<PAGE> 1
File No. 70-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
______________________
CENTRAL POWER AND LIGHT COMPANY
539 N. Carancahua Street
Corpus Christi, Texas 78401
(Name of company filing this statement and address
of principal executive office)
______________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
______________________
David P. Sartin
Controller
Central Power and Light Company
539 N. Carancahua Street
Corpus Christi, Texas 74801
Stephen J. McDonnell
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
George J. Forsyth, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
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Item 1. Description of Proposed Transactions.
Central Power and Light Company (the "Company"), a Texas corporation,
is a wholly-owned electric utility subsidiary of 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").
The Company hereby requests authority to issue and sell, in one or more
series, from time to time through December 31, 1996, up to one million
additional shares of its authorized and unissued preferred stock, par value
$100 per share (the "Additional Preferred Stock"), either pursuant to the
competitive bidding procedures of Rule 50 of the Act, as modified, if
applicable, by the Statement of Policy dated September 2, 1982 (HCAR No.
22623) of the Securities and Exchange Commission (the "Commission"), or in
negotiated transactions with underwriters or agents pursuant to an exception
from the competitive bidding requirements of Rule 50 under subsection (a)(5)
thereof.
Terms of the Additional Preferred Stock
The Company requests authority to set the terms and amount of the
Additional Preferred Stock to be issued depending upon market conditions and
other circumstances existing at the time of such issuance and sale. The
number of shares of any series of the Additional Preferred Stock to be issued,
and the terms thereof, will be established by a resolution of the Company's
Board of Directors, or a committee thereof, amending the Company's Restated
Articles of Incorporation (the "Articles").
If market conditions existing at the time of the issuance and sale of
the Additional Preferred Stock are such that the Company determines that
preferred stock having an offering price other than $100 per share (for
example: $25 per share which is customary in the retail market) is likely to
have a better market reception than preferred stock having an offering price
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of $100 per share, the Company requests authority to sell the Additional
Preferred Stock as "depositary preferred stock". In an offering of depositary
preferred stock, the Company would issue and sell Additional Preferred Stock
to underwriters for deposit with a Depositary. The underwriters would then
receive from the Depositary, and deliver to purchasers in a subsequent public
offering, receipts ("Depositary Receipts") evidencing Depositary Preferred
Shares, each representing a proportional share of Additional Preferred Stock
(for example: one-fourth share for a Depositary Receipt with a face value of
$25 per share). Any additional terms of such an arrangement would be
established at the time of the proposed issuance.
The terms of the Additional Preferred Stock may include provisions
for mandatory or optional redemption at various prices and may include various
restrictions on optional redemption for a specified number of years. The
exact terms of any redemption or refunding restrictions would be determined at
or about the time of sale of the Additional Preferred Stock. Further, the
Company may include provisions for a sinking or retirement fund for any series
of the Additional Preferred Stock designed to redeem annually, commencing a
specified number of years after the first day of the calendar month in which
such series is issued, a number of shares specified in such provision. Such
provisions may also give the Company the option to credit against any sinking
fund requirement shares of Additional Preferred Stock of that series
theretofore purchased or otherwise acquired by the Company and not previously
credited against any sinking fund requirement. Additionally, any such sinking
or retirement fund provision may give the Company the option to redeem or
purchase on an annual basis up to an additional equivalent amount of the
shares so retired pursuant to the sinking or retirement fund requirement. The
Company would not expect to determine whether to include a sinking or
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retirement fund as part of the terms of any series of the Additional Preferred
Stock until at or about the time of issuance and sale of such series.
The Company hereby requests authorization for the period during which
any shares of the Additional Preferred Stock are outstanding to (i) redeem
shares of the Additional Preferred Stock in accordance with any mandatory or
optional redemption provisions established in any series of the Additional
Preferred Stock, and (ii) redeem (or purchase in lieu of redemption) shares of
Additional Preferred Stock in accordance with any sinking or retirement fund
provisions established in any series of the Additional Preferred Stock.
