1
Filed Pursuant to Rule 424(b)(5)
Registration Statement No. 33-60801
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 26, 1995)
WEST TEXAS UTILITIES COMPANY
$80,000,000
First Mortgage Bonds, Series U, 6 3/8%, due 2005
Interest payable April 1 and October 1
ISSUE PRICE: 99.483%
The First Mortgage Bonds, Series U, 6 3/8% (the "New Bonds"), will bear interest
from October 24, 1995, at the rate of 6 3/8% per annum, payable semiannually on
April 1 and October 1, commencing April 1, 1996. The New Bonds will mature on
October 1, 2005. The New Bonds will not be redeemable at the option of West
Texas Utilities Company (the "Company") prior to maturity and are not subject to
any sinking fund. See "Supplemental Description of the New Bonds."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -----------------------------------------------------------------------------------------------
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
- -----------------------------------------------------------------------------------------------
Per New Bond 99.483% .650% 98.833%
- -----------------------------------------------------------------------------------------------
Total $79,586,400 $520,000 $79,066,400
- -----------------------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from October 24, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting expenses payable by the Company, estimated at $230,000.
The New Bonds are offered, subject to prior sale, when, as and if accepted by
the Underwriters and subject to approval of certain legal matters by Sidley &
Austin, counsel for the Underwriters. It is expected that delivery of the New
Bonds will be made on or about October 24, 1995, at the office of J.P. Morgan
Securities Inc., New York, New York, against payment therefor in immediately
available funds.
J.P. MORGAN SECURITIES INC. SMITH BARNEY INC.
October 18, 1995
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NEW BONDS
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IT IS EXPECTED THAT DELIVERY OF THE NEW BONDS WILL BE MADE AGAINST PAYMENT
THEREFOR ON OR ABOUT THE DATE SPECIFIED IN THE LAST PARAGRAPH OF THE COVER PAGE,
WHICH IS THE FOURTH BUSINESS DAY FOLLOWING THE DATE HEREOF (SUCH SETTLEMENT
CYCLE BEING HEREIN REFERRED TO AS "T+4"). PURCHASERS OF NEW BONDS SHOULD NOTE
THAT THE ABILITY TO SETTLE SECONDARY MARKET TRADES OF THE NEW BONDS EFFECTED ON
THE DATE HEREOF MAY BE EFFECTED BY THE T+4 SETTLEMENT. SEE "UNDERWRITERS."
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Prospectus Supplement or the accompanying Prospectus and, if
given or made, such information or representation must not be relied upon as
having been authorized by the Company or any Underwriter. Neither this
Prospectus Supplement nor the accompanying Prospectus constitutes an offer to
sell or a solicitation of any offer to buy any of the securities offered hereby
in any state to any person to whom it is unlawful to make such offer or
solicitation in such state. Neither the delivery of this Prospectus Supplement
or the accompanying Prospectus, nor any sale made hereunder or thereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Company since the date hereof or thereof or that the
information contained or incorporated by reference herein or therein is correct
as of any time subsequent to its date.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary................................................. S-3
The Company................................................................... S-4
Use of Proceeds............................................................... S-4
Supplemental Description of the New Bonds..................................... S-4
Underwriters.................................................................. S-5
PROSPECTUS
Available Information......................................................... 2
Incorporation of Certain Documents by Reference............................... 2
Prospectus Summary............................................................ 3
The Company................................................................... 4
Use of Proceeds............................................................... 4
Description of the New Bonds.................................................. 4
Legal Opinions................................................................ 8
Experts....................................................................... 8
Plan of Distribution.......................................................... 9
S-2
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PROSPECTUS SUPPLEMENT SUMMARY
The following material is qualified in its entirety by, and should be read
in conjunction with, the information appearing elsewhere in this Prospectus
Supplement, and the accompanying Prospectus and in the documents, financial
statements and other information incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus.
THE OFFERING
Company.................... West Texas Utilities Company
Amount and Type of
Security................. $80,000,000 First Mortgage Bonds, Series U
Interest Payment Dates..... April 1 and October 1, commencing April 1, 1996
Maturity Date.............. October 1, 2005
Redemption................. The New Bonds may not be redeemed prior to
maturity.
Security................... Secured, together with all other outstanding First
Mortgage Bonds, by a mortgage on substantially
all of the Company's properties.
