
made to non-exempt United States Holders unless the holder provides its taxpayer
7
<PAGE>
identification number and the certifications required to establish that it is
not subject to backup withholding. In order to prevent backup withholding, each
United States Holder voting in favor of the proposed amendment must provide such
holder's taxpayer identification number and certify that such holder is not
subject to backup withholding by completing the substitute Form W-9 included
herewith.
The amount of any backup withholding from a payment to a United States
Holder will be allowed as a credit against such holder's United States federal
income tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on Cash Payments, the preferred shareholder is
required to notify CPL of his or her correct TIN by completing the Substitute
Form W-9 attached to the proxy certifying that the TIN provided on Substitute
Form W-9 is correct and that (a) the preferred shareholder has not been notified
by the Internal Revenue Service that he or she is subject to federal income tax
backup withholding as a result of failure to report all interest or dividends or
(b) the Internal Revenue Service has notified the preferred shareholder that he
or she is no longer subject to federal income tax backup withholding. Foreign
preferred shareholders must submit a properly completed Form W-8 in order to
avoid the applicable backup withholding; provided, however, that backup
withholding will not apply to foreign preferred shareholders subject to 30% (or
lower treaty rate) withholding on the Cash Payments.
WHAT NUMBER TO GIVE TO CPL
The preferred shareholder is required to give CPL the social security number
or employer identification number of the registered owner of the shares. If the
shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidance on which number to report.
DELIVERY OF PROXIES
Properly executed proxies must be received, by mail or facsimile, at or
prior to the Special Meeting which will be held on , ,
1997. Such proxies may be mailed to Central and South West Services, Inc., at
1616 Woodall Rodgers Freeway, Dallas, Texas 75202 or sent by facsimile to (214)
777-[ ]. Properly executed proxies may also be delivered to Goldman,
Sachs & Co., at 85 Broad Street, New York, New York 10004 or by facsimile to
(212) 902-3000 or to Smith Barney Inc. at 390 Greenwich Street, New York, New
York 10013 or by facsimile to (212) 723-8798.
By Order of the Board of Directors
Secretary
Dated: March , 1997
8
<PAGE>
PROXY PROXY
CENTRAL POWER AND LIGHT COMPANY
The undersigned hereby appoints [ ],
[ ], and [ ], or any of them, as
proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated hereunder and in their discretion
with respect to any other business properly brought before the Special Meeting,
all the shares of cumulative preferred stock of Central Power and Light Company
("CPL") which the undersigned is entitled to vote at the Special Meeting of
Shareholders to be held on , 1997, or any adjournment(s) or
postponement(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CPL. This
proxy, when properly executed, will be voted in the manner directed herein by
the undersigned shareholder(s). If no direction is made, the proxy will be voted
FOR Item 1.
Indicate your vote by an (X). The Board of Directors recommends voting FOR
Item 1.
ITEM 1.
To remove from the Restated Articles of Incorporation subparagraph (c) of
paragraph 6 of Article VI in its entirety, which limits CPL's ability to issue
unsecured indebtedness.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
ALTHOUGH HOLDERS OF CPL'S AUCTION RATE AND MONEY MARKET PREFERRED STOCK MAY
ONLY PURCHASE AND TRANSFER THEIR SHARES IN BLOCKS OF 1,000 SHARES, SUCH
SHAREHOLDERS MAY VOTE ANY NUMBER OF SHARES TO WHICH THEY ARE THE RECORD HOLDER.
SHAREHOLDERS OF ALL SERIES OF CPL'S PREFERRED STOCK SHOULD INDICATE BELOW THE
NUMBER OF SHARES THEY ARE VOTING.
Number of Shares Voted: ______
Please check box if you plan to attend the Special Meeting. / /
<PAGE>
LETTER OF TRANSMITTAL AND PROXY
TO ACCOMPANY
SHARES OF % SERIES CUMULATIVE PREFERRED STOCK
CUSIP NUMBER
OF
SOUTHWESTERN ELECTRIC POWER COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
CENTRAL AND SOUTH WEST CORPORATION,
DATED , 1997, FOR PURCHASE AT A
PURCHASE PRICE OF $ PER SHARE
AND/OR
VOTED PURSUANT TO THE PROXY STATEMENT
OF
SOUTHWESTERN ELECTRIC POWER COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, , 1997, UNLESS THE OFFER IS EXTENDED.
THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1997, OR ON
SUCH DATE TO WHICH THE MEETING IS ADJOURNED OR POSTPONED.
TO: THE BANK OF NEW YORK, DEPOSITARY
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
(212) 815-6213
INFORMATION AND CONFIRM BY TELEPHONE:
(800) 507-9357
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S))
<PAGE>
PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES
SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE TO VALIDLY TENDER THEIR SHARES
UNLESS THEY HAVE SUBMITTED A DULY COMPLETED, VALID AND UNREVOKED PROXY
INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING
PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING.
CENTRAL AND SOUTH WEST CORPORATION WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR
PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND
ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE
FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY
CASTING THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF
TRANSMITTAL AND PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE
PROPOSED AMENDMENT IS APPROVED AND ADOPTED, SOUTHWESTERN ELECTRIC POWER COMPANY
WILL MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO VOTED IN
FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED
PURSUANT TO THE OFFER.
HOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE
CLOSE OF BUSINESS ON , 1997 (THE "RECORD DATE") AND WHO WISH TO TENDER IN
THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED, VALID AND
UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF AN IRREVOCABLE ASSIGNMENT OF PROXY
AS SET FORTH IN THIS LETTER OF TRANSMITTAL AND PROXY) FROM THE HOLDER OF RECORD
ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO FACILITATE RECEIPT OF PROXIES,
SHARES SHALL, DURING THE PERIOD WHICH COMMENCED , 1997 (TWO BUSINESS DAYS
PRIOR TO THE RECORD DATE) AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE
EXPIRATION DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE
TRANSFEREE WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY
SOLICITATION.
NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
The undersigned hereby appoints [ ], [ ], and [ ],
or any of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated hereunder and in
their discretion with respect to any other business properly brought before the
Special Meeting, all the shares of cumulative preferred stock of Southwestern
Electric Power Company ("SWEPCO") which the undersigned is entitled to vote at
the Special Meeting of Shareholders to be held on , 1997, or any
adjournment(s) or postponement(s) thereof.
NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE
CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY.
THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF SWEPCO. The proxy contained herein, when properly executed, will be
voted in the manner directed herein by the undersigned shareholder(s). If no
direction is made, the proxy will be voted FOR Item 1.
Indicate your vote by an (X). The Board of Directors recommends voting FOR
Item 1.
2
<PAGE>
ITEM 1.
HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE FOR THE PROPOSED
AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL MEETING.
To remove from the Restated Certificate of Incorporation subparagraph (c) of
paragraph 5 of Article Fourth in its entirety, which limits SWEPCO's ability to
issue unsecured indebtedness.
/ / FOR / / AGAINST / / ABSTAIN
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish to the satisfaction of SWEPCO its entitlement to
exercise or transfer this Proxy.
This will ordinarily require an assignment by such record holders in blank,
or if not in blank, to and from each successive transferee, including the
holder, with each signature guaranteed by an Eligible Institution. A form of
irrevocable assignment of proxy has been provided herein.
Please check box if you plan to attend the Special Meeting. / /
SIGNATURE(S) OF OWNER(S)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------, 1997
Name(s):
- -------------------------------------------------------------
.....................................................
(PLEASE PRINT)
Capacity (full title):
- ---------------------------------------------------
Address:
- -------------------------------------------------------------
.....................................................
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.:
- ------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title and see Instruction 5.)
3
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES
(IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION
APPEARS ON CERTIFICATE(S))
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
TOTAL NUMBER OF NUMBER OF SHARES NOT
SHARES REPRESENTED BY NUMBER OF TENDERED BUT AS TO
CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** WHICH PROXIES GIVEN ONLY
<S> <C> <C> <C>
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4. You must vote for the Proposed Amendment with respect to any
Shares tendered.
If any of your certificate(s) for Shares have been lost, stolen or
destroyed, please call the Depositary at 1-800-507-9357. In addition, you should
advise the Depositary of any certificate(s) you have in your possession. You
will need to complete an Affidavit of Loss with respect to the lost
certificate(s) (which will be provided by the Depositary) and pay an indemnity
bond premium fee.
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- ----------------------------
Name:
- ----------------------------
Name of Firm:
- ----------------------------
Address of Firm:
- ----------------------------
Area Code and Telephone No.:
- ----------------------------
Dated:
- ----------------------------, 1997
4
<PAGE>
IF SELLING SHARES SUBSEQUENT TO , 1997, A RECORD HOLDER MUST
COMPLETE THE FOLLOWING IRREVOCABLE PROXY
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK
PROXY TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO
WAS NOT A HOLDER OF RECORD ON , 1997
IRREVOCABLE PROXY
with respect to shares of the
% Series Cumulative Preferred Stock
of
SOUTHWESTERN ELECTRIC POWER COMPANY ("SWEPCO")
the undersigned hereby irrevocably appoints
______________________________
Type or Print Name of Transferee
as attorney and proxy, with full power of substitution, to vote and otherwise
act for and in the name(s) of the undersigned with respect to the Shares
indicated below which were held of record by the undersigned on ,
1997, in the manner in which the undersigned would be entitled to vote and
otherwise act in respect of such shares on any and all matters.
This proxy shall be effective whether or not the shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigns of the undersigned.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in the Offer to Purchase and Proxy Statement and in this
Letter of Transmittal and Proxy will constitute a binding agreement between the
undersigned and SWEPCO upon the terms and subject to the conditions of the
Offer.
<TABLE>
<CAPTION>
DESCRIPTION OF PREFERRED STOCK
CERTIFICATE NUMBER(S) (ATTACH AGGREGATE NUMBER
LIST IF NECESSARY) OF SHARES
<S> <C>
TOTAL:
Signature of Record or Signature of Record or
Authorized Signatory Authorized Signatory
Type of Print Name Type or Print Name
Dated: , 19 Dated: , 19
Tax Identification or Social Security No(s).
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Must be signed by holder(s) exactly as name(s) appear(s) on the Record Date on certificate(s) for the
Shares or on a security position listing or by person(s) authorized to become holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a
fiduciary or representative capacity, please provide the following information and see Instruction 5.
Name Address
Please Print Include Zip Code
Area Code and Tel. No.
</TABLE>
Capacity (Full Title) __________________________________________________________
________________________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Name of Firm: __________________________________________________________________
Authorized Signature: __________________________________________________________
Title: _________________________________________________________________________
Dated: _______________________________________________________________, 19______
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A
FORM W-8, AS APPLICABLE.
DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN TO
THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE
SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING IN
FAVOR OF THE PROPOSED AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH
BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX
INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC.,
D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR SOUTHWESTERN
ELECTRIC POWER COMPANY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED.
6
<PAGE>
This Letter of Transmittal and Proxy is to be used (a) if Shares are to be
voted but not tendered, or (b) if certificates for Shares are to be forwarded
herewith or (c) if delivery of tendered Shares (as defined below) is to be made
by book-entry transfer to the Depositary's account at The Depository Trust
Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement (as defined
below).
Preferred Shareholders who wish to tender Shares yet who cannot deliver
their Shares and all other documents required hereby to the Depositary by the
Expiration Date (as defined in the Offer to Purchase and Proxy Statement) must
tender their Shares pursuant to the guaranteed delivery procedure set forth
under the heading "Terms of the Offer--Procedure for Tendering Shares" in the
Offer to Purchase and Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS
TO CENTRAL AND SOUTH WEST CORPORATION, SOUTHWESTERN ELECTRIC POWER COMPANY OR A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY.
/ / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
A Holder tendering Shares pursuant to this Letter of Transmittal and Proxy
must check one of the following boxes:
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR the
Proposed Amendment is included herein.
/ / A vote FOR the Proposed Amendment will be cast at the Special
Meeting.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
AND COMPLETE THE FOLLOWING:
Name of tendering institution:
------------------------------------------------------------------------
/ / DTC / / PDTC
Account No:
---------------------------------------------------------------------------
Transaction Code No:
-------------------------------------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of tendering shareholder(s)
- -------------------------------------------------------------------
Date of execution of Notice of Guaranteed Delivery and Proxy
- -----------------------------------------------
Name of institution that guaranteed delivery
- ------------------------------------------------------------
If delivery is by book-entry transfer:
Name of tendering institution
- --------------------------------------------------------------------------
Account no.
- ---------------------- at / / DTC / / PDTC
Transaction Code No.
- --------------------------------------------------------------------------------
A holder electing to tender Shares pursuant to a Notice of Guaranteed
Delivery and Proxy must check one of the following boxes:
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR
the Proposed Amendment was included with the Notice of Guaranteed
Delivery and Proxy previously sent to the Depositary.
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR
the Proposed Amendment is being delivered pursuant to a Notice of
Guaranteed Delivery and Proxy previously sent to the Depositary.
/ / A valid vote FOR the Proposed Amendment will be cast at the
Special Meeting.
7
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED ABOVE.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The abovesigned hereby tenders to Central and South West Corporation, a
Delaware corporation ("CSW"), the shares in the amount set forth in the box
above labeled "Description of Shares Tendered" pursuant to CSW's offer to
purchase any and all of the outstanding shares of the series of cumulative
preferred stock of Southwestern Electric Power Company ("SWEPCO"), a Delaware
corporation and direct utility subsidiary of CSW, shown on the first page hereof
and to which this Letter of Transmittal and Proxy is applicable (the "Shares")
at the purchase price per Share shown on the first page hereof, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase and Proxy Statement, dated , 1997 (the "Offer to
Purchase and Proxy Statement"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal and Proxy (which as to the Shares, together with the
Offer to Purchase and Proxy Statement, constitutes the "Offer"). PREFERRED
SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN
FAVOR OF THE PROPOSED AMENDMENT TO SWEPCO'S RESTATED CERTIFICATE OF
INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE
"PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT
BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO
PURCHASE AND PROXY STATEMENT). See "Proposed Amendment and Proxy Solicitation",
"Terms of the Offer--Extension of Tender Period; Termination; Amendments" and
"Terms of the Offer--Certain Conditions of the Offer" in the Offer to Purchase
and Proxy Statement.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the abovesigned hereby
sells, assigns and transfers to, or upon the order of, CSW all right, title and
interest in and to all the Shares that are being tendered hereby and hereby
constitutes and appoints The Bank of New York (the "Depositary") the true and
lawful agent and attorney-in-fact of the abovesigned with respect to such
Shares, with full power of substitution (such power of attorney being an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares, or transfer ownership of such Shares on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of CSW, (b) present such Shares for registration and transfer on the
books of SWEPCO and (c) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares, all in accordance with the terms of the
Offer. The Depositary will act as agent for tendering shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
shareholders.
