UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of earliest event reported: August 27, 1999
Date of report: September 1, 1999
Commission Registrant, State of Incorporation, I.R.S. Employer
File Number Address and Telephone Number Identification No.
1-1443 Central and South West Corporation 51-0007707
(A Delaware Corporation)
1616 Woodall Rodgers Freeway
Dallas, Texas 75202-1234
(214) 777-1000
1-3146 Southwestern Electric Power Company 72-0323455
(A Delaware Corporation)
428 Travis Street
Shreveport, Louisiana 71156-0001
(318) 673-3000
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GLOSSARY OF TERMS
The following abbreviations or acronyms used in this text are defined below:
Abbreviation or Acronym Definition
AEP Merger.................Proposed merger by AEP and CSW where CSW would become
a wholly owned subsidiary of AEP
Cajun......................Cajun Electric Power Cooperative, Inc.
Cajun Members Committee....Committee comprised of 7 of the 12 Louisiana member
distribution Cooperatives served by Cajun
CSW........................Central and South West Corporation, Dallas, Texas
CSW System.................CSW and its subsidiaries
Exchange Act...............Securities Exchange Act of 1934, as amended
July 1999 SWEPCO Plan......SWEPCO's and the Cajun Members Committee's Joint
Reorganization Plan for Cajun Electric Power Coopera-
tive, Inc., as amended
Louisiana Generating LLC...A partnership of subsidiaries of Southern Energy,
Inc. and Northern States Power Company
SWEPCO.....................Southwestern Electric Power Company, Shreveport,
Louisiana
FORWARD-LOOKING INFORMATION
This report made by CSW and certain of its subsidiaries contains forward-looking
statements within the meaning of Section 21E of the Exchange Act. Although CSW
and each of its subsidiaries believe that their expectations are based on
reasonable assumptions, any such statements may be influenced by factors that
could cause actual outcomes and results to be materially different from those
projected. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include, but are not
limited to:
- - the impact of general economic changes in the United States and in
countries in which CSW either currently has made or in the future may
make investments,
- - the impact of the proposed AEP Merger including any regulatory
conditions imposed on the merger, the inability to consummate the AEP
Merger, or other merger and acquisition activity,
- - the impact of deregulation on the United States electric utility
business, especially in the States comprising the CSW System's service
territory
- - increased competition and electric utility industry restructuring in
the United States,
- - federal and state regulatory developments and changes in law which may
have a substantial adverse impact on the value of CSW System generating
and other assets,
- - timing and adequacy of rate relief,
- - adverse changes in electric load and customer growth,
- - climatic changes or unexpected changes in weather patterns, and
- - changing fuel prices, generating plant and distribution facility
performance.
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ITEM 5. OTHER EVENTS
SWEPCO's Withdrawal of Its Cajun Asset Proposal
On August 26, 1999, SWEPCO, together with the Cajun Members
Committee and Washington-St. Tammany Electric Cooperative, announced that
they had reached a settlement agreement to withdraw their joint July 1999
SWEPCO Plan to acquire all of the non-nuclear assets of Cajun. The
agreement to withdraw the July 1999 SWEPCO Plan was reached during a
settlement conference ordered by the United States District Court in Baton
Rouge, Louisiana.
As previously reported, on July 28, 1999, SWEPCO raised its bid for
the non-nuclear assets of Cajun under the July 1999 SWEPCO Plan to $1.0255
billion. On August 13, 1999, Louisiana Generating LLC raised its bid for
the Cajun non-nuclear assets to $1.0455 billion. As part of the settlement
that eliminates all appeals, Louisiana Generating LLC lowered its bid to
$1.026 billion.
As of July 31, 1999, SWEPCO had deferred approximately $13.0
million in costs related to the Cajun acquisition on its consolidated
balance sheet, which will be charged to expense in the third quarter of
1999. Under the settlement agreement, SWEPCO will receive $7.5 million,
which will be used to offset a portion of its total acquisition costs.
