<PAGE>
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 North 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)
_________________________
Shirley S. Briones, Treasurer
Central Power and Light Company
539 North Carancahua Street
Corpus Christi, Texas 78401
Stephen J. McDonnell, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Central Power and Light Company (the "Company"), a Texas corporation,
is a wholly-owned electric public 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").
Item 1.Description of Proposed Transaction.
The Company is seeking authority through December 31, 1998, to incur
obligations in connection with the proposed issuance by Nueces County
Navigation District No. 1 ("Nueces") and/or Guadalupe - Blanco River Authority
(Texas) ("Guadalupe") in one or more series of up to $95,000,000 aggregate
principal amount of Pollution Control Revenue Bonds of which (i) up to
$45,000,000 aggregate principal amount may be Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) (the "Refunding
Bonds"), and (ii) up to $50,000,000 aggregate principal amount may be new
money Revenue Bonds (Central Power and Light Company Project) (the "New Money
Bonds" and, together with the Refunding Bonds, the "New Bonds"). The issuance
of New Money Bonds may be combined with the issuance of Refunding Bonds.
Guadalupe and Nueces are each referred to herein as an "Issuer" and,
together as the "Issuers".
The purpose of the issuance of the Refunding Bonds is to reacquire
all or a portion of (i) Nueces' $7,425,000 of outstanding 7-1/8%
Environmental Improvement Revenue Bonds (Central Power and Light Company
Facilities) Series 1974, Issue A (the "Series 1974A Bonds"), (ii) Nueces'
$1,000,000 of outstanding 7-1/8% Environmental Improvement Revenue Bonds
(Central Power
and Light Company Facilities) Series 1974, Issue B (the "Series 1974B Bonds"),
(iii) Guadalupe's $33,465,000 of outstanding 6% Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1977 (the "Series 1977
bonds") and (iv) Guadalupe's $770,000 of outstanding 6% Pollution Control
Revenue Bonds (Central Power and Light Company Project) Series 1977A (the
"Series 1977A Bonds" and, together with the Series 1974A Bonds, Series 1974B
Bonds and Series 1977 Bonds, the "Old Bonds"). The purpose of the issuance
of the New Money Bonds is to reimburse the Company's treasury for any
expenditures made that qualify for tax-exempt financing or to provide for
current solid waste expenditures. See "Use of Proceeds" below.
As discussed below under the heading "Managing Interest Rates", the
Company also seeks authorization to manage interest rate risk or lower its
interest rate costs on any variable rate New Bonds through the use of caps
and floors and related instruments during the life of the New Bonds.
The Old Bonds
In July 1974, Nueces issued the Series 1974A Bonds and the Series
1974B Bonds pursuant to the Indenture of Trust between Nueces and NationsBank
of Texas, N.A., Dallas, Texas (successor to Commerce Union Bank, Nashville,
Tennessee), as Trustee. In November 1977, Guadalupe issued the Series 1977
Bonds and the Series 1977A Bonds pursuant to the Indenture of Trust between
Guadalupe and Texas Commerce Bank - Dallas, N.A. (successor to Corpus Christi
National Bank), as Trustee. The Indentures of Trust for the Old Bonds are
referred to collectively herein as the "Indentures". NationsBank of Texas,
N.A., Dallas, Texas and Texas Commerce Bank - Dallas, N.A. are referred to
collectively herein as the "Trustees".
Certain terms of the Indentures include the following:
<TABLE>
<CAPTION>
Interest
Series Rate Maturity Date First Redemption Date (1)
(per annum)
<S> <C> <C> <C>
1974A 7-1/8% June 1, 2004 June 1, 1984
1974B 7-1/8% June 1, 2004 June 1, 1984
1977 6% November 1, 2007 November 1, 1987
1977A 6% November 1, 2007 November 1, 1987
</TABLE>
____________________________
(1)The Indentures provide that the bonds of each series may not be redeemed
prior to its First Redemption Date and thereafter may be redeemed at the
then applicable redemption price plus accrued interest to the redemption
date. The Old Bonds are currently callable at par.
The Company and the Issuers entered into Installment Sale Agreements
(the "Sale Agreements") between the Issuers and the Company to provide for
the issuance of the Old Bonds. In connection with the issuance of the New
Bonds, the Company will (i) amend the Sale Agreements, (ii) enter into
agreements with substantially the same terms as the Sale Agreements and/or
(iii) enter into new installment sale agreements (each, an "Amended Sale
Agreement").
The Series 1974A Bonds and the Series 1974B Bonds were originally
issued to provide funds for the acquisition, construction and improvement of
air and water pollution control facilities (the "Davis Facilities") at the
Barney M. Davis Power Station (the "Davis Power Station") which is operated
by the Company and located in Nueces County, Texas.
