Exhibit F-1
[PRELIMINARY]
November 20, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pinnacle West Capital Corporation
Form U-1 Application/Declaration
(File No. 070-09745)
Ladies and Gentlemen:
We are Arizona counsel for Pinnacle West Capital Corporation, an Arizona
corporation (the "COMPANY"), and are familiar with the matters relating to the
"REORGANIZATION," as such term is defined in the Form U-1 Application /
Declaration (File No. 070-09745) under the Public Utility Holding Company Act of
1935, as amended (the "ACT"), filed with the Securities and Exchange Commission
(the "COMMISSION") by the Company on September 12, 2000 (the "APPLICATION").
Capitalized terms used herein and not otherwise defined will have the meanings
given in the Application. The term "ASSETS," when used herein will mean those
assets actually contributed to Transitory Subsidiary in the Reorganization, as
contemplated in the Application. The term "ASSUMED DEBT," when used herein, will
mean the indebtedness of APS actually assumed or agreed to be assumed by
Transitory Subsidiary and ultimately by PWE in the Reorganization, as
contemplated in the Application. Insofar as the fossil assets of APS may be
acquired by PWE at different times, it is understood that the term
"REORGANIZATION," when used herein, will refer only to the first transaction
described herein and in the Application whereby PWE acquires Assets of APS. We
are aware that PWE may file an application with the Federal Energy Regulatory
Commission for temporary status as an exempt wholesale generator pending
Commission approval under the Act. As described in the Application, the
Reorganization involves the following:
1. The formation of Transitory Subsidiary as a wholly-owned subsidiary of
APS (the "FORMATION");
<PAGE>
Securities and Exchange Commission
November 20, 2000
Page 2
2. The contribution of the Assets and the Assumed Debt by APS to
Transitory Subsidiary in exchange for the common stock of Transitory
Subsidiary (the "CAPITALIZATION");
3. The distribution of the stock of Transitory Subsidiary by APS to the
Company (the "SPIN-OFF"); and
4. The merger of Transitory Subsidiary into PWE, with PWE surviving (the
"MERGER").
Among other things, we have examined:
(a) The Application;
(b) The parties' corporate proceedings and the proceedings before the
Arizona Corporation Commission (the "ACC") relative to the
Reorganization and related matters; and
(c) Such other documents and certificates (including those being delivered
to you concurrently herewith) and such statutes, rules, and
regulations as we have deemed relevant.
In our examination of the documents referred to above, we have assumed (i)
the genuineness of the signatures not witnessed, the authenticity of documents
submitted to us as originals, and the conformity to originals of documents
submitted to us as copies; (ii) the legal capacity of all natural persons
executing such documents; (iii) that such documents accurately describe and
contain the mutual understanding of the parties, and that there are no oral or
written statements or agreements that modify, amend, or vary, or purport to
modify, amend, or vary, any of the terms of such documents; (iv) with respect to
the Assumed Debt, that each such entity (other than APS, PWE, and Transitory
Subsidiary), and with respect to all such other documents, that each such
entity, had the power to enter into and perform its obligations under such
documents, and that such documents have been duly authorized, executed, and
delivered by, and are valid, binding upon, and enforceable against, such
entities; (v) that the parties to such documents will receive no interest,
charges, fees, or other benefits or compensation in the nature of interest in
connection with the transactions other than those that the Company has agreed in
writing in such documents to pay; and (vi) that no fraud has occurred in
connection with such transactions.
Based upon the foregoing, and subject to the assumptions and conditions set
forth herein, we are of the opinion that, in the event that the Reorganization
is consummated in accordance with the Application:
<PAGE>
Securities and Exchange Commission
November 20, 2000
Page 3
1. All laws of the State of Arizona applicable to the Reorganization will
have been complied with.
2. Following the Formation and the Capitalization, Transitory Subsidiary
will be validly organized and duly existing.