A news release announcing SWEPCO's withdrawal of its plan to acquire
the non-nuclear assets of Cajun is included as Exhibit 99.1 and
incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
Exhibit 99.1 SWEPCO News Release dated August 27, 1999 announcing
SWEPCO's withdrawal of its joint plan to acquire the
non-nuclear assets of Cajun.
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SIGNATURES
Pursuant to the requirements of the Exchange Act, each registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
CENTRAL AND SOUTH WEST CORPORATION
Date: September 1, 1999
By: /s/ Lawrence B. Connors
Lawrence B. Connors
Controller and Chief Accounting Officer
(Principal Accounting Officer)
SOUTHWESTERN ELECTRIC POWER COMPANY
Date: September 1, 1999
By: /s/ R. Russell Davis
R. Russell Davis
Controller and Chief Accounting Officer
(Principal Accounting Officer)
SWEPCO, Committee, WST
Withdraw Plan in Settlement CAJUN
of Cajun Electric Bankruptcy LOGO
SHREVEPORT, LA (Aug. 27, 1999) - Southwestern Electric Power Company, the
Committee of Certain Members and Washington-St. Tammany Electric Cooperative
have withdrawn their joint reorganization plan for Cajun Electric Power
Cooperative as part of a settlement reached Aug. 26 to end Cajun's
four-and-a-half-year-old bankruptcy. In the settlement, SWEPCO has avoided
further litigation and obtained a partial recovery of its costs in the matter.
The agreement came during a settlement conference ordered by the U.S. District
Court in Baton Rouge, La. SWEPCO was one of two remaining bidders for Cajun's
non-nuclear assets and the opportunity to sell wholesale power to Cajun's 11
member distribution cooperatives.
"We certainly hoped for a different outcome when we set out four years ago to
acquire Cajun's non-nuclear assets and provide substantial rate savings to the
Cajun member cooperatives and their ratepayers," said Mike Smith, vice president
of Central and South West Corp., SWEPCO's parent company. "However, as low
bidder it was time for us to bow out and let the other parties close the
transaction as quickly as possible so the rates to the co-ops could be lowered
as soon as possible," he said.
"The fact that we were allowed to recover $7.5 million of our costs, we believe,
is an acknowledgment by the court and the other parties of the value SWEPCO
brought to the process in lowering rates to the cooperatives and maintaining
value for the Cajun estate," Smith said. "The $7.5 million is approximately half
of the cost we expect to incur in the Cajun matter. As of June 30, we had
incurred approximately $12.7 million," Smith said.
"We understand that the cooperatives who supported our plan made a difficult
decision in agreeing to the settlement, but one that was in the best financial
interests of the cooperatives and their customers," Smith said. "The settlement
avoids continued costly litigation for us and for the non-profit co-ops, who
have fought so hard on behalf of their members."
The Louisiana Public Service Commission also played a key role in the
settlement, continuing its emphasis on lower rates and the return to ratepayers
of $100 million to $200 million in Cajun's interest escrow funds. "The
settlement was important to the LPSC and the co-ops because it speeds up the
return of the interest escrow funds to rural ratepayers across the state," Smith
said.
Under the settlement, the co-ops have a number of power supply options,
including short-term transition agreements with the winning bidder or going
immediately to the open market. "The relationship and mutual respect we have
developed with those cooperatives over the four-plus years of this process means
a great deal to us, and we certainly hope it continues in the future," Smith
said.
The Committee of Certain Members includes Beauregard Electric Cooperative, Inc.,
Dixie Electric Membership Corp., Jefferson Davis Electric Cooperative, Inc.,
Northeast Louisiana Power Cooperative, Inc., South Louisiana Electric
Cooperative Association and Valley Electric Membership Corp.
Washington-St. Tammany Electric Cooperative, Inc. (WST) was a co-proponent with
SWEPCO and the Committee. Claiborne Electric Cooperative, Inc. which is not a
member of the Committee, also supported the SWEPCO/Committee/WST plan.
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Southwestern Electric Power Co., based in Shreveport, La., is a subsidiary of
Central and South West Corp. (NYSE: CSR), a Dallas-based public utility holding
company.