Use of Proceeds............ To provide for the redemption of the Company's
First Mortgage Bonds, Series O, 9 1/4%, due
December 1, 2019, to repay short-term debt, to
provide working capital and for other general
corporate purposes.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
TWELVE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------
SEPTEMBER 30, 1995 1994 1993 1992
------------------ -------- -------- --------
(UNAUDITED)
Operating Revenues.................... $312,456 $342,991 $345,445 $315,370
Operating Income...................... 58,829 54,763 46,576 57,302
Net Income Before Cumulative Effect of
a Change in Accounting Principles... 38,537 37,366 26,517 35,007
Cumulative Effect of a Change in
Accounting Principles............... -- -- 3,779 --
Net Income............................ 38,537 37,366 30,296 35,007
Net Utility Plant..................... 673,280 663,855 653,426 651,221
CAPITALIZATION AT
SEPTEMBER 30, 1995
------------------
(UNAUDITED)
Long-Term Debt.......................................................... $249,518 46.5%
Preferred Stock......................................................... 6,291 1.2
Common Equity........................................................... 280,936 52.3
-------- -----
$536,745 100.0%
======== =====
S-3
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THE COMPANY
West Texas Utilities Company, a Texas corporation (the "Company"), is a
public utility company engaged in the production, purchase, transmission,
distribution and sale of electricity in central west Texas. Central and South
West Corporation ("CSW"), a registered public utility holding company under the
Public Utility Holding Company Act of 1935, as amended, owns all of the issued
and outstanding common stock of the Company. The Company's executive offices are
located at 301 Cypress Street, Abilene, Texas 79601, telephone number (915)
674-7000.
RATIO OF EARNINGS TO FIXED CHARGES
TWELVE YEAR ENDED DECEMBER 31,
MONTHS ENDED ----------------------------------------
SEPTEMBER 30, 1995 1994 1993 1992 1991 1990
- ------------------ ---- ---- ---- ---- ----
(UNAUDITED)
2.87 3.37 2.79 3.22 3.30 3.05
For computation of the ratio: (i) earnings consist of operating income plus
Federal income taxes, deferred income taxes and investment tax credits, other
income and deductions and allowance for funds (both borrowed and equity) used
during construction; and (ii) fixed charges consist of interest on long-term
debt and other interest charges.
USE OF PROCEEDS
The net proceeds from the sale of the New Bonds offered hereby will be used
by the Company to redeem all of the Company's First Mortgage Bonds, Series O,
9 1/4%, due December 1, 2019, $53,288,000 aggregate principal amount of which
were outstanding at September 30, 1995. The redemption price for the Series O
Bonds at the anticipated date of redemption will be 107.32% of the principal
amount of such Bonds, plus accrued and unpaid interest to the date of
redemption. The balance of the proceeds will be used to repay outstanding
short-term borrowings incurred or expected to be incurred primarily to finance
construction expenditures, to provide working capital and for other general
corporate purposes. At October 1, 1995, the Company had outstanding
approximately $14,761,178 of short-term debt with a weighted average interest
cost of approximately 4.96%.
SUPPLEMENTAL DESCRIPTION OF THE NEW BONDS
The following description of the particular terms of the New Bonds offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the New Bonds set forth in
the accompanying Prospectus.
GENERAL
The New Bonds will mature on October 1, 2005, and will bear interest at the
rate of 6 3/8% per annum payable on April 1 and October 1, commencing April 1,
1996.
The New Bonds offered hereby will be authenticated under the Indenture
against $33,333,400 of unused net expenditures for bondable property, against
money deposited with the Trustee for the redemption of $53,000,000 aggregate
principal amount of Series O Bonds and against $7,000,000 aggregate principal
amount of previously retired First Mortgage Bonds.
REDEMPTION
The New Bonds offered hereby may not be redeemed by the Company prior to
maturity.
S-4
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MAINTENANCE AND RENEWAL
The New Bonds are entitled to the covenants of the Indenture described in
the Prospectus under the heading "Description of the New Bonds -- Maintenance
and Renewal" except that the reference to "Series I through T" in the first
sentence of such section shall instead refer to "Series I through U". The
Indenture now provides that so long as any Bonds of Series I through U are
outstanding, the Company is required to expend during each calendar year an
amount equal to at least 2.9% (unless modified upon application to the
Securities and Exchange Commission) of the average amount of depreciable
property for (1) the construction or acquisition of bondable property on which
the Indenture is a first lien, subject only to permitted encumbrances and liens
and prepaid liens, or (2) the retirement, through purchase or payment of Bonds
issued under the Indenture, or redemption of Bonds issued under the Indenture
that are subject to redemption.
ISSUANCE OF ADDITIONAL BONDS
The Indenture does not fix an overall limitation on the aggregate principal
amount of Bonds of all series that may be outstanding thereunder. An aggregate
amount of $233,288,000 in principal amount of Bonds was outstanding under the
Indenture on August 31, 1995.
Based on the unused net expenditures for bondable property test described
in the accompanying Prospectus, which is currently the most restrictive of the
Indenture's issuance tests, the Company, as of August 31, 1995, could have
issued approximately $22,598,249 principal amount of additional Bonds. At August
31, 1995, the Company had approximately $27,712,000 principal amount of
previously retired Bonds available for authentication of additional Bonds and
such unused net expenditures aggregated approximately $37,663,748.
