SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 21, 1997
(Date of earliest event reported)
Registrant; State of
Commission Incorporation; Address and I.R.S. Employer
File Number Telephone Number Identification No.
1-3525 AMERICAN ELECTRIC POWER COMPANY, INC. 13-4922640
(A New York Corporation)
1 Riverside Plaza
Columbus, Ohio 43215
Telephone (614)223-1000
0-18135 AEP GENERATING COMPANY 31-1033833
(An Ohio Corporation)
1 Riverside Plaza
Columbus, Ohio 43215
Telephone (614)223-1000
1-3457 APPALACHIAN POWER COMPANY 54-0124790
(A Virginia Corporation)
40 Franklin Road, S.W.
Roanoke, Virginia 24011
Telephone (540)985-2300
1-2680 COLUMBUS SOUTHERN POWER COMPANY 31-4154203
(An Ohio Corporation)
215 North Front Street
Columbus, Ohio 43215
Telephone (614)464-7700
1-3570 INDIANA MICHIGAN POWER COMPANY 35-0410455
(An Indiana Corporation)
One Summit Square
P.O. Box 60
Fort Wayne, Indiana 46801
Telephone (219)425-2111
1-6858 KENTUCKY POWER COMPANY 61-0247775
(A Kentucky Corporation)
1701 Central Avenue
Ashland, Kentucky 41101
Telephone (800)572-1141
1-6543 OHIO POWER COMPANY 31-4271000
(An Ohio Corporation)
301 Cleveland Avenue, S.W.
Canton, Ohio 44702
Telephone (330)456-8173
This combined Form 8-K is separately filed by American Electric
Power Company, Inc., a New York corporation ("AEP"), AEP Generating
Company ("AEP Generating"), Appalachian Power Company
("Appalachian"), Columbus Southern Power Company ("Columbus"),
Indiana Michigan Power Company ("Indiana"), Kentucky Power Company
("Kentucky"), and Ohio Power Company ("Ohio"). Information
contained herein relating to any individual registrant is filed by
such registrant on its behalf. No registrant makes any
representation as to information relating to any other registrant,
except that information relating to any of AEP Generating,
Appalachian, Columbus, Indiana, Kentucky or Ohio is also attributed
to AEP.
Item 5. Other Events.
On December 21, 1997, AEP, Central and South West Corporation,
a Delaware corporation ("CSW"), and Augusta Acquisition
Corporation, a Delaware corporation and a wholly owned subsidiary
of AEP ("Merger Sub"), entered into an Agreement and Plan of
Merger, dated as of December 21, 1997 (the "Merger Agreement"),
pursuant to which CSW would merge with and into Merger Sub (the
"Merger") with CSW being the surviving corporation. As a result of
the Merger, each outstanding share of common stock, par value $3.50
per share, of CSW (other than shares owned by AEP or Merger Sub
held by AEP or CSW) shall be converted into the right to receive
0.6 of a share of common stock, par value $6.50 per share, of AEP.
Consummation of the Merger is subject to certain conditions,
including receipt of approval of the Merger and the transactions
contemplated thereby by the stockholders of AEP and CSW and the
receipt of the required regulatory approvals.
A copy of the press release, dated December 22, 1997, issued
jointly by AEP and CSW, relating to the above-described transaction
is attached as Exhibit 99 hereto.
Item 7. Financial Statements and Exhibits.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
The following exhibits are filed herewith in accordance with
Item 601 of Regulation S-K:
Exhibit No. Description
99 Press Release of AEP and CSW, dated
December 22, 1997, announcing the Merger
and the transactions contemplated
thereby.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, each Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN ELECTRIC POWER COMPANY, INC.
Registrant
AEP GENERATING COMPANY
Registrant
APPALACHIAN POWER COMPANY
Registrant
COLUMBUS SOUTHERN POWER COMPANY
Registrant
INDIANA MICHIGAN POWER COMPANY
Registrant
KENTUCKY POWER COMPANY
Registrant
OHIO POWER COMPANY
Registrant
By: /s/ Gerald P. Maloney
Gerald P. Maloney
Vice President of each Registrant
December 24, 1997
EXHIBIT INDEX
Exhibit No. Description
99 Press Release of AEP and CSW dated
December 22, 1997, announcing the Merger
and the transactions contemplated
thereby.
Exhibit 99
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. (NYSE: AEP) ("AEP") and
Central and South West Corporation (NYSE: CSR) ("CSW") 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). (Survey conducted by University
of Michigan Business School and American Society of Quality
Control.)
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.
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 the 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."
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 workforces.
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 workforce 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.
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.
