Exhibit 99.2
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED
$
Arizona Public Service Company
% Senior Notes Due
Interest payable and Due
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The Offered Notes will mature on _____________. Interest on the Offered Notes
is payable semiannually on ______________ and __________________of each year,
commencing _________________ . The Offered Notes are redeemable prior to
Maturity at a redemption price equal to the sum of (i) the principal of
the Offered Notes being redeemed plus accrued interest thereon to the
redemption date plus (ii) the Make-Whole Amount. For other terms
of the Offered Notes, see "Certain Terms of the Offered Notes"
herein and "Description of Senior Notes" in the accompanying
Prospectus. The Notes will be represented by one or more
Global Securities (as defined herein) registered in the
name of a nominee of The Depository Trust Company.
Until the Release Date (as defined in the accompanying Prospectus), the Offered
Notes will be secured by the Company's first mortgage bonds issued and
delivered to the Senior Note Trustee. See "Description of Senior Notes
-- Release Date" and "Description of Senior Notes -- Security" in the
accompanying Prospectus. On the Release Date, the Offered Notes will
cease to be secured by such first mortgage bonds, will become
unsecured general obligations of the Company and will rank
on a parity with other unsecured indebtedness of the Company
(unless otherwise secured as described in the Prospectus
under the caption "Description of Senior Notes -- Limitations
on Liens and Sale and Lease-Back Transactions").
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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. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Price To Discounts And Proceeds To
Public(1) Commissions Company(1)(2)
--------- ----------- -------------
Per Offered Note ............. % % %
Total ........................ $ $ $
(1) Plus accrued interest, if any, from .
(2) Before deduction of expenses payable by the Company estimated at $ .
--------------------------
The Offered Notes are offered by the several Underwriters when, as and if
issued by the Company, delivered to and accepted by the Underwriters and subject
to their right to reject orders in whole or in part. It is expected that the
delivery of the Offered Notes in book-entry form will be made through the
facilities of The Depository Trust Company on or about , against
payment therefor in immediately available funds.
The date of this Prospectus Supplement is _____________.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED NOTES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
-----------------
APPLICATION OF PROCEEDS
The Company intends to apply the net proceeds from the sale of the Offered
Notes to . Any proceeds not immediately so applied will be invested
temporarily, pending such application, in United States government or agency
obligations, commercial paper, bank certificates of deposit, or repurchase
agreements collateralized by United States government or agency obligations, or
will be deposited with banks.
CERTAIN TERMS OF THE OFFERED NOTES
The following description of the particular terms of the Offered Notes
offered hereby supplements the description of the general terms and conditions
of Senior Notes set forth under the heading "Description of Senior Notes" in the
Prospectus, to which description reference is hereby made. The terms and
conditions set forth herein will apply to each Offered Note. Capitalized terms
not defined under this heading have the meanings assigned to them in the
Prospectus or the Indenture (the "Senior Note Indenture"), dated as of November
15, 1996, between the Company and The Bank of New York, as Trustee (the "Senior
Note Trustee").
General
The Offered Notes offered hereby will be issued under the Senior Note
Indenture as supplemented by the First Supplemental Indenture, dated as of
November 15, 1996, the Second Supplemental Indenture dated as of April 1, 1997,
and the Third Supplemental Indenture, dated as of , (collectively, the
"Supplemental Indentures"), between the Company and the Senior Note Trustee. The
Offered Notes constitute a single series for purposes of the Senior Note
Indenture, limited to an aggregate principal amount not to exceed $ .
The Offered Notes will initially be represented by a Global Note that will be
deposited with, or on behalf of, The Depository Trust Company (the
"Depositary"). See "Description of Senior Notes -- Global Notes" in the
accompanying Prospectus. The Offered Notes will be issuable in denominations of
$1,000 and any integral multiple thereof.
The Offered Notes will mature on (the "Maturity").
The Offered Notes will bear interest from and including or
from and including the most recent Interest Payment Date with respect to which
interest on such Offered Note (or any predecessor Offered Note) has been paid or
duly provided for to, but excluding, the relevant Interest Payment Date at
% per annum until the principal thereof is paid or made available for
payment. The Interest Payment Dates will be and of each
year, commencing . Interest will be payable to the person
(which, in the case of the Global Note, shall be the Depositary) in whose name
an Offered Security is registered at the close of business on
or (each, a "Regular Record Date") next preceding such Interest
Payment Date; provided, however, that the interest payable at Maturity will be
payable to the person to whom principal shall be payable. The amount of interest
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months.
