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PROSPECTUS SUPPLEMENT Registration No. 33-49577
(TO PROSPECTUS DATED NOVEMBER 18, 1993) Filed Pursuant to Rule 424(b)(5)
$100,000,000
CENTRAL POWER AND LIGHT COMPANY
FIRST MORTGAGE BONDS, SERIES JJ, 7 1/2%, DUE 1999
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INTEREST PAYABLE MAY 1 AND NOVEMBER 1
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The First Mortgage Bonds, Series JJ, 7 1/2% (the "New Bonds") will mature
on May 1, 1999. The New Bonds may not be redeemed by the Company prior to
maturity and are not subject to any sinking fund. The New Bonds will be issued
only in fully registered form in denominations of $1,000 and integral multiples
thereof. See "Supplemental Description of the New Bonds".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
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<S> <C> <C> <C>
Per New Bond..................... 99.79% .6% 99.19%
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Total............................ $99,790,000 $600,000 $99,190,000
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(1) Plus accrued interest, if any, from May 18, 1994.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company, estimated at $75,000.
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The New Bonds are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them and subject to approval of
certain legal matters by counsel for the Underwriters, and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the New Bonds will be made in New York, New York on or about May 18,
1994.
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MERRILL LYNCH & CO. MORGAN STANLEY & CO.
INCORPORATED
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The date of this Prospectus Supplement is May 10, 1994.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW BONDS AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
PROSPECTUS SUPPLEMENT SUMMARY
The following material is qualified in its entirety by, and should be read
in conjunction with, the information appearing elsewhere in this Prospectus
Supplement and the accompanying Prospectus and in the documents, financial
statements and other information incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus.
THE OFFERING
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Company......................... Central Power and Light Company
Amount and Type of
Security...................... $100,000,000 First Mortgage Bonds, Series JJ
Interest Payment Dates.......... May 1 and November 1, commencing November 1, 1994
Maturity Date................... May 1, 1999
Redemption...................... The New Bonds may not be redeemed prior to maturity.
Security........................ Secured, together with all other outstanding First Mortgage
Bonds, by a mortgage on substantially all of the Company's
properties.
Use of Proceeds................. To repay a portion of its short-term borrowings, to provide
working capital and for other general corporate purposes.
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SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
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TWELVE
MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------------------
1994 1993 1992 1991
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(UNAUDITED)
<S> <C> <C> <C> <C>
Operating Revenues...................... $1,248,503 $1,223,528 $1,113,423 $1,098,730
Operating Income........................ 187,429 190,079 266,665 249,573
Net Income Before Cumulative Effect of
Changes in Accounting Principles...... 143,271 145,130 218,511 217,206
Net Income.............................. 142,851 172,425 218,511 217,206
Net Utility Plant....................... 3,456,065 3,453,306 3,406,088* 3,450,007*
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* For comparison purposes, certain financial statement items which are
components of Net Utility Plant have been reclassified to conform to the 1993
presentation.
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CAPITALIZATION AT
MARCH 31, 1994
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(UNAUDITED)
<S> <C> <C>
Long-Term Debt.......................................................... $1,425,667 46.6%
Preferred Stock......................................................... 268,902 8.8
Common Equity........................................................... 1,364,545 44.6
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$3,059,114 100.0%
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Subsequent to the date of the accompanying Prospectus, the Company filed
with the Securities and Exchange Commission an Annual Report on Form 10-K for
the year ended December 31, 1993, and Current Reports on Form 8-K dated March
10, 1994, April 7, 1994 and May 6, 1994 which documents are incorporated by
reference in this Prospectus Supplement.
THE COMPANY
Central Power and Light Company, a Texas corporation (the "Company"), is a
public utility company engaged in the production, purchase, transmission,
distribution and sale of electricity in South Texas. Central and South West
Corporation ("CSW"), a registered public utility holding company under the
Public Utility Holding Company Act of 1935, owns all of the issued and
outstanding Common Stock of the Company. The Company's executive offices are
located at 539 North Carancahua Street, Corpus Christi, Texas 78401-2802,
telephone number (512) 881-5300.
RATIO OF EARNINGS TO FIXED CHARGES (UNAUDITED):
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TWELVE
MONTHS ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------------------------------------------
1994 1993 1992 1991 1990 1989
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<S> <C> <C> <C> <C> <C>
2.70 2.69 3.23 3.18 3.11 2.49
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For computation of the ratio: (i) earnings consist of operating income plus
Federal income taxes, deferred income taxes and investment tax credits, other
income and deductions, allowance for funds (both borrowed and equity) used
during construction, STP carrying costs and mirror CWIP amortization, and (ii)
fixed charges consist of interest on long-term debt and short-term debt, and
other interest charges.