UNDERWRITERS
Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof, the Underwriters named below have severally agreed to
purchase, and the Company has agreed to sell to them, severally, the respective
principal amounts of the New Bonds set forth opposite their respective names
below:
PRINCIPAL
AMOUNT OF
UNDERWRITER NEW BONDS
----------------------------------------------------------------------- -----------
J.P. Morgan Securities Inc............................................. $40,000,000
Smith Barney Inc....................................................... $40,000,000
-----------
Total........................................................ $80,000,000
===========
The Underwriting Agreement provides that the obligations of the
Underwriters to pay for and accept delivery of the New Bonds are subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the New
Bonds if any are taken.
The Underwriters have advised the Company that they propose to offer part
of the New Bonds directly to the public at the public offering price set forth
on the cover page of this Prospectus Supplement and part to certain dealers at a
price that represents a concession not in excess of .40% of the principal amount
of the New Bonds. Any Underwriter may allow, and such dealers may reallow, a
discount not in excess of .25% of the principal amount of the New Bonds to
certain other dealers. After the initial public offering of the New Bonds, the
offering price, concession and discount may be changed.
S-5
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The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Company does not intend to apply for listing of the New Bonds offered
hereby on a national securities exchange, but has been advised by the
Underwriters that they presently intend to make a market in the New Bonds, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the New Bonds and any such market making
may be discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the New Bonds.
In the ordinary course of their respective businesses, J.P. Morgan
Securities Inc. and its affiliates have from time to time performed commercial
and investment banking services for the Company and its affiliates. In the
ordinary course of its business, Smith Barney Inc. has performed investment
banking services for CSW. Sidley & Austin, counsel for the Underwriters, has
represented CSW, the Company and certain other affiliates of CSW from time to
time in connection with certain legal matters.
It is expected that delivery of the New Bonds will be made against payment
therefor on or about the date specified in the last paragraph of the cover page
hereof, which is the fourth business day following the date hereof. Under Rule
15c6-1 recently adopted by the Commission under the Securities Exchange Act of
1934, as amended, trades in the secondary market generally are required to
settle in three business days, unless the parties to any such trade expressly
agree otherwise. Accordingly, purchasers who wish to trade New Bonds on the date
hereof will be required, by virtue of the fact that the New Bonds initially will
settle in T+4, to specify alternate settlement arrangements to prevent a failed
settlement.
S-6
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PROSPECTUS
$80,000,000
FIRST MORTGAGE BONDS
OF
WEST TEXAS UTILITIES COMPANY
---------------------
West Texas Utilities Company (the "Company") intends to offer from time to
time, in one or more series, up to $80,000,000 aggregate principal amount of its
First Mortgage Bonds (the "New Bonds") in amounts, at prices and on terms to be
determined at the time of offering.
The series designation, aggregate principal amount, maturity, interest rate
and interest payment dates, redemption provisions, sinking fund provisions,
initial public offering price and any other specific terms of each series of the
New Bonds, in respect of which this Prospectus is being delivered, will be set
forth in a Prospectus Supplement (the "Prospectus Supplement") to be delivered
at the time of the offering and sale of the New Bonds. See "DESCRIPTION OF THE
NEW BONDS" herein.
---------------------
The Company may sell the New Bonds in one or more series to or through
underwriters or dealers designated from time to time through competitive
bidding, or through negotiation, or directly to other purchasers or through
agents. The Prospectus Supplement applicable to any series of New Bonds will set
forth the initial public offering price, the proceeds to the Company, the names
of any purchasers, underwriters or agents and any applicable discounts or
commissions with respect to the New Bonds being offered. See "PLAN OF
DISTRIBUTION".
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 26, 1995.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND, WITH RESPECT TO ANY SERIES OF NEW BONDS, THE
PROSPECTUS SUPPLEMENT RELATING THERETO, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. NEITHER THIS PROSPECTUS NOR ANY
PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY OR THEREBY IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY
SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549-1004; and at the Commission's Regional Offices at 500 West Madison St.,
Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th
Floor, New York, New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission at its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
It is the Company's current practice to prepare and mail to the holders of
its Preferred Stock copies of the Company's annual financial reports. Such
reports contain certain financial information that is examined and reported
upon, with an opinion expressed, by the Company's independent public
accountants. The Company is not required to and does not provide annual reports
to the holders of its debt securities unless specifically requested by such a
holder. In addition, certain of the Company's securities are listed on, and
reports and other information concerning the Company can also be inspected at,
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus.
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995 and June 30, 1995.
3. The Company's Current Reports on Form 8-K dated February 17, 1995, July
10, 1995 and September 6, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the New Bonds shall be deemed to be
incorporated by reference into this Prospectus from their respective dates of
filing.
THE COMPANY HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS HAS BEEN DELIVERED, UPON
THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
FOREGOING DOCUMENTS INCORPORATED HEREIN BY REFERENCE (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO THE
INFORMATION THAT THE REGISTRATION STATEMENT INCORPORATES). WRITTEN OR TELEPHONE
REQUESTS SHOULD BE DIRECTED TO STEPHEN D. WISE, DIRECTOR, FINANCE, CENTRAL AND
SOUTH WEST CORPORATION, 1616 WOODALL RODGERS FREEWAY, DALLAS, TEXAS 75202, AS
AGENT FOR THE COMPANY, TELEPHONE NUMBER (214) 777-1000.
