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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 AND SOUTH WEST SERVICES, INC.
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
(Name of companies filing this statement and address
of principal executive office)
_________________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
_________________________________
Shirley Briones
Treasurer
Central and South West Services, Inc.
1616 Woodall Rogers Freeway
Dallas, Texas 75202
Stephen J. McDonnell
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
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Central and South West Services, Inc. ("CSWS"), a Texas corporation
and a wholly owned 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 "1935 Act"), together with CSW,
hereby files this Form U-1 Application-Declaration to request authority to
refinance certain of its long-term assets (the "Assets"), including the CSW
headquarters building located in Dallas, Texas (the "Headquarters Building"),
as more fully described below.
Item 1. Description of Proposed Transactions.
CSWS hereby requests authority through December 31, 1996, to borrow
up to a total of $60 million from one or more commercial banks or
institutional lenders, or a combination thereof. The borrowings will be
designed to refinance the Assets, including the Headquarters Building, which
are currently financed primarily through the CSW Money Pool (the "Money
Pool"), the short-term borrowing facility for the CSW System. The proceeds
may also be used to prepay an existing mortgage note described under the
heading "Description of Headquarters Building". The proposed borrowings will
be in addition to CSWS's borrowings from time to time through the Money Pool.
CSWS is currently authorized to borrow up to $110 million under the Money
Pool. (File No. 70-8157; HCAR No. 35-26066; June 15, 1994). Recently, CSWS's
highest borrowing pursuant to the Money Pool was approximately $108.1 million
reached on August 10, 1994.
By refinancing the Assets on a longer term basis, CSWS will reduce
its outstanding short-term debt levels, better match its assets and
liabilities, and lock in current interest rates as a hedge against possible
future increases in interest rates. CSWS's strategy will also free up short-
term borrowing capacity under the Money Pool to allow CSWS to meet
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fluctuations in its short-term borrowing needs. While CSWS has not begun
negotiations with potential lenders, CSWS expects that the proposed borrowings
will have terms based on market conditions at the time, but within the
parameters discussed below.
FINANCING ALTERNATIVES
CSWS and CSW request authority to refinance the Assets either through
a floating rate loan from a commercial bank, as described below under the
heading "Bank Borrowings", or through a fixed rate private placement of
securities to institutional lenders, as described below under the heading
"Institutional Placement." The choice between the financing alternatives will
depend principally on market conditions. If the yield curve flattens or
becomes inverted, a fixed rate private placement would be more attractive as a
way to lock in a relatively low long-term rate. If the yield curve is steep,
a floating rate bank financing is likely to be more attractive as a way to
take advantage of lower rates and minimize the cost of the borrowing.
Whichever financing alternative is pursued, CSWS and CSW will not
effect borrowings pursuant to this Application-Declaration until CSWS and CSW
have first filed a post-effective amendment hereto setting forth the type of
borrowing and the terms and conditions thereof. CSWS and CSW therefore
request that the Securities and Exchange Commission (the "Commission") reserve
jurisdiction over the specific terms of the proposed financings pending the
submission of additional information to the Commission.
Bank Borrowings. CSWS requests authority to enter into one or more
loan agreements (each, a "Loan Agreement") with commercial banks pursuant to
which the banks would extend loans evidenced by secured or unsecured notes in
a form customarily used by the lending bank or banks in one or more
transactions. Loans under a Loan Agreement would have a maturity not
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exceeding 15 years. The interest rate on outstanding loans would be a
floating rate which would likely be set at a spread of not more than 100 basis
points over LIBOR or a similar rate. The exact rate would be a function of
the identity of the lender, the maturity of the loan, the size of the
borrowing, prevailing market conditions and non-financial terms and
conditions. CSWS also requests authority to achieve the added economy of
floating rate sources and the comfort of fixed rate financing through the use
of interest rate swaps and other similar hedging devices. CSWS would expect
that the notes would, at its option, or, under certain circumstances, with the
consent of the lending banks, be prepayable, in whole or in part at any time
without premium or penalty.