The Series 1977 Bonds and the Series 1977A Bonds were originally
issued to provide funds for the acquisition, construction and improvement of
certain facilities designed to abate or control air and water pollution (the
"Coleto Facilities", and together with the Davis Facilities, the "Facilities")
at the Coleto Creek generating plant (the "Coleto Plant", and together with
the Davis Power Station, the "Plants") of the Company located in Goliad
County, Texas.
The Series 1974A Bonds and the Series 1977 Bonds are subject to
sinking fund provisions. The Company looses the tax-exempt financing on the
amount of the sinking funds each year. To date, the Company has lost an
aggregate $4,535,000 in tax-exempt financing due to the sinking fund
requirements imposed on the Series 1974A Bonds and the Series 1977 Bonds:
<TABLE>
<CAPTION>
Original Sinking Fund Current
Principal Payments Other Principal
Series Amount to date Redemptions Amount
------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
1974A 8,825,000 1,400,000 0 7,425,000
1974B 1,000,000 0 0 1,000,000
1977 36,600,000 3,135,000 0 33,465,000
1977A 1,000,000 0 230,000 770,000
----------- ----------- ----------- -----------
$47,425,000 $ 4,535,000 $ 230,000 $42,660,000
</TABLE>
By refunding the Old bonds, the Company will preserve tax-exempt financing
on the $40,890,000 aggregate principal amount of the Series 1974A Bonds and
the Series 1977 Bonds.
Terms of the New Bonds
The New Bonds will bear interest at a fixed or floating rate, may or
may not be secured with First Mortgage Bonds and will mature in not more
than forty years. The interest rate, redemption provisions and other terms
and conditions applicable to the New Bonds will be determined by negotiations
between the Company and one or more investment banking firms or other entities
that will purchase or underwrite the New Bonds (the "Purchasers"). It is
anticipated that (i) the New Bonds will be redeemable at any time in whole at
the option of the Company at the principal amount thereof plus accrued
interest, upon the occurrence of various extraordinary events specified in
the Amended Sale Agreements, as supplemented, or similar documents utilized
in connection with the issuance of the New Bonds, and the Indentures as
amended by one or more supplements (each a "Supplemental Indenture"), or
a new indenture (the "New Indenture"), relating generally to (a) destruction
or condemnation of the Facilities or the Plants, (b) conditions rendering
operation of the Facilities or the Plants infeasible, (c) the imposition on
the Company or the Issuers of unreasonable burdens or excessive liabilities
with respect to the Facilities or the Plants, or (d) if a constitutional
amendment or legislative, administrative or judicial action causes the
obligations of the Company under the Sale Agreements to become unenforceable
or impossible of performance in any material respect with the expressed
intention of the parties; (ii) the New Bonds will be subject to optional
redemption in whole or in part at times and with premiums to be determined
by negotiations between the Company and the Purchaser(s); and (iii) the New
Bonds will be subject to special mandatory redemption, in whole or in part,
at the principal amount thereof plus accrued interest, in the event the
interest on the New Bonds becomes subject to federal income tax.
Pursuant to the Sale Agreements, the Company transferred the Davis
Facilities and the Coleto Facilities to Nueces and Guadalupe, respectively,
which financed the acquisitions and related costs thereof with the proceeds of
the Old Bonds. The Sale Agreements contain commitments by the Company to pay
to the Issuers at specified times amounts sufficient to enable the Issuers to
pay debt service on the Old Bonds, including principal, interest and
redemption premium, if any.
The Company may obtain credit enhancement for the New Bonds, which
could include bond insurance, a letter of credit or a liquidity facility.
Due to heightened credit sensitivity in the short-term tax-exempt market,
the Company anticipates it may be required to provide credit enhancement if
it were to issue floating rate bonds, whereas credit enhancement would be a
purely economic decision for the Company if it were to issue fixed rate bonds.
The Company anticipates that even though it would be required to pay a
premium or fee to obtain the credit enhancement, it would realize a net
benefit through a reduced interest rate on the New Bonds. The Company would
obtain credit enhancement only if it determines it would be economically
beneficial to do so.
If bond insurance is obtained, the Company may be required to enter
into an agreement with the insurer and an escrow agent pursuant to which the
Company would be obligated to make payments of certain amounts into an escrow
fund upon the Company's failure to maintain certain financial ratios and on
the occurrence of certain other events. Amounts held in such an escrow fund
would be payable to the insurer as an indemnity for any amounts paid by the
insurer with respect to principal or interest on the New Bonds. The New
Bonds may also contain other terms and conditions deemed necessary or
desirable to take maximum advantage of the then current market conditions.
