File No. 070 - ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1 DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
________________________________
AMERICAN ELECTRIC POWER COMPANY, INC.
1 Riverside Plaza
Columbus, Ohio 43215
and
CENTRAL AND SOUTH WEST CORPORATION
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266
(Name of companies and top registered holding company
parents filing this statement and address
of principal executive offices)
_________________________________
Armando A. Pena Wendy G. Hargus
Treasurer Treasurer
American Electric Power Company, Inc. Central and South West Corporation
1 Riverside Plaza 1616 Woodall Rodgers Freeway
Columbus, Ohio 43215 P.O. Box 660164
Dallas, Texas 75266
Marianne Smythe Joris M. Hogan
Wilmer, Cutler & Pickering Milbank, Tweed, Hadley & McCloy
2445 M Street, N.W. 1 Chase Manhattan Plaza
Washington, D.C. 20037-1420 New York, New York 10005
(Names and addresses of agents for service)
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American Electric Power Company, Inc. ("AEP"), a New York corporation and a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended (the "Act"), and Central and South West Corporation ("CSW", and
together with AEP, the "Companies"), a Delaware corporation and a registered
holding company under the Act, hereby file this joint Form U-1 Declaration (the
"Declaration") for the purpose of obtaining approval to solicit the proxies of
the holders of common stock of the respective Companies.
Item 1. Description of Proposed Transaction.
AEP and CSW have entered into an Agreement and Plan of Merger, dated as of
December 21, 1997 (the "Merger Agreement"), pursuant to which Augusta
Acquisition Corporation ("AEP Sub"), a wholly owned merger subsidiary of AEP,
will on the closing date merge with and into CSW (the "Merger"). On December 22,
1997, AEP and CSW jointly issued a press release, a copy of which is attached
hereto as Exhibit 1 and incorporated herein by reference, announcing the
proposed Merger and related information.
Pursuant to the terms of the Merger Agreement, the Companies have agreed to
convene meetings of their respective shareholders for the purpose of obtaining
required shareholder approvals relating to the Merger. In respect of the Merger,
AEP will seek to obtain (1) the affirmative vote of holders of a majority of
outstanding shares of AEP common stock to approve an amendment to the restated
certificate of incorporation to increase the number of authorized shares of AEP
common stock, and (2) the affirmative vote of holders of a majority of the
shares of AEP common stock
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cast on the proposal to approve the issuance of shares of AEP common stock,
provided that the total votes cast on the proposal represent a majority of the
outstanding shares of AEP common stock. CSW will seek to obtain approval of the
Merger by the affirmative vote of the holders of a majority of the outstanding
shares of CSW common stock.
A copy of the AEP and CSW preliminary proxy materials, including the
Companies' respective solicitation letters to their shareholders and the joint
proxy statement/prospectus, are included as Confidential Exhibit 2 and
incorporated herein by reference.
AEP and CSW currently intend to mail definitive proxy materials to their
shareholders at least 30 days prior to their regularly scheduled annual
meetings. Their annual meetings are tentatively scheduled for the last week in
April. Accordingly, the Companies respectfully request that the Commission grant
them authority to provide their respective shareholders with such proxy
materials in their final form (the "Solicitation"). At a later date, AEP and CSW
plan to file an application/declaration on Form U-1 requesting authority to
consummate the Merger and related transactions.
Item 2. Fees, Commissions and Expenses.
The estimate of the approximate amount of fees and expenses payable in
connection with the proposed Solicitation is as follows:
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Counsel fees 7,500
Proxy solicitation firm 125,000
Printing expenses 540,000
Miscellaneous and
incidental expenses 25,000
TOTAL $697,500
Item 3. Applicable Statutory Provisions.
Section 12(e) of the Act provides that any solicitation of any proxy
regarding any security of a registered holding company shall be unlawful if made
in contravention of such rules as may be promulgated by the Commission. The
Commission has promulgated Rule 62 under the Act, which provides that no such
solicitation shall be made except pursuant to a Declaration with respect to such
solicitation which has become effective. This Declaration is being filed by the
Companies with respect to the proposed Solicitation in accordance with Rule 62.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority, other
than the Commission, have jurisdiction over the proposed Solicitation.
Item 5. Procedure.
It is requested that the Commission issue and publish not later than March
13, 1998 a notice with respect to the filing of this Declaration and,
concurrently therewith, that the Commission enter an appropriate order granting
and permitting this Declaration to become effective.
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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 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 - Joint Press Release.
Confidential
Exhibit 2 - Preliminary Proxy Materials of AEP and CSW.
