Wednesday, March 19, 1997

WTU seeks permission to issue unsecured debt

By DOUG WILLIAMSON

Business Editor

West Texas Utilities Co. and its three sister electric utilities of Central and South West Corp. are asking shareholders' permission to issue unsecured debt.

The parent company also is trying to buy back all outstanding shares of preferred stock of WTU, Central Power and Light, Public Service Co. of Oklahoma and Southwestern Electric Power Co.

Sharon Peavy, CSW director of investor relations, said Tuesday the moves will give the company more flexibility to issue unsecured debt, including short-term debt.

"These debt restrictions currently limit the subsidiaries' flexibility in planning and financing their business activities," she said. "Since financial flexibility and capital cost reduction are crucial factors to continued success in an increasingly competitive utility environment, the subsidiaries feel that they may ultimately be placed at a competitive disadvantage if debt restrictions are not removed."

Many power marketers, independent power producers and electric utilities have taken similar action, she said.

Sixty-six percent of the shares must approve the action for each subsidiary. Peavy said there are 60,000 WTU shares outstanding.

If the proposed amendment is approved, PSO, SWEPCO and WTU will pay stockholders who voted in favor of the action $1 per share. CPL shareholders will get 25 cents per share.

Peavy termed the payment "a standard incentive."

However, shareholders also may sell those stocks back to the company. WTU will be paying $69.11 per share. That is based on a $7.28 per share premium on top of Monday's close of the 30-year bond market, she said. The other companies will pay from $62.82 to $103.13 a share.

The tender offer began Tuesday afternoon and will end at 5 p.m. on April 16. The offers are conditional on the approval and adoption of the amendment at special shareholder meetings. WTU shareholders will meet April 16.

"After we tender and get the old (shares) in, we will issue a new type of preferred (stock) with dividends that are tax deductible to Central and South West," she said.

Changes in those federal tax laws are being considered and the company is pushing to make the moves quickly. It has called special meetings of its stockholders early next month to vote on the issues.

Goldman, Sachs & Co. and Smith Barney Inc. are serving as dealer managers for the tender offer. D.F. King & Co. Inc. is the information agent. The depository is The Bank of New York.