Institutional Placement. As an alternative to entering into a Loan
Agreement, CSWS requests authority to borrow from one or more institutional
lenders (each, an "Institutional Lender"). Borrowings from an Institutional
Lender would be evidenced by promissory notes. Each such note would bear
interest at a rate not expected to exceed the effective cost of money from
unsecured prime commercial bank loans prevailing on the date of such borrowing
and would be subject to prepayment by the borrower in whole or in part at any
time or in part from time to time without penalty.
CSW GUARANTEES
As the sole holder of the outstanding common stock of CSWS and as an
inducement to commercial banks or institutional lenders to make loans to CSWS,
it is contemplated that CSW may be required to guarantee the obligations of
CSWS to the lenders. Accordingly, CSW requests authority to guarantee the
payments due to lenders. Among other things, a guarantee, the terms of which
would be set along with the terms of the borrowing, might obligate CSW to pay
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all installments of principal and interest to the lenders if not paid by CSWS,
and all legal and other costs and expenses incurred by the lender to enforce
its rights under the notes or the guarantee.
USE OF PROCEEDS
The proceeds of the proposed borrowings will be used principally to
repay a portion of CSWS's outstanding Money Pool borrowings. At July 31,
1994, CSWS had outstanding $100.3 million of borrowings under the Money Pool.
Proceeds may also be used to prepay an existing mortgage note as described
below under the heading "Description of Headquarters Building."
Proceeds from the proposed borrowings will not be used to finance the
acquisition of an exempt wholesale generator ("EWG") or a foreign utility
company ("FUCO") as defined in Sections 32 and 33 of the 1935 Act. Neither
CSW nor any subsidiary thereof has a direct or indirect ownership interest in
an EWG or FUCO. Therefore, no compliance with Rule 54 under the 1935 Act is
required.
DESCRIPTION OF HEADQUARTERS BUILDING
In 1989, CSW purchased the Headquarters Building, an 111,500 square
foot office building located in downtown Dallas, Texas. The purchase price
for the building was approximately $8.35 million and in connection with the
purchase, CSWS assumed an existing mortgage in the amount of approximately
$5.88 million. The assumption of the existing mortgage was approved by the
Commission by order dated March 14, 1989 (HCAR No. 35-24837). The remaining
portion of the purchase price of $2,470,000 was paid in cash by CSWS out of
advances from the Money Pool, pursuant to authority previously granted to
CSWS, by order dated April 2, 1987 (HCAR No. 24363). Subsequently, CSWS has
made substantial improvements to the property, including an expansion which
added approximately 170,000 square feet of space. The cost of improvements to
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the original structure and constructing the addition to the Headquarters
Building, approximately $47 million, has been funded by CSWS through
borrowings under the Money Pool. CSWS has a total investment in the property
of approximately $55.4 million including the assumed mortgage and furniture,
fixtures and equipment. CSW intends to utilize the Headquarters Building for
the foreseeable future.
Item 2. Fees, Commissions and Expenses.
An estimate of the fees and expenses to be paid or incurred by CSWS
in connection with the proposed transactions is set forth below:
Amount
--------
Holding Company Act filing fee ................. $ 2,000*
Fees of Public Accountants ..................... 7,500
Financial Printing Expenses .................... 5,000
Counsel Fees:
Milbank, Tweed, Hadley & McCloy
New York, New York ............................. 30,000
Miscellaneous and incidental expenses
including travel, telephone and
postage ........................................ 1,500
-------
TOTAL $46,000
=======
_______________
* Actual amount.
The fees and expenses include those charges incurred for the services
of 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
Accounting Department.
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Item 3. Applicable Statutory Provisions.
Sections 6(a), 7 and 12 of the 1935 Act and Rules 23, 24 and 45
promulgated thereunder are or may be applicable to the proposed transactions.
To the extent any other sections of the 1935 Act may be applicable to the
proposed transactions, Applicants hereby request appropriate orders
thereunder.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority,
other than the Commission under the 1935 Act, have jurisdiction over the
proposed transactions.
Item 5. Procedure.
CSWS requests that the Commission issue and publish no later than
September 9, 1994, the requisite notice under Rule 23 with respect to the
filing of this Application-Declaration, such notice to specify a date not
later than October 3, 1994, as the date after which an order granting and
permitting this Application-Declaration to become effective may be entered by
the Commission, and that the Commission enter not later than October 4, 1994,
an appropriate order granting and permitting this Application-Declaration to
become effective.