Use of Proceeds
The net proceeds to be derived by the Company from the issue and sale
of the Additional Preferred Stock will be used principally to redeem, or
reimburse the Company's treasury in connection with the redemption of, all or
a portion of one or more series of the Company's outstanding preferred stock,
including the Company's 10.05% Preferred Stock, $100 par value ("10.05%
Preferred Stock") and 8.72% Preferred Stock, $100 par value ("8.72% Preferred
Stock") at the then current redemption prices (currently, 104.76% and 102.91%
of the principal amount of the 10.05% and 8.72% Preferred Stock,
respectively), plus accrued and unpaid dividends, if any, to the redemption
date. As of February 2, 1994, $22.375 million and $50 million of the 10.05%
and 8.72% Preferred Stock were outstanding, respectively. The 10.05%
Preferred Stock and the 8.72% Preferred Stock are collectively referred to as
the "Old Preferred Stock." Any net proceeds from the issuance of the
Additional Preferred Stock not used for the redemption of the Old Preferred
Stock, or reimbursement of the Company's treasury in respect thereof, will be
used to repay the Company's outstanding short-term borrowings or for other
general corporate purposes. In the event that the proceeds from the sale of
the Additional Preferred Stock are less than the amount required to redeem the
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Old Preferred Stock, or to reimburse the Company's treasury in respect
thereof, the Company will pay a portion of the redemption price from
internally generated funds or available short-term borrowings pursuant to an
order of the Commission dated March 31, 1993 (HCAR No. 35-25777).
The Company will not redeem the Old Preferred Stock with the proceeds
from the sale of the Additional Preferred Stock unless the estimated present
value savings derived from the net difference between dividend payments on a
hypothetical new issue of preferred stock of a structure comparable to the
structure on the Old Preferred Stock is greater than the present value of all
redemption and issuance costs, assuming a discount rate based on the estimated
dividend rate on the Additional Preferred Stock.
Coverage Test
The Company's Articles prohibit the Company, without the affirmative
vote or the consent of the record holders of a majority of the total number of
shares of the preferred stock (of all series) at the time outstanding, from
issuing any additional shares of preferred stock or any other stock ranking on
a parity with the preferred stock as to dividends or assets for any purpose
other than in exchange for or to effect the redemption or other retirement of
not less than an equal par amount or stated value of the preferred stock at
the time outstanding, unless the Company meets the requirements of a "coverage
test" set forth in the Articles (the "Coverage Test"). The Coverage Test
requires that (a) the gross income of the Company (after deducting all taxes,
including taxes based on income) for twelve consecutive calendar months within
the fifteen calendar months immediately preceding the issuance of the shares
to be issued shall have been at least one and one-half times the sum of (i)
the annual interest charge on all indebtedness of the Company represented by
bonds, notes or other securities, which will be outstanding immediately after
the issuance of the shares to be issued, and (ii) the annual dividend
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requirement on all shares of preferred stock and of any other stock ranking
prior to or on a parity with the preferred stock as to dividends or assets
(including the shares to be issued), which will be outstanding immediately
after the issuance of the shares to be issued; and (b) the common stock equity
of the Company, computed as provided in paragraph 7 of the Articles, shall not
be less than the aggregate amount payable in the event of the involuntary
liquidation, dissolution or winding up of the Company in respect of all shares
of the preferred stock and of any other stock ranking prior to or on a parity
with the preferred stock as to dividends or assets, which will be outstanding
immediately after the issuance of the shares to be issued.
The Company has calculated the Coverage Test for the twelve months
ended December 31, 1993 and the actual Coverage Test ratio at such date was
2.2 to 1. The Company would therefore comply with the Coverage Test, if
applicable, since this is above the 1.5 to 1 ratio.
Exception From Competitive Bidding
The Company requests authority to sell the Additional Preferred Stock
either pursuant to competitive bidding or in negotiated transactions with
underwriters or agents. In a competitive bidding, the Company intends to
invite bids for the purchase of shares of the Additional Preferred Stock
either in accordance with Rule 50 under the Act, or, in the case of a delayed
or continuous offering and sale pursuant to Rule 415 under the Securities Act
of 1933, as amended (the "Securities Act"), the alternative bidding procedures
as permitted by Release No. 35-22623 (September 2, 1982). If the annual
dividend rate and price of the Additional Preferred Stock are to be determined
by competitive bidding, the terms and conditions relating to bids for the
Additional Preferred Stock will require each bid to specify the annual
dividend rate to be borne by the Additional Preferred Stock, the underwriting
discounts and commissions charged, and the price to be paid to the Company for
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the Additional Preferred Stock, which will not be less than 100% of the
principal amount of the Additional Preferred Stock.