3. The common stock of Transitory Subsidiary issued to APS in the
Formation and the Capitalization will be validly issued, fully paid
and non-assessable, and APS, as the holder of such stock following the
Formation and the Capitalization, and the Company, as the holder of
such stock immediately following the Spin-off, will be entitled to the
rights and privileges appertaining thereto set forth in the articles
of incorporation of Transitory Subsidiary.
4. PWE is validly organized and duly existing.
5. The common stock of PWE to be held by the Company following the
Reorganization will be validly issued, fully paid and non-assessable,
and the Company, as the holder of such stock immediately following the
Merger, will be entitled to the rights and privileges appertaining
thereto set forth in the articles of incorporation of PWE.
6. Following the Capitalization, the Assumed Debt that is assumed
effective as of the date of the Capitalization will be the valid and
binding obligation of Transitory Subsidiary in accordance with its
terms. Upon the effective time of the Merger, the Assumed Debt that is
assumed effective as of the date of the Merger be the valid and
binding obligation of PWE in accordance with its terms.
7. Upon the effective time of the Spin-off, the Company will legally
acquire the common stock of Transitory Subsidiary issued in the
Capitalization.
8. The consummation of the Reorganization will not violate the legal
rights of the holders of any securities issued by the Company or any
"associate company," as defined in the Act, thereof.
The opinions expressed above are subject to the following assumptions and
conditions:
(a) The Reorganization, as contemplated by the Application, will be
authorized by the Commission. The Commission will duly enter an
appropriate order or orders with respect to the Reorganization, as
described in the Application, granting and permitting the Application
to become effective under the Act and the rules and regulations
thereunder and the Reorganization will be consummated in accordance
with the Application.
<PAGE>
Securities and Exchange Commission
November 20, 2000
Page 4
(b) The Reorganization will be duly authorized and approved to the extent
required by the governing documents and applicable federal and state
laws, by the board of directors of each of APS, Transitory Subsidiary
and PWE, and by the Company as the sole shareholder of APS, Transitory
Subsidiary and PWE, and such authorizations and approvals remain in
full force and effect.
(c) Without limitation of paragraph (b) above, the board of directors of
Transitory Subsidiary will authorize the issuance of the common stock
to APS in the Capitalization in accordance with Arizona law, and the
number of shares so issued will be authorized in the articles of
incorporation of Transitory Subsidiary.
(d) The Spin-off will be effected in accordance with Arizona law and the
amount thereof will not exceed any limitation contained in APS'
articles of incorporation.
(e) Instruments of merger will be duly and validly filed with the ACC, and
such other corporate formalities as are required by the laws of the
State of Arizona for the consummation of the Merger will be taken, and
the Merger will become effective in accordance with the laws of the
State of Arizona.
(f) None of the Capitalization, the Spin-off or the Merger will constitute
a fraudulent conveyance and APS will not be rendered insolvent as a
result of the Reorganization.
(g) All required approvals, authorizations, consents, certificates, and
orders of, and all filings and registrations with, all applicable
federal and state commissions and regulatory authorities with respect
to the Reorganization will be obtained or made, as the case may be,
and remain in effect (including the approval and authorization of the
Commission under the Act, the Federal Energy Regulatory Commission
under the Federal Power Act, as amended, and the rules and regulations
thereunder, and the ACC under the applicable laws of the State of
Arizona), and the Reorganization will be accomplished in accordance
with all such approvals, authorizations, consent, certificates,
orders, filings and registrations. APS will not utilize utility funds
to form Transitory Subsidiary or to divest itself of Transitory
Subsidiary.
(h) The parties will comply with, or obtain all consents, waivers and
releases, if any, required for the Reorganization under all applicable
governing corporate documents, contracts, agreements, debt
instruments, indentures, franchises, licenses, and permits to be
listed on a schedule to be provided by the Company and/or any of its
associate companies.