Redemption
The Offered Notes may be redeemed at any time at the option of the Company,
in whole or from time to time in part, at a redemption price equal to the sum of
(i) the principal amount of the Offered
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Notes (or portion thereof) being redeemed plus accrued interest thereon to the
redemption date and (ii) the Make-Whole Amount (as defined below), if any, with
respect to the Offered Notes (or portion thereof) being redeemed (the
"Redemption Price").
If notice has been given as provided in the Senior Note Indenture and funds
for the redemption of any Offered Notes (or any portion thereof) called for
redemption shall have been made available on the redemption date referred to in
such notice, such Offered Notes (or any portion thereof) will cease to bear
interest on the date fixed for such redemption specified in such notice and the
only right of the Holders of such Offered Notes will be to receive payment of
the Redemption Price.
Notice of any optional redemption of any Offered Notes (or any portion
thereof) will be given to Holders at their addresses, as shown in the security
register for such Offered Notes, not more than 60 nor less than 30 days prior to
the date fixed for redemption. The notice of redemption will specify, among
other items, the Redemption Price and the principal amount of the Offered Notes
held by such Holder to be redeemed. If less than all of the Offered Notes are to
be redeemed at the option of the Company, the Trustee shall select, in such
manner as it shall deem fair and appropriate, such Offered Notes to be redeemed
in whole or in part.
As used herein:
"Make-Whole Amount" means, in connection with any optional redemption of
any Offered Notes, the excess, if any, of (i) the aggregate present value as
of the date of such redemption of each dollar of principal being redeemed and
the amount of interest (exclusive of interest accrued to the date of
redemption) that would have been payable in respect of each such dollar if
such redemption had not been made, determined by discounting, on a
semi-annual basis, such principal and interest at the Reinvestment Rate
(determined on the third Business Day preceding the date such notice of
redemption is given) from the respective dates on which such principal and
interest would have been payable if such redemption had not been made, over
(ii) the aggregate principal amount of the Offered Notes being redeemed.
"Reinvestment Rate" means % plus the arithmetic mean of the
yields under the respective heading "Week Ending" published in the most
recent Statistical Release under the caption "Treasury Constant Maturities"
for the maturity (rounded to the nearest month) corresponding to the
remaining life to maturity, as of the payment date of the principal being
redeemed. If no maturity exactly corresponds to such maturity, yields for the
two published maturities most closely corresponding to such maturity shall be
calculated pursuant to the immediately preceding sentence and the
Reinvestment Rate shall be interpolated or extrapolated from such yields on a
straight-line basis, rounding in each of such relevant periods to the nearest
month. For the purpose of calculating the Reinvestment Rate, the most recent
Statistical Release published prior to the date of determination of the Make-
Whole Amount shall be used.
"Statistical Release" means the statistical release designed "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States
government securities adjusted to constant maturities, or, if such
statistical release is not published at the time of any determination under
the Indenture, then such other reasonably comparable index which shall be
designated by the Company.
The Offered Notes will not be subject to any sinking fund.
Security
Upon the issuance of the Offered Notes, the Company will simultaneously issue
and deliver to the Senior Note Trustee, as security for the Offered Notes, First
Mortgage Bonds, Senior Note Series (the "Series First Mortgage
Bonds"). The Series First Mortgage Bonds will have the same interest
rate, Interest Payment Dates, Maturity and redemption provisions, and will be in
the same aggregate principal amount as the Offered Notes.
Subject to the provisions of the Senior Note Indenture governing disbursement
of funds following an event of default, payment by the Company to the Senior
Note Trustee of the principal and interest on the
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Series First Mortgage Bonds will be applied by the Senior Note
Trustee to satisfy the Company's obligations with respect to the principal and
interest on the Offered Notes. As provided in the supplemental indenture setting
forth the terms of the Series First Mortgage Bonds, the Company's
obligation to make payments with respect to the principal, premium, and/or
interest on the Series First Mortgage Bonds shall be fully or partially,
as the case may be, satisfied and discharged to the extent that, at the time
that any such payment shall be due, the corresponding amount of principal,
premium, if any, and/or interest then due, on the Offered Notes shall have been
fully or partially paid, as the case may be, or there shall have been deposited
with the Senior Note Trustee pursuant to the Senior Note Indenture trust funds
sufficient under the provisions of the Senior Note Indenture to fully or
partially pay the corresponding amount of principal, premium, if any, and/or
interest then due on the Offered Notes.