The abovesigned hereby represents and warrants that the abovesigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and that, when and to the extent the same are accepted for payment by
CSW, CSW will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
the same will not be subject to any adverse claims. The abovesigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or CSW to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the abovesigned, and
any obligations of the abovesigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the abovesigned. Except as
stated in the Offer, this tender is irrevocable.
The abovesigned understands that tenders of Shares pursuant to any one of
the procedures described under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement and in the
instructions hereto will constitute the abovesigned's acceptance of the terms
and conditions of the Offer. CSW's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
abovesigned and CSW upon the terms and subject to the conditions of the Offer.
The abovesigned recognizes that, under certain circumstances set forth in
the Offer to Purchase and Proxy Statement, CSW may terminate or amend the Offer
or may not be required to purchase any of the Shares tendered hereby. In either
event, the abovesigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the abovesigned.
8
<PAGE>
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions", please issue the check for the purchase price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the abovesigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions", please mail the check for the purchase price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the abovesigned at the
address shown below the abovesigned signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares purchased
and/or return any Shares not tendered or not purchased in the name(s) of, and
mail said check and/or any certificates to, the person(s) so indicated. The
abovesigned recognizes that CSW has no obligation, pursuant to the "Special
Payment Instructions", to transfer any Shares from the name of the registered
holder(s) thereof if CSW does not accept for payment any of the Shares so
tendered.
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6 AND 7) (SEE INSTRUCTIONS 4, 6 AND 7)
To be completed ONLY if the check for To be completed ONLY if the check for
the purchase price of Shares purchased, the purchase price of Shares
the certificates for Shares not tendered purchased, the certificates for Shares not
or not purchased or the check for the Cash tendered or not purchased or the check for
Payment are to be issued in the name of the Cash Payment are to be mailed to
someone other than the abovesigned. someone other than the abovesigned or to
Issue / / check and/or the abovesigned at an address other than
/ / certificate(s) to: that shown below the abovesigned's
Name signature(s).
(PLEASE PRINT) Mail / / check and/or
Address / / certificate(s) to:
(INCLUDE ZIP CODE) Name
(TAXPAYER IDENTIFICATION OR (PLEASE PRINT)
SOCIAL SECURITY NUMBER) Address
(INCLUDE ZIP CODE)
LOST CERTIFICATES BOX
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND
WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 12.)
Number of Shares represented by lost, destroyed or stolen certificates:
---------------
</TABLE>
9
<PAGE>
SOLICITED TENDERS
(SEE INSTRUCTION 10)
As provided in Instruction 10, CSW will pay to any Soliciting Dealer, as
defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares
tendered, accepted for payment and paid pursuant to the Offer in transactions
for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00
per Share in transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or exceeding 2,500 Shares
shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers
(which may be a Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned by such Soliciting
Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm: __________________________________________________________________
(PLEASE PRINT)
Name of Individual Broker
or Financial Consultant: _______________________________________________________
Telephone Number of Broker
or Financial Consultant: _______________________________________________________
Identification Number (if known):
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
The following is to be completed ONLY if customer's Shares held in nominee
name are tendered.
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Offer to Purchase; (c) in soliciting tenders of Shares, it has used no
soliciting materials other than those furnished by CSW; and (d) if it is a
foreign broker or dealer not eligible for membership in the National Association
of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations.
THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH
SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY.
(IF SHARES ARE BEING TENDERED, PLEASE COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE: _____________________________________________________________________
Signature of Owner(s)
_______________________________________
Signature of Owner(s)
10
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm
that is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States which is a
participant in an approved Signature Guarantee Medallion Program (an "Eligible
Institution"). Signatures on this Letter of Transmittal and Proxy need not be
guaranteed (a) if this Letter of Transmittal and Proxy is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in one of the Book-Entry Transfer Facilities whose
name appears on a security position listing as the owner of Shares) tendered
herewith and such holder(s) has not completed the box above under the heading
"Special Payment Instructions" or the box above under the heading "Special
Delivery Instructions" on this Letter of Transmittal and Proxy, (b) if such
Shares are tendered for the account of an Eligible Institution or (c) if this
Letter of Transmittal and Proxy is being used solely for the purpose of voting
Shares which are not being tendered pursuant to the Offer. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of
Transmittal and Proxy is to be used if (a) certificates are to be forwarded
herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant
to the procedures set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement or (c) Shares are
being voted in connection with the Offer. Certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal and Proxy (or facsimile thereof) and any other documents
required by this Letter of Transmittal and Proxy, must be received by the
Depositary at one of its addresses set forth on the front page of this Letter of
Transmittal and Proxy on or prior to the Expiration Date (as defined in the
Offer to Purchase and Proxy Statement) with respect to all Shares. Preferred
Shareholders who wish to tender their Shares yet who cannot deliver their Shares
and all other required documents to the Depositary on or prior to the Expiration
Date must tender their Shares pursuant to the guaranteed delivery procedure set
forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in
the Offer to Purchase and Proxy Statement. Pursuant to such procedure: (a) such
tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery and Proxy in the form
provided by CSW (with any required signature guarantees) must be received by the
Depositary on or prior to the applicable Expiration Date and (c) the
certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal and Proxy (or
facsimile thereof) and any other documents required by this Letter of
Transmittal and Proxy must be received by the Depositary by 5:00 p.m. (central
time) within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery and Proxy, all as provided under
the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to
Purchase and Proxy Statement.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
"Terms of the Offer--Number of Shares; Purchase Price; Expiration Date
Dividends" in the Offer to Purchase and Proxy Statement. By executing this
Letter of Transmittal and Proxy (or facsimile thereof), the tendering
stockholder waives any right to receive any notice of the acceptance for payment
of the Shares.
3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES
PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO SWEPCO'S
RESTATED CERTIFICATE OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND
PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE
PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED
IN THE OFFER TO PURCHASE AND PROXY STATEMENT). In addition, Preferred
Shareholders have the right to vote for the Proposed Amendment regardless of
whether they tender their Shares by casting their vote and duly executing this
11
<PAGE>
Letter of Transmittal and Proxy or by voting in person at the Special Meeting.
By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder
is taken to have tendered the Shares described in such Notice of Guaranteed
Delivery and Proxy and to have voted such Shares in accordance with the proxy
contained therein. If no vote is indicated on an otherwise properly executed
proxy contained within this Letter of Transmittal and Proxy (or within a Notice
of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will
be voted in favor of the Proposed Amendment. See "PROPOSED AMENDMENT AND PROXY
SOLICITATION" in the Offer to Purchase and Proxy Statement. The Offer is being
sent to all persons in whose names Shares are registered on the books of SWEPCO
on the Record Date (as defined in the Offer to Purchase and Proxy Statement).
Preferred Shareholders who purchase or whose purchase is registered after the
Record Date and who wish to tender in the Offer must arrange with their seller
to receive a proxy from the holder of record on the Record Date of such Shares.
Any holder of Shares held of record on the Record Date in the name of another
must establish to the satisfaction of SWEPCO his entitlement to exercise or
transfer such Proxy. This will ordinarily require an assignment by such record
holder in blank, or if not in blank, to and from each successive transferee,
including the holder, with each signature guaranteed by an Eligible Institution.
See Instruction 5. In order to facilitate receipt of proxies, Shares shall,
during the period which commenced on , 1997 (two business days prior
to the Record Date) and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired shares in the Proxy
Solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any
person who is the beneficial owner but not the record holder of Shares must
arrange for the record transfer of such Shares prior to tendering or direct the
record holder to tender on behalf of the beneficial owner.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered". In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal and Proxy, unless otherwise provided in the box above
under the heading "Special Payment Instructions" or "Special Delivery
Instructions", as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND/OR NOTICE OF GUARANTEED
DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of
Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together,
the "Tender and Proxy Documents") is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered or voted under either Tender and Proxy
Document is held of record by two or more persons, all such persons must sign
such Tender and Proxy Document.
If any of the Shares tendered or voted under either Tender and Proxy
Document is registered in different names or different certificates, it will be
necessary to complete, sign and submit as many separate applicable Tender and
Proxy Documents as there are different registrations of certificates.
If either Tender and Proxy Document is signed by the registered holder(s) of
the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
If this Letter of Transmittal and Proxy is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender and Proxy Document or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to CSW of the authority of such person to act must be submitted.
12
<PAGE>
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, CSW
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom, is submitted. See
"Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase
Price and Dividend" in the Offer to Purchase and Proxy Statement. EXCEPT AS
PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX
STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, any Shares not
tendered or not purchased are to be returned to or the check for the Cash
Payment is to be issued in the name of, a person other than the person(s)
signing this Letter of Transmittal and Proxy or if the check and/or any
certificate for Shares not tendered or not purchased are to be mailed to someone
other than the person(s) signing this Letter of Transmittal and Proxy or to an
address other than that shown in the box above under the heading "Name(s) and
Address(es) of Registered Holder(s)", then the "Special Payment Instructions"
and/or "Special Delivery Instructions" on this Letter of Transmittal and Proxy
should be completed. Preferred Shareholders tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting the
account maintained by such Preferred Shareholder at the Book-Entry Transfer
Facility from which such transfer was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder or a
Preferred Shareholder voting in favor of the Proposed Amendment is required to
provide the Depositary with either a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the Preferred
Shareholder to 31% federal income tax backup withholding on the payment of the
purchase price for the Shares or the Cash Payment. If the Preferred Shareholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, the Preferred Shareholder may write "Applied For" in
the space for the TIN in Part I of Substitute Form W-9. If the Preferred
Shareholder writes "Applied For" in the space for the TIN in Substitute Form W-9
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% on the payment of the purchase price for the Shares
or the Cash Payment.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Managers
at their respective telephone numbers and addresses listed below. Requests for
additional copies of the Offer to Purchase and Proxy Statement, this Letter of
Transmittal and Proxy or other tender offer materials may be directed to the
Information Agent or the Dealer Managers and such copies will be furnished
promptly at CSW's expense. Preferred Shareholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
10. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered, accepted for payment and paid pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500 Shares and a solicitation
fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more
Shares, provided that fees payable in transactions equal to or exceeding 2,500
Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting
Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal
and Proxy which designates, under the heading "Solicited Tenders", as having
solicited and obtained the tender, the name of (a) any broker or dealer in
securities, including a Dealer Manager in its capacity as a dealer or broker,
which is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or
dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (c) any bank or trust
company (each of which is referred to herein as a "Soliciting Dealer"). No such
fee shall be payable to a Soliciting Dealer with respect to the tender of Shares
by a holder unless the Letter of Transmittal and Proxy accompanying such tender
designates such Soliciting Dealer. No such fee shall be payable to a Soliciting
Dealer in respect of Shares registered in the name of such Soliciting Dealer
unless such Shares are held by such Soliciting Dealer as nominee and such Shares
are being tendered for the benefit of one or more beneficial owners identified
on the Letter of Transmittal and Proxy or on the Notice of Solicited Tenders
(included in
13
<PAGE>
the materials provided to brokers and dealers). No such fee shall be payable to
a Soliciting Dealer with respect to the tender of Shares by the holder of
record, for the benefit of the beneficial owner, unless the beneficial owner has
designated such Soliciting Dealer. If tendered Shares are being delivered by
book-entry transfer, the Soliciting Dealer must return a Notice of Solicited
Tenders to the Depositary within three business days after expiration of the
Offer to receive a solicitation fee. No such fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
such fee shall be paid to a Soliciting Dealer with respect to Shares tendered
for such Soliciting Dealer's own account. No broker, dealer, bank, trust company
or fiduciary shall be deemed to be the agent of CSW, the Depositary, the
Information Agent or the Dealer Managers for purposes of the Offer.
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by CSW, in its sole discretion, and its
determination shall be final and binding. CSW reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any
of the conditions to the Offer or any defect or irregularity in any tender of
Shares and CSW's interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the Preferred Shareholder should
promptly notify the Depositary by checking the Lost Certificates Box immediately
following the Special Payment Instructions/Special Delivery Instructions and
indicating the number of Shares lost, destroyed or stolen. The Preferred
Shareholder will then be instructed as to the procedures that must be taken in
order to replace the certificate. The tender of Shares pursuant to this Letter
of Transmittal and Proxy will not be valid unless prior to the Expiration Date
(as defined in the Offer to Purchase and Proxy Statement): (a) such procedures
have been completed and a replacement certificate for the Shares has been
delivered to the Depositary or (b) a Notice of Guaranteed Delivery and Proxy has
been delivered to the Depositary. See Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY
HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY
AND PROXY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT).
IMPORTANT TAX INFORMATION
Under federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment or who will receive a Cash Payment as a result of
voting in favor of the Proposed Amendment is required to provide the Depositary
(as payer) with either such Preferred Shareholder's correct TIN on Substitute
Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder
is an individual, the TIN is his or her social security number. For businesses
and other entities, the number is the federal employer identification number. If
the Depositary is not provided with the correct TIN or properly completed Form
W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such Preferred
Shareholder may be subject to backup withholding. The Form W-8 can be obtained
from the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the Preferred Shareholder. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
14
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on a Cash Payment or payments that are made to a
Preferred Shareholder with respect to Shares purchased pursuant to the Offer,
the Preferred Shareholder is required to notify the Depositary of his or her
correct TIN by completing the Substitute Form W-9 attached hereto certifying
that the TIN provided on Substitute Form W-9 is correct and that (a) the
Preferred Shareholder is exempt from federal income tax backup withholding or
(b) the Preferred Shareholder has not been notified by the Internal Revenue
Service that he or she is subject to federal income tax backup withholding as a
result of failure to report all interest or dividends or (c) the Internal
Revenue Service has notified the Preferred Shareholder that he or she is no
longer subject to federal income tax backup withholding. Foreign Preferred
Shareholders must submit a properly completed Form W-8 in order to avoid the
applicable backup withholding; provided, however, that backup withholding will
not apply to foreign Preferred Shareholders subject to 30% (or lower treaty
rate) withholding on the Cash Payment or on gross payments received pursuant to
the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
15
<PAGE>
<TABLE>
<CAPTION>
PAYER'S NAME: THE BANK OF NEW YORK
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
SIGNING AND DATING BELOW. TIN ------------------------
Name (Please Print) PART 2--
Address For Payees Exempt from Backup
City State Zip Code Withholding (See Guidelines)
PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct taxpayer
identification number (or a TIN has not been issued to me but I have
applied for a TIN or intend to do so in the near future), and (2) I am
not subject to backup withholding either because I am exempt from
backup withholding or I have not been notified by the Internal Revenue
PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a
TAXPAYER
IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has
AND CERTIFICATION notified me that I am no longer subject to backup withholding. I
understand that, if I have written "Applied For" in the space for the
TIN in Part I, I must provide a TIN by the time of payment, or 31% of
the Cash Payment or the payment of the purchase price of the Shares
made to me will be withheld.