Item 7. Environmental Effects.
The proposed Solicitation does not involve major Federal action having a
significant effect on the human environment. No Federal agency has prepared or
is preparing an environmental impact statement with respect to the proposed
Solicitation.
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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, the undersigned Companies have duly caused this statement to be duly
signed on their behalf by the undersigned thereunto duly authorized.
Date: February 3, 1998
AMERICAN ELECTRIC POWER COMPANY, INC.
By /s/ARMANDO A. PENA
Armando A. Pena
Treasurer
CENTRAL AND SOUTH WEST CORPORATION
By /s/WENDY G. HARGUS
Wendy G. Hargus
Treasurer
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INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
- ------- ---------------- ------------
1 Joint Press Release. Electronic
2 Preliminary Proxy Materials Paper
of AEP and CSW (confidential).
EXHIBIT 1
AEP American CSW
Electric ==================================
Power Central and South West Corporation
AEP: America's Energy PartnerSM ==================================
CONTACTS FOR AMERICAN ELECTRIC POWER: CONTACTS FOR CENTRAL AND SOUTH WEST:
MEDIA: MEDIA:
Name: Pat D. Hemlepp Name: Gerald R. Hunter
Phone: (614) 223-1620 Phone: (214) 777-1165
INVESTORS: INVESTORS:
Name: John Bilacic Name: Becky Hall
Phone: (614) 223-2847 Phone: (214) 777-1277
AMERICAN ELECTRIC POWER AND CENTRAL AND SOUTH WEST
AGREE TO $28.1 BILLION COMBINATION
CREATES NATION'S PREEMINENT DIVERSIFIED ELECTRIC UTILITY
WITH LOW-COST GENERATION ASSETS
COLUMBUS, OHIO, AND DALLAS, TEXAS (DECEMBER 22, 1997) - American Electric Power
Company, Inc. ("AEP") [NYSE: AEP] and Central and South West Corporation ("CSW")
[NYSE: CSR] today announced that their boards of directors have approved a
definitive merger agreement for a tax-free, stock-for-stock transaction creating
a company with a total market capitalization of approximately $28.1 billion
($16.5 billion in equity; $11.6 billion in debt and preferred stock). The
combination is expected to be accounted for as a pooling of interests.
This combination creates the nation's preeminent diversified electric utility
serving more than 4.6 million customers in 11 states and approximately 4 million
customers outside the United States. Both companies have low-cost generation and
offer their customers in every state prices below the national average. Over the
last two years, both AEP and CSW have ranked among the top five electric
utilities in customer satisfaction in the American Customer Satisfaction
Index(TM).*
Under the agreement, each common share of CSW will be converted into 0.6 shares
of AEP. Based upon AEP's closing price of $52.00 on Friday, December 19, 1997,
this represents a premium of 20% over the CSW closing price of $26.00. AEP will
issue approximately $6.6 billion in stock to CSW stockholders to complete the
transaction. CSW stockholders will own approximately 40% of the combined
company. Both companies anticipate continuing their current dividend policies
until the close of the transaction.
- more -
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- 2 -
Under the merger agreement, there will be no changes required with respect to
the public debt issues or the outstanding preferred stock of CSW or its
subsidiaries.
Dr. E. Linn Draper Jr., chairman, president and chief executive officer of AEP,
said, "We believe that together we will be a successful competitor - nationally
and internationally - in the 21st century. This merger creates a company that is
diverse in its fuels, its generation and its workplace - a link between the
Midwest and the Southwest, reaching from Canada to Mexico. We are two companies
that have historically been efficient and financially strong. Together, we will
participate in three major power pools (ERCOT, SPP and ECAR) across the country.
"No two companies are more closely aligned in their visions and philosophies
than AEP and CSW," Draper continued. "We are both pro-competition and are eager
for the day when customers have a choice of energy companies. We believe this
agreement creates the kind of company regulators, legislators and government
officials want operating in their states - a company able to produce and deliver
low-cost power, a company ready to compete for the benefit of its customers and
a high-quality, well-capitalized company positioned to handle the future. The
agreement we announce today will create value for customers, employees and
shareholders."
E. R. Brooks, chairman and chief executive officer of CSW, said, "With this
merger, CSW and AEP will be doing much more than simply combining two excellent
companies to create a larger one. We are creating a new standard for excellence
in the emerging global energy and related services market.
"CSW and AEP are the right fit. We both excel at customer service. We both are
among the lowest-cost electricity generators in the United States. We both place
a premium on innovation. And, most importantly, we both are committed to leading
our industry into a competitive future," said Brooks. "This strategic
combination will create new value for shareholders. It will deliver exceptional
service and products to customers and it will be a magnet for talented
employees."