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PROSPECTUS SUMMARY
The following material is qualified in its entirety by, and should be read
in conjunction with, the information appearing elsewhere in this Prospectus, in
the applicable Prospectus Supplement and in the documents, financial statements
and other information incorporated by reference in this Prospectus.
THE OFFERING
Company.................... West Texas Utilities Company
Amount and Type of
Security................... Not exceeding $80,000,000 First Mortgage Bonds
Interest Payment Dates..... Semiannually on dates to be determined
Maturity Date.............. To be determined
Redemption................. To be determined
Security................... Secured, together with all other outstanding First
Mortgage Bonds, by a mortgage on substantially
all of the Company's properties
Use of Proceeds............ To reimburse the Company's treasury for the
redemption or repurchase of all or a portion of
certain of the Company's First Mortgage Bonds,
together with costs associated with the issuance
of the New Bonds, to repay short-term debt, to
provide working capital or for other general
corporate purposes
THE COMPANY
Business................... A public utility engaged in the production,
purchase, transmission, distribution and sale of
electricity
Service Area............... Approximately 53,000 square miles in central west
Texas
Population of Service Area
(December 31, 1994)...... Approximately 410,000
Customers (June 30,
1995).................... Approximately 185,900
SELECTED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
TWELVE YEAR ENDED DECEMBER 31,
MONTHS ENDED --------------------------------
JUNE 30, 1995 1994 1993 1992
------------- -------- -------- --------
(UNAUDITED)
Operating Revenues.............................. $ 334,626 $342,991 $345,445 $315,370
Operating Income................................ 56,401 54,763 46,576 57,302
Net Income Before Cumulative Effect of a Change
in Accounting Principles...................... 37,787 37,366 26,517 35,007
Cumulative Effect of a Change in Accounting
Principles.................................... -- -- 3,779 --
Net Income...................................... 37,787 37,366 30,296 35,007
Net Utility Plant............................... 669,077 663,855 653,426 651,221
CAPITALIZATION AT
JUNE 30, 1995
-----------------
(UNAUDITED)
Long-Term Debt............................................................. $250,997 47.3%
Preferred Stock............................................................ 6,291 1.2
Common Equity.............................................................. 272,981 51.5
-------- -----
$530,269 100.0%
======== =====
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THE COMPANY
West Texas Utilities Company, a Texas corporation, is a public utility
company engaged in the production, purchase, transmission, distribution and sale
of electricity in central west Texas. Central and South West Corporation, a
registered public utility holding company under the Public Utility Holding
Company Act of 1935, owns all of the issued and outstanding Common Stock of the
Company. The Company's executive offices are located at 301 Cypress, Abilene,
Texas 79601, telephone number (915) 674-7000.
RATIO OF EARNINGS TO FIXED CHARGES:
TWELVE MONTHS YEAR ENDED DECEMBER 31,
ENDED JUNE -----------------------------------------------------------------
30, 1995 1994 1993 1992 1991 1990
------------- --------- --------- --------- --------- ---------
(UNAUDITED)
3.24 3.37 2.79 3.22 3.30 3.05
For computation of the ratio: (i) earnings consist of operating income plus
Federal income taxes, deferred income taxes and investment tax credits, other
income and deductions and allowance for funds (both borrowed and equity) used
during construction; and (ii) fixed charges consist of interest on long-term
debt and other interest charges.
USE OF PROCEEDS
Unless otherwise specified in the Prospectus Supplement, the Company
intends to use the net proceeds from the sale of the New Bonds offered hereby to
redeem, repurchase or reimburse the Company's treasury for the redemption or
repurchase of, certain of the Company's outstanding First Mortgage Bonds, and to
pay costs associated with the issuance of the New Bonds. The balance of the net
proceeds, if any, will be used to repay outstanding short-term borrowings, to
provide working capital or for other general corporate purposes.
DESCRIPTION OF THE NEW BONDS
The following description sets forth certain general terms and provisions
of the New Bonds to which any Prospectus Supplement may relate. The particular
terms of the New Bonds offered by any Prospectus Supplement and the extent, if
any, to which such general provisions may apply to the New Bonds so offered will
be described therein.
The New Bonds will be issued in one or more series under and secured by the
Company's Indenture, dated August 1, 1943, between the Company and Harris Trust
and Savings Bank (the "Trustee") and J. Bartolini, successor co-Trustee, as
Trustees, as heretofore amended and as to be further amended in connection with
the sale of each series of New Bonds by a supplemental indenture (the
"Supplemental Indenture") to be entered into in connection with the creation and
issuance of the New Bonds of any series (collectively the "Indenture"). All
bonds (including the New Bonds) which may from time to time be issued and
outstanding under the Indenture are herein referred to as "Bonds."