SIGNATURE DATE, 1997
You must cross out item (2) above if you have been notified by the IRS
that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER
OR PROXY SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
</TABLE>
THE DEALER MANAGERS:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
THE INFORMATION AGENT:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
16
<PAGE>
LETTER OF TRANSMITTAL AND PROXY
TO ACCOMPANY
SHARES OF % SERIES CUMULATIVE PREFERRED STOCK
CUSIP NUMBER
OF
PUBLIC SERVICE COMPANY OF OKLAHOMA
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
CENTRAL AND SOUTH WEST CORPORATION,
DATED , 1997, FOR PURCHASE AT A
PURCHASE PRICE OF $ PER SHARE
AND/OR
VOTED PURSUANT TO THE PROXY STATEMENT
OF
PUBLIC SERVICE COMPANY OF OKLAHOMA
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, , 1997, UNLESS THE OFFER IS EXTENDED.
THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE
SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON , 1997, OR ON
SUCH DATE TO WHICH THE MEETING IS ADJOURNED OR POSTPONED.
TO: THE BANK OF NEW YORK, DEPOSITARY
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
(212) 815-6213
INFORMATION AND CONFIRM BY TELEPHONE:
(800) 507-9357
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S))
<PAGE>
PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES
SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE TO VALIDLY TENDER THEIR SHARES
UNLESS THEY HAVE SUBMITTED A DULY COMPLETED, VALID AND UNREVOKED PROXY
INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING
PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING.
CENTRAL AND SOUTH WEST CORPORATION WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR
PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND
ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE
FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY
CASTING THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF
TRANSMITTAL AND PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE
PROPOSED AMENDMENT IS APPROVED AND ADOPTED, PUBLIC SERVICE COMPANY OF OKLAHOMA
WILL MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO VOTED IN
FAVOR OF THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED
PURSUANT TO THE OFFER.
HOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE
CLOSE OF BUSINESS ON , 1997 (THE "RECORD DATE") AND WHO WISH TO
TENDER IN THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED,
VALID AND UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF AN IRREVOCABLE ASSIGNMENT
OF PROXY AS SET FORTH IN THIS LETTER OF TRANSMITTAL AND PROXY) FROM THE HOLDER
OF RECORD ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO FACILITATE RECEIPT OF
PROXIES, SHARES SHALL, DURING THE PERIOD WHICH COMMENCED , 1997
(TWO BUSINESS DAYS PRIOR TO THE RECORD DATE) AND WHICH WILL END AT THE CLOSE OF
BUSINESS ON THE EXPIRATION DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A
PROXY PROVIDING THE TRANSFEREE WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN
THE PROXY SOLICITATION.
NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
The undersigned hereby appoints [ ], [ ], and [ ],
or any of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated hereunder and in
their discretion with respect to any other business properly brought before the
Special Meeting, all the shares of cumulative preferred stock of Public Service
Company of Oklahoma ("PSO") which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held on , 1997, or any
adjournment(s) or postponement(s) thereof.
NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE
CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY.
THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF PSO. The proxy contained herein, when properly executed, will be
voted in the manner directed herein by the undersigned shareholder(s). If no
direction is made, the proxy will be voted FOR Item 1.
Indicate your vote by an (X). The Board of Directors recommends voting FOR
Item 1.
ITEM 1.
HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE FOR THE PROPOSED
AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL MEETING.
To remove from the Restated Certificate of Incorporation subparagraph (c) of
paragraph 5 of Article VI in its entirety, which limits PSO's ability to issue
unsecured indebtedness.
/ / FOR / / AGAINST / / ABSTAIN
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
2
<PAGE>
Any holder of Shares held of record on the Record Date in the name of
another holder must establish to the satisfaction of PSO its entitlement to
exercise or transfer this Proxy. This will ordinarily require an assignment by
such record holders in blank, or if not in blank, to and from each successive
transferee, including the holder, with each signature guaranteed by an Eligible
Institution. A form of irrevocable assignment of proxy has been provided herein.
Please check box if you plan to attend the Special Meeting. / /
SIGNATURE(S) OF OWNER(S)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------, 1997
Name(s):
- -------------------------------------------------
..............................................
(PLEASE PRINT)
Capacity (full title):
- ---------------------------------------------------
Address:
- -------------------------------------------------------------
..........................................
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.:
- ------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title and see Instruction 5.)
3
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES
(IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION APPEARS ON CERTIFICATE(S))
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
TOTAL NUMBER OF NUMBER OF SHARES NOT
SHARES REPRESENTED BY NUMBER OF TENDERED BUT AS TO
CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** WHICH PROXIES GIVEN ONLY
<S> <C> <C> <C>
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4. You must vote for the Proposed Amendment with respect to any
Shares tendered.
If any of your certificate(s) for Shares have been lost, stolen or
destroyed, please call the Depositary at 1-800-507-9357. In addition, you should
advise the Depositary of any certificate(s) you have in your possession. You
will need to complete an Affidavit of Loss with respect to the lost
certificate(s) (which will be provided by the Depositary) and pay an indemnity
bond premium fee.
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- ----------------------------
Name:
- ----------------------------
Name of Firm:
- ----------------------------
Address of Firm:
- ----------------------------
Area Code and Telephone No.:
- ----------------------------
Dated:
- ----------------------------, 1997
4
<PAGE>
IF SELLING SHARES SUBSEQUENT TO , 1997, A RECORD HOLDER MUST
COMPLETE THE FOLLOWING IRREVOCABLE PROXY
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK
PROXY TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO
WAS NOT A HOLDER OF RECORD ON , 1997
IRREVOCABLE PROXY
with respect to shares of the
% Series Cumulative Preferred Stock
of
PUBLIC SERVICE COMPANY OF OKLAHOMA ("PSO")
the undersigned hereby irrevocably appoints
______________________________
Type or Print Name of Transferee
as attorney and proxy, with full power of substitution, to vote and otherwise
act for and in the name(s) of the undersigned with respect to the Shares
indicated below which were held of record by the undersigned on ,
1997, in the manner in which the undersigned would be entitled to vote and
otherwise act in respect of such shares on any and all matters.
This proxy shall be effective whether or not the shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigns of the undersigned.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in the Offer to Purchase and Proxy Statement and in this
Letter of Transmittal and Proxy will constitute a binding agreement between the
undersigned and PSO upon the terms and subject to the conditions of the Offer.
<TABLE>
<CAPTION>
DESCRIPTION OF PREFERRED STOCK
CERTIFICATE NUMBER(S) (ATTACH AGGREGATE NUMBER
LIST IF NECESSARY) OF SHARES
<S> <C>
TOTAL:
Signature of Record or Signature of Record or
Authorized Signatory Authorized Signatory
Type of Print Name Type or Print Name
Dated: , 19 Dated: , 19
Tax Identification or Social Security No(s).
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Must be signed by holder(s) exactly as name(s) appear(s) on the Record Date on certificate(s) for the
Shares or on a security position listing or by person(s) authorized to become holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a
fiduciary or representative capacity, please provide the following information and see Instruction 5.
Name Address
Please Print Include Zip Code
Area Code and Tel. No.
</TABLE>
Capacity (Full Title) __________________________________________________________
________________________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Name of Firm: __________________________________________________________________
Authorized Signature: __________________________________________________________
Title: _________________________________________________________________________
Dated: _______________________________________________________________, 19______
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A
FORM W-8, AS APPLICABLE.
DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN TO
THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE
SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING IN
FAVOR OF THE PROPOSED AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH
BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX
INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC.,
D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR PUBLIC SERVICE
COMPANY OF OKLAHOMA.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED.
6
<PAGE>
This Letter of Transmittal and Proxy is to be used (a) if Shares are to be
voted but not tendered, or (b) if certificates for Shares are to be forwarded
herewith or (c) if delivery of tendered Shares (as defined below) is to be made
by book-entry transfer to the Depositary's account at The Depository Trust
Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement (as defined
below).
Preferred Shareholders who wish to tender Shares yet who cannot deliver
their Shares and all other documents required hereby to the Depositary by the
Expiration Date (as defined in the Offer to Purchase and Proxy Statement) must
tender their Shares pursuant to the guaranteed delivery procedure set forth
under the heading "Terms of the Offer--Procedure for Tendering Shares" in the
Offer to Purchase and Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS
TO CENTRAL AND SOUTH WEST CORPORATION, PUBLIC SERVICE COMPANY OF OKLAHOMA OR A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY.
/ / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
A Holder tendering Shares pursuant to this Letter of Transmittal and Proxy
must check one of the following boxes:
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR the
Proposed Amendment is included herein.
/ / A vote FOR the Proposed Amendment will be cast at the Special
Meeting.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
AND COMPLETE THE FOLLOWING:
Name of tendering institution:
------------------------------------------------------------------------
/ / DTC / / PDTC
Account No:
---------------------------------------------------------------------------
Transaction Code No:
-------------------------------------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of tendering shareholder(s)
- -------------------------------------------------------------------
Date of execution of Notice of Guaranteed Delivery and Proxy
- -----------------------------------------------
Name of institution that guaranteed delivery
- ------------------------------------------------------------
If delivery is by book-entry transfer:
Name of tendering institution
- --------------------------------------------------------------------------
Account no.
- ---------------------- at / / DTC / / PDTC
Transaction Code No.
- --------------------------------------------------------------------------------
A holder electing to tender Shares pursuant to a Notice of Guaranteed
Delivery and Proxy must check one of the following boxes:
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR
the Proposed Amendment was included with the Notice of Guaranteed
Delivery and Proxy previously sent to the Depositary.
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR
the Proposed Amendment is being delivered pursuant to a Notice of
Guaranteed Delivery and Proxy previously sent to the Depositary.
/ / A valid vote FOR the Proposed Amendment will be cast at the
Special Meeting.
7
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED ABOVE.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The abovesigned hereby tenders to Central and South West Corporation, a
Delaware corporation ("CSW"), the shares in the amount set forth in the box
above labeled "Description of Shares Tendered" pursuant to CSW's offer to
purchase any and all of the outstanding shares of the series of cumulative
preferred stock of Public Service Company of Oklahoma ("PSO"), an Oklahoma
corporation and direct utility subsidiary of CSW, shown on the first page hereof
and to which this Letter of Transmittal and Proxy is applicable (the "Shares")
at the purchase price per Share shown on the first page hereof, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase and Proxy Statement, dated , 1997 (the "Offer to
Purchase and Proxy Statement"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal and Proxy (which as to the Shares, together with the
Offer to Purchase and Proxy Statement, constitutes the "Offer"). PREFERRED
SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN
FAVOR OF THE PROPOSED AMENDMENT TO PSO'S RESTATED CERTIFICATE OF INCORPORATION,
AS SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED
AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED
AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED IN THE OFFER TO PURCHASE AND
PROXY STATEMENT). See "Proposed Amendment and Proxy Solicitation", "Terms of the
Offer--Extension of Tender Period; Termination; Amendments" and "Terms of the
Offer--Certain Conditions of the Offer" in the Offer to Purchase and Proxy
Statement.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the abovesigned hereby
sells, assigns and transfers to, or upon the order of, CSW all right, title and
interest in and to all the Shares that are being tendered hereby and hereby
constitutes and appoints The Bank of New York (the "Depositary") the true and
lawful agent and attorney-in-fact of the abovesigned with respect to such
Shares, with full power of substitution (such power of attorney being an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares, or transfer ownership of such Shares on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of CSW, (b) present such Shares for registration and transfer on the
books of PSO and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the terms of the
Offer. The Depositary will act as agent for tendering shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
shareholders.
The abovesigned hereby represents and warrants that the abovesigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and that, when and to the extent the same are accepted for payment by
CSW, CSW will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
the same will not be subject to any adverse claims. The abovesigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or CSW to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the abovesigned, and
any obligations of the abovesigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the abovesigned. Except as
stated in the Offer, this tender is irrevocable.
The abovesigned understands that tenders of Shares pursuant to any one of
the procedures described under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement and in the
instructions hereto will constitute the abovesigned's acceptance of the terms
and conditions of the Offer. CSW's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
abovesigned and CSW upon the terms and subject to the conditions of the Offer.
The abovesigned recognizes that, under certain circumstances set forth in
the Offer to Purchase and Proxy Statement, CSW may terminate or amend the Offer
or may not be required to purchase any of the Shares tendered hereby. In either
event, the abovesigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the abovesigned.
8
<PAGE>
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions", please issue the check for the purchase price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the abovesigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions", please mail the check for the purchase price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the abovesigned at the
address shown below the abovesigned signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares purchased
and/or return any Shares not tendered or not purchased in the name(s) of, and
mail said check and/or any certificates to, the person(s) so indicated. The
abovesigned recognizes that CSW has no obligation, pursuant to the "Special
Payment Instructions", to transfer any Shares from the name of the registered
holder(s) thereof if CSW does not accept for payment any of the Shares so
tendered.
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6 AND 7) (SEE INSTRUCTIONS 4, 6 AND 7)
To be completed ONLY if the check for To be completed ONLY if the check for
the purchase price of Shares purchased, the purchase price of Shares
the certificates for Shares not tendered purchased, the certificates for Shares not
or not purchased or the check for the Cash tendered or not purchased or the check for
Payment are to be issued in the name of the Cash Payment are to be mailed to
someone other than the abovesigned. someone other than the abovesigned or to
Issue / / check and/or the abovesigned at an address other than
/ / certificate(s) to: that shown below the abovesigned's
Name signature(s).
(PLEASE PRINT) Mail / / check and/or
Address / / certificate(s) to:
(INCLUDE ZIP CODE) Name
(TAXPAYER IDENTIFICATION OR (PLEASE PRINT)
SOCIAL SECURITY NUMBER) Address
(INCLUDE ZIP CODE)
LOST CERTIFICATES BOX
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND
WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 12.)
Number of Shares represented by lost, destroyed or stolen certificates:
---------------
</TABLE>
9
<PAGE>
SOLICITED TENDERS
(SEE INSTRUCTION 10)
As provided in Instruction 10, CSW will pay to any Soliciting Dealer, as
defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares
tendered, accepted for payment and paid pursuant to the Offer in transactions
for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00
per Share in transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or exceeding 2,500 Shares
shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers
(which may be a Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned by such Soliciting
Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm: __________________________________________________________________
(PLEASE PRINT)
Name of Individual Broker
or Financial Consultant: _______________________________________________________
Telephone Number of Broker
or Financial Consultant: _______________________________________________________
Identification Number (if known): ______________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
The following is to be completed ONLY if customer's Shares held in nominee
name are tendered.