The Company also requests authority to issue First Mortgage Bonds as
security for the payment of the New Bonds, at its option, depending upon
market conditions at the time of issuance of the New Bonds. The Company
will issue First Mortgage Bonds, subject to applicable indenture restrictions
upon the issuance thereof, by executing a Supplemental Indenture to its
Mortgage Indenture dated November 1, 1943 to the First National Bank of
Chicago and A.H. Bohm (the "Mortgage Indenture"). Such First Mortgage Bonds
will be issued to the Trustee for the New Bonds pursuant to the Mortgage
Indenture. The First Mortgage Bonds will be held by the Trustee solely for
the benefit of the holders of the New Bonds and will not be transferable
except to a successor Trustee. The First Mortgage Bonds will be issued in the
exact amount and have substantially the same terms as the New Bonds. To the
extent payments in respect of the New Bonds are made in accordance with their
terms, <PAGE>
corresponding payment obligations under the First Mortgage Bonds will be
deemed satisfied.
As applied to any First Mortgage Bonds that may be issued as
collateral for the New Bonds, the optional redemption provisions described
herein may deviate from the Securities and Exchange Commission's (the
"Commission") Statement of Policy Regarding First Mortgage Bonds Subject to
the Public Utility Holding Company Act of 1935, Release No. 35-13105, 21 Fed.
Reg. 1286 (1956), as supplemented by Commission Release No. 35-16369, 34 Fed.
Reg. 9553 (1969) (together, the "Statement of Policy"), in that the First
Mortgage Bonds may be subject to a redemption limitation of up to fifteen
years while the Statement of Policy requires that first mortgage bonds be
subject to redemption at any time upon reasonable notice and with reasonable
redemption premiums, if any. The Company has been advised by several
investment banks that purchasers of fixed-rate, tax-exempt bonds generally
expect a ten year redemption limitation and that failure to include such a
limitation may cause the New Bonds to be unmarketable to a large pool of such
purchasers, and may result in an increase in the effective interest cost to
the Company. In consideration of current and future market expectations with
regard to redemption limitations, the Company hereby requests that the
Commission approve the above-described deviation from the Statement of Policy
so that the First Mortgage Bonds, and therefore the New Bonds, may contain up
to a 15 year optional redemption limitation.
As applied to the First Mortgage Bonds, any sinking fund provisions
may also deviate from the Statement of Policy, in that the First Mortgage
Bonds will not have sinking fund provisions unless the New Bonds have sinking
fund provisions. The Statement of Policy requires the Company to deposit
annually with the trustee for the First Mortgage Bonds an amount of cash
equal to not less than one percent of the aggregate principal amount of Bonds
of all series authenticated under the First Mortgage Bond indenture. The
Company has been advised by several investment bankers that purchasers of
private activity bonds generally do not expect sinking fund provisions. In
light of market expectations, and the Company's desire to retain 'permanent'
tax-exempt financing (see "The Old Bonds" above), the Company hereby requests
that the Commission approve the above-described deviation from the Statement
of Policy so that the First Mortgage Bonds, and therefore the New Bonds, may
omit sinking fund provisions.
The Company also requests a waiver from the requirement in the
Statement of Policy for a limitation on dividends. The Company believes that
dividend limitations, if any, are a matter best left to the financial
marketplace and the state regulatory commissions. The limitation on
dividends provision in the Statement of Policy was adopted when accounting
standards and ratemaking practices were very different from today. For
example, ratemaking disallowances on grounds of alleged lack of prudence or
alleged excess capacity have become more prevalent today. Under today's
accounting requirements, disallowances might result in charges to the income
statement and current retained earnings, which could preclude the payment of
dividends on common stock.
All of the Company's bonds of Series AA and prior contain dividend
restrictions in the supplemental indentures which will continue to limit the
Company's dividend payments until all such bonds mature or are retired. In
light of these dividend restrictions and provisions in the Company's Articles
of Incorporation restricting the payment of dividends to a percentage of net
income available for dividends on common stock if the Company's common stock
equity is not maintained at a certain percentage of total capitalization,
the Company believes that the omission of the limitation on dividends as
contemplated by the Statement of Policy will not materially and adversely
affect the holders of the New Bonds. The terms and provisions of the First
Mortgage Bonds will not otherwise materially deviate from the Statement of
Policy.
Messrs. McCall, Parkhurst & Horton, who are anticipated to act as
Bond Counsel, have informed the Company that they will be prepared to give a
legal opinion that interest on the New Bonds will be excluded from gross
income for federal income tax purposes.
