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File No. 70-6977
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 5 (POST-EFFECTIVE) TO
FORM U-1 DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
__________________________________
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71156
(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 Briones
Treasurer
Southwestern Electric Power Company
428 Travis Street
Shreveport, Louisiana 71156
Stephen J. McDonnell
Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
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Southwestern Electric Power Company, a Delaware corporation (the
"Company") and an electric utility subsidiary of Central and South West
Corporation ("CSW"), a registered holding company under the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), hereby files this
Amendment No. 5 (Post-Effective) to the Form U-1 Declaration in File No.
70-6977 to amend and restate Item 1 in its entirety and to amend Item 6 to
file an amended Exhibit 4. In all other respects, the Application as
previously filed and as heretofore amended will remain the same.
In Item 1 ("Description of Proposed Transaction"):
(a) the fourth paragraph (beginning with the words "The Company")
is hereby amended to delete the fourth sentence thereof (beginning with the
words "It is anticipated") and replace it with the following sentence: "It is
anticipated that the interest rate under the New Loan Agreement will be either
.375% above the LIBOR Rate, as defined in the New Loan Agreement, or the
Alternate Base Rate, as defined in the New Loan Agreement, through June 15,
1997, and the Alternate Base Rate from June 16, 1997 to and including June 15,
2000, except that amounts not paid when due will bear interest at 1% per annum
plus the Alternate Base Rate."
(b) after the fourth paragraph, a new paragraph has been added as
follows: "As indicated above, the maturity date of the notes under the New
Loan Agreement will be June 15, 2000. Notwithstanding the fact that the notes
will be long term obligations of the Company, due to the pricing options set
forth above, the interest rate on the notes, which the Company may select from
time to time upon prior notice to BNY, as agent, will be based on short term
interest rates. In the case of loans that bear interest based upon the LIBOR
Rate, the Company may select interest periods of one, two, three or six
months."
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(c) the fifth paragraph (beginning with the words "An arrangement
fee") has been amended to add the following parenthetical after the fourth
sentence: "(other than a funding indemnity payable to the Banks if loans
bearing interest based upon the LIBOR Rate are prepaid on a day that is not
the last day of an interest period therefor)."
(d) the sixth paragraph (beginning with the words "The New Loan
Agreement") is hereby amended to add the following sentence after the second
sentence (beginning with the words "Because the circumstances"): "However, the
Company anticipates that it is unlikely that the Company would be required to
pay any such compensation and that, by virtue of the Company's ability to
prepay the loans made under the New Loan Agreement, the effective cost to the
Company of paying any such compensation would not be substantial."
Item 1. Description of Proposed Transactions.
Item 1 is hereby restated in its entirety to read as follows:
By order dated June 8, 1984 (HCAR No. 23325), the Securities and
Exchange Commission (the "Commission") authorized the Company to issue prior
to December 31, 1984, up to $75 million of unsecured notes in one or more
transactions evidencing borrowings from commercial banks. Pursuant to the
granted authority the Company borrowed $50 million from The Bank of New York
("BNY") and First Interstate Bank of California ("FIBC") under a Term Loan
Agreement dated as of June 15, 1984 (the "Loan Agreement"). The Loan
Agreement provided for a $50 million loan at varying interest rates not
exceeding 115% of the Prime Rate, as defined.
By the Assignment and Assumption Agreement dated January 9, 1991, a
copy of which was previously filed as Exhibit No. 7, BNY sold a portion of
its loan to Swiss Volksbank (New York Branch) ("Volksbank"). On or before
January 1, 1989, FIBC assigned its portion of the loan to its affiliate First
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Interstate Bank of Texas ("FIB-Texas"). As a result, the lenders under the
Loan Agreement were BNY, FIB-Texas and Volksbank (collectively, the
"Lenders").