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Offer to Purchase; (c) in soliciting tenders of Shares, it has used no
soliciting materials other than those furnished by CSW; and (d) if it is a
foreign broker or dealer not eligible for membership in the National Association
of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations.
THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH
SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY.
(IF SHARES ARE BEING TENDERED, PLEASE COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE: _____________________________________________________________________
Signature of Owner(s)
_______________________________________
Signature of Owner(s)
10
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm
that is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States which is a
participant in an approved Signature Guarantee Medallion Program (an "Eligible
Institution"). Signatures on this Letter of Transmittal and Proxy need not be
guaranteed (a) if this Letter of Transmittal and Proxy is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in one of the Book-Entry Transfer Facilities whose
name appears on a security position listing as the owner of Shares) tendered
herewith and such holder(s) has not completed the box above under the heading
"Special Payment Instructions" or the box above under the heading "Special
Delivery Instructions" on this Letter of Transmittal and Proxy, (b) if such
Shares are tendered for the account of an Eligible Institution or (c) if this
Letter of Transmittal and Proxy is being used solely for the purpose of voting
Shares which are not being tendered pursuant to the Offer. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of
Transmittal and Proxy is to be used if (a) certificates are to be forwarded
herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant
to the procedures set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement or (c) Shares are
being voted in connection with the Offer. Certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal and Proxy (or facsimile thereof) and any other documents
required by this Letter of Transmittal and Proxy, must be received by the
Depositary at one of its addresses set forth on the front page of this Letter of
Transmittal and Proxy on or prior to the Expiration Date (as defined in the
Offer to Purchase and Proxy Statement) with respect to all Shares. Preferred
Shareholders who wish to tender their Shares yet who cannot deliver their Shares
and all other required documents to the Depositary on or prior to the Expiration
Date must tender their Shares pursuant to the guaranteed delivery procedure set
forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in
the Offer to Purchase and Proxy Statement. Pursuant to such procedure: (a) such
tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery and Proxy in the form
provided by CSW (with any required signature guarantees) must be received by the
Depositary on or prior to the applicable Expiration Date and (c) the
certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal and Proxy (or
facsimile thereof) and any other documents required by this Letter of
Transmittal and Proxy must be received by the Depositary by 5:00 p.m. (central
time) within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery and Proxy, all as provided under
the heading "Terms of the Offer --Procedure for Tendering Shares" in the Offer
to Purchase and Proxy Statement.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
"Terms of the Offer--Number of Shares; Purchase Price; Expiration Date
Dividends" in the Offer to Purchase and Proxy Statement. By executing this
Letter of Transmittal and Proxy (or facsimile thereof), the tendering
stockholder waives any right to receive any notice of the acceptance for payment
of the Shares.
3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES
PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO PSO'S
RESTATED CERTIFICATE OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND
PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE
PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED
IN THE OFFER TO PURCHASE AND PROXY STATEMENT). In addition, Preferred
Shareholders have the right to vote for the Proposed Amendment regardless of
whether they tender their Shares by casting their vote and duly executing this
11
<PAGE>
Letter of Transmittal and Proxy or by voting in person at the Special Meeting.
By executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder
is taken to have tendered the Shares described in such Notice of Guaranteed
Delivery and Proxy and to have voted such Shares in accordance with the proxy
contained therein. If no vote is indicated on an otherwise properly executed
proxy contained within this Letter of Transmittal and Proxy (or within a Notice
of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will
be voted in favor of the Proposed Amendment. See "PROPOSED AMENDMENT AND PROXY
SOLICITATION" in the Offer to Purchase and Proxy Statement. The Offer is being
sent to all persons in whose names Shares are registered on the books of PSO on
the Record Date (as defined in the Offer to Purchase and Proxy Statement).
Preferred Shareholders who purchase or whose purchase is registered after the
Record Date and who wish to tender in the Offer must arrange with their seller
to receive a proxy from the holder of record on the Record Date of such Shares.
Any holder of Shares held of record on the Record Date in the name of another
must establish to the satisfaction of PSO his entitlement to exercise or
transfer such Proxy. This will ordinarily require an assignment by such record
holder in blank, or if not in blank, to and from each successive transferee,
including the holder, with each signature guaranteed by an Eligible Institution.
See Instruction 5. In order to facilitate receipt of proxies, Shares shall,
during the period which commenced on , 1997 (two business days prior
to the Record Date) and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired shares in the Proxy
Solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any
person who is the beneficial owner but not the record holder of Shares must
arrange for the record transfer of such Shares prior to tendering or direct the
record holder to tender on behalf of the beneficial owner.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered". In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal and Proxy, unless otherwise provided in the box above
under the heading "Special Payment Instructions" or "Special Delivery
Instructions", as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND/OR NOTICE OF GUARANTEED
DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of
Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together,
the "Tender and Proxy Documents") is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered or voted under either Tender and Proxy
Document is held of record by two or more persons, all such persons must sign
such Tender and Proxy Document.
If any of the Shares tendered or voted under either Tender and Proxy
Document is registered in different names or different certificates, it will be
necessary to complete, sign and submit as many separate applicable Tender and
Proxy Documents as there are different registrations of certificates.
If either Tender and Proxy Document is signed by the registered holder(s) of
the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
If this Letter of Transmittal and Proxy is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender and Proxy Document or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to CSW of the authority of such person to act must be submitted.
12
<PAGE>
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, CSW
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom, is submitted. See
"Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase
Price and Dividend" in the Offer to Purchase and Proxy Statement. EXCEPT AS
PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX
STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, any Shares not
tendered or not purchased are to be returned to or the check for the Cash
Payment is to be issued in the name of, a person other than the person(s)
signing this Letter of Transmittal and Proxy or if the check and/or any
certificate for Shares not tendered or not purchased are to be mailed to someone
other than the person(s) signing this Letter of Transmittal and Proxy or to an
address other than that shown in the box above under the heading "Name(s) and
Address(es) of Registered Holder(s)", then the "Special Payment Instructions"
and/or "Special Delivery Instructions" on this Letter of Transmittal and Proxy
should be completed. Preferred Shareholders tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting the
account maintained by such Preferred Shareholder at the Book-Entry Transfer
Facility from which such transfer was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder or a
Preferred Shareholder voting in favor of the Proposed Amendment is required to
provide the Depositary with either a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the Preferred
Shareholder to 31% federal income tax backup withholding on the payment of the
purchase price for the Shares or the Cash Payment. If the Preferred Shareholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, the Preferred Shareholder may write "Applied For" in
the space for the TIN in Part I of Substitute Form W-9. If the Preferred
Shareholder writes "Applied For" in the space for the TIN in Substitute Form W-9
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% on the payment of the purchase price for the Shares
or the Cash Payment.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Managers
at their respective telephone numbers and addresses listed below. Requests for
additional copies of the Offer to Purchase and Proxy Statement, this Letter of
Transmittal and Proxy or other tender offer materials may be directed to the
Information Agent or the Dealer Managers and such copies will be furnished
promptly at CSW's expense. Preferred Shareholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
10. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered, accepted for payment and paid pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500 Shares and a solicitation
fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more
Shares, provided that fees payable in transactions equal to or exceeding 2,500
Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting
Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal
and Proxy which designates, under the heading "Solicited Tenders", as having
solicited and obtained the tender, the name of (a) any broker or dealer in
securities, including a Dealer Manager in its capacity as a dealer or broker,
which is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or
dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (c) any bank or trust
company (each of which is referred to herein as a "Soliciting Dealer"). No such
fee shall be payable to a Soliciting Dealer with respect to the tender of Shares
by a holder unless the Letter of Transmittal and Proxy accompanying such tender
designates such Soliciting Dealer. No such fee shall be payable to a Soliciting
Dealer in respect of Shares registered in the name of such Soliciting Dealer
unless such Shares are held by such Soliciting Dealer as nominee and such Shares
are being tendered for the benefit of one or more beneficial owners identified
on the Letter of Transmittal and Proxy or on the Notice of Solicited Tenders
(included in
13
<PAGE>
the materials provided to brokers and dealers). No such fee shall be payable to
a Soliciting Dealer with respect to the tender of Shares by the holder of
record, for the benefit of the beneficial owner, unless the beneficial owner has
designated such Soliciting Dealer. If tendered Shares are being delivered by
book-entry transfer, the Soliciting Dealer must return a Notice of Solicited
Tenders to the Depositary within three business days after expiration of the
Offer to receive a solicitation fee. No such fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
such fee shall be paid to a Soliciting Dealer with respect to Shares tendered
for such Soliciting Dealer's own account. No broker, dealer, bank, trust company
or fiduciary shall be deemed to be the agent of CSW, the Depositary, the
Information Agent or the Dealer Managers for purposes of the Offer.
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by CSW, in its sole discretion, and its
determination shall be final and binding. CSW reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any
of the conditions to the Offer or any defect or irregularity in any tender of
Shares and CSW's interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the Preferred Shareholder should
promptly notify the Depositary by checking the Lost Certificates Box immediately
following the Special Payment Instructions/Special Delivery Instructions and
indicating the number of Shares lost, destroyed or stolen. The Preferred
Shareholder will then be instructed as to the procedures that must be taken in
order to replace the certificate. The tender of Shares pursuant to this Letter
of Transmittal and Proxy will not be valid unless prior to the Expiration Date
(as defined in the Offer to Purchase and Proxy Statement): (a) such procedures
have been completed and a replacement certificate for the Shares has been
delivered to the Depositary or (b) a Notice of Guaranteed Delivery and Proxy has
been delivered to the Depositary. See Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY
HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY
AND PROXY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT).
IMPORTANT TAX INFORMATION
Under federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment or who will receive a Cash Payment as a result of
voting in favor of the Proposed Amendment is required to provide the Depositary
(as payer) with either such Preferred Shareholder's correct TIN on Substitute
Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder
is an individual, the TIN is his or her social security number. For businesses
and other entities, the number is the federal employer identification number. If
the Depositary is not provided with the correct TIN or properly completed Form
W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such Preferred
Shareholder may be subject to backup withholding. The Form W-8 can be obtained
from the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the Preferred Shareholder. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
14
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on a Cash Payment or payments that are made to a
Preferred Shareholder with respect to Shares purchased pursuant to the Offer,
the Preferred Shareholder is required to notify the Depositary of his or her
correct TIN by completing the Substitute Form W-9 attached hereto certifying
that the TIN provided on Substitute Form W-9 is correct and that (a) the
Preferred Shareholder is exempt from federal income tax backup withholding or
(b) the Preferred Shareholder has not been notified by the Internal Revenue
Service that he or she is subject to federal income tax backup withholding as a
result of failure to report all interest or dividends or (c) the Internal
Revenue Service has notified the Preferred Shareholder that he or she is no
longer subject to federal income tax backup withholding. Foreign Preferred
Shareholders must submit a properly completed Form W-8 in order to avoid the
applicable backup withholding; provided, however, that backup withholding will
not apply to foreign Preferred Shareholders subject to 30% (or lower treaty
rate) withholding on the Cash Payment or on gross payments received pursuant to
the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
15
<PAGE>
<TABLE>
<CAPTION>
PAYER'S NAME: THE BANK OF NEW YORK
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
SIGNING AND DATING BELOW. TIN ------------------------
Name (Please Print) PART 2--
Address For Payees Exempt from Backup
City State Zip Code Withholding (See Guidelines)
PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct taxpayer
identification number (or a TIN has not been issued to me but I have
applied for a TIN or intend to do so in the near future), and (2) I am
not subject to backup withholding either because I am exempt from
backup withholding or I have not been notified by the Internal Revenue
PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a
TAXPAYER
IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has
AND CERTIFICATION notified me that I am no longer subject to backup withholding. I
understand that, if I have written "Applied For" in the space for TIN
in Part I, I must provide a TIN by the time of payment, or 31% of the
Cash Payment or the payment of the purchase price of shares made to me
will be withheld.
SIGNATURE DATE, 1997
You must cross out item (2) above if you have been notified by the IRS
that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER
OR PROXY SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
</TABLE>
THE DEALER MANAGERS:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
THE INFORMATION AGENT:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
16
<PAGE>
LETTER OF TRANSMITTAL AND PROXY
TO ACCOMPANY
SHARES OF 4.40% SERIES CUMULATIVE PREFERRED STOCK
CUSIP NUMBER 956279202
OF
WEST TEXAS UTILITIES COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
CENTRAL AND SOUTH WEST CORPORATION,
DATED , 1997, FOR PURCHASE AT A
PURCHASE PRICE OF $ PER SHARE
AND/OR
VOTED PURSUANT TO THE PROXY STATEMENT
OF
WEST TEXAS UTILITIES COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, , 1997, UNLESS THE OFFER IS EXTENDED.
THE PROXY CONTAINED IN THIS DOCUMENT IS IN RESPECT OF THE SPECIAL MEETING
OF SHAREHOLDERS TO BE HELD ON , 1997, OR ON
SUCH DATE TO WHICH THE MEETING IS ADJOURNED OR POSTPONED.
TO: THE BANK OF NEW YORK, DEPOSITARY
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
BY FACSIMILE TRANSMISSION:
(for Eligible Institutions only)
(212) 815-6213
INFORMATION AND CONFIRM BY TELEPHONE:
(800) 507-9357
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(Please fill in exactly as name(s) and address(es) appear(s) on certificate(s))
<PAGE>
PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO ACQUIRE SHARES
SUBSEQUENT TO THE RECORD DATE) WILL NOT BE ABLE TO VALIDLY TENDER THEIR SHARES
UNLESS THEY HAVE SUBMITTED A DULY COMPLETED, VALID AND UNREVOKED PROXY
INDICATING THEIR VOTE FOR THE PROPOSED AMENDMENT OR INDICATE IN THE ACCOMPANYING
PROXY THEIR INTENTION TO VOTE FOR THE PROPOSED AMENDMENT AT THE SPECIAL MEETING.