The Company anticipates that the New Bonds will be sold by the
Issuer(s) pursuant to a Bond Purchase Agreement (the "Purchase Agreement")
between the Issuer(s) and one or more Purchasers. The Company may or may not
be a party to the Purchase Agreement, but if it is not a party, the Purchase
Agreement will be subject to approval by the Company and the Company will
enter into a letter of representation with the Purchasers, containing various
warranties, representations and indemnities upon which the Purchasers will
rely in entering into the Purchase Agreement.
The Company requests authority to enter into negotiations with
Purchasers with respect to the interest rate, redemption provisions and other
terms and conditions applicable to the New Bonds and to set the terms of the
New Bonds subject to the receipt of an order under the Act if an order has not
been issued when the Company enters into the Purchase Agreement.
Use of Proceeds
The proceeds of the offering of the New Bonds will be used to
(i) redeem the Old Bonds pursuant to the terms of the Indentures (the
"Redemption") and (ii) reimburse the Company's treasury for any expenditures
made that qualify for tax-exempt financing or to provide for current solid
waste expenditures. The proceeds of any offering may also be used to
reimburse the Company's treasury for Old Bonds previously acquired.
The Company may be required to deposit the proceeds of the New Bonds
with the Trustees in connection with the Redemption of the Old Bonds. Any
additional funds required to pay for the Redemption of Old Bonds and the costs
of issuance of the New Bonds will be provided by the Company from internally
generated funds and short-term borrowings pursuant to orders of the Commission
dated March 31, 1993 (HCAR No. 35-25777), September 28, 1993 (HCAR No. 35-
25897), March 18, 1994 (HCAR No. 35-26007), June 15, 1994 (HCAR No. 35-26066)
and March 21, 1995 (HCAR No. 35-26254), or subsequent orders (the "Short-Term
Borrowing Orders").
The Company believes that the Redemption of the Old Bonds and the
issuance of floating rate Refunding Bonds could result in substantial savings
to the Company and benefit the Company's ratepayers. Based on the average of
the last 10 years J.J. Kenny Index, it is estimated that the Issuer(s) could
issue floating rate Refunding Bonds at an interest rate of approximately
4.42%. As set forth in Exhibit 11 hereto, the acquisition of the Old Bonds
and the issuance of the floating rate Refunding Bonds based upon the J.J.
Kenny 10 year average would result in an estimated annual aggregate reduction
in interest costs to the Company of $768,809, if all of the Old Bonds were
reacquired. Total interest savings to the Company over the remaining life
of the Old Bonds would aggregate $8,542,020.
In any case, whether or not net present value savings are available,
the Company proposes to refund the Series 1974A Bonds and the Series 1977
Bonds to eliminate the sinking fund requirement so that the current amount
of tax-exempt bonds outstanding will be maintained. To the extent that
Series 1974A Bonds and Series 1977 Bonds are retired through the sinking fund,
the Company would otherwise be required to fund such retired bonds on a
taxable basis, which is a more expensive funding source. For example,
currently a taxable 30 year, no-call ten-year structure is approximately 160
basis points higher than on a tax-exempt basis. The company proposes to
refund the Series 1974B Bonds and the Series 1977A Bonds in conjunction with
the refunding of the Series 1974A Bonds and the Series 1977 Bonds to achieve
the administrative benefits and associated cost savings resulting from
consolidating several series of bonds into one or two series. In addition, if
the Series 1974B Bonds and the Series 1977A Bonds are not refunded along with
the Series 1974A Bonds and the Series 1977 Bonds, then the Company will likely
not be able to refund the Series 1974B Bonds and the Series 1977A Bonds when
such bonds mature, thus loosing the benefit of the tax-exempt financing,
because the size of such an offering would be too small to market.
None of the proceeds from the sale of New Bonds will be used by CSW
or any subsidiary thereof for the direct or indirect acquisition of an
interest in an exempt wholesale generator ("EWG") or a foreign utility company
("FUCO"). Rule 54 promulgated under the Act states that in determining
whether to approve the issue or sale of a security by a registered holding
company for purposes other than the acquisition of an EWG or a FUCO, or other
transactions by such registered holding company or its subsidiaries other than
with respect to EWGs or FUCOs, the Commission shall not consider the effect of
the capitalization or earnings of any subsidiary which is an EWG or a FUCO
upon the registered holding company system if Rule 53(a), (b) and (c) are
satisfied. As set forth below, all applicable conditions set forth in Rule
53(a) are, and, assuming the consummation of the transactions proposed herein,
will be, satisfied and none of the conditions set forth in Rule 53(b) exist or
will exist as a result of the transactions proposed herein.