The Company also requests authority to sell the Additional Preferred
Stock in one or more negotiated offerings rather than pursuant to competitive
bidding under the Act. The Company believes that under current market
conditions the ability to sell the Additional Preferred Stock on a negotiated
basis will provide the Company with the flexibility to respond quickly to
changing market conditions and choose the best method for selling the
Additional Preferred Stock in order to achieve the most favorable pricing. In
stable market conditions, the Company may achieve the best price through
competitive bidding. In volatile markets, however, the ability to do
negotiated offerings would enable the Company and a potential underwriter to
monitor market conditions and evaluate various terms for the Additional
Preferred Stock and elect the most favorable alternatives.
The Company therefore requests an exception from the competitive
bidding requirements of Rule 50 of the Act under subsection (a)(5) thereto,
and also requests authority to immediately enter into negotiations with
potential underwriters with respect to the annual dividend rate, redemption
provisions and other terms and conditions applicable to the Additional
Preferred Stock and to set the terms of the Additional Preferred Stock subject
to the receipt of the order of the Commission requested hereby authorizing the
issuance and sale of the Additional Preferred Stock.
The Company hereby requests authorization for the period during which
any shares of the Old Preferred Stock are outstanding to repurchase,
reacquire, or redeem shares of the Old Preferred Stock in accordance with
applicable provisions therein. The Company desires to have the flexibility to
redeem, repurchase or reacquire shares of the Old Preferred Stock whether or
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not it determines to issue the Additional Preferred Stock. The Company will
pay for any such repurchase, reacquisition or redemption from the proceeds of
the issuance of debt securities approved by the Commission or from internally
generated funds or available short-term borrowings pursuant to an order of the
Commission dated March 31, 1993 (HCAR No. 35-2577).
Item 2. Fees, Commissions and Expenses.
Assuming an issuance of up to one million shares of Additional Preferred
Stock, an estimate of the fees and expenses, other than underwriting discounts
and commissions, to be paid or incurred by the Company in connection with the
proposed transactions is set forth below:
Holding Company Act filing fee................... $ 2,000*
Securities Act Registration fee.................. $ 34,483
Financial Printing Expenses...................... 15,000
Blue Sky fees and expenses....................... 4,000
Expenses of Central and South
West Services, Inc............................. 15,000
Fees of Public Accountants....................... 7,000
Fees of Rating Agencies........................... 33,750
Counsel Fees:
Milbank, Tweed, Hadley & McCloy
New York, New York............................. 65,000
Vinson & Elkins
Dallas, Texas.................................. 10,000
Miscellaneous and incidental expenses including
travel, telephone, copying, postage, etc. ..... 13,767
--------
TOTAL $200,000
========
_______________
* Actual Amount.
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The fees and expenses include those charges incurred for the services
of Central and South West Services, Inc. ("CSWS"), an affiliated service
company of CSW operating pursuant to Section 13 of the Act and the rules
thereunder. The services of CSWS will consist principally of services
performed by the corporation's Treasury and Accounting Departments and
Transfer Agent and Registrar services.
Item 3. Applicable Statutory Provisions.
Section 6(a) and 7 of the Act and Rules 23 and 50 thereunder are or
may be applicable to the issue and sale of the Additional Preferred Stock.
The Company requests that any issuance of Additional Preferred Stock by the
Company be excepted from the competitive bidding requirements of Rule 50,
pursuant to paragraph (a)(5) thereof, since compliance with subparagraphs (b)
and (c) of Rule 50 with respect to such transactions is not appropriate to aid
the Commission to determine whether the fees, commissions or other
remuneration to be paid directly or indirectly in connection with such
transactions is reasonable, or whether any term or condition of any issuance
of Additional Preferred Stock is detrimental to the public interest or the
interest of investors or consumers, or necessary or appropriate in the public
interest or for the protection of investors or consumers to ensure the
maintenance of competitive conditions or the receipt of adequate
consideration.