<PAGE>
Securities and Exchange Commission
November 20, 2000
Page 4
(i) Our opinions herein are given solely with respect to the actual
effectuation of the Reorganization, including with respect to
consents, licenses, permits, filings with and approvals of
governmental authorities that are required to effect the
Reorganization, and no opinion is given as to whether APS, the
Company, Transitory Subsidiary, or PWE or their businesses or
operations are currently in compliance with any laws or will be after
the Reorganization or as to any consents, licenses, permits, filings
with or approvals of any governmental body or agency or other person
required for the ownership or operation of the Assets before or
following the Reorganization.
(j) The opinions set forth in paragraph 6 herein are subject to, and
limited by, the following:
(i) the effect of any applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws
relating to or affecting creditors rights generally;
(ii) the effect of general principles of equity, including (without
limitation) concepts of materiality, reasonableness, good faith
and fair dealing (regardless of whether considered in a
proceeding in equity or at law);
(iii) the qualification that certain waivers, procedures, remedies,
and other provisions of the documents governing the Assumed Debt
may be unenforceable under or limited by the law of the State of
Arizona; however, such law does not, in our opinion,
substantially prevent the practical realization of the benefits
intended by such documents; and
(iv) we express no opinion as to the effect of the law of any
jurisdiction other than the State of Arizona wherein any
creditor may be located or wherein enforcement of the Assumed
Debt may be sought which limits the rates of interest legally
chargeable or collectible.
(k) No act or event other than as described herein shall have occurred
subsequent to the date hereof that would change the opinions expressed
herein.
(l) The Reorganization will be consummated as described in the Application
or with such changes as we have approved, and all legal matters
incident thereto will be satisfactory to us. With respect to required
approvals of the ACC, we note that two parties have filed legal
actions challenging the validity of the Settlement as approved by the
ACC. However, under Arizona law, an ACC order remains in effect
pending appeal.
<PAGE>
Securities and Exchange Commission
November 20, 2000
Page 5
(m) In giving the final opinion required by the Commission in connection
with the Reorganization, we may rely exclusively upon opinions of
other counsel to the Company as to certain matters, or such other
counsel may provide certain of such opinions in separate opinion
letters provided to the Commission concurrently with our final
opinion.
The opinions expressed herein are limited to the laws of the State of
Arizona and, with respect to paragraphs 6 and 7, the federal law of the United
States of America and we express no opinion on the laws of any other
jurisdiction. Without limiting the foregoing, opinions herein relating to
labor/employment or employee benefit matters, environmental matters, tax
matters, and real estate matters are limited to the laws of the State of
Arizona. The opinions expressed herein are based upon the law in effect on the
date hereof, and we assume no obligation to revise or supplement this opinion
should such law be changed by legislative action, judicial decision, or in any
other manner, or otherwise to notify you of any changes in law or fact relevant
to the opinions expressed herein. This opinion letter is rendered solely for
your benefit in connection with the transactions described above, and this
opinion letter is not to be used, circulated, quoted, or otherwise referred to
for any other purpose.
We hereby consent to the use of this opinion as an exhibit to the
Application.
Very truly yours,
Snell & Wilmer L.L.P.
<PAGE>
Exhibit F-1
[PRELIMINARY]
November 21, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Pinnacle West Capital Corporation
Form U-1 Application/Declaration
(File No. 070-09745)
Ladies and Gentlemen:
We are special New Mexico counsel for Pinnacle West Capital Corporation, an
Arizona corporation (the "COMPANY"), in regard to certain matters relating to
the "REORGANIZATION," as such term is defined in the Form U-1
Application/Declaration (File No. 070-09745) under the Public Utility Holding
Company Act of 1935, as amended (the "ACT"), filed with the Securities and
Exchange Commission (the "COMMISSION") by the Company on September 12, 2000 (the
"APPLICATION"). Capitalized terms used herein and not otherwise defined will
have the meanings given in the Application. The term "FOUR CORNERS TRANSFER,"
when used herein, will mean the transfer of the Four Corners Power Plant from
APS to PWE pursuant to the Reorganization, as contemplated in the Application,
which we have examined.