CSW Northwest GP, Inc. and CSW Northwest LP, Inc. (collectively, "CSW
Northwest"), each an indirect subsidiary of CSW, are the only EWGs, as defined
in Section 32 of the Act, in which CSW has equity interests. CSW, through its
subsidiary, CSW Energy, Inc., has invested less than 1% of $1,811,750,000, the
average of CSW's consolidated retained earnings for the four consecutive
quarters ended June 30, 1995, thus satisfying Rule 53(a)(1). CSW will
maintain and make available the books and records required by Rule 53(a)(2).
No more than 2% of the employees of CSW's operating subsidiaries will, at any
one time, directly or indirectly, render services to an EWG or FUCO in which
CSW directly or indirectly owns an interest, satisfying Rule 53(a)(3). And
lastly, CSW will submit a copy of Item 9 and Exhibits G and H of CSW's Form
U5S to each of the public service commissions having jurisdiction over the
retail rates of CSW's operating utility subsidiaries, satisfying Rule
53(a)(4).
None of the conditions described in Rule 53(b) exist with respect to
CSW or any of its subsidiaries, thereby satisfying such rule and making Rule
53(c) inapplicable.
Managing Interest Rates
The Company proposes to manage interest rate risk through the use of
caps, floors, collars and related instruments if it issues variable rate New
Bonds. The Company may elect to purchase an interest rate cap to limit its
exposure to rising interest rates. The cap would provide protection on
floating rate New Bonds by fixing the interest rate when rates move above the
cap strike. The Company may elect to sell an interest rate floor to reduce
the cost of the cap. The floor would fix the minimum interest rate the
Company will receive on variable rate New Bonds when rates fall below the
floor strike. If the Company sells a floor in conjunction with purchasing a
cap, it will have created an interest rate collar. The collar would allow the
company variable rate exposure within a band of rates. The collar would
provide protection against adverse upward rate movements while allowing for
some downward rate benefit, at a minimum cost.
Conclusion
The Company believes that the consummation of the transactions
proposed herein will be in the best interests of its consumers and investors
and consistent with sound and prudent financial policy.
Item 2. Fees, Commissions and Expenses.
An estimate of the appropriate amount of the fees and expenses, other
than underwriting commissions or discounts, to be paid or incurred by the
Company in connection with the proposed transaction is as follows:
<TABLE>
<CAPTION>
Approximate
Amount
-----------
<S> <C>
Holding Company Act filing fee ........... $ 2,000*
Printing of Official Statement
and Bonds .............................. 20,000
Fees of Public Accountant ................ 7,500
Fee of Trustee ........................... 20,000
Fee of District .......................... 100,000
Fees of Rating Agencies .................. 40,000
Expenses of Central and South West
Services, Inc. ......................... 3,500
Counsel fees:
Milbank, Tweed, Hadley & McCloy,
New York, New York ..................... 65,000
Vinson & Elkins,
Dallas, Texas .......................... 50,000
McCall, Parkhurst & Horton
Dallas, Texas (Bond Counsel) ........... 190,000
Blue Sky and investment fees
and expenses ........................... 5,000
Miscellaneous expenses, including
travel, telephone, copying,
postage ................................ 2,000
----------
TOTAL $ 505,000
==========
_______________
* Actual Amount.
</TABLE>
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 Treasury Department and the Controller's Department.
Item 3. Applicable Statutory Provisions.
Sections 6(a) and 7 of the Act are or may be applicable with
respect to the Company's obligations under the Sale Agreements to make debt
service payments with respect to the New Bonds.
Section 9(a)(1) and 10 of the Act are applicable with respect to
the repurchase by the Company of the Company's portion of the Facilities.
Section 12(d) and Rule 44 thereunder of the Act are applicable to the sale
of any completed portions of the Facilities, but such sale would be excepted
from Section 12(d) and from Rule 44 under subsection (b)(3) of said rule.
If the Company enters into a Preliminary Agreement, as defined in
Rule 51, such Agreement will satisfy the conditions set forth in paragraphs
(a) through (d) of said Rule. Sections 6(a), 7, 9(a) and 10 of the Act are
or may be applicable to the proposed entering into of caps, collars, floors
and related instruments.
To the extent any other provisions of the Act or the rules
promulgated thereunder may be applicable to the proposed transactions, the
Company hereby requests appropriate orders to such effect.
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
transaction.
The Company believes (based on review of applicable state laws) that
no state approvals are required in connection with the entering into by the
Company of caps, collars, floors or related instruments to effectively lower
the Company's interest cost on one or more series of New Bonds. The Company
will, however, prior to entry into any such hedging instruments, provide
information on such product to members of the staff of the Public Utility
Commission of Texas.