CENTRAL AND SOUTH WEST CORPORATION WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT OR
PAY FOR ANY SHARES TENDERED IF THE PROPOSED AMENDMENT IS NOT APPROVED AND
ADOPTED AT THE SPECIAL MEETING. PREFERRED SHAREHOLDERS HAVE THE RIGHT TO VOTE
FOR THE PROPOSED AMENDMENT REGARDLESS OF WHETHER THEY TENDER THEIR SHARES BY
CASTING THEIR VOTE AND SIGNING THE PROXY CONTAINED WITHIN THIS LETTER OF
TRANSMITTAL AND PROXY OR BY VOTING IN PERSON AT THE SPECIAL MEETING. IF THE
PROPOSED AMENDMENT IS APPROVED AND ADOPTED, WEST TEXAS UTILITIES COMPANY WILL
MAKE A SPECIAL CASH PAYMENT TO EACH PREFERRED SHAREHOLDER WHO VOTED IN FAVOR OF
THE PROPOSED AMENDMENT, PROVIDED THAT THEIR SHARES ARE NOT TENDERED PURSUANT TO
THE OFFER.
HOLDERS WHO PURCHASE OR WHOSE PURCHASE SETTLES OR IS REGISTERED AFTER THE
CLOSE OF BUSINESS ON , 1997 (THE "RECORD DATE") AND WHO WISH TO TENDER IN
THE OFFER MUST ARRANGE WITH THEIR SELLER TO RECEIVE A DULY COMPLETED, VALID AND
UNREVOKED PROXY (WHICH MAY BE IN THE FORM OF AN IRREVOCABLE ASSIGNMENT OF PROXY
AS SET FORTH IN THIS LETTER OF TRANSMITTAL AND PROXY) FROM THE HOLDER OF RECORD
ON THE RECORD DATE OF SUCH SHARES. IN ORDER TO FACILITATE RECEIPT OF PROXIES,
SHARES SHALL, DURING THE PERIOD WHICH COMMENCED , 1997 (TWO BUSINESS DAYS
PRIOR TO THE RECORD DATE) AND WHICH WILL END AT THE CLOSE OF BUSINESS ON THE
EXPIRATION DATE, TRADE IN THE OVER-THE-COUNTER MARKET WITH A PROXY PROVIDING THE
TRANSFEREE WITH THE RIGHT TO VOTE SUCH ACQUIRED SHARES IN THE PROXY
SOLICITATION.
NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
The undersigned hereby appoints [ ], [ ], and [ ],
or any of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote as designated hereunder and in
their discretion with respect to any other business properly brought before the
Special Meeting, all the shares of cumulative preferred stock of West Texas
Utilities Company ("WTU") which the undersigned is entitled to vote at the
Special Meeting of Shareholders to be held on , 1997, or any
adjournment(s) or postponement(s) thereof.
NOTE: IF YOU ARE VOTING BUT NOT TENDERING SHARES, DO NOT SEND ANY SHARE
CERTIFICATES WITH THIS LETTER OF TRANSMITTAL AND PROXY.
THIS LETTER OF TRANSMITTAL AND PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS OF WTU. The proxy contained herein, when properly executed, will be
voted in the manner directed herein by the undersigned shareholder(s). If no
direction is made, the proxy will be voted FOR Item 1.
Indicate your vote by an (X). The Board of Directors recommends voting FOR
Item 1.
2
<PAGE>
ITEM 1.
HOLDERS OF SHARES WHO WISH TO TENDER THEIR SHARES MUST VOTE FOR THE PROPOSED
AMENDMENT EITHER BY SUBMITTING THIS PROXY OR BY VOTING AT THE SPECIAL MEETING.
To remove from the Restated Articles of Incorporation subparagraph (B) of
paragraph 5 of Article VI in its entirety, which limits WTU's ability to issue
unsecured indebtedness.
/ / FOR / / AGAINST / / ABSTAIN
SHARES REPRESENTED BY ALL PROPERLY EXECUTED PROXIES WILL BE VOTED IN
ACCORDANCE WITH INSTRUCTIONS APPEARING ON THIS PROXY. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF
THE BOARD OF DIRECTORS, AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE SPECIAL MEETING.
Any holder of Shares held of record on the Record Date in the name of
another holder must establish to the satisfaction of WTU its entitlement to
exercise or transfer this Proxy. This will ordinarily require an assignment by
such record holders in blank, or if not in blank, to and from each successive
transferee, including the holder, with each signature guaranteed by an Eligible
Institution. A form of irrevocable assignment of proxy has been provided herein.
Please check box if you plan to attend the Special Meeting. / /
SIGNATURE(S) OF OWNER(S)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------, 1997
Name(s):
- ----------------------------------------------------------
..................................................
(PLEASE PRINT)
Capacity (full title):
- ---------------------------------------------------
Address:
- -------------------------------------------------------------
.....................................................
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.:
- ------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title and see Instruction 5.)
3
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES
(IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION APPEARS ON CERTIFICATE(S))
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
NUMBER OF SHARES NOT
TOTAL NUMBER OF TENDERED
SHARES REPRESENTED BY NUMBER OF BUT AS TO
CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED** WHICH PROXIES GIVEN ONLY
<S> <C> <C> <C>
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4. You must vote for the Proposed Amendment with respect to any
Shares tendered.
If any of your certificate(s) for Shares have been lost, stolen or
destroyed, please call the Depositary at 1-800-507-9357. In addition, you should
advise the Depositary of any certificate(s) you have in your possession. You
will need to complete an Affidavit of Loss with respect to the lost
certificate(s) (which will be provided by the Depositary) and pay an indemnity
bond premium fee.
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
- ----------------------------
Name:
- ----------------------------
Name of Firm:
- ----------------------------
Address of Firm:
- ----------------------------
Area Code and Telephone No.:
- ----------------------------
Dated:
- ----------------------------, 1997
4
<PAGE>
IF SELLING SHARES SUBSEQUENT TO , 1997, A RECORD HOLDER MUST
COMPLETE THE FOLLOWING IRREVOCABLE PROXY
PLEASE SIGN THIS TO IRREVOCABLY TRANSFER A PREFERRED STOCK
PROXY TO A SUBSEQUENT HOLDER OF PREFERRED STOCK WHO
WAS NOT A HOLDER OF RECORD ON , 1997
IRREVOCABLE PROXY
with respect to shares of the
4.40% Series Cumulative Preferred Stock
of
WEST TEXAS UTILITIES COMPANY ("WTU")
the undersigned hereby irrevocably appoints
______________________________
Type or Print Name of Transferee
as attorney and proxy, with full power of substitution, to vote and otherwise
act for and in the name(s) of the undersigned with respect to the Shares
indicated below which were held of record by the undersigned on ,
1997, in the manner in which the undersigned would be entitled to vote and
otherwise act in respect of such shares on any and all matters.
This proxy shall be effective whether or not the shares indicated below are
tendered in the Offer.
This instrument supersedes and revokes any and all previous appointments of
proxies heretofore made by the undersigned with respect to the shares indicated
below as to any and all matters. THIS PROXY IS IRREVOCABLE AND IS COUPLED WITH
AN INTEREST.
All authority conferred or agreed to be conferred herein shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, administrators, legal and
personal representatives, successors in interest and assigns of the undersigned.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in the Offer to Purchase and Proxy Statement and in this
Letter of Transmittal and Proxy will constitute a binding agreement between the
undersigned and WTU upon the terms and subject to the conditions of the Offer.
<TABLE>
<CAPTION>
DESCRIPTION OF PREFERRED STOCK
CERTIFICATE NUMBER(S) (ATTACH AGGREGATE NUMBER
LIST IF NECESSARY) OF SHARES
<S> <C>
TOTAL:
Signature of Record or Signature of Record or
Authorized Signatory Authorized Signatory
Type of Print Name Type or Print Name
Dated: , 19 Dated: , 19
Tax Identification or Social Security No(s).
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
Must be signed by holder(s) exactly as name(s) appear(s) on the Record Date on certificate(s) for the
Shares or on a security position listing or by person(s) authorized to become holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person acting in a
fiduciary or representative capacity, please provide the following information and see Instruction 5.
Name Address
Please Print Include Zip Code
Area Code and Tel. No.
</TABLE>
Capacity (Full Title) _________________________________________________________
________________________________________________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Name of Firm: __________________________________________________________________
Authorized Signature: __________________________________________________________
Title: _________________________________________________________________________
Dated: _______________________________________________________________, 19______
NOTE: IF SHARES ARE BEING TENDERED, THE REMAINDER OF THIS LETTER OF TRANSMITTAL
AND PROXY MUST BE COMPLETED, INCLUDING THE SUBSTITUTE FORM W-9 BELOW OR A
FORM W-8, AS APPLICABLE.
DELIVERY OF THIS LETTER OF TRANSMITTAL AND PROXY TO AN ADDRESS OTHER THAN TO
THE DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A
FACSIMILE NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL AND PROXY IN THE APPROPRIATE
SPACE THEREFOR PROVIDED ABOVE AND, IF YOU ARE TENDERING ANY SHARES OR VOTING IN
FAVOR OF THE PROPOSED AMENDMENT, COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH
BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 8 AND "IMPORTANT TAX
INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC.,
D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR WEST TEXAS
UTILITIES COMPANY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL AND PROXY SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL AND PROXY IS COMPLETED.
This Letter of Transmittal and Proxy is to be used (a) if Shares are to be
voted but not tendered, or (b) if certificates for Shares are to be forwarded
herewith or (c) if delivery of tendered Shares (as defined below) is to be made
by book-entry transfer to the Depositary's account at The Depository Trust
Company ("DTC") or Philadelphia Depository Trust Company ("PDTC") (hereinafter
collectively referred to as the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement (as defined
below).
Preferred Shareholders who wish to tender Shares yet who cannot deliver
their Shares and all other documents required hereby to the Depositary by the
Expiration Date (as defined in the Offer to Purchase and Proxy Statement) must
tender their Shares pursuant to the guaranteed delivery procedure set forth
under the heading "Terms of the Offer--Procedure for Tendering Shares" in the
Offer to Purchase and Proxy Statement. See Instruction 2. DELIVERY OF DOCUMENTS
TO CENTRAL AND SOUTH WEST CORPORATION, WEST TEXAS UTILITIES COMPANY OR A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE A VALID DELIVERY.
/ / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
6
<PAGE>
A Holder tendering Shares pursuant to this Letter of Transmittal and Proxy
must check one of the following boxes:
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR the
Proposed Amendment is included herein.
/ / A vote FOR the Proposed Amendment will be cast at the Special
Meeting.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
AND COMPLETE THE FOLLOWING:
Name of tendering institution:
------------------------------------------------------------------------
/ / DTC / / PDTC
Account No:
---------------------------------------------------------------------------
Transaction Code No:
-------------------------------------------------------------------------------
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND PROXY PREVIOUSLY SENT TO THE DEPOSITARY AND
COMPLETE THE FOLLOWING:
Name(s) of tendering shareholder(s)
- -------------------------------------------------------------------
Date of execution of Notice of Guaranteed Delivery and Proxy
- ----------------------------------------------
Name of institution that guaranteed delivery
- ------------------------------------------------------------
If delivery is by book-entry transfer:
Name of tendering institution
- --------------------------------------------------------------------------
Account no.
- ---------------------- at / / DTC / / PDTC
Transaction Code No.
- --------------------------------------------------------------------------------
A holder electing to tender Shares pursuant to a Notice of Guaranteed
Delivery and Proxy must check one of the following boxes:
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR
the Proposed Amendment was included with the Notice of Guaranteed
Delivery and Proxy previously sent to the Depositary.
/ / A duly completed, valid and unrevoked proxy indicating a vote FOR
the Proposed Amendment is being delivered pursuant to a Notice of
Guaranteed Delivery and Proxy previously sent to the Depositary.
/ / A valid vote FOR the Proposed Amendment will be cast at the
Special Meeting.
NOTE: SIGNATURES MUST BE PROVIDED ABOVE.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The abovesigned hereby tenders to Central and South West Corporation, a
Delaware corporation ("CSW"), the shares in the amount set forth in the box
above labeled "Description of Shares Tendered" pursuant to CSW's offer to
purchase any and all of the outstanding shares of the series of cumulative
preferred stock of West Texas Utilities Company ("WTU"), a Texas corporation and
direct utility subsidiary of CSW, shown on the first page hereof and to which
this Letter of Transmittal and Proxy is applicable (the "Shares") at the
purchase price per Share shown on the first page hereof, net to the seller in
cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase and Proxy Statement, dated , 1997 (the "Offer to Purchase
and Proxy Statement"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal and Proxy (which as to the Shares, together with the Offer
to Purchase and Proxy Statement, constitutes the "Offer"). PREFERRED
SHAREHOLDERS WHO WISH TO TENDER THEIR SHARES PURSUANT TO THE OFFER MUST VOTE IN
FAVOR OF THE PROPOSED AMENDMENT TO WTU'S RESTATED ARTICLES OF INCORPORATION, AS
SET FORTH IN THE OFFER TO PURCHASE AND PROXY STATEMENT (THE "PROPOSED
AMENDMENT"). THE OFFER IS CONDITIONED UPON THE PROPOSED AMENDMENT BEING APPROVED
AND ADOPTED AT THE SPECIAL MEETING
7
<PAGE>
(AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT). See "Proposed
Amendment and Proxy Solicitation", "Terms of the Offer--Extension of Tender
Period; Termination; Amendments" and "Terms of the Offer--Certain Conditions of
the Offer" in the Offer to Purchase and Proxy Statement.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the abovesigned hereby
sells, assigns and transfers to, or upon the order of, CSW all right, title and
interest in and to all the Shares that are being tendered hereby and hereby
constitutes and appoints The Bank of New York (the "Depositary") the true and
lawful agent and attorney-in-fact of the abovesigned with respect to such
Shares, with full power of substitution (such power of attorney being an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares, or transfer ownership of such Shares on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of CSW, (b) present such Shares for registration and transfer on the
books of WTU and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the terms of the
Offer. The Depositary will act as agent for tendering shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
shareholders.
The abovesigned hereby represents and warrants that the abovesigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and that, when and to the extent the same are accepted for payment by
CSW, CSW will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
the same will not be subject to any adverse claims. The abovesigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or CSW to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the abovesigned, and
any obligations of the abovesigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the abovesigned. Except as
stated in the Offer, this tender is irrevocable.
The abovesigned understands that tenders of Shares pursuant to any one of
the procedures described under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement and in the
instructions hereto will constitute the abovesigned's acceptance of the terms
and conditions of the Offer. CSW's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
abovesigned and CSW upon the terms and subject to the conditions of the Offer.
The abovesigned recognizes that, under certain circumstances set forth in
the Offer to Purchase and Proxy Statement, CSW may terminate or amend the Offer
or may not be required to purchase any of the Shares tendered hereby. In either
event, the abovesigned understands that certificate(s) for any Shares not
tendered or not purchased will be returned to the abovesigned.