RECENT DEVELOPMENTS
The Company is currently involved in significant operational and regulatory
matters arising out of an outage at the South Texas Project nuclear electric
generating station ("STP"), a two unit nuclear power plant in which the Company
has a 25.2% ownership interest. Units 1 and 2 of STP shut down in early February
1993 in an unscheduled outage resulting from mechanical problems relating to two
auxiliary feedwater pumps. Unit 1 has returned to service, operating at the 100%
output level since early April 1994. Reloading of nuclear fuel was completed at
Unit 2 in early April 1994 and the unit is expected to resume service during the
second quarter of 1994. As a result of the outage, the Company's fuel and
purchased power costs have been, and are expected to continue to be, increased
as the power normally generated by STP must be replaced through sources with
higher costs. It is unclear how the Public Utility Commission of Texas will
address the reasonableness of higher costs associated with the outage. At
January 31, 1993, before the start of the STP outage, the Company had an
over-recovered fuel balance of $5.2 million, exclusive of interest. At April 30,
1994, the Company's under-recovered fuel balance was $66.8 million, exclusive of
interest.
For detailed information regarding issues related to the outage, including
a rate review initiated by several parties challenging the Company's rates in
light of the outage, reference is made to the Company's Annual Report on Form
10-K for the year ended December 31, 1993, and Current Reports on Form 8-K dated
March 10, 1994 and April 7, 1994.
S-3
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USE OF PROCEEDS
The net proceeds from the sale of the New Bonds offered hereby will be used
by the Company to repay a portion of its short-term borrowings, to provide
working capital and for other general corporate purposes. At April 30, 1994, the
Company had outstanding approximately $219.9 million of short-term debt with a
weighted average interest cost of 3.9%.
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SUPPLEMENTAL DESCRIPTION OF THE NEW BONDS
The following description of the particular terms of the New Bonds offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the New Bonds set forth in
the accompanying Prospectus.
GENERAL
The New Bonds will mature on May 1, 1999, and will bear interest at the
rate of 7 1/2% per annum payable on May 1 and November 1, commencing November 1,
1994.
The New Bonds offered hereby will be authenticated under the Indenture
against $166,667,000 of unused net expenditures for bondable property. As of
December 31, 1993, such unused net expenditures aggregated approximately $644
million.
REDEMPTION
The New Bonds offered hereby may not be redeemed by the Company prior to
maturity.
MAINTENANCE AND RENEWAL
The New Bonds are entitled to the covenants of the Indenture described in
the Prospectus under the heading "Description of the New Bonds -- Maintenance
and Renewal" and the reference to "Series O through II" in the second sentence
of such section shall instead refer to "Series O through JJ".
UNDERWRITERS
Under the terms and subject to the conditions in an Underwriting Agreement
dated the date hereof, the Underwriters named below have severally agreed to
purchase, and the Company has agreed to sell to them, severally, the respective
principal amounts of the New Bonds set forth opposite their respective names
below:
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PRINCIPAL
AMOUNT
UNDERWRITER OF NEW BONDS
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<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. $ 50,000,000
Morgan Stanley & Co. Incorporated...................................... 50,000,000
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Total..................................................... $100,000,000
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The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the New Bonds are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the New
Bonds if any are taken.
The Underwriters have advised the Company that they propose initially to
offer part of the New Bonds directly to the public at the public offering price
set forth on the cover page of this Prospectus Supplement and part to certain
dealers at such price less a concession not in excess of .35% of the principal
amount of the New Bonds. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of .25% of the
S-4
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principal amount of the New Bonds to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company does not intend to apply for listing of the New Bonds offered
hereby on a national securities exchange, but has been advised by the
Underwriters that they presently intend to make a market in the New Bonds, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the New Bonds and any such market making
may be discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the New Bonds.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. NEITHER THIS
PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY
IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH STATE. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT
OR THE ACCOMPANYING PROSPECTUS, NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
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PAGE
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Prospectus Supplement Summary........ S-2
Incorporation of Certain Documents by
Reference.......................... S-3
The Company.......................... S-3
Recent Developments.................. S-3
Use of Proceeds...................... S-4
Supplemental Description of the New
Bonds.............................. S-4
Underwriters......................... S-4
PROSPECTUS
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 2
Prospectus Summary................... 3
The Company.......................... 4
Use of Proceeds...................... 4
Description of the New Bonds......... 4
Legal Opinions....................... 8
Experts.............................. 8
Plan of Distribution................. 9
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$100,000,000
CENTRAL POWER AND LIGHT COMPANY
FIRST MORTGAGE BONDS,
SERIES JJ
7 1/2%, DUE MAY 1, 1999
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
MAY 10, 1994
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