Item 5. Procedure.
The Company requests that the Commission issue and publish no later
than August 25, 1995, the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date not
later than September 18, 1995, 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 September 19, 1995, an
appropriate order granting and permitting this Application-Declaration to
become effective with respect to the proposed transactions.
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 in accordance with the schedule
outlined above.
No recommended decision by a hearing officer or any 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 preparation of the Commission's decision in this matter. There should
be no 30-day waiting period between the issuance and the effective date of
any order issued by the Commission in this matter; and it is respectfully
requested that any such order be made effective immediately upon the entry
thereof.
Item 6. Exhibits and Financial Statements.
Exhibit 1 - Form of Installment Sale Agreement between the
Company and the District (to be filed by
amendment).
Exhibit 2 - Form of Indenture of Trust between the District and
the Trustee (to be filed by amendment).
Exhibit 3 - Form of Bond Purchase Agreement between the
District and the Purchasers (to be filed by
amendment).
Exhibit 4 - Form of Letter of Representation from the Company
to the Purchasers (to be filed by amendment).
Exhibit 5 - Preliminary Official Statement relating to the
Bonds (to be filed by amendment).
Exhibit 6 - Preliminary opinion of Milbank, Tweed, Hadley &
McCloy, counsel for the Company (to be filed by
amendment).
Exhibit 7 - Final or "past tense" opinion of counsel for the
Company (to be filed with Certificate of
Notification).
Exhibit 8 - Financial Statements per books and pro forma as of
June 30, 1995 (to be filed by amendment).
Exhibit 9 - Proposed Notice of Proceeding.
Exhibit 10 - Form of Proposed Supplemental Indenture to First
Mortgage Indenture (to be filed by amendment, if
applicable).
Exhibit 11 - Illustration of hypothetical interest savings.
Item 7. Information as to Environmental Effects.
The proposed transaction does 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.
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: August 25, 1995
CENTRAL POWER AND LIGHT COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
------- -------------------- ------------
1 Form of Installment Sale Agreement ---
between the Company and the District
(to be filed by amendment).
2 Form of Indenture of Trust between the ---
District and the Trustee (to be filed
by amendment).
3 Form of Bond Purchase Agreement between ---
the District and the Underwriters (to
be filed by amendment).
4 Form of Letter of Representation from ---
the Company to the Purchasers (to be
filed by amendment).
5 Preliminary Official Statement relating ---
to the Bonds (to be filed by amendment).
6 Preliminary opinion of Milbank, Tweed, ---
Hadley & McCloy, counsel for the Company
(to be filed by amendment).
7 Final or "past tense" opinion of counsel ---
for the Company (to be filed with
Certificate of Notification).
8 Financial Statements per books and pro ---
forma as of June 30, 1995 (to be filed
by amendment).
9 Proposed Notice of Proceeding. Electronic
10 Form of Proposed Supplemental Indenture ---
to First Mortgage Indenture (to be
filed by amendment).
11 Illustration of hypothetical interest Electronic
savings.
<PAGE>
EXHIBIT 9
---------
SECURITIES AND EXCHANGE COMMISSION
(Release No. 35 - __________)
Filings Under the Public Utility Holding Company Act of 1935 ("Act")
______________, 1995
Notice is hereby given that the following filings(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 transactions(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 _________________, 1995 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 address(es) specified
below. Proof of service (by affidavit or, in 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
manner. After said date, the application(s) and/or declaration(s), as
filed or as amended, may be granted and/or permitted to become effective.
Central Power and Light Company (File No. 70-____)
Central Power and Light Company (the "Company"), 539 North
Carancahua Street, Corpus Christi, Texas 78401, a wholly-owned electric
utility subsidiary of Central and South West Corporation, a registered
holding company, has filed an application-declaration pursuant to
Sections 6(a), 7, 9(a), 10 and 12(d) of the Act and Rule 44 promulgated
thereunder.
The Company proposes to incur obligations, through December
31, 1998, in connection with the proposed issuance of up to $95,000,000
aggregate principal amount of Pollution Control Revenue Bonds of which
(i) up to $45,000,000 aggregate principal amount may be Pollution Control
Revenue Refunding Bonds (Central Power and Light Company Project) (the
"Refunding Bonds"), and (ii) up to $50,000,000 aggregate principal amount
may be new money Revenue Bonds (Central Power and Light Company Project)
(the "New Money Bonds" and, together with the Refunding Bonds, the "New
Bonds"). The issuance of New Money Bonds may be combined with the
issuance of Refunding Bonds.