CSWS respectfully requests that appropriate and timely action be
taken by the Commission in this matter.
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
preparation of the Commission's decision in this matter. There should be no
thirty-day waiting period between the issuance and the effective date of any
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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 - Preliminary Offering Memorandum and purchase agreement
or draft of loan agreement and mortgage, if any, and
form of promissory note to evidence borrowing from
institutional lenders or banks, respectively (to be
filed by amendment).
Exhibit 2 - Final Offering Memorandum and purchase agreement or loan
agreement and mortgage, if any, and form of promissory
note to evidence borrowing from institutional lenders or
banks, respectively (to be filed with Certificate of
Notification).
Exhibit 3 - Preliminary opinion of Milbank, Tweed, Hadley & McCloy,
counsel to CSWS and CSW.
Exhibit 4 - Financial Statements per books and pro forma as of June
30, 1994 (to be filed by amendment.)
Exhibit 5 - Final or "past tense" opinion of Milbank, Tweed, Hadley
& McCloy, counsel to the Company (to be filed with
Certificate of Notification).
Exhibit 6 - Proposed Notice of Proceeding.
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 CSWS'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: August 24, 1994
CENTRAL AND SOUTH WEST SERVICES, INC.
By: SHIRLEY BRIONES
Shirley Briones
Treasurer
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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: August 24, 1994
CENTRAL AND SOUTH WEST CORPORATION
By: STEPHEN J. MCDONNELL
Stephen J. McDonnell
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBIT METHOD
- ------- ------- ------------
1 Preliminary Offering Memorandum and ---
purchase agreement or draft of loan
agreement and mortgage, if any, and form
of promissory note to evidence borrowing
from institutional lenders or banks,
respectively (to be filed by amendment).
2 Final Offering Memorandum and purchase ---
agreement or loan agreement and mortgage,
if any, and form of promissory note to
evidence borrowing from institutional
lenders or banks, respectively (to be
filed with Certificate of Notification).
3 Preliminary opinion of Milbank, Tweed, Electronic
Hadley & McCloy, counsel to CSWS and CSW.
4 Financial Statements per books and pro
forma as of June 30, 1994 (to be filed
by amendment.)
5 Final or "past tense" opinion of Milbank, ---
Tweed, Hadley & McCloy, counsel to the
Company (to be filed with Certificate
of Notification).
6 Proposed Notice of Proceeding. Electronic
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EXHIBIT 3
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Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
August 24, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central and South West Services, Inc.
Form U-1 Application-Declaration
Dear Sirs:
We refer to a Form U-1 Application Declaration (the
"Application-Declaration") under the Public Utility Holding Company Act of
1935, as amended (the "1935 Act"), dated today, filed by Central and South
West Services, Inc. (the "Company"), a Texas corporation and a wholly-
owned subsidiary of Central and South West Corporation ("CSW"), a Delaware
corporation and a registered holding company. The Application-Declaration
relates to the proposed borrowing of up to $60 million from one or more
commercial banks or institutional lenders, or a combination thereof (the
"Borrowings"), to refinance certain of the Company's long-term assets,
including the CSW headquarters building located in Dallas, Texas. We have
acted as special counsel for the Company in connection with the
Application-Declaration, and, as such counsel, we are familiar with the
corporate proceedings taken and to be taken by the Company in connection
with the proposed Borrowings as described in the Application-Declaration.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company and CSW,
certificates of public officials, certificates of officers and
representatives of the Company and CSW and other documents as we have
deemed it necessary to require as a basis for the opinions hereinafter
expressed. In such examination we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as
originals and the conformity with the originals of all documents submitted
to us as copies. As to various questions of fact material to such
opinions we have, when relevant facts were not independently established,
relied upon certificates by officers of the Company, CSW and other
appropriate persons and statements contained in the Application-
Declaration.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that, in the
event that the proposed transactions are consummated in accordance with
the Application-Declaration, as it may be amended, and subject to the
assumptions and conditions set forth below:
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1. The Company is validly organized and duly existing under the
laws of the State of Texas.
2. CSW is validly organized and duly existing under the laws of
the State of Delaware.
3. All state laws applicable to the proposed Borrowings as
described in the Application-Declaration will have been complied
with.