The following statements, unless the context otherwise indicates, are brief
summaries of certain provisions of the Indenture. Such statements make use of
defined terms, are not complete and are subject to all the provisions of the
Indenture. The Indenture is in part filed as an exhibit to, and in part
incorporated by reference in, the Registration Statement of which this
Prospectus is a part.
GENERAL. Reference is made to the Prospectus Supplement relating to the
particular series of New Bonds offered thereby for the following terms or
additional provisions: (1) the title of the New Bonds offered thereby; (2) the
aggregate principal amount of the series of New Bonds; (3) the date or dates on
which the New Bonds of the series will mature; (4) the rate per annum at which
the New Bonds of the series will bear interest; (5) the date from which interest
on the New Bonds of the series will accrue, the dates on which such interest
will be payable and the record dates of any interest payment dates; (6) if
applicable, the date after which and
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the prices at which the New Bonds of the series may be redeemed at the option of
the Company; and (7) any additional terms of the New Bonds.
The New Bonds will be issuable in definitive fully registered form without
coupons, in denominations of $1,000 or in integral multiples thereof. Principal,
premium, if any, and interest on the New Bonds will be payable at the office or
agency of the Company in the City of New York, State of New York. The New Bonds
are exchangeable and transferable as provided in the Indenture and without
charge therefor, except for any stamp tax or other governmental charge;
provided, that the Company (a) shall not register, exchange or transfer New
Bonds during the ten days preceding any interest payment date thereof and (b)
shall not be required to register, exchange or transfer New Bonds during the
period beginning ten days preceding any date for selection of New Bonds to be
called for redemption and ending on the date of the giving of the relevant
notice of redemption and, as to New Bonds selected for redemption, from and
after the date of such selection.
DEBT RETIREMENT. The Debt Retirement provisions, if any, for each series of
New Bonds will be described in the Prospectus Supplement relating thereto. The
Bonds of Series O, outstanding under the Indenture on the date of this
Prospectus, provide that, during each 12-month period specified in the
Indenture, the Company will (a) retire, or pay to the Trustee on the first day
of April of each year a sum of money sufficient to redeem and retire, 1% of the
greatest principal amount of the Bonds of such series outstanding at any time
between the end of such period and the day before the date of the Supplemental
Indenture relating to such series of Bonds (the "Supplemental Indenture Date")
or (b) to the extent that Bonds of such series are not so retired or cash so
deposited, make and certify to the Trustee $1,666.67 of net expenditures for
bondable property on which the Indenture is a first lien, subject only to
permitted encumbrances and liens and prepaid liens, for each $1,000 of Bonds of
such series otherwise required to be retired. Unused net expenditures for
bondable property and, as applied to each such series of Bonds, unused excess
retirements of Bonds of that series, may be used to satisfy the foregoing
provisions.
REDEMPTION. The optional redemption provisions, if any, for each series of
the New Bonds will be described in the Prospectus Supplement relating thereto.
MAINTENANCE AND RENEWAL. The Indenture provides that so long as Bonds of
Series I through T are outstanding, the Company is required to expend during
each calendar year an amount equal to at least 2.9% (unless modified upon
application to the Commission) of the average amount of depreciable property for
(1) the construction or acquisition of bondable property on which the Indenture
is a first lien, subject only to permitted encumbrances and liens and prepaid
liens, or (2) the retirement, through purchase or payment of Bonds issued under
the Indenture, or redemption of Bonds issued under the Indenture that are
subject to redemption. The Company may take a credit for use in subsequent years
for the amount of excess expenditures made in any preceding year or years. If
the required expenditures for the foregoing purposes are not so made, the
Company shall deposit with the Trustee cash to the extent of any deficiency,
after deducting (subject to the terms of the Indenture) any eligible credit for
unused excess expenditures previously made for such purposes. Such cash may be
applied to the redemption at the applicable General Redemption Price or to the
repurchase of Bonds or withdrawn to the extent of 100% of either net
expenditures or excess gross expenditures for such bondable property.
The Indenture also provides that (a) the Company shall maintain the
mortgaged properties in thorough repair, working order and condition, (b) the
Trustee may, and if requested by holders of a majority in principal amount of
all outstanding Bonds and furnished with funds therefor shall, cause such
properties to be inspected by an independent engineer (not more often than at
five-year intervals) to determine whether they have been so maintained and
whether any property, not retired on the Company's books, should be classified
as retired for the purpose of computing net expenditures for bondable property
or otherwise under the Indenture, and (c) the Company shall make good any
deficiency in maintenance disclosed by such engineer's report as rendered or as
modified by arbitration.
