UNITED STATES
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 (Date of Earliest Event Reported): December 30, 1997
UNISOURCE ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
Arizona 1-13739 86-0786732
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
220 West Sixth Street, Tucson, Arizona 85701
(Address of principal executive office) (Zip Code)
(520) 571-4000
(Registrant's telephone number, including area code)
Item 5. Other Events
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Share Exchange
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On January 1, 1998, Tucson Electric Power Company (TEP) and
UniSource Energy Corporation (UniSource) completed a statutory
share exchange, pursuant to which the outstanding common stock of
TEP was exchanged, on a share-for-share basis, for shares of
UniSource common stock, no par value. As a result of the
transaction, TEP is now a wholly-owned subsidiary of UniSource.
Certificates for TEP common stock are deemed to represent
UniSource common stock. The share exchange was effected pursuant
to the terms of an Agreement and Plan of Exchange dated as of
March 20, 1995 between TEP and UniSource, and was approved by
TEP's shareholders in May 1995. The formation of the holding
company structure was approved by the Federal Energy Regulatory
Commission in September 1997 and by the Arizona Corporation
Commission (ACC) in November 1997.
The common stock of UniSource has been listed on the New York and
Pacific Stock Exchanges, and began trading under the symbol of
UNS on January 2, 1998.
Following the share exchange, TEP transferred the stock of its
subsidiary, MEH Corporation (MEH), to UniSource in exchange for a
promissory note from UniSource in the approximate amount of $95
million. The promissory note was issued in accordance with the
ACC order authorizing the holding company. MEH is the parent
company of Nations Energy Corporation, Advanced Energy
Technologies, Inc., Southwest Energy Systems, Inc. and Millennium
Energy Holdings, Inc.
Notwithstanding the share exchange, there remain outstanding
warrants for the purchase of approximately 6.75 percent of TEP
common stock. The warrants were issued to owner participants in
TEP's Springerville Unit 1 Lease as part of the 1992 comprehensive
restructuring of TEP's obligations to certain of its creditors,
major suppliers and Lease participants.
As a result of the share exchange and such transfer,
substantially all of the assets of UniSource consist of the
common stock of TEP and MEH.
New Credit Agreement
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On December 30, 1997, TEP entered into a new $544 million credit
agreement to replace the credit facilities provided under the
Master Restructuring Agreement (MRA). The new credit agreement
consists of a $100 million Revolving Credit Facility for general
corporate purposes and a $444 million Letter of Credit Facility
to support tax-exempt variable rate debt obligations. The new
facilities have a term of five years and are secured by $544
million in Second Mortgage Bonds issued under the General Second
Mortgage Indenture. The new credit agreement contains certain
financial covenants, including interest coverage, leverage and
net worth tests.
The replacement of the MRA with new bank credit facility was one
of four components of TEP's financing plan outlined in the
Financing Application filed with the ACC in July 1997 and
approved on November 19, 1997. The new facility has a longer
term than the MRA and eases various financial and operating
restrictions. Unlike the MRA, which contained prohibitive
restrictions on the payment of dividends, the new credit
agreement allows for the payment of dividends as long as TEP
meets its financial covenants and maintains compliance with the
agreement. The payment of dividends, however, is currently
restricted by certain covenants of the supplemental mortgage
indentures relating to $184 million principal amount of
outstanding first mortgage bonds.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
UNISOURCE ENERGY CORPORATION
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(Registrant)
Date: January 6, 1998 Ira R. Adler
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Ira R. Adler
Senior Vice President and
Principal Financial Officer