The Refunding Bonds will be issued by Nueces County Navigation
District No. 1 ("Nueces") and/or Guadalupe - Blanco River Authority
(Texas) ("Guadalupe") in one or more series to reacquire all or a portion
of (i) Nueces' $7,425,000 of outstanding 7-1/8% Environmental Improvement
Revenue Bonds (Central Power and Light Company Facilities) Series 1974,
Issue A (the "Series 1974A Bonds"), (ii) Nueces' $1,000,000 of
outstanding 7-1/8% Environmental Improvement Revenue Bonds (Central Power
and Light Company Facilities) Series 1974, Issue B (the "Series 1974B
Bonds"), (iii) Guadalupe's $33,465,000 of outstanding 6% Pollution
Control Revenue Bonds (Central Power and Light Company Project) Series
1977 (the "Series 1977 Bonds") and (iv) Guadalupe's $770,000 of
outstanding 6% Pollution Control Revenue Bonds (Central Power and Light
Company Project) Series 1977A (the "Series 1977A Bonds" and, together
with the Series 1974A Bonds, Series 1974B Bonds and Series 1977 Bonds,
the "Old Bonds"). Guadalupe and Nueces are each referred to herein as an
"Issuer" and, together as the "Issuers".
In July 1974, Nueces issued the Series 1974A Bonds and the
Series 1974B Bonds pursuant to the Indenture of Trust between Nueces and
NationsBank of Texas, N.A., Dallas, Texas (successor to Commerce Union
Bank, Nashville, Tennessee), as Trustee. In November 1977, Guadalupe
issued the Series 1977 Bonds and the Series 1977A Bonds pursuant to the
Indenture of Trust between Guadalupe and Texas Commerce Bank - Dallas,
N.A. (successor to Corpus Christi National Bank), as Trustee. The
Indentures of Trust for the Old Bonds are referred to collectively herein
as the "Indentures". NationsBank of Texas, N.A., Dallas, Texas and Texas
Commerce Bank - Dallas, N.A. are referred to collectively herein as the
"Trustees".
The Company and the Issuers entered into Installment Sale
Agreements (the "Sale Agreements") between the Issuers and the Company to
provide for the issuance of the Old Bonds. In connection with the
issuance of the New Bonds, the Company will (i) amend the Sale
Agreements, (ii) enter into agreements with substantially the same terms
as the Sale Agreements and/or (iii) enter into new installment sale
agreements (each, an "Amended Sale Agreement").
The Series 1974A Bonds and the Series 1974B Bonds were
originally issued to provide funds for the acquisition, construction and
improvement of air and water pollution control facilities at the Barney
M. Davis Power Station which is operated by the Company and located in
Nueces County, Texas. The Series 1977 Bonds and the Series 1977A Bonds
were originally issued to provide funds for the acquisition, construction
and improvement of certain facilities designed to abate or control air
and water pollution at the Company's Coleto Creek generating plant
located in Goliad County, Texas. The New Bonds will bear interest at a
fixed or floating rate, may or may not be secured with First Mortgage
Bonds and will mature in not more than forty years. The interest rate,
redemption provisions and other terms and conditions applicable to the
New Bonds will be determined by negotiations between the Company and one
or more investment banking firms or other entities that will purchase or
underwrite the New Bonds (the "Purchasers"). It is anticipated that (i)
the New Bonds will be redeemable at any time in whole at the option of
the Company at the principal amount thereof plus accrued interest, upon
the occurrence of various extraordinary events specified in the Amended
Sale Agreements, as supplemented, or similar documents utilized in
connection with the issuance of the New Bonds, and the Indentures as
amended by one or more supplements (each a "Supplemental Indenture"), or
a new indenture (the "New Indenture"), relating generally to (a)
destruction or condemnation of the Facilities or the Plants, (b)
conditions rendering operation of the Facilities or the Plants
infeasible, (c) the imposition on the Company or the Issuers of
unreasonable burdens or excessive liabilities with respect to the
Facilities or the Plants, or (d) if a constitutional amendment or
legislative, administrative or judicial action causes the obligations of
the Company under the Sale Agreements to become unenforceable or
impossible of performance in any material respect with the expressed
intention of the parties; (ii) the New Bonds will be subject to optional
redemption in whole or in part at times and with premiums to be
determined by negotiations between the Company and the Purchaser(s); and
(iii) the New Bonds will be subject to special mandatory redemption, in
whole or in part, at the principal amount thereof plus accrued interest,
in the event the interest on the New Bonds becomes subject to federal
income tax.