SECURITY. The New Bonds of any series will be secured by the lien of the
Indenture and will rank equally with all Bonds at any time outstanding under and
secured by the Indenture, except as to differences between series permitted by
the Indenture and not affecting the rank of the lien. The Indenture will
constitute a first mortgage lien, subject only to permitted encumbrances and
liens and prepaid liens, on all or substantially all
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the permanent fixed properties, other than excepted property, owned by the
Company. The Indenture contains provisions subjecting after-acquired property,
other than excepted property, to the lien thereof. Such provisions may not be
effective as to property or proceeds acquired subsequent to the filing of any
case under the Bankruptcy Code. The Indenture excepts from the lien thereof all
cash, securities, accounts and bills receivable, choses in action and certain
judgments not deposited with, assigned to or pledged with the Trustee, all
tangible personal property held for sale, rental or consumption in the ordinary
course of business, the last day of each term under any lease of property, all
oil, gas and mineral leaseholds, interests and estates, gas gathering lines and
certain real estate described therein.
ISSUANCE OF ADDITIONAL BONDS. The Indenture does not fix an overall
limitation on the aggregate principal amount of Bonds of all series that may be
outstanding thereunder. An aggregate of $235,203,000 in principal amount of
Bonds was outstanding under the Indenture on June 30, 1995.
Additional Bonds, of a new or an existing series, may be issued from time
to time under the Indenture, subject to the terms thereof, in a principal amount
equal to: (a) 60% of eligible net expenditures made by the Company for bondable
property constructed or acquired by it on or after August 1, 1943, and on which
the Indenture is a first lien, subject only to permitted encumbrances and liens
and prepaid liens, (b) the principal amount of Bonds previously authenticated
under the Indenture and which have been retired or for the retirement of which
the Trustee holds the necessary funds, other than Bonds made ineligible for the
purpose by the terms of the Indenture (which Bonds so made ineligible include
Bonds retired through the operation of the debt retirement and the maintenance
and renewal provisions of the Indenture), and (c) the amount of money deposited
with the Trustee for the purpose, which money may be applied to the retirement
of Bonds or may be withdrawn in lieu of the authentication of an equivalent
principal amount of Bonds under the Indenture provisions referred to in clauses
(a) and (b). Net expenditures for bondable property are determined as provided
in the Indenture. In general, bondable property, the net expenditures for which
are eligible as a basis for issuance of additional Bonds, means any electric
utility plant, property or equipment owned by the Company on August 1, 1943, or
constructed or acquired by it on or after that date which is used or useful in
its utility business and which the Company has lawful power to own and operate.
No additional Bonds may be authenticated under the Indenture provisions
referred to in clauses (a) and (c) above, and no Bonds bearing a higher rate of
interest than the Bonds for the retirement of which they are to be issued may be
authenticated under the Indenture provisions referred to in clause (b) above,
more than five years before maturity of the Bonds to be retired, unless, in each
case, net earnings of the Company for a 12-month period ending within 90 days
preceding such authentication were at least equal to twice the interest for one
year on (1) all of the Bonds of all series to be outstanding under the Indenture
immediately after such authentication, other than Bonds for which the Trustee
holds the funds necessary for retirement, and (2) all other indebtedness then
secured by a lien equal or prior to the Indenture on property of the Company,
except any of such indebtedness then held in pledge under such lien or by the
Trustee and except prepaid liens. Net earnings for the period in question are
determined by deducting from total gross earnings and income all operating
expenses for the period, including taxes other than income taxes, rentals and
insurance and all charges or provisions for maintenance and repairs and for
depreciation, retirements, renewals, replacements and amortization, provided
that charges or provisions to be deducted for such purposes shall aggregate at
least the amount required to be certified in connection with the maintenance and
renewal fund under the Indenture, described under "Maintenance and Renewal"
above. Such net earnings are also subject to any other adjustment required by
the Indenture.
Based on the bondable property test described above, which is currently the
most restrictive of the Indenture's issuance tests, and without taking into
account the retirement of any Bonds with the proceeds of the New Bonds, the
Company, as of June 30, 1995, could have issued approximately $18,052,885
principal amount of additional Bonds.
The Company anticipates that the New Bonds will be authenticated under the
Indenture against retired Bonds of prior series, to the extent available, or
against unused net expenditures for bondable property to the extent permitted in
the Indenture. At June 30, 1995, the Company had approximately $25,797,000
principal
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amount of previously retired Bonds available for authentication of additional
Bonds and such unused net expenditures aggregated approximately $30,088,141.
ACQUISITION OF PROPERTY SUBJECT TO A PRIOR LIEN. The Indenture provides
that the Company will not acquire any property of a value in excess of $500,000
which at the time of acquisition is subject to a lien equal or prior to the
Indenture (other than permitted encumbrances and liens and prepaid liens) unless
at that time (a) the principal amount of all outstanding obligations secured by
such equal or prior lien shall not exceed 60% of the fair value of any bondable
property so acquired and (b) the net earnings derived from the operations of
such property during a 12-month period ending within 90 days immediately
preceding such acquisition were equal to at least twice the annual interest
charge on such obligations, except obligations owned by the Company or
obligations for the retirement of which funds are deposited under such lien or
with the Trustee.