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions", please issue the check for the purchase price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the abovesigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions", please mail the check for the purchase price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the abovesigned at the
address shown below the abovesigned signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares purchased
and/or return any Shares not tendered or not purchased in the name(s) of, and
mail said check and/or any certificates to, the person(s) so indicated. The
abovesigned recognizes that CSW has no obligation, pursuant to the "Special
Payment Instructions", to transfer any Shares from the name of the registered
holder(s) thereof if CSW does not accept for payment any of the Shares so
tendered.
8
<PAGE>
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 4, 6 AND 7) (SEE INSTRUCTIONS 4, 6 AND 7)
To be completed ONLY if the check for To be completed ONLY if the check for
the purchase price of Shares purchased, the purchase price of Shares
the certificates for Shares not tendered purchased, the certificates for Shares not
or not purchased or the check for the Cash tendered or not purchased or the check for
Payment are to be issued in the name of the Cash Payment are to be mailed to
someone other than the abovesigned. someone other than the abovesigned or to
Issue / / check and/or the abovesigned at an address other than
/ / certificate(s) to: that shown below the abovesigned's
Name signature(s).
(PLEASE PRINT) Mail / / check and/or
Address / / certificate(s) to:
(INCLUDE ZIP CODE) Name
(TAXPAYER IDENTIFICATION OR (PLEASE PRINT)
SOCIAL SECURITY NUMBER) Address
(INCLUDE ZIP CODE)
LOST CERTIFICATES BOX
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND
WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 12.)
Number of Shares represented by lost, destroyed or stolen certificates:
---------------
</TABLE>
10
<PAGE>
SOLICITED TENDERS
(SEE INSTRUCTION 10)
As provided in Instruction 10, CSW will pay to any Soliciting Dealer, as
defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares
tendered, accepted for payment and paid pursuant to the Offer in transactions
for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00
per Share in transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or exceeding 2,500 Shares
shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers
(which may be a Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned by such Soliciting
Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm: __________________________________________________________________
(PLEASE PRINT)
Name of Individual Broker
or Financial Consultant: _______________________________________________________
Telephone Number of Broker
or Financial Consultant: _______________________________________________________
Identification Number (if known): ______________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
The following is to be completed ONLY if customer's Shares held in nominee
name are tendered.
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Offer to Purchase; (c) in soliciting tenders of Shares, it has used no
soliciting materials other than those furnished by CSW; and (d) if it is a
foreign broker or dealer not eligible for membership in the National Association
of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations.
THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH
SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY.
(IF SHARES ARE BEING TENDERED, PLEASE COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE: _____________________________________________________________________
Signature of Owner(s)
_______________________________________
Signature of Owner(s)
11
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal and Proxy must be guaranteed by a firm
that is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office or correspondent in the United States which is a
participant in an approved Signature Guarantee Medallion Program (an "Eligible
Institution"). Signatures on this Letter of Transmittal and Proxy need not be
guaranteed (a) if this Letter of Transmittal and Proxy is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in one of the Book-Entry Transfer Facilities whose
name appears on a security position listing as the owner of Shares) tendered
herewith and such holder(s) has not completed the box above under the heading
"Special Payment Instructions" or the box above under the heading "Special
Delivery Instructions" on this Letter of Transmittal and Proxy, (b) if such
Shares are tendered for the account of an Eligible Institution or (c) if this
Letter of Transmittal and Proxy is being used solely for the purpose of voting
Shares which are not being tendered pursuant to the Offer. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND PROXY AND SHARES. This Letter of
Transmittal and Proxy is to be used if (a) certificates are to be forwarded
herewith, (b) delivery of Shares is to be made by book-entry transfer pursuant
to the procedures set forth under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and Proxy Statement or (c) Shares are
being voted in connection with the Offer. Certificates for all physically
delivered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at one of the Book-Entry Transfer Facilities of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal and Proxy (or facsimile thereof) and any other documents
required by this Letter of Transmittal and Proxy, must be received by the
Depositary at one of its addresses set forth on the front page of this Letter of
Transmittal and Proxy on or prior to the Expiration Date (as defined in the
Offer to Purchase and Proxy Statement) with respect to all Shares. Preferred
Shareholders who wish to tender their Shares yet who cannot deliver their Shares
and all other required documents to the Depositary on or prior to the Expiration
Date must tender their Shares pursuant to the guaranteed delivery procedure set
forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in
the Offer to Purchase and Proxy Statement. Pursuant to such procedure: (a) such
tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery and Proxy in the form
provided by CSW (with any required signature guarantees) must be received by the
Depositary on or prior to the applicable Expiration Date and (c) the
certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal and Proxy (or
facsimile thereof) and any other documents required by this Letter of
Transmittal and Proxy must be received by the Depositary by 5:00 p.m. (central
time) within three New York Stock Exchange trading days after the date of
execution of such Notice of Guaranteed Delivery and Proxy, all as provided under
the heading "Terms of the Offer--Procedure for Tendering Shares" in the Offer to
Purchase and Proxy Statement.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
"Terms of the Offer--Number of Shares; Purchase Price; Expiration Date
Dividends" in the Offer to Purchase and Proxy Statement. By executing this
Letter of Transmittal and Proxy (or facsimile thereof), the tendering
stockholder waives any right to receive any notice of the acceptance for payment
of the Shares.
3. VOTING. PREFERRED SHAREHOLDERS (INCLUDING PREFERRED SHAREHOLDERS WHO
ACQUIRE SHARES SUBSEQUENT TO THE RECORD DATE) WHO WISH TO TENDER THEIR SHARES
PURSUANT TO THE OFFER MUST VOTE IN FAVOR OF THE PROPOSED AMENDMENT TO WTU'S
RESTATED ARTICLES OF INCORPORATION, AS SET FORTH IN THE OFFER TO PURCHASE AND
PROXY STATEMENT (THE "PROPOSED AMENDMENT"). THE OFFER IS CONDITIONED UPON THE
PROPOSED AMENDMENT BEING APPROVED AND ADOPTED AT THE SPECIAL MEETING (AS DEFINED
IN THE OFFER TO PURCHASE AND PROXY STATEMENT). In addition, Preferred
Shareholders have the right to vote for the Proposed Amendment regardless of
whether they tender their Shares by casting their vote and duly executing this
Letter of
12
<PAGE>
Transmittal and Proxy or by voting in person at the Special Meeting. By
executing a Notice of Guaranteed Delivery and Proxy, a Preferred Shareholder is
taken to have tendered the Shares described in such Notice of Guaranteed
Delivery and Proxy and to have voted such Shares in accordance with the proxy
contained therein. If no vote is indicated on an otherwise properly executed
proxy contained within this Letter of Transmittal and Proxy (or within a Notice
of Guaranteed Delivery and Proxy), then all Shares in respect of such proxy will
be voted in favor of the Proposed Amendment. See "PROPOSED AMENDMENT AND PROXY
SOLICITATION" in the Offer to Purchase and Proxy Statement. The Offer is being
sent to all persons in whose names Shares are registered on the books of WTU on
the Record Date (as defined in the Offer to Purchase and Proxy Statement).
Preferred Shareholders who purchase or whose purchase is registered after the
Record Date and who wish to tender in the Offer must arrange with their seller
to receive a proxy from the holder of record on the Record Date of such Shares.
Any holder of Shares held of record on the Record Date in the name of another
must establish to the satisfaction of WTU his entitlement to exercise or
transfer such Proxy. This will ordinarily require an assignment by such record
holder in blank, or if not in blank, to and from each successive transferee,
including the holder, with each signature guaranteed by an Eligible Institution.
See Instruction 5. In order to facilitate receipt of proxies, Shares shall,
during the period which commenced on , 1997 (two business days prior
to the Record Date) and which will end at the close of business on the
Expiration Date, trade in the over-the-counter market with a proxy providing the
transferee with the right to vote such acquired shares in the Proxy
Solicitation. No record date is fixed for determining which persons are
permitted to tender Shares. However, only the holders of record, or holders who
acquire an assignment of proxy from such holders, are permitted to vote for the
Proposed Amendment and thereby validly tender Shares pursuant to the Offer. Any
person who is the beneficial owner but not the record holder of Shares must
arrange for the record transfer of such Shares prior to tendering or direct the
record holder to tender on behalf of the beneficial owner.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered". In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal and Proxy, unless otherwise provided in the box above
under the heading "Special Payment Instructions" or "Special Delivery
Instructions", as promptly as practicable following the expiration or
termination of the Offer. All Shares represented by certificates delivered to
the Depositary will be deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL AND PROXY AND/OR NOTICE OF GUARANTEED
DELIVERY AND PROXY; STOCK POWERS AND ENDORSEMENTS. If either this Letter of
Transmittal and Proxy or the Notice of Guaranteed Delivery and Proxy (together,
the "Tender and Proxy Documents") is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates without alteration, enlargement or any
change whatsoever.
If any of the Shares tendered or voted under either Tender and Proxy
Document is held of record by two or more persons, all such persons must sign
such Tender and Proxy Document.
If any of the Shares tendered or voted under either Tender and Proxy
Document is registered in different names or different certificates, it will be
necessary to complete, sign and submit as many separate applicable Tender and
Proxy Documents as there are different registrations of certificates.
If either Tender and Proxy Document is signed by the registered holder(s) of
the Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the purchase price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s). Signatures on any such certificates
or stock powers must be guaranteed by an Eligible Institution. See Instruction
1.
If this Letter of Transmittal and Proxy is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender and Proxy Document or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to CSW of the authority of such person to act must be submitted.
13
<PAGE>
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, CSW
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal and Proxy,
the amount of any stock transfer taxes (whether imposed on the registered
holder(s), such other person or otherwise) payable on account of the transfer to
such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes, or exemption therefrom, is submitted. See
"Terms of the Offer--Acceptance of Shares for Payment and Payment of Purchase
Price and Dividend" in the Offer to Purchase and Proxy Statement. EXCEPT AS
PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX
STAMPS TO THE CERTIFICATES REPRESENTING SHARES TENDERED HEREBY.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, any Shares not
tendered or not purchased are to be returned to or the check for the Cash
Payment is to be issued in the name of, a person other than the person(s)
signing this Letter of Transmittal and Proxy or if the check and/or any
certificate for Shares not tendered or not purchased are to be mailed to someone
other than the person(s) signing this Letter of Transmittal and Proxy or to an
address other than that shown in the box above under the heading "Name(s) and
Address(es) of Registered Holder(s)", then the "Special Payment Instructions"
and/or "Special Delivery Instructions" on this Letter of Transmittal and Proxy
should be completed. Preferred Shareholders tendering Shares by book-entry
transfer will have any Shares not accepted for payment returned by crediting the
account maintained by such Preferred Shareholder at the Book-Entry Transfer
Facility from which such transfer was made.
8. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder or a
Preferred Shareholder voting in favor of the Proposed Amendment is required to
provide the Depositary with either a correct Taxpayer Identification Number
("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the Preferred
Shareholder to 31% federal income tax backup withholding on the payment of the
purchase price for the Shares or the Cash Payment. If the Preferred Shareholder
has not been issued a TIN and has applied for a number or intends to apply for a
number in the near future, the Preferred Shareholder may write "Applied For" in
the space for the TIN in Part I of Substitute Form W-9. If the Preferred
Shareholder writes "Applied For" in the space for the TIN in Substitute Form W-9
and the Depositary is not provided with a TIN by the time of payment, the
Depositary will withhold 31% on the payment of the purchase price for the Shares
or the Cash Payment.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Managers
at their respective telephone numbers and addresses listed below. Requests for
additional copies of the Offer to Purchase and Proxy Statement, this Letter of
Transmittal and Proxy or other tender offer materials may be directed to the
Information Agent or the Dealer Managers and such copies will be furnished
promptly at CSW's expense. Preferred Shareholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
10. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered, accepted for payment and paid pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500 Shares and a solicitation
fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more
Shares, provided that fees payable in transactions equal to or exceeding 2,500
Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting
Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal
and Proxy which designates, under the heading "Solicited Tenders", as having
solicited and obtained the tender, the name of (a) any broker or dealer in
securities, including a Dealer Manager in its capacity as a dealer or broker,
which is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or
dealer not eligible for membership in the NASD which agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (c) any bank or trust
company (each of which is referred to herein as a "Soliciting Dealer"). No such
fee shall be payable to a Soliciting Dealer with respect to the tender of Shares
by a holder unless the Letter of Transmittal and Proxy accompanying such tender
designates such Soliciting Dealer. No such fee shall be payable to a Soliciting
Dealer in respect of Shares registered in the name of such Soliciting Dealer
unless such Shares are held by such Soliciting Dealer as nominee and such Shares
are being tendered for the benefit of one or more beneficial owners identified
on the Letter of Transmittal and Proxy or on the Notice of Solicited Tenders
(included in
14
<PAGE>
the materials provided to brokers and dealers). No such fee shall be payable to
a Soliciting Dealer with respect to the tender of Shares by the holder of
record, for the benefit of the beneficial owner, unless the beneficial owner has
designated such Soliciting Dealer. If tendered Shares are being delivered by
book-entry transfer, the Soliciting Dealer must return a Notice of Solicited
Tenders to the Depositary within three business days after expiration of the
Offer to receive a solicitation fee. No such fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
such fee shall be paid to a Soliciting Dealer with respect to Shares tendered
for such Soliciting Dealer's own account. No broker, dealer, bank, trust company
or fiduciary shall be deemed to be the agent of CSW, the Depositary, the
Information Agent or the Dealer Managers for purposes of the Offer.
11. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by CSW, in its sole discretion, and its
determination shall be final and binding. CSW reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any
of the conditions to the Offer or any defect or irregularity in any tender of
Shares and CSW's interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
12. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the Preferred Shareholder should
promptly notify the Depositary by checking the Lost Certificates Box immediately
following the Special Payment Instructions/Special Delivery Instructions and
indicating the number of Shares lost, destroyed or stolen. The Preferred
Shareholder will then be instructed as to the procedures that must be taken in
order to replace the certificate. The tender of Shares pursuant to this Letter
of Transmittal and Proxy will not be valid unless prior to the Expiration Date
(as defined in the Offer to Purchase and Proxy Statement): (a) such procedures
have been completed and a replacement certificate for the Shares has been
delivered to the Depositary or (b) a Notice of Guaranteed Delivery and Proxy has
been delivered to the Depositary. See Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL AND PROXY (OR A FACSIMILE COPY
HEREOF), DULY EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR
CONFIRMATION OF BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY
AND PROXY MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE
EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE AND PROXY STATEMENT).