Reference is made to "Description Of Senior Notes -- Release Date" in the
accompanying Prospectus for a description of the circumstances under which all
or part of the Senior Note Mortgage Bonds will cease to be held by the Senior
Note Trustee as security for the Senior Notes. As explained in the Prospectus,
the Senior Notes will cease to be secured by the Senior Note Mortgage Bonds on
the Release Date and will become unsecured general obligations of the Company.
The Release Date will be the date that all First Mortgage Bonds of the Company
issued and outstanding under the Mortgage, other than Senior Note Mortgage
Bonds, have been retired (at, before or after the maturity thereof) through
payment, redemption or otherwise. The following is a schedule of maturities and
outstanding principal amounts of First Mortgage Bonds (not including Senior Note
Mortgage Bonds) which are outstanding as of March 31, 1997. This schedule does
not reflect the timing of redemptions which may occur prior to maturity.
7.625% Series due March 15, 1998 $100,000,000
7.625% Series due June 15, 1999 100,000,000
5.75% Series due Sept. 15, 2000 100,000,000
8.125% Series due March 15, 2002 125,000,000
6.625% Series due March 1, 2004 100,000,000
10-1/4 % Series due May 15, 2020 114,550,000
9.5% Series due April 15, 2021 45,810,000
9% Series due Dec. 15, 2021 72,500,000
7.25% Series due Aug. 1, 2023 100,000,000
8.75% Series due Jan. 15, 2024 122,000,000
8% Series due Feb. 1, 2025 107,700,000
5.5% Series due Aug. 15, 2028 25,000,000
5.875% Series due Aug. 15, 2028 154,000,000
Defeasance
The provisions described in the accompanying Prospectus under the caption
"Description of Senior Notes -- Defeasance and Covenant Defeasance" are
applicable to the Offered Notes.
UNDERWRITING
The Underwriters named below have severally agreed to purchase from the
Company the following respective principal amounts of Offered Notes:
Principal
Underwriter Amount
------------------- --------------
$
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Total ................................... $
==============
The Distribution Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent, and that the Underwriters will be
obligated to purchase all of the Offered Notes if any are purchased.
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The Company has been advised by the several Underwriters that they propose to
offer the Offered Notes to the public initially at the public offering price set
forth on the cover page of this Prospectus Supplement and to certain dealers at
such price less a concession not in excess of % of the principal
amount of the Offered Notes. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of % of the principal amount of
the Offered Notes to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
The Offered Notes are a new issue of securities with no established trading
market. The Company has been advised by the Underwriters that they intend to
make a market in the Offered Notes, but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Offered Notes.
Certain of the Underwriters have provided various investment banking
services, including serving as commercial paper dealers under the Company's
commercial paper program, to the Company and its affiliates from time to time,
for which they have received customary compensation. In addition, certain of the
Underwriters have provided various investment banking services to Pinnacle West
Capital Corporation, the Company's parent, from time to time, for which they
have received customary compensation.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
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No dealer, salesperson or other person
has been authorized to give any information
or to make any representation not contained
in this Prospectus Supplement or the Arizona Public Service
Prospectus and, if given or made, such Company
information or representation must not be
relied upon as having been authorized by the
Company or by any Underwriter. This
Prospectus Supplement and the Prospectus do
not constitute an offer to sell or a
solicitation of an offer to buy any of the APS
securities offered hereby in any
jurisdiction to any person to whom it is
unlawful to make such offer in such
jurisdiction. Neither the delivery of this $
Prospectus Supplement or the Prospectus nor % Senior Notes Due
any sale made hereunder and thereunder
shall, under any circumstances, create any
implication that the information herein is
correct as of any time subsequent to the
date hereof or that there has been no change
in the affairs of the Company since such PROSPECTUS SUPPLEMENT
date.
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TABLE OF CONTENTS
Prospectus Supplement
Page
---
Application of Proceeds .................S-2
Certain Terms of the Offered Notes ......S-2
Underwriting ............................S-4
Prospectus
Available Information ................... 2
Incorporation of Certain Documents by
Reference .............................. 2
Selected Information .................... 3
The Company ............................. 4
Principal Holders of Voting Securities .. 4
Application of Proceeds ................. 4
Earnings Ratios ......................... 4
Securities .............................. 5
Description of New Bonds ................ 5
Description of Senior Notes ............. 9
Description of Debt Securities .......... 19
Plan of Distribution .................... 27
Experts ................................. 27
Legal Opinions .......................... 27
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