By order dated June 7, 1991 (HCAR No. 25328), the Commission
authorized the Company to enter into an amendment to the Loan Agreement (the
Loan Agreement as so amended being referred to herein as the "Existing Loan
Agreement") with the Lenders to (1) extend the maturity of the notes through
June 15, 1997; (2) amend the interest rate on the loan; (3) add provisions to
compensate the lenders for their costs of complying with capital adequacy
regulations; and (4) add assignment and participation provisions. The Company
did not receive any new proceeds as a result of entering into the amendment to
the Existing Loan Agreement and the aggregate principal amount of notes
outstanding remained at $50 million.
The Company now proposes to enter into a new Term Loan Agreement
(the "New Loan Agreement") with Credit Suisse, First Interstate Bank of
California, The Yasuda Trust and Banking Co., LTD., New York Branch and with
BNY, individually and as agent (collectively, the "Banks"), to replace the
Existing Loan Agreement. The New Loan Agreement will modify the Existing Loan
Agreement in several respects, including (i) extending the maturity of the
outstanding loan through June 15, 2000 and (ii) amending the interest rate on
the loan. An initial draft of the proposed New Loan Agreement is filed as
Exhibit No. 8 hereto. The aggregate principal amount of the notes outstanding
under the New Loan Agreement, will be $50 million. It is anticipated that the
interest rate under the New Loan Agreement will be either .375% above the
LIBOR Rate, as defined in the New Loan Agreement, or the Alternate Base Rate,
as defined in the New Loan Agreement, through June 15, 1997, and the Alternate
Base Rate from June 16, 1997 to and including June 15, 2000, except that
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amounts not paid when due will bear interest at 1% per annum plus the
Alternate Base Rate. The interest rate charged under the Existing Loan
Agreement since 1984 has ranged between 0.4% and 0.6% above the Federal Funds
Rate. The interest rate charged became fixed at 0.5% above the Federal Funds
Rate in 1991. The average of the monthly interest rates during each of the
years 1984 to 1994 (to date) were as follows:
1984 10.87
1985 8.53
1986 7.31
1987 7.25
1988 8.18
1989 9.68
1990 8.52
1991 6.80
1992 4.02
1993 3.51
1994 4.15
As indicated above, the maturity date of the notes under the New
Loan Agreement will be June 15, 2000. Notwithstanding the fact that the notes
will be long term obligations of the Company, due to the pricing options set
forth above, the interest rate on the notes, which the Company may select from
time to time upon prior notice to BNY, as agent, will be based on short term
interest rates. In the case of loans that bear interest based upon the LIBOR
Rate, the Company may select interest periods of one, two, three or six
months.
An arrangement fee of seven and one-half basis points ($37,500) will
be paid to BNY upon Commission approval of the New Loan Agreement. The
aggregate principal amount of notes to be issued under the New Loan Agreement
together with all other unsecured indebtedness of the Company will not exceed
20% of the sum of the secured indebtedness of the Company and the Company's
total capital stock and surplus. The notes and the New Loan Agreement will
permit prepayment of principal in whole or in part at any time prior to
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maturity without penalty. The Company presently anticipates that the notes
issued under the New Loan Agreement will be repaid no later than June 15, 1997
(other than a funding indemnity payable to the Banks if loans bearing interest
based upon the LIBOR Rate are prepaid on a day that is not the last day of an
interest period therefor). No compensating balances with BNY will be
required. The New Loan Agreement in final form will be filed with the
Commission by Certificate of Notification to this Declaration. The Company
requests pursuant to this Declaration authorization through December 31, 1994,
to enter into the New Loan Agreement.