Sections 9(a), 10 and 12(c) of the Act and Rule 42 thereunder are
or may be applicable to (i) the redemption and/or purchase of the Old
Preferred Stock, and (ii) the redemption and/or purchase of the Additional
Preferred Stock pursuant to any mandatory or optional redemption or sinking
fund requirements.
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To the extent that the proposed transactions are considered by the
Commission to require authorization, approval or exemption under any section
of the Act or provision of the rules or regulations other than those
specifically referred to herein, request for such authorization, approval or
exemption is hereby made.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, has jurisdiction over the proposed
transactions for which approval is sought under this Application-Declaration.
Item 5. Procedure.
A registration statement on Form S-3 under the Securities Act of
1933, as amended, will be filed with the Commission in connection with the
issue and sale by the Company of the Additional Preferred Stock.
The Company requests that the Commission issue and publish no later
than February 18, 1994 the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date as soon
as possible, but in any case not later than March 14, 1994, as the date after
which an order granting and permitting this Application-Declaration to become
effective may be entered by the Commission and the Commission enter not later
than March 15, 1994, an appropriate order granting and permitting this
Application-Declaration to become effective.
The Company respectfully requests that appropriate and timely
action be taken by the Commission in this matter in order to permit
consummation of the proposed transactions at the earliest possible date.
No recommended decision by a hearing officer or other responsible
officer of the Commission is necessary or required in this matter. The
Division of Investment Management of the Commission may assist in the
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preparation of the Commission's decision in this matter. There should be no
30-day waiting period between the entry and the effective date of any order
issued by the Commission in this matter and it is respectively requested that
any such order be made effective immediately upon the entry thereof.
Item 6. Exhibits and Financial Statements.
Exhibit 1 - Restated Articles of Incorporation of the Company, as
amended (to be filed by amendment).
Exhibit 2 - Form of stock certificate representing the Additional
Preferred Stock (to be filed by amendment).
Exhibit 3 - Resolutions providing for the establishment of the
terms of the Additional Preferred Stock (to be filed by
amendment).
Exhibit 4 - Form S-3 Registration Statement of the Company under
the Securities Act of 1933, as amended, relating to the
sale of the Additional Preferred Stock (to be filed by
amendment).
Exhibit 5 - Form of Invitation for Bids, Terms and Conditions
Relating to Bids and form of Bid (to be filed by
amendment if the Additional Preferred Stock is sold by
competitive bidding).
Exhibit 6 - Copy of executed Form of Bid (to be filed by amendment
if the Additional Preferred Stock is sold pursuant to
competitive bidding).
Exhibit 7 - Form of Underwriting Agreement (to be filed by
amendment).
Exhibit 8 - Preliminary earnings coverage computations (to be filed
by amendment).
Exhibit 9 - Preliminary Opinion of Milbank, Tweed, Hadley & McCloy,
counsel to the Company (to be filed by amendment).
Exhibit 10 - Financial Statements, per books and pro forma, as of
December 31, 1993 (to be filed by amendment).
Exhibit 11 - Illustration of hypothetical dividend savings.
Exhibit 12 - Final or "past tense" opinion of Milbank, Tweed, Hadley
& McCloy, counsel to the Company (to be filed with
Certificate of Notification).
Exhibit 13 - Proposed Notice of Proceeding.
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Item 7. Information as to Environmental Effects.
The proposed transactions do not involve major federal action having
a significant effect on the human environment. To the best of the Company's
knowledge, no federal agency has prepared or is preparing an environmental
impact statement with respect to the proposed transactions.
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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: February 11, 1994
CENTRAL POWER AND LIGHT COMPANY
By: /s/ DAVID P. SARTIN
David P. Sartin
Controller
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
- ------- ------- ------------
1 Restated Articles of Incorporation of ---
the Company, as amended (to be filed
by amendment).
2 Form of stock certificate representing ---
the Additional Preferred Stock (to be
filed by amendment).
3 Resolutions providing for the establishment ---
of the terms of the Additional Preferred
Stock (to be filed by amendment).