The Company may obtain credit enhancement for the New Bonds,
which could include bond insurance, a letter of credit or a liquidity
facility. Alternatively, the Company also requests authority to issue
First Mortgage Bonds as security for the payment of the New Bonds, at its
option, depending upon market conditions at the time of issuance of the
New Bonds. The Company will issue First Mortgage Bonds, subject to
applicable indenture restrictions upon the issuance thereof, by executing
a Supplemental Indenture to its Mortgage Indenture dated November 1, 1943
to the First National Bank of Chicago and A.H. Bohm (the "Mortgage
Indenture"). Such First Mortgage Bonds will be issued to the Trustee for
the New Bonds pursuant to the Mortgage Indenture. The First Mortgage
Bonds will be held by the Trustee solely for the benefit of the holders
of the New Bonds and will not be transferable except to a successor
Trustee. The First Mortgage Bonds will be issued in the exact amount and
have substantially the same terms as the New Bonds. To the extent
payments in respect of the New Bonds are made in accordance with their
terms, corresponding payment obligations under the First Mortgage Bonds
will be deemed satisfied.
The Company seeks authority to deviate from the Securities and
Exchange Commission's (the "Commission") Statement of Policy Regarding
First Mortgage Bonds Subject to the Public Utility Holding Company Act of
1935, Release No. 35-13105, 21 Fed. Reg. 1286 (1956), as supplemented by
Commission Release No. 35-16369, 34 Fed. Reg. 9553 (1969) (together, the
"Statement of Policy"), in that the First Mortgage Bonds may be subject
to a redemption limitation of up to fifteen years while the Statement of
Policy requires that first mortgage bonds be subject to redemption at any
time upon reasonable notice and with reasonable redemption premiums, if
any. As applied to the First Mortgage Bonds, any sinking fund provisions
may also deviate from the Statement of Policy, in that the First Mortgage
Bonds will not have sinking fund provisions unless the New Bonds have sinking
fund provisions. The Statement of Policy requires the Company to deposit
annually with the trustee for the First Mortgage Bonds an amount of cash
equal to not less than one percent of the aggregate principal amount of
Bonds of all series authenticated under the First Mortgage Bond
indenture. The Company also requests a waiver from the requirement in
the Statement of Policy for a limitation on dividends.
The proceeds of the offering of the New Bonds will be used to
(i) redeem the Old Bonds pursuant to the terms of the Indentures (the
"Redemption") and (ii) reimburse the Company's treasury for any
expenditures made that qualify for tax-exempt financing or to provide for
current solid waste expenditures. The proceeds of any offering may also
be used to reimburse the Company's treasury for Old Bonds previously
acquired. The Company may be required to deposit the proceeds of the New
Bonds with the Trustees in connection with the Redemption of the Old
Bonds. The Company proposes to manage interest rate risk through the use
of caps, floors, collars and related instruments if it issues variable
rate New Bonds.
The Company requests authority to enter into negotiations with
Purchasers with respect to the interest rate, redemption provisions and
other terms and conditions applicable to the New Bonds and to set the
terms of the New Bonds subject to the receipt of an order under the Act
if an order has not been issued when the Company enters into a Bond
Purchase Agreement.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
EXHIBIT 11
----------
<TABLE>
CENTRAL POWER AND LIGHT COMPANY
ESTIMATED INTEREST SAVINGS
<CAPTION>
SERIES 1974A SERIES 1977
AND SERIES 1974B AND SERIES 1977A
EXISTING SECURITIES BONDS BONDS
------------------- ---------------- ----------------
<S> <C> <C>
Amount Outstanding $ 8,425,000 $ 34,235,000
Coupon Rate 7.125% 6%
--------------- ---------------
Annual Interest Expense $ 600,281 $ 2,054,100
=============== ===============
Amount Redeemed $ 8,425,000 $ 34,235,000
Redemption Price 100.00 100.00
--------------- ---------------
Aggregate Redemption Price $ 8,425,000 $ 34,235,000
NEW SECURITIES
--------------
Principal Amount $ 8,425,000 $ 34,235,000
Coupon Rate 4.42% 4.42%
--------------- ---------------
Annual Interest $ 372,385 $ 1,513,187
Amortization of Redemption
Premium** 0 0
--------------- ---------------
Annual Interest Cost $ 372,385 $ 1,513,187
=============== ===============
Annual Interest Savings by
Refunding $ 227,896 $ 540,913
Aggregate Annual Interest Savings $ 768,809
===============
Total Interest Savings over
the remaining life of the
Old Bonds $ 2,051,064 $ 6,490,956
=============== ===============
Aggregate Total Interest Savings
over the remaining life of the
old bonds. $ 8,542,020
===============
</TABLE>
* Based on the average of the last 10 years J.J. Kenny Index
** Amortized over an assumed 30-year life of New Bonds
