-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ExMj4cRtdUsj1QllVk0NQoBiWNGPtMiFDhGLGqYNinlyZN7rksHj5ApRmLht48CS /umfC77JR6qKrbapBMKtSQ== 0000004904-98-000004.txt : 19980204 0000004904-98-000004.hdr.sgml : 19980204 ACCESSION NUMBER: 0000004904-98-000004 CONFORMED SUBMISSION TYPE: U-1 PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19980203 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN ELECTRIC POWER COMPANY INC CENTRAL INDEX KEY: 0000004904 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 134922640 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1 SEC ACT: SEC FILE NUMBER: 070-09169 FILM NUMBER: 98520540 BUSINESS ADDRESS: STREET 1: 1 RIVERSIDE PLZ CITY: COLUMBUS STATE: OH ZIP: 43215 BUSINESS PHONE: 6142231000 FORMER COMPANY: FORMER CONFORMED NAME: KINGSPORT UTILITIES INC DATE OF NAME CHANGE: 19660906 U-1 1 MERGER 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) 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 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: 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. 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. 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 INDEX OF EXHIBITS EXHIBIT TRANSMISSION NUMBER EXHIBITS METHOD - ------- ---------------- ------------ 1 Joint Press Release. Electronic 2 Preliminary Proxy Materials Paper of AEP and CSW (confidential). EX-99.1 2 EXHIBIT 99.1 PRESS RELEASE 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 - - 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 - - 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 - - 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 -----END PRIVACY-ENHANCED MESSAGE-----