4 Form S-3 Registration Statement of the ---
Company under the Securities Act of 1933,
as amended, relating to the sale of the
Additional Preferred Stock (to be filed
by amendment).
5 Form of Invitation for Bids, Terms and ---
Conditions Relating to Bids and form of
Bid (to be filed by amendment if the
Additional Preferred Stock is sold
pursuant to competitive bidding).
6 Copy of executed Form of Bid (to be ---
filed by amendment if the Additional
Preferred Stock is sold pursuant to
competitive bidding).
7 Form of Underwriting Agreement (to be ---
filed by amendment).
8 Preliminary earnings coverage comput- ---
ations (to be filed by amendment).
9 Preliminary Opinion of Milbank, Tweed, ---
Hadley & McCloy, counsel to the Company
(to be filed by amendment).
10 Financial Statements, per books and pro ---
forma, as of December 31, 1993 (to be
filed by amendment).
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
- ------- ------- ------------
11 Illustration of hypothetical dividend Electronic
savings.
12 Final or "past tense" opinion of Milbank, ---
Tweed, Hadley & McCloy, counsel to the
Company (to be filed with Certificate
of Notification).
13 Proposed Notice of Proceeding. Electronic
<PAGE> 1
EXHIBIT 11
----------
CENTRAL POWER AND LIGHT COMPANY
HYPOTHETICAL DIVIDEND SAVINGS
8.72% 10.05%
Preferred Preferred
Stock Stock(1)
----------- ----------
EXISTING SECURITIES:
- -------------------
Amount Outstanding $ 50,000,000 $ 22,375,000
Dividend Rate 8.72% 10.05%
------------ ------------
Annual Dividend $ 4,360,000 $ 2,248,688
============ ============
NEW SECURITIES:
- --------------
Amount Called $ 50,000,000 $ 22,375,000
Call Price 102.91% 104.76%
------------ ------------
Aggregate Call Price $ 51,455,000 $ 23,440,050
Dividend Rate 7.250% 4.675%
------------ ------------
Annual Dividend $ 3,730,488 $ 1,095,822
Annual Dividend Saving
By Call $ 629,512 $ 1,152,866
============ ============
TOTAL DIVIDEND SAVINGS: $ 17,430,360 $ 3,200,554
(Net of Call Premiums) ============ ============
(1) Due to a sinking fund provision, this security has a weighted average
remaining life of 3.7 years.
<PAGE> 1
EXHIBIT 13
----------
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35- )
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
_________________, 1994
Notice is hereby given that the following filing(s) has/have been
made with the Commission pursuant to provisions of the Act and rules
promulgated thereunder. All interested persons are referred to the
application(s) and/or declaration(s) for complete statements of the proposed
transaction(s) summarized below. The application(s) and/or declaration(s) and
any amendment(s) thereto is/are available for public inspection through the
Commission's Office of Public Reference.
Interested persons wishing to comment or request a hearing on the
application(s) and/or declaration(s) should submit their views in writing by
___________, 1994, to the Secretary, Securities and Exchange Commission,
Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or
declarant(s) at the addresses specified below. Proof of service (by
affidavit, or, in the case of an attorney at law, by certificate) should be
filed with the request. Any request for hearing shall identify specifically
the issues of fact or law that are disputed. A person who so requests will be
notified of any hearing, if ordered, and will receive a copy of any notice or
order issued in the matter. After said date, the application(s) and/or
declaration(s), as filed or as amended, may be granted and/or permitted to
become effective.
<PAGE> 2
Central Power and Light Company (File No. 70- )
Central Power and Light Company (the "Company"), 539 N. Carancahua
Street, Corpus Christi, Texas, 78401-2431, a wholly-owned electric utility
subsidiary of Central and South West Corporation, a registered holding
company, has filed an application-declaration with the Commission pursuant to
Sections 6(a), 7, 9(a), 10 and 12(c) of the Act and Rules 23, 42(a) and 50
thereunder.
The Company requests authority to issue and sell in one or more
series, through December 31, 1996, up to one million additional shares of its
authorized and unissued preferred stock, par value $100 per share (the
"Additional Preferred Stock") under the competitive bidding procedures or, in
the alternative, in a negotiated underwriting.
