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File No. 70-6977
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 4 (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 "Act"), hereby files this
Amendment No. 4 (Post-Effective) to the Form U-1 Declaration in File No.
70-6977 to amend and restate the Declaration as follows:
Item 1. Description of Proposed Transactions.
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 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
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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
.375% above the LIBOR Rate, as defined, through June 15, 2000. 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
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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 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. 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 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. 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
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(12 CFR Part 3, Appendix A). If this provision was to increase the
Company's costs under the 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.
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Item 2. Fees, Commissions and Expenses.
An estimate of the fees and expenses to be paid or incurred by the
Company in connection with the proposed transaction is set forth below:
Holding Company Act filing fee.............. $ 2,000*
Counsel Fees:
Milbank, Tweed, Hadley & McCloy
New York, New York...................... 7,500
Central and South West Services, Inc........ 1,000
Miscellaneous and incidental expenses,
including travel, telephone, copying
and postage............................. 500
-------
TOTAL $11,000
=======
________________
* Actual amount
Item 3. Applicable Statutory Provisions.
Sections 6(a) and 7 of the Act and Rules 23 and 24 under the Act
are applicable to the issue and sale of the notes.
Item 4. Regulatory Approval.
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, have jurisdiction over the proposed
transaction.
Item 5. Procedure.
It is requested that the Commission issue and publish no later
than August 26, 1994, the requisite notice under Rule 23 with respect to the
filing of this Declaration, such notice to specify a date not later than
September 19, 1994, as the date after which an order permitting this
Declaration to become effective may be entered by the Commission, and that
the Commission enter not later than September 20, 1994, an appropriate order
permitting this Declaration to become effective.
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The Company respectfully requests that appropriate and timely
action be taken by the Commission in this matter in order to permit
consummation of the proposed transaction in accordance with the schedule
outlined above.
No recommended decision by a hearing officer or other 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 or orders
entered 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 - Amendment dated as of April 8, 1991 to the Term Loan
Agreement and form of Amended and Restated Promissory
Note (previously filed).
Exhibit 2 - Draft loan agreement amendment and form of unsecured
notes between the Company and the Banks (previously
filed).
Amended
Exhibit 3 - Preliminary opinion of Milbank, Tweed, Hadley &
McCloy, counsel for the Company.
Amended
Exhibit 4 - Proposed Notice of Proceeding.
Amended
Exhibit 5 - Final or "past tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel for the Company (to be filed
with the Certificate of Notification).
Amended
Exhibit 6 - Financial statements as of June 30, 1994, of the
Company and Central and South West Corporation and
consolidated subsidiaries (to be filed by amendment).
Exhibit 7 - Assignment and Assumption Agreement dated as of
January 9, 1991 between BNY and Volksbank (previously
filed).
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Exhibit 8 - New Term Loan Agreement and form of unsecured notes
between the Company and the Banks (to be filed with
the Certificate of Notification).
Exhibit 9 - Draft of the New Term Loan Agreement and form of
unsecured notes between the Company and the Banks.
Item 7. Information as to Environmental Effects.
The proposed transaction does not involve major federal action
having a significant effect on the human environment. To the best of the
Company's knowledge no federal agency has prepared or is preparing an
environmental impact statement with respect to the proposed transaction.
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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 23, 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: August 23, 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 Amendment dated as of April 8, 1991 ---
to the Term Loan Agreement and form
of Amended and Restated Promissory
Note (previously filed).
2 Draft loan agreement amendment and ---
form of unsecured notes between the
Company and the Banks (previously
filed).
3 Preliminary opinion of Milbank, Electronic
Tweed, Hadley & McCloy, counsel for
the Company (amended exhibit).
4 Proposed Notice of Proceeding Electronic
(amended exhibit).
5 Final or "past tense" opinion of ---
Milbank, Tweed, Hadley & McCloy,
counsel for the Company (amended
exhibit) (to be filed with the
Certificate of Notification).
6 Financial statements as of June 30, ---
1994, of the Company and Central and
South West Corporation and consoli-
dated subsidiaries (amended exhibit)
(to be filed by amendment).
7 Assignment and Assumption Agreement ---
dated as of January 9, 1991 between
BNY and Volksbank (previously filed).
8 New Term Loan Agreement and form of ---
unsecured notes between the Company
and the Banks (to be filed with the
Certificate of Notification).
9 Draft the New Term Loan Agreement SE
and form of unsecured notes between
the Company and the Banks.
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EXHIBIT 3
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Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
August 23, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Southwestern Electric Power Company
Amendment No. 4 (Post-Effective) to Form U-1
Declaration (70-6977)
Dear Sirs:
We refer to Amendment No. 4 (Post-Effective) (the "Amendment")
to Form U-1 Declaration (File No. 70-6977) (the "Declaration") under the
Public Utility Holding Company Act of 1935, as amended (the "1935 Act"),
dated today, filed by Southwestern Electric Power Company (the "Company"),
a Delaware corporation and a wholly-owned electric utility subsidiary of
Central and South West Corporation ("CSW"), a Delaware corporation and a
registered holding company. The Amendment relates to the proposed new Term
Loan Agreement which replaces a Term Loan Agreement dated as of June 15,
1984, between The Bank of New York and the Company. We have acted as
special counsel for the Company in connection with the Amendment, and, as
such counsel, we are familiar with the corporate proceedings taken and to be
taken by the Company in connection with the proposed new Term Loan Agreement
which replaces the Term Loan Agreement as described in the Amendment.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company, certificates of
public officials, certificates of officers and representatives of the
Company 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 and other appropriate persons and statements contained in the
Amendment.
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
Amendment, 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 Delaware.
2. All state laws applicable to the new Term Loan Agreement
which replaces the Term Loan Agreement as described in the
Amendment will have been complied with.
3. The Promissory Notes (the "Notes") to be issued under the
new Term Loan Agreement will be valid and binding obligations of
the Company in accordance with their terms.
4. The issuance and sale of the Notes as described in the
Amendment 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 Amendment 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.
b. The Commission shall have duly entered an appropriate order
or orders granting and permitting the Declaration, as amended by
the Amendment, 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. 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.
e. No act or event other than as described herein shall have
occurred subsequent to the date hereof which would change the
opinions expressed above.
f. 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.
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We hereby consent to the use of this opinion as an exhibit to
the Declaration.
Very truly yours,
MILBANK, TWEED, HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
RMG/RBW
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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- )
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. 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.
For the Commission, by the Division of Investment Management,
pursuant to delegated authority.
Jonathan G. Katz
Secretary