4. The promissory notes (the "Notes") to be issued in
connection with the proposed Borrowings will be valid and
binding obligations of the Company in accordance with their
terms.
5. Any guarantee (a "Guarantee") of the Notes by CSW will be a
valid and binding obligation of CSW in accordance with its
terms.
6. The issuance and sale of the Notes as described in the
Application-Declaration will not violate the legal rights of the
holders of any securities issued by the Company or any associate
company of the Company.
The opinions expressed above in respect of the transactions
described in the Application-Declaration are subject to the following
assumptions or conditions:
a. The transactions shall have been duly authorized and
approved to the extent required by state law by the Board of
Directors of the Company and CSW.
b. The Securities and Exchange Commission (the
"Commission") shall have duly entered an appropriate order or
orders granting and permitting the Application-Declaration to
become effective with respect to the transactions described
therein.
c. The Notes shall have been duly issued and sold in
accordance with the authorization of the Board of Directors of
the Company and such order or orders of the Commission.
d. Any Guarantee shall have been duly issued in accordance
with the authorization of the Board of Directors of CSW and such
order or orders of the Commission.
e. The Notes shall have been duly issued, in accordance
with required approvals, authorizations, consents, certificates
and orders of any state commission or regulatory authority with
respect to the issue and sale of the Notes and all such required
approvals, authorizations, consents, certificates and orders
shall have been obtained and remain in effect.
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f. No act or event other than as described herein shall
have occurred subsequent to the date hereof which would change
the opinions expressed above.
g. The consummation of the transactions shall be conducted
under our supervision and all legal matters incident thereto
shall be satisfactory to us, including the receipt in
satisfactory form of opinions of other counsel qualified to
practice in jurisdictions pertaining to the transactions in
which we are not admitted to practice.
We hereby consent to the use of this opinion as an exhibit to
the Application-Declaration.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
GJF/RBW
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EXHIBIT 6
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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) 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 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.
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Central and South West Services, Inc. (File No. 70-________)
Central and South West Services, Inc. ("CSWS"), 1616 Woodall
Rogers Freeway, Dallas, Texas 75202, a Texas corporation and a wholly
owned 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"), together with CSW,
have filed an Application-Declaration pursuant to Sections 6(a), 7 and 12
of the Act and Rules 23, 24 and 45 promulgated thereunder.
CSWS has requested authority through December 31, 1996, to
refinance certain of its long-term assets (the "Assets"), including the
CSW headquarters building located in Dallas, Texas (the "Headquarters
Building") by borrowing up to a total of $60 million from one or more
commercial banks or institutional lenders, or a combination thereof. The
Assets, including the Headquarters Building, are currently financed
primarily through the CSW Money Pool (the "Money Pool"), the short-term
borrowing facility for the CSW System. The proceeds from the borrowings
may also be used to prepay an existing mortgage note on the Headquarters
Building. Proceeds from the proposed borrowings will not be used to
finance the acquisition of an exempt wholesale generator or a foreign
utility company as defined in Sections 32 and 33 of the 1935 Act.
By refinancing the Assets on a longer term basis, CSWS will
reduce its outstanding short-term debt levels, better match its assets and
liabilities, and lock in current interest rates as a hedge against
possible future increases in interest rates.
CSWS and CSW have requested authority to refinance the Assets
either through a floating rate loan from a commercial bank or through a
fixed rate private placement of securities to institutional lenders. The
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choice between the financing alternatives will depend principally on
market conditions. Whichever financing alternative is pursued, CSWS and
CSW will not effect borrowings pursuant to this Application-Declaration
until CSWS and CSW have first filed a post-effective amendment hereto
setting forth the type of borrowing and the terms and conditions thereof.
CSWS and CSW have therefore requested that the Securities and Exchange
Commission (the "Commission") reserve jurisdiction over the specific terms
of the proposed financings pending the submission of additional
information to the Commission.
As the sole holder of the outstanding common stock of CSWS and as
an inducement to commercial banks or institutional lenders to make loans
to CSWS, it is contemplated that CSW may be required to guarantee the
obligations of CSWS to the lenders. Accordingly, CSW has requested
authority to guarantee the payments due to lenders.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