The Company requests the authority to sell the Additional Preferred
Stock as "depositary preferred stock" if market conditions at the time of
issuance and sale are such that preferred stock having an offering price other
than $100 per share is likely to have a better market reception than preferred
stock having an offering price of $100 per share. In an offering of
depositary preferred stock, the Company would issue and sell Additional
Preferred Stock to underwriters for deposit with a Depositary. The
underwriters would then receive from the Depositary, and deliver to purchasers
in a subsequent public offering, receipts ("Depositary Receipts") evidencing
Depositary Preferred Shares, each representing a proportional share of
Additional Preferred Stock. Any additional terms of such an arrangement would
be established at the time of the proposed issuance.
<PAGE> 3
The Company requests the flexibility to set the terms and amount of
Additional Preferred Stock to be issued at the time of the issuance of any
series thereof. The terms of the Additional Preferred Stock may include
provisions for mandatory or optional redemption at various prices and may
include various restrictions on optional redemption for a specified number of
years. The exact terms of any redemption or refunding restrictions would be
determined at or about the time of sale of the Additional Preferred Stock.
Further, the Company may include provisions for a sinking or retirement fund
for any series of the Additional Preferred Stock designed to redeem annually,
commencing a specified number of years after the first day of the calendar
month in which such series is issued, a number of shares specified in such
provision. Such provisions may also give the Company the option to credit
against any sinking fund requirement shares of Additional Preferred Stock of
that series theretofore purchased or otherwise acquired by the Company and not
previously credited against any sinking fund requirement. Additionally, any
such sinking or retirement fund provision may give the Company the option to
redeem or purchase on an annual basis up to an additional equivalent amount of
the shares so retired pursuant to the sinking or retirement fund requirement.
The Company would not expect to determine whether to include a sinking or
retirement fund as part of the terms of any series of the Additional Preferred
Stock until at or about the time of issuance and sale of such series.
The Company is requesting authority, for the period during which any
shares of the Additional Preferred Stock are outstanding to (i) redeem shares
of Additional Preferred Stock in accordance with any mandatory or optional
redemption provisions established in any series of the Additional Preferred
Stock, and (ii) redeem (or purchase in lieu of redemption) shares of
Additional Preferred Stock in accordance with any sinking or retirement fund
provisions established in any series of the Additional Preferred Stock.
<PAGE> 4
The proceeds from the sale of the Additional Preferred Stock will be
applied to redeem, or reimburse the Company's treasury in connection with the
redemption of, all or a portion of one or more series of the Company's
outstanding preferred stock, including the Company's 10.05% Preferred Stock,
$100 par value and 8.72% Preferred Stock, $100 par value (collectively, the
"Old Preferred Stock") at the then current redemption prices, plus accrued and
unpaid dividends, if any, to the redemption date. Any net proceeds from the
issuance of the Additional Preferred Stock not used for the redemption of the
Old Preferred Stock, or reimbursement of the Company's treasury in respect
thereof, will be used to repay outstanding short-term borrowings that provide
working capital or for other general corporate purposes. In the event that
the proceeds from the sale of the Additional Preferred Stock are less than the
amount required to redeem the Old Preferred Stock, the Company will pay a
portion of the redemption price from internally generated funds or available
short-term borrowings pursuant to an order of the Commission dated March 31,
1993 (HCAR No. 35-25777).
The Company will not redeem the Old Preferred Stock with the proceeds
from the sale of the Additional Preferred Stock unless the estimated present
value savings derived from the net difference between dividend payments on a
hypothetical new issue of preferred stock of a structure comparable to the
structure on the Old Preferred Stock is greater than the present value of all
redemption and issuance costs, assuming a discount rate based on the estimated
dividend rate on the Additional Preferred Stock.
The Company is also requesting authority for the period during which
any shares of the Old Preferred Stock are outstanding to repurchase, reacquire
or redeem shares of the Old Preferred Stock. The Company will pay for any
such repurchase, reacquisition or redemption from the proceeds of the issuance
<PAGE> 5
of debt securities approved by the Commission or from internally generated
funds or available short-term borrowings pursuant to an order of the
Commission dated March 31, 1993 (HCAR No. 35-25777).
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