LIMITATIONS ON DIVIDENDS ON COMMON STOCK. Unless otherwise specified in a
Prospectus Supplement relating to a particular series of New Bonds, the
Supplemental Indenture for each series of New Bonds will not contain provisions
restricting the payment of dividends on Common Stock by the Company. Dividend
restrictions dependent upon earned surplus are binding on the Company so long as
certain prior series of the Company's Bonds are outstanding. The Indenture
provides in effect that, so long as any Bonds of Series O or a prior series are
outstanding, the aggregate amount of all dividends and distributions on the
Common Stock of the Company on and after the Supplemental Indenture Date for
such series, except dividends payable in shares of Common Stock of the Company
or in cash where concurrently with the payment thereof an amount at least equal
to such dividends is received in cash as a capital contribution or as the
proceeds from the sale of Common Stock, shall not exceed the sum of (a) the
earned surplus of the Company earned on and after the Supplemental Indenture
Date for such series, (b) its earned surplus at the Supplemental Indenture Date
for such series, and (c) such additional amount as may be approved by the
Commission. In determining earned surplus on and after the Supplemental
Indenture Date for such series for such purpose, deductions are required to be
made for depreciation, retirements, renewals, replacements and amortization as
required in computing net earnings as set forth in the next to last sentence of
the third paragraph under the subheading "Issuance of Additional Bonds" above.
Because dividend restrictions for prior series require minimum deductions
for maintenance and repairs based on operating revenues, the Company began
several years ago to incur deficiencies which had the effect of increasing
dividend restrictions. The Company therefore obtained an order from the
Commission permitting the payment, out of earned surplus after December 31,
1978, of dividends not otherwise permitted under the Company's most restrictive
supplemental indentures, by effectively modifying the required deductions from
gross earnings to eliminate those deductions based on operating revenues. The
Commission order requires that any dividend paid out of amounts that would
otherwise be restricted must be limited to net income earned in the 12 months
immediately preceding payment of the dividend.
MODIFICATIONS OF INDENTURE. The Indenture may be amended, by supplemental
indenture without the consent of bondholders, for various purposes specified
therein, including the making of any change in the Indenture effective only with
respect to Bonds authenticated after the execution of such supplemental
indenture and only if such change would not adversely affect Bonds then
outstanding and the making of any other change not inconsistent with the terms,
and which would not impair the security, of the Indenture. The Indenture also
provides that with the consent of the holders of not less than 66 2/3% in
principal amount of Bonds then outstanding that would be affected thereby, when
authorized by a resolution of its Board of Directors, the Indenture may be
amended in any respect, except that without the consent of the holder of each
outstanding Bond affected thereby no such amendment shall, among other things,
(i) extend the time for, reduce or otherwise affect the terms of any payment of
the principal of or interest or premium on any Bond, (ii) permit the creation of
any lien ranking prior to or on a parity with the lien of the Indenture, other
than permitted encumbrances and liens and prepaid liens, (iii) reduce the
percentage in principal amount of Bonds the consent of the holders of which is
required for any such amendment, (iv) impair the right of any bondholder to
institute suit for the enforcement of any payment in respect of his Bonds or (v)
deprive any non-assenting bondholders of a lien upon the mortgaged property for
the security of his Bonds.
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HIGHLY LEVERAGED TRANSACTIONS. Certain provisions of the Indenture may
provide holders of the New Bonds with some protection in the event of a highly
leveraged transaction. These provisions are described in more detail in this
Prospectus under the following headings:
Security: A description of the first mortgage lien securing the New
Bonds and the limited exceptions from the lien.
Issuance of Additional Bonds: A description of limitations on the
issuance of additional bonds, including 60% of eligible net expenditures
for bondable property, the principal amount of retired bonds, or cash
deposited with the Trustee, subject to the applicability of an earnings
coverage test.
Limitations on Dividends on Common Stock: A description of dividend
limitations applicable so long as certain series of the Company's Bonds are
still outstanding.
Modifications of Indenture: An explanation of the circumstances under
which the Indenture may be modified, including amendments requiring either
a 66 2/3% vote of outstanding Bonds or a unanimous vote.
The Indenture also provides that any merger of the Company or conveyance of
all or substantially all of its property shall not impair the lien of the
Indenture. Any successor to the Company shall assume the obligations of the
Company under the Indenture.
Further, the issuance of debt securities or additional common or preferred
stock, the sale of significant assets, or any disposition of the Company's stock
by its parent, Central and South West Corporation, are regulated by the Texas
Public Utilities Commission or the Securities and Exchange Commission under the
Public Utility Holding Company Act of 1935, as amended.