The New Loan Agreement includes a provision requiring the Company to
compensate each Bank for the cost to such Bank of complying with any law,
rule, regulation, request or guideline of any governmental authority, central
bank or comparable agency regarding the capital adequacy to the extent that
such cost arises as a consequence of the Bank's obligations under the New Loan
Agreement. Because the circumstances of individual banks vary and it is not
possible to predict what changes might occur relating to capital requirements
for banks generally, the cost to the Company of complying with this provision
of the New Loan agreement cannot be determined. However, the Company
anticipates that it is unlikely that the Company would be required to pay any
such compensation and that, by virtue of the Company's ability to prepay the
loans made under the New Loan Agreement, the effective cost to the Company of
paying any such compensation would not be substantial. The inclusion of such
a provision in bank financing agreements has become common since the adoption
of the Final Risk-Based Capital Guidelines by the Board of Governors of the
Federal Reserve System (12 CFR Part 208, Appendix A; 12 CFR Part 225,
Appendix A) and the Office of the Comptroller of the Currency (12 CFR Part 3,
Appendix A). If this provision was to increase the Company's costs under the
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New Loan Agreement, the Company could exercise its option to prepay without
penalty, although the obligation of the Company to pay any increased costs
under this provision would survive termination of the New Loan Agreement to
the extent that any demand for payment was made prior to prepayment.
Because the Company is requesting authority to replace the Existing
Loan Agreement and to extend the maturity of the existing loan, no new
proceeds will be received by the Company upon entering into the New Loan
Agreement in excess of the amounts required to prepay its obligations under
the Existing Loan Agreement. When the Existing Loan Agreement was originally
executed, the Company anticipated repaying the entire principal amount of the
loan prior to maturity from excess internally generated funds. Due to the
favorable interest rate under the Existing Loan Agreement, early repayment
would have raised the Company's embedded cost of debt.
As an alternative to entering into the New Loan Agreement, the
Company has estimated the cost of seeking additional long-term financing as of
August 1, 1994 as follows: Merrill Lynch & Co. estimates that the rate for 5
year notes for AA utilities is 7.0%. The average rate on the Existing Loan
Agreement in July, 1994 was 4.76%, which is 2.24% lower than the rate on the 5
year notes described above.
Item 6. Exhibits and Financial Statements.
Item 6 is hereby amended to file the following exhibit:
Amended
Exhibit 4 - Proposed Notice of Proceeding.
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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: September 16, 1994
SOUTHWESTERN ELECTRIC POWER COMPANY
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: September 16, 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
- ------- ------- ------------
4 Proposed Notice of Proceeding Electronic
(amended exhibit).
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EXHIBIT 4
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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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Southwestern Electric Power Company (File No. 70-6977)
Southwestern Electric Power Company ("SWEPCO"), 428 Travis Street,
Shreveport, Louisiana 71156, a wholly-owned electric utility subsidiary of
Central and South West Corporation, a registered holding company under the
Public Utility Holding Company Act of 1935, as amended (the "Act"), has filed
a declaration pursuant to Sections 6(a) and 7 of the Act and Rules 23, 24 and
50(a)(2) thereunder.
SWEPCO has requested authority to enter into a new term loan
agreement (the "New Loan Agreement") with Credit Suisse, First Interstate Bank
of California, The Yasuda Trust and Banking Co., LTD., New York Branch and
with The Bank of New York, individually and as agent, which replaces its
existing $50 million loan agreement in several respects, including (i)
extending the maturity of the loan through June 15, 2000 and (ii) amending the
interest rate on the loan. It is anticipated that the interest rate under the
New Loan Agreement will be .375% above the LIBOR Rate, as defined in the New
Loan Agreement, or the Alternate Base Rate, as defined in the New Loan
Agreement, currently 7.75%, through June 15, 1997 and the Alternate Base Rate
from June 16, 1997, to and including June 15, 2000, except that amounts not
paid when due will bear interest at 1% per annum plus the Alternate Base Rate.
Because the Company is requesting authority to replace its existing loan
agreement and to extend the maturity of the existing loan, no new proceeds
will be received by the Company upon entering into the New Loan Agreement in
excess of the amounts required to prepay its obligations under the existing
loan agreement. When the existing loan agreement was originally executed, the
Company anticipated repaying the entire principal amount of the loan prior to
maturity from excess internally generated funds. Due to the favorable
interest rate under the existing loan agreement, early repayment would have
raised the Company's embedded cost of debt.
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For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