Brooks continued, "AEP has positioned itself to become `America's Energy
Partner'SM at a time when customer choices on energy supply are rapidly
expanding. This past summer, drawing aim at that same future of customer choice,
CSW embraced the slogan `Advanced thinking. Enhanced living.' as our standard
for customer service. Separately, I am confident we would reach these
objectives. Together, we'll do it smarter, we'll do it better, and we'll get
where we intend to go faster."
- more -
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- 3 -
The companies anticipate savings related to the merger of approximately $2
billion over a 10-year period from the elimination of duplication in corporate
and administrative programs, greater efficiencies in operations and business
processes, increased purchasing efficiencies, and the combination of the two
work forces. At the same time, the companies will continue their commitment to
high-quality, reliable service. Position reductions because of the merger are
expected to be approximately 1,300 out of a total domestic work force of
approximately 25,000. The combined company will use a combination of growth,
reduced hiring and attrition to minimize the need for employee separations.
Organizational and staffing recommendations will be made by transition teams of
employees from both companies.
The companies anticipate that the merger will not affect base rates. The
electric systems of AEP and CSW will operate on an integrated and coordinated
basis as required by the Public Utility Holding Company Act of 1935. Any fuel
savings resulting from the coordinated operation of the combined company will be
passed on to customers.
Draper, currently chairman, president and chief executive officer of AEP, will
remain chairman, president and chief executive officer of the combined company.
Brooks, currently chairman and chief executive officer of CSW, will become a
board member of the combined company. Thomas V. Shockley III, CSW president and
chief operating officer, will continue as a key senior officer of the combined
company in the Southwest region. The board of the combined company will be made
up of 15 members, 10 from AEP, plus Brooks and four others from CSW. The name of
the combined company will be American Electric Power Company, Inc. and will be
headquartered in Columbus, Ohio, with significant operations in all 11 states.
The merger is conditioned, among other things, upon the approvals of each
company's shareholders and state and federal regulatory agencies. The companies
anticipate that regulatory procedures can be completed in 12 to 18 months.
AEP and CSW have ownership interests in two regional electric companies in the
United Kingdom. AEP owns 50% of Yorkshire Electricity Group plc through a joint
venture with New Century Energies, Inc. CSW owns SEEBOARD plc. AEP and CSW will
keep the United Kingdom regulators and officials fully advised of the
transaction.
Salomon Smith Barney acted as financial advisor and provided a fairness opinion
to AEP. Morgan Stanley & Co. Incorporated acted as financial advisor and
provided a fairness opinion to CSW.
- more -
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- 4 -
Central and South West Corporation is a global, diversified public utility
holding company based in Dallas. CSW owns four electric operating subsidiaries
serving 1.7 million customers in Texas, Oklahoma, Louisiana and Arkansas, a
regional electricity company in the United Kingdom, other international energy
operations and non-utility subsidiaries involved in energy-related investments,
telecommunications, energy efficiency and financial transactions.
American Electric Power Company, Inc., a global energy company, is one of the
United States' largest investor-owned utilities, providing energy to 2.9 million
customers in Ohio, Indiana, Michigan, West Virginia, Virginia, Tennessee and
Kentucky. AEP has holdings in the United States, the United Kingdom and China.
Wholly-owned subsidiaries provide power engineering, consulting and management
services around the world. The company is based in Columbus, Ohio.
The press release includes forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements reflect numerous assumptions, and involve a number of risks and
uncertainties. Among the factors that could cause actual results to differ
materially are: electric load and customer growth; abnormal weather conditions;
available sources and cost of fuel and generating capacity; the speed and degree
to which competition enters the power generation, wholesale and retail sectors
of the electric utility industry; state and federal regulatory initiatives that
increase competition, threaten cost and investment recovery, and impact rate
structures; the ability of the combined company to successfully reduce its cost
structure; the degree to which the combined company develops non-regulated
business ventures; the economic climate and growth in the service territories of
the two companies; economies generated by the merger; inflationary trends and
interest rates and the other risks detailed from time to time in the two
companies' SEC reports.
* Survey conducted by University of Michigan Business School and American
Society of Quality Control.
Note to Editors: Today's news release, along with other news about American
Electric Power Company, Inc. and Central and South West Corporation, is
available on the Internet at www.aep.com and www.csw.com.
EXHIBIT 2
CONFIDENTIAL EXHIBIT 2 FILED BY PAPER FILING