APS has represented to us, and we have relied upon such representation,
that the only business in which it is engaged in the State of New Mexico
consists of and is limited to ownership and operation of electric generating
units (or undivided interests therein) and electric transmission lines, sales of
electricity at retail to BHP Navajo Coal Company ("BHP") solely for its conduct
of coal mining operations on the Navajo Reservation ("BHP CONTRACT"),
transmission of electricity from Tucson Electric Power Company to the Navajo
Tribal Utility Authority for resale, and wholesale transactions with other
utilities.
APS and PWE have represented to us, and we have relied upon such
representation, that the only asset located in the State of New Mexico that is
being transferred from APS to PWE pursuant to the Reorganization is the Four
Corners Power Plant.
<PAGE>
Securities and Exchange Commission
November 21, 2000
Page 2
PWE has represented to us, and we have relied upon such representation,
that it is not currently engaged in any business in the State of New Mexico, and
that the only business in which it will be engaged in the State of New Mexico
immediately following the Reorganization consists of and is limited to ownership
and operation of electric generating units (or undivided interests therein) at
the Four Corners Power Plant and the sale of power and energy at wholesale from
the Plant.
The Company has represented to us, and we have relied upon such
representation, that it is not engaged in any business in the State of New
Mexico.
Our opinions herein are given solely with respect to the actual
effectuation of the Four Corners Transfer, and no opinion is given as to whether
APS, the Company, Transitory Subsidiary or PWE, or their businesses or
operations, are currently in compliance with any laws, or will be after the
Reorganization, or as to any consents, licenses, permits, filings with or
approvals of any governmental body or agency or other person required for the
ownership or operation of the Four Corners Power Plant before or following the
Reorganization.
Our opinions relate only to the Four Corners Transfer. In respect only of
the laws of New Mexico, and subject to the qualifications and limitations with
respect to this opinion letter set forth above, we are of the opinion that:
1. The activities of APS in the State of New Mexico to date do not
constitute it a "public utility" as that term is defined in the
relevant laws of the State of New Mexico, and accordingly, no
approval, authorization, or consent of the New Mexico Public
Regulation Commission is required by APS for the Four Corners Transfer
contemplated in the Application. In addition, the rates and charges
pursuant to the BHP Contract between APS and BHP are not subject to
regulation by the New Mexico Public Regulation Commission.
2. The activities of PWE in the State of New Mexico to date do not, and
immediately following the Reorganization will not, constitute it a
"public utility" as that term is defined in the relevant laws of the
State of New Mexico, and accordingly, no approval, authorization, or
consent of the New Mexico Public
<PAGE>
Securities and Exchange Commission
November 21, 2000
Page 3
Regulation Commission is required by PWE for the Four Corners Transfer
contemplated in the Application.
The opinions expressed herein are limited to the laws of the State of New
Mexico and we express no opinion about the laws of any other jurisdiction. The
opinions expressed herein are based upon the law in effect on the date hereof,
and we assume no obligation to revise or supplement this opinion should such law
be changed by legislative action, judicial decision, or in any other manner, or
otherwise to notify you of any changes in law or fact relevant to the opinions
expressed herein. Without limitation of the foregoing, we express no opinion on
the requirements that might become applicable upon the implementation of open
access in New Mexico, currently scheduled to begin January 1, 2002. This opinion
letter is rendered solely for your benefit in connection with the Four Corners
Transfer described above, and this opinion letter is not to be used, circulated,
quoted, or otherwise referred to for any other purpose.
We hereby consent to the use of this opinion as an exhibit to the
Application.
Yours truly,
KELEHER & MCLEOD, P.A.
By: Susan M. McCormack
------------------------------------
Susan M. McCormack