IMPORTANT TAX INFORMATION
Under federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment or who will receive a Cash Payment as a result of
voting in favor of the Proposed Amendment is required to provide the Depositary
(as payer) with either such Preferred Shareholder's correct TIN on Substitute
Form W-9 below or a properly completed Form W-8. If such Preferred Shareholder
is an individual, the TIN is his or her social security number. For businesses
and other entities, the number is the federal employer identification number. If
the Depositary is not provided with the correct TIN or properly completed Form
W-8, the Preferred Shareholder may be subject to a $50 penalty imposed by the
Internal Revenue Service. In addition, payments that are made to such Preferred
Shareholder may be subject to backup withholding. The Form W-8 can be obtained
from the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the Preferred Shareholder. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
15
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PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on a Cash Payment or payments that are made to a
Preferred Shareholder with respect to Shares purchased pursuant to the Offer,
the Preferred Shareholder is required to notify the Depositary of his or her
correct TIN by completing the Substitute Form W-9 attached hereto certifying
that the TIN provided on Substitute Form W-9 is correct and that (a) the
Preferred Shareholder is exempt from federal income tax backup withholding or
(b) the Preferred Shareholder has not been notified by the Internal Revenue
Service that he or she is subject to federal income tax backup withholding as a
result of failure to report all interest or dividends or (c) the Internal
Revenue Service has notified the Preferred Shareholder that he or she is no
longer subject to federal income tax backup withholding. Foreign Preferred
Shareholders must submit a properly completed Form W-8 in order to avoid the
applicable backup withholding; provided, however, that backup withholding will
not apply to foreign Preferred Shareholders subject to 30% (or lower treaty
rate) withholding on the Cash Payment or on gross payments received pursuant to
the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
16
<PAGE>
<TABLE>
<CAPTION>
PAYER'S NAME: THE BANK OF NEW YORK
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
SIGNING AND DATING BELOW. TIN ------------------------
Name (Please Print) PART 2--
Address For Payees Exempt from Backup
City State Zip Code Withholding (See Guidelines)
PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct taxpayer
identification number (or a TIN has not been issued to me but I have
applied for a TIN or intend to do so in the near future), and (2) I am
not subject to backup withholding either because I am exempt from
backup withholding or I have not been notified by the Internal Revenue
PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a
TAXPAYER
IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has
AND CERTIFICATION notified me that I am no longer subject to backup withholding. I
understand that, if I have written "Applied For" in the space for the
TIN in Part I, I must provide a TIN by the time of payment, or 31% of
the Cash Payment or the payment of the purchase price of the Shares
made to me will be withheld.
SIGNATURE DATE, 1997
You must cross out item (2) above if you have been notified by the IRS
that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER
OR PROXY SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9
FOR ADDITIONAL DETAILS.
</TABLE>
THE DEALER MANAGERS:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Attention: Paul S. Galant
</TABLE>
THE INFORMATION AGENT:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
17
<PAGE>
LETTER OF TRANSMITTAL
TO ACCOMPANY
SHARES OF % SERIES CUMULATIVE PREFERRED STOCK
CUSIP NUMBER
OF
CENTRAL POWER AND LIGHT COMPANY
TENDERED PURSUANT TO THE OFFER TO PURCHASE FOR CASH
BY
CENTRAL AND SOUTH WEST CORPORATION,
DATED , 1997, FOR PURCHASE AT A
PURCHASE PRICE OF $ PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., CENTRAL TIME, ON
, , 1997, UNLESS THE OFFER IS EXTENDED.
TO: THE BANK OF NEW YORK, DEPOSITARY
<TABLE>
<CAPTION>
BY MAIL: BY HAND OR OVERNIGHT COURIER:
<S> <C>
Tender & Exchange Department Tender & Exchange Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver window
New York, New York 10286-1248 New York, New York 10286
</TABLE>
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(212) 815-6213
INFORMATION AND CONFIRM BY TELEPHONE:
(800) 507-9357
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) AND ADDRESS(ES) APPEAR(S) ON CERTIFICATE(S))
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED HEREIN. PLEASE READ THE ACCOMPANYING
INSTRUCTIONS CAREFULLY.
SIGNATURE(S) OF OWNER(S)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------, 1997
Name(s):
- -------------------------------------------------
..........................................
(PLEASE PRINT)
Capacity (full title):
- ---------------------------------------------------
Address:
- -------------------------------------------------------------
..........................................
(INCLUDE ZIP CODE)
DAYTIME Area Code and Telephone No.:
- ------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on the
stock certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title and see Instruction 4.)
2
<PAGE>
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES
(IF TENDERING SHARES, PLEASE FILL IN EXACTLY AS INFORMATION
APPEARS ON CERTIFICATE(S))
(ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
TOTAL NUMBER OF
SHARES REPRESENTED BY NUMBER OF
CERTIFICATE NUMBER(S)* CERTIFICATE(S)* SHARES TENDERED**
<S> <C> <C>
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 3.
If any of your certificate(s) for Shares have been lost, stolen or
destroyed, please call the Depositary at 1-800-507-9357. In addition, you should
advise the Depositary of any certificate(s) you have in your possession. You
will need to complete an Affidavit of Loss with respect to the lost
certificate(s) (which will be provided by the Depositary) and pay an indemnity
bond premium fee.
GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 4)
Authorized Signature:
- ----------------------------
Name:
- ----------------------------
Name of Firm:
- ----------------------------
Address of Firm:
- ----------------------------
Area Code and Telephone No.:
- ----------------------------
Dated:
- ----------------------------, 1997
3
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN TO THE
DEPOSITARY AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE
NUMBER OTHER THAN ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU
MUST SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE THEREFOR PROVIDED
ABOVE AND, IF YOU ARE TENDERING ANY SHARES, COMPLETE THE SUBSTITUTE FORM W-9 SET
FORTH BELOW OR A FORM W-8, AS APPLICABLE. SEE INSTRUCTION 7 AND "IMPORTANT TAX
INFORMATION" BELOW.
DO NOT SEND ANY CERTIFICATES TO GOLDMAN, SACHS & CO., SMITH BARNEY INC.,
D.F. KING & CO., INC., CENTRAL AND SOUTH WEST CORPORATION, OR THE CENTRAL POWER
AND LIGHT COMPANY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used (a) if certificates for Shares are
to be forwarded herewith or (b) if delivery of tendered Shares (as defined
below) is to be made by book-entry transfer to the Depositary's account at The
Depository Trust Company ("DTC") or Philadelphia Depository Trust Company
("PDTC") (hereinafter collectively referred to as the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth under the heading "Terms of
the Offer--Procedure for Tendering Shares" in the Offer to Purchase (as defined
below).
Preferred Shareholders who wish to tender Shares yet who cannot deliver
their Shares and all other documents required hereby to the Depositary by the
Expiration Date (as defined in the Offer to Purchase) must tender their Shares
pursuant to the guaranteed delivery procedure set forth under the heading "Terms
of the Offer-- Procedure for Tendering Shares" in the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO CENTRAL AND SOUTH WEST CORPORATION,
CENTRAL POWER AND LIGHT COMPANY OR A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE A VALID DELIVERY.
/ / CHECK HERE IF TENDERED SHARES ARE ENCLOSED HEREWITH.
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES
AND COMPLETE THE FOLLOWING:
Name of tendering institution:___________________________________________
/ / DTC / / PDTC
Account No:________________________________________________________________
Transaction Code No:_______________________________________________________
/ / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of tendering shareholder(s)_____________________________________________
Date of execution of Notice of Guaranteed Delivery______________________________
Name of institution that guaranteed delivery____________________________________
If delivery is by book-entry transfer:
Name of tendering institution___________________________________________________
Account no.
- ---------------------- at / / DTC / / PDTC
Transaction Code No.____________________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED ABOVE.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The abovesigned hereby tenders to Central and South West Corporation, a
Delaware corporation ("CSW"), the shares in the amount set forth in the box
above labeled "Description of Shares Tendered" pursuant to CSW's offer to
purchase any and all of the outstanding shares of the series of cumulative
preferred stock of Central Power and Light Company ("CPL"), a Texas corporation
and direct utility subsidiary of CSW, shown on the first
4
<PAGE>
page hereof and to which this Letter of Transmittal is applicable (the "Shares")
at the purchase price per Share shown on the first page hereof, net to the
seller in cash, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated , 1997 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which as to
the Shares, together with the Offer to Purchase, constitutes the "Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the abovesigned hereby
sells, assigns and transfers to, or upon the order of, CSW all right, title and
interest in and to all the Shares that are being tendered hereby and hereby
constitutes and appoints The Bank of New York (the "Depositary") the true and
lawful agent and attorney-in-fact of the abovesigned with respect to such
Shares, with full power of substitution (such power of attorney being an
irrevocable power coupled with an interest), to (a) deliver certificates for
such Shares, or transfer ownership of such Shares on the account books
maintained by any of the Book-Entry Transfer Facilities, together, in any such
case, with all accompanying evidences of transfer and authenticity, to or upon
the order of CSW, (b) present such Shares for registration and transfer on the
books of CPL and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, all in accordance with the terms of the
Offer. The Depositary will act as agent for tendering shareholders for the
purpose of receiving payment from CSW and transmitting payment to tendering
shareholders.
The abovesigned hereby represents and warrants that the abovesigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and that, when and to the extent the same are accepted for payment by
CSW, CSW will acquire good, marketable and unencumbered title thereto, free and
clear of all liens, restrictions, charges, encumbrances, conditional sales
agreements or other obligations relating to the sale or transfer thereof, and
the same will not be subject to any adverse claims. The abovesigned will, upon
request, execute and deliver any additional documents deemed by the Depositary
or CSW to be necessary or desirable to complete the sale, assignment and
transfer of the Shares tendered hereby.
All authority herein conferred or agreed to be conferred shall not be
affected by, and shall survive the death or incapacity of the abovesigned, and
any obligations of the abovesigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the abovesigned. Except as
stated in the Offer, this tender is irrevocable.
The abovesigned understands that tenders of Shares pursuant to any one of
the procedures described under the heading "Terms of the Offer--Procedure for
Tendering Shares" in the Offer to Purchase and in the instructions hereto will
constitute the abovesigned's acceptance of the terms and conditions of the
Offer. CSW's acceptance for payment of Shares tendered pursuant to the Offer
will constitute a binding agreement between the abovesigned and CSW upon the
terms and subject to the conditions of the Offer.
The abovesigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, CSW may terminate or amend the Offer or may not be
required to purchase any of the Shares tendered hereby. In either event, the
abovesigned understands that certificate(s) for any Shares not tendered or not
purchased will be returned to the abovesigned.
Unless otherwise indicated in the box below under the heading "Special
Payment Instructions", please issue the check for the purchase price of any
Shares purchased, and/or return any Shares not tendered or not purchased, in the
name(s) of the abovesigned (and, in the case of Shares tendered by book-entry
transfer, by credit to the account at the Book-Entry Transfer Facility
designated above). Unless otherwise indicated in the box below under the heading
"Special Delivery Instructions", please mail the check for the purchase price of
any Shares purchased and/or any certificates for Shares not tendered or not
purchased (and accompanying documents, as appropriate) to the abovesigned at the
address shown below the abovesigned signature(s). In the event that both
"Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the check for the purchase price of any Shares purchased
and/or return any Shares not tendered or not purchased in the name(s) of, and
mail said check and/or any certificates to, the person(s) so indicated. The
abovesigned recognizes that CSW has no obligation, pursuant to the "Special
Payment Instructions", to transfer any Shares from the name of the registered
holder(s) thereof if CSW does not accept for payment any of the Shares so
tendered.
5
<PAGE>
<TABLE>
<S> <C>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 3, 5 AND 6) (SEE INSTRUCTIONS 3, 5 AND 6)
To be completed ONLY if the check for To be completed ONLY if the check for
the purchase price of Shares purchased the purchase price of Shares purchased
and/or certificates for Shares not and/or certificates for Shares not
tendered or not purchased are to be issued tendered or not purchased are to be mailed
in the name of someone other than the to someone other than the abovesigned or
abovesigned. to the abovesigned at an address other
Issue / / check and/or than that shown below the abovesigned's
/ / certificate(s) to: signature(s).
Name Mail / / check and/or
(PLEASE PRINT) / / certificate(s) to:
Address Name
(INCLUDE ZIP CODE) (PLEASE PRINT)
(TAXPAYER IDENTIFICATION OR Address
SOCIAL SECURITY NUMBER) (INCLUDE ZIP CODE)
LOST CERTIFICATES BOX
/ / CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN AND
WISH TO TENDER HAVE BEEN DESTROYED OR STOLEN. (SEE INSTRUCTION 11.)
Number of Shares represented by lost, destroyed or stolen certificates:
---------------
</TABLE>
6
<PAGE>
SOLICITED TENDERS
(SEE INSTRUCTION 9)
As provided in Instruction 9, CSW will pay to any Soliciting Dealer, as
defined in Instruction 10, a solicitation fee of $1.50 per Share for any Shares
tendered, accepted for payment and paid pursuant to the Offer in transactions
for beneficial owners of fewer than 2,500 Shares and a solicitation fee of $1.00
per Share in transactions for beneficial owners of 2,500 or more Shares,
provided that fees payable in transactions equal to or exceeding 2,500 Shares
shall be paid 80% to the Dealer Managers and 20% to any Soliciting Dealers
(which may be a Dealer Manager). However, Soliciting Dealers will not be
entitled to a solicitation fee for Shares beneficially owned by such Soliciting
Dealer.
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm: __________________________________________________________________
(PLEASE PRINT)
Name of Individual Broker
or Financial Consultant: _______________________________________________________
Telephone Number of Broker
or Financial Consultant: _______________________________________________________
Identification Number (if known): ______________________________________________
Address: _______________________________________________________________________
(INCLUDE ZIP CODE)
The following is to be completed ONLY if customer's Shares held in nominee
name are tendered.
<TABLE>
<S> <C>
NAME OF BENEFICIAL OWNER NUMBER OF SHARES TENDERED
(ATTACH ADDITIONAL LIST IF NECESSARY)
</TABLE>
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that (a) it has complied with the applicable requirements
of the Securities Exchange Act of 1934, as amended, and the applicable rules and
regulations thereunder, in connection with such solicitation; (b) it is entitled
to such compensation for such solicitation under the terms and conditions of the
Offer to Purchase; (c) in soliciting tenders of Shares, it has used no
soliciting materials other than those furnished by CSW; and (d) if it is a
foreign broker or dealer not eligible for membership in the National Association
of Securities Dealers, Inc. (the "NASD"), it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations.
THE PAYMENT OF COMPENSATION TO ANY SOLICITING DEALER IS DEPENDENT ON SUCH
SOLICITING DEALER RETURNING A NOTICE OF SOLICITED TENDERS TO THE DEPOSITARY.