DEFAULTS. The Indenture includes as events of default: any default in
payment of principal of any Bonds at maturity or otherwise; any default
continued for 60 days in payment of interest thereon; any default in payment of
principal or interest on prior lien bonds continued beyond any applicable grace
period; any adjudication of bankruptcy, appointment of receiver, filing of
petition in voluntary bankruptcy or admission of insolvency by or with respect
to the Company; and any default continued for 90 days after notice from the
Trustee in the performance of any covenant or condition in the Indenture or with
respect to any prior lien. The Company is required to give periodic certificates
as to the absence of a default and compliance with the terms of the Indenture,
and must also give certificates to such effect in connection with the
authentication of additional bonds or withdrawal of cash under the Indenture.
The Trustee is not required to take action with respect to a default except upon
written request of the holders of not less than 25% in principal amount of
outstanding Bonds under the Indenture and upon the tender of security and
indemnity satisfactory to the Trustee against all costs and liabilities which
might be incurred by reason of the taking of such action. The Indenture provides
that the Trustee may withhold notice to bondholders of any default (except in
payment of the principal of or interest on any Bonds or in the making of any
sinking fund or similar payment) if it considers such withholding to be in the
interest of bondholders.
LEGAL OPINIONS
Legal opinions relating to the validity of the New Bonds will be given by
Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York
10005, counsel for the Company, and Sidley & Austin, One First National Plaza,
Chicago, Illinois 60603, counsel for the Underwriters. Sidley & Austin has
represented Central and South West Corporation and affiliates of Central and
South West Corporation from time to time in connection with certain legal
matters.
EXPERTS
The financial statements, and schedules incorporated by reference in this
Prospectus and elsewhere in the Registration Statement, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report dated February 13, 1995, with respect thereto, and are incorporated
herein by reference in reliance upon the authority of said firm as experts in
giving said reports.
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PLAN OF DISTRIBUTION
The Company may sell the New Bonds offered hereby (i) through competitive
bidding; (ii) through negotiation with one or more underwriters; (iii) through
one or more agents designated from time to time; (iv) directly to purchasers; or
(v) any combination of the above. The distribution of the New Bonds may be
effected from time to time in one or more transactions at a fixed price or
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. A
Prospectus Supplement will describe the method of distribution of the New Bonds
of any series.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale, and the names of the underwriters of the transaction will be set forth in
the Prospectus Supplement relating to such sale. The New Bonds will be acquired
by the underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of the sale. Unless
otherwise indicated in the Prospectus Supplement, the underwriting or purchase
agreement will provide that the underwriter or underwriters are obligated to
purchase all of the New Bonds offered in the Prospectus Supplement if any are
purchased.
If any of the New Bonds are sold through an agent or agents designated by
the Company from time to time, the Prospectus Supplement will name any such
agent, set forth any commissions payable by the Company to any such agent and
the obligations of such agent with respect to the New Bonds. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
The New Bonds of any series, when first issued, will have no established
trading market. Any underwriters or agents to or through whom New Bonds are sold
by the Company for public offering and sale may make a market in such New Bonds,
but such underwriters or agents will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any New Bonds.
In connection with the sale of the New Bonds, any purchasers, underwriters
or agents may receive compensation from the Company or from purchasers in the
form of concessions or commissions. The underwriters will be, and any agents and
any dealers participating in the distribution of the New Bonds may be, deemed to
be underwriters within the meaning of the Securities Act of 1933, as amended.
The agreement between the Company and any purchasers, underwriters or agents
will contain reciprocal covenants of indemnity between the Company and the
purchasers, underwriters, or agents against certain liabilities, including
liabilities under the Act, and will provide for contribution by the Company in
lieu of its indemnity obligations.
Certain of the underwriters or agents and their associates may engage in
transactions with, or perform services for, the Company and its affiliates in
the ordinary course of business.
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CENTRAL AND SOUTH WEST CORPORATION
1616 WOODALL RODGERS FREEWAY
P.O. BOX 660164
DALLAS, TEXAS 75202
October 19, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: West Texas Utilities Company
Amendment No. 1 to Registration Statement on Form S-3
(File No. 33-60801)
Ladies and Gentlemen:
In accordance with Rule 424(b)(5) under the Securities Act of 1933, as
amended (the "Act"), electronically transmitted herewith is a filing
consisting of a Prospectus Supplement dated October 18, 1995 to the Prospectus
dated September 26, 1995 which was filed as part of the captioned Registration
Statement. The Registration Statement was declared effective on Tuesday,
September 26, 1995. The Public Offering of the bonds began on Wednesday,
October 18, 1995.
In accordance with clause (e) of Rule 424, the Prospectus Supplement
contains in the upper right hand corner of the cover page the file number of
the Registration Statement and the deignation that the filing is pursuant to
Rule 424(b)(5).
If you have any questions regarding this filing, please contact Robert
Williams, (212) 530-5516 at Milbank, Tweed, Hadley & McCloy or the undersigned
at (214) 777-1205.
Sincerely,
Stephen D. Wise
cc: Carolyn J. Sherman