(IF SHARES ARE BEING TENDERED, PLEASE COMPLETE
SUBSTITUTE FORM W-9 BELOW OR A FORM W-8, AS APPLICABLE)
SIGN HERE: _____________________________________________________________________
Signature of Owner(s)
_______________________________________
Signature of Owner(s)
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or the National Association
of Securities Dealers, Inc., or by a commercial bank or trust company having an
office or correspondent in the United States which is a participant in an
approved Signature Guarantee Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered holder(s) of the Shares (which
term, for purposes of this document, shall include any participant in one of the
Book-Entry Transfer Facilities whose name appears on a security position listing
as the owner of Shares) tendered herewith and such holder(s) has not completed
the box above under the heading "Special Payment Instructions" or the box above
under the heading "Special Delivery Instructions" on this Letter of Transmittal
or (b) if such Shares are tendered for the account of an Eligible Institution.
See Instruction 4.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARES. This Letter of Transmittal
is to be used if (a) certificates are to be forwarded herewith or (b) delivery
of Shares is to be made by book-entry transfer pursuant to the procedures set
forth under the heading "Terms of the Offer--Procedure for Tendering Shares" in
the Offer to Purchase. Certificates for all physically delivered Shares, or a
confirmation of a book-entry transfer into the Depositary's account at one of
the Book-Entry Transfer Facilities of all Shares delivered electronically, as
well as a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the front page of this Letter of Transmittal on or prior to the
Expiration Date (as defined in the Offer to Purchase) with respect to all
Shares. Preferred Shareholders who wish to tender their Shares yet who cannot
deliver their Shares and all other required documents to the Depositary on or
prior to the Expiration Date must tender their Shares pursuant to the guaranteed
delivery procedure set forth under the heading "Terms of the Offer--Procedure
for Tendering Shares" in the Offer to Purchase. Pursuant to such procedure: (a)
such tender must be made by or through an Eligible Institution, (b) a properly
completed and duly executed Notice of Guaranteed Delivery in the form provided
by CSW (with any required signature guarantees) must be received by the
Depositary on or prior to the applicable Expiration Date and (c) the
certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at one of the Book-Entry
Transfer Facilities of all Shares delivered electronically, as well as a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof) and any other documents required by this Letter of Transmittal must be
received by the Depositary by 5:00 p.m. (central time) within three New York
Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as provided under the heading "Terms of the
Offer--Procedure for Tendering Shares" in the Offer to Purchase.
THE METHOD OF DELIVERY OF SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT THE
OPTION AND RISK OF THE TENDERING PREFERRED SHAREHOLDER. IF CERTIFICATES FOR
SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
No alternative, conditional or contingent tenders will be accepted. See
"Terms of the Offer--Number of Shares; Purchase Price; Expiration Date
Dividends" in the Offer to Purchase. By executing this Letter of Transmittal (or
facsimile thereof), the tendering stockholder waives any right to receive any
notice of the acceptance for payment of the Shares.
3. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box above under the heading "Description of
Shares Tendered". In such case, a new certificate for the remainder of the
Shares represented by the old certificate will be sent to the person(s) signing
this Letter of Transmittal, unless otherwise provided in the box above under the
heading "Special Payment Instructions" or "Special Delivery Instructions", as
promptly as practicable following the expiration or termination of the Offer.
All Shares represented by certificates delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
4. SIGNATURES ON LETTER OF TRANSMITTAL AND/OR NOTICE OF GUARANTEED DELIVERY;
STOCK POWERS AND ENDORSEMENTS. If either this Letter of Transmittal or the
Notice of Guaranteed Delivery (together, the "Tender Documents") is signed by
the registered holder(s) of the Shares tendered hereby, the
8
<PAGE>
signature(s) must correspond with the name(s) as written on the face of the
certificates without alteration, enlargement or any change whatsoever.
If any of the Shares tendered under either Tender Document is held of record
by two or more persons, all such persons must sign such Tender Document.
If any of the Shares tendered or voted under either Tender Document is
registered in different names or different certificates, it will be necessary to
complete, sign and submit as many separate applicable Tender Documents as there
are different registrations of certificates.
If either Tender Document is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s). Signatures on any such certificates or
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates must be
endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Shares. Signature(s) on any such certificates or stock powers must be
guaranteed by an Eligible Institution. See Instruction 1.
If either Tender Document or any certificate or stock power is signed by a
trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
CSW of the authority of such person to act must be submitted.
5. STOCK TRANSFER TAXES. Except as set forth in this Instruction 5, CSW
will pay or cause to be paid any stock transfer taxes with respect to the sale
and transfer of any Shares to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or Shares not tendered
or not purchased are to be registered in the name of, any person other than the
registered holder(s), or if tendered Shares are registered in the name of any
person other than the person(s) signing this Letter of Transmittal, the amount
of any stock transfer taxes (whether imposed on the registered holder(s), such
other person or otherwise) payable on account of the transfer to such person
will be deducted from the purchase price unless satisfactory evidence of the
payment of such taxes, or exemption therefrom, is submitted. See "Terms of the
Offer--Acceptance of Shares for Payment and Payment of Purchase Price and
Dividend" in the Offer to Purchase. EXCEPT AS PROVIDED IN THIS INSTRUCTION 5, IT
WILL NOT BE NECESSARY TO AFFIX TRANSFER TAX STAMPS TO THE CERTIFICATES
REPRESENTING SHARES TENDERED HEREBY.
6. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase
price of any Shares purchased is to be issued in the name of, and/or any Shares
not tendered or not purchased are to be returned to, a person other than the
person(s) signing this Letter of Transmittal or if the check and/or any
certificate for Shares not tendered or not purchased are to be mailed to someone
other than the person(s) signing this Letter of Transmittal or to an address
other than that shown in the box above under the heading "Name(s) and
Address(es) of Registered Holder(s)", then the "Special Payment Instructions"
and/or "Special Delivery Instructions" on this Letter of Transmittal should be
completed. Preferred Shareholders tendering Shares by book-entry transfer will
have any Shares not accepted for payment returned by crediting the account
maintained by such Preferred Shareholder at the Book-Entry Transfer Facility
from which such transfer was made.
7. SUBSTITUTE FORM W-9 AND FORM W-8. A tendering Preferred Shareholder is
required to provide the Depositary with either a correct Taxpayer Identification
Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the tendering
Preferred Shareholder to 31% federal income tax backup withholding on the
payment of the purchase price for the Shares. If the tendering Preferred
Shareholder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, such Preferred Shareholder may write
"Applied For" in the space for the TIN in Part I of Substitute Form W-9. If the
tendering Preferred Shareholder writes "Applied For" in the space for the TIN in
Part I of Substitute Form W-9 and the Depositary is not provided with a TIN by
the time of payment, the Depositary will withhold 31% on the payment of the
purchase price for the Shares.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Managers
at their respective telephone numbers and
9
<PAGE>
addresses listed below. Requests for additional copies of the Offer to Purchase,
this Letter of Transmittal or other tender offer materials may be directed to
the Information Agent or the Dealer Managers and such copies will be furnished
promptly at CSW's expense. Preferred Shareholders may also contact their local
broker, dealer, commercial bank or trust company for assistance concerning the
Offer.
9. SOLICITED TENDERS. CSW will pay a solicitation fee of $1.50 per Share
for any Shares tendered, accepted for payment and paid pursuant to the Offer in
transactions for beneficial owners of fewer than 2,500 Shares and a solicitation
fee of $1.00 per Share in transactions for beneficial owners of 2,500 or more
Shares, provided that fees payable in transactions equal to or exceeding 2,500
Shares shall be paid 80% to the Dealer Managers and 20% to any Soliciting
Dealers (which may be a Dealer Manager), covered by the Letter of Transmittal
which designates, under the heading "Solicited Tenders", as having solicited and
obtained the tender, the name of (a) any broker or dealer in securities,
including a Dealer Manager in its capacity as a dealer or broker, which is a
member of any national securities exchange or of the National Association of
Securities Dealers, Inc. (the "NASD"), (b) any foreign broker or dealer not
eligible for membership in the NASD which agrees to conform to the NASD's Rules
of Fair Practice in soliciting tenders outside the United States to the same
extent as though it were an NASD member, or (c) any bank or trust company (each
of which is referred to herein as a "Soliciting Dealer"). No such fee shall be
payable to a Soliciting Dealer with respect to the tender of Shares by a holder
unless the Letter of Transmittal accompanying such tender designates such
Soliciting Dealer. No such fee shall be payable to a Soliciting Dealer in
respect of Shares registered in the name of such Soliciting Dealer unless such
Shares are held by such Soliciting Dealer as nominee and such Shares are being
tendered for the benefit of one or more beneficial owners identified on the
Letter of Transmittal or on the Notice of Solicited Tenders (included in the
materials provided to brokers and dealers). No such fee shall be payable to a
Soliciting Dealer with respect to the tender of Shares by the holder of record,
for the benefit of the beneficial owner, unless the beneficial owner has
designated such Soliciting Dealer. If tendered Shares are being delivered by
book-entry transfer, the Soliciting Dealer must return a Notice of Solicited
Tenders to the Depositary within three business days after expiration of the
Offer to receive a solicitation fee. No such fee shall be payable to a
Soliciting Dealer if such Soliciting Dealer is required for any reason to
transfer the amount of such fee to a depositing holder (other than itself). No
such fee shall be paid to a Soliciting Dealer with respect to Shares tendered
for such Soliciting Dealer's own account. No broker, dealer, bank, trust company
or fiduciary shall be deemed to be the agent of CSW, the Depositary, the
Information Agent or the Dealer Managers for purposes of the Offer.
10. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance of any tender
of Shares will be determined by CSW, in its sole discretion, and its
determination shall be final and binding. CSW reserves the absolute right to
reject any and all tenders of Shares that it determines are not in proper form
or the acceptance for payment of or payment for Shares that may, in the opinion
of CSW's counsel, be unlawful. CSW also reserves the absolute right to waive any
of the conditions to the Offer or any defect or irregularity in any tender of
Shares and CSW's interpretation of the terms and conditions of the Offer
(including these instructions) shall be final and binding. Unless waived, any
defects or irregularities in connection with tenders must be cured within such
time as CSW shall determine. None of CSW, the Dealer Managers, the Depositary,
the Information Agent or any other person shall be under any duty to give notice
of any defect or irregularity in tenders nor shall any of them incur any
liability for failure to give any such notice. Tenders will not be deemed to
have been made until all defects and irregularities have been cured or waived.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the Preferred Shareholder should
promptly notify the Depositary by checking the Lost Certificates Box immediately
following the Special Payment Instructions/Special Delivery Instructions and
indicating the number of Shares lost, destroyed or stolen. The Preferred
Shareholder will then be instructed as to the procedures that must be taken in
order to replace the certificate. The tender of Shares pursuant to this Letter
of Transmittal will not be valid unless prior to the Expiration Date (as defined
in the Offer to Purchase): (a) such procedures have been completed and a
replacement certificate for the Shares has been delivered to the Depositary or
(b) a Notice of Guaranteed Delivery has been delivered to the Depositary. See
Instruction 2.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE COPY HEREOF), DULY
EXECUTED, TOGETHER WITH, IF APPLICABLE, CERTIFICATES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE
DEPOSITARY, OR, IF APPLICABLE, THE NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE APPLICABLE EXPIRATION DATE (AS
DEFINED IN THE OFFER TO PURCHASE).
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<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a Preferred Shareholder whose tendered Shares
are accepted for payment is required to provide the Depositary (as payer) with
either such Preferred Shareholder's correct TIN on Substitute Form W-9 below or
a properly completed Form W-8. If such Preferred Shareholder is an individual,
the TIN is his or her social security number. For businesses and other entities,
the number is the federal employer identification number. If the Depositary is
not provided with the correct TIN or properly completed Form W-8, the Preferred
Shareholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such Preferred Shareholder with
respect to Shares purchased pursuant to the Offer may be subject to backup
withholding. The Form W-8 can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
If federal income tax backup withholding applies, the Depositary is required
to withhold 31% of any payments made to the Preferred Shareholder. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a Preferred
Shareholder with respect to Shares purchased pursuant to the Offer, the
Preferred Shareholder is required to notify the Depositary of his or her correct
TIN by completing the Substitute Form W-9 attached hereto certifying that the
TIN provided on Substitute Form W-9 is correct and that (a) the Preferred
Shareholder is exempt from federal income tax backup withholding or (b) the
Preferred Shareholder has not been notified by the Internal Revenue Service that
he or she is subject to federal income tax backup withholding as a result of
failure to report all interest or dividends or (c) the Internal Revenue Service
has notified the Preferred Shareholder that he or she is no longer subject to
federal income tax backup withholding. Foreign Preferred Shareholders must
submit a properly completed Form W-8 in order to avoid the applicable backup
withholding; provided, however, that backup withholding will not apply to
foreign Preferred Shareholders subject to 30% (or lower treaty rate) withholding
on gross payments received pursuant to the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The Preferred Shareholder is required to give the Depositary the social
security number or employer identification number of the registered owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
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<TABLE>
<CAPTION>
PAYER'S NAME: THE BANK OF NEW YORK
<S> <C> <C>
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN Social Security Number OR
FORM W-9 THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number
SIGNING AND DATING BELOW. TIN ------------------------
Name (Please Print) PART 2--
Address For Payees Exempt from Backup
City State Zip Code Withholding (See Guidelines)
PART 3--CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) the number shown on this form is my correct taxpayer
identification number (or a TIN has not been issued to me but I have
applied for a TIN or intend to do so in the near future), and (2) I am
not subject to backup withholding either because I am exempt from
backup withholding or I have not been notified by the Internal Revenue
PAYER'S REQUEST FOR Service (the "IRS") that I am subject to backup withholding as a
TAXPAYER
IDENTIFICATION NUMBER (TIN) result of a failure to report all interest or dividends or the IRS has
AND CERTIFICATION notified me that I am no longer subject to backup withholding. I
understand that, if I have written "Applied For" in the space for the
TIN in Part I, I must provide a TIN by the time of payment, or 31% of
the payment of the purchase price of the Shares made to me will be
withheld.
SIGNATURE DATE, 1997
You must cross out item (2) above if you have been notified by the IRS
that you are currently subject to backup withholding because of
underreporting interest or dividends on your tax return.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
</TABLE>
THE DEALER MANAGERS:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. SMITH BARNEY INC.
85 Broad Street 388 Greenwich Street
New York, New York 10004 New York, New York 10013
(800) 828-3182 (800) 655-4811
Attention: Paul S. Galant
</TABLE>
THE INFORMATION AGENT:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 755-3107 (Toll Free)
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