CENTRAL AND SOUTH WEST CORP. TO FILE AMENDED PLAN AND TO SEEK HEARING DATE ON DISCLOSURE STATEMENT FOR REORGANIZATION OF EL PASO ELECTRIC CO.
DALLAS, July 13 /PRNewswire/ -- Central and South West Corporation (NYSE: CSR) today said it intends to file with the U.S. Bankruptcy Court for the Western District of Texas in Austin an amended plan to reflect the increased value of its offer to acquire El Paso Electric Company and to ask the court to reschedule a hearing on a disclosure statement for El Paso Electric's revised reorganization plan, which would make El Paso Electric a subsidiary of Central and South West. Central and South West said its publicly disclosed merger plan with El Paso Electric continues to offer a higher estate value than a proposal by Southwestern Public Service Company when the value for interest from confirmation to effective date is taken into account. "Our plan is endorsed by El Paso Electric's first and second mortgage holders, by its unsecured creditors committee and by the major banks that hold letters of credit on its pollution-control bonds," said Dick Brooks, chairman, president and chief executive officer of Central and South West. "These creditors have petitioned the bankruptcy court to maintain El Paso Electric's exclusive right to proceed with its reorganization plan and have urged that its plan with Central and South West be confirmed as soon as possible." Brooks noted that Central and South West's plan with El Paso Electric provides consideration for El Paso Electric's 46,325 common shareholders. "These investors have been ignored completely by Southwestern Public Service in its proposal," Brooks said. "As a result we have the full support of the debtor, which has stated it will strenuously oppose the Southwestern proposal as a hostile offer because it does not provide El Paso Electric shareholders any value whatsoever. The support of El Paso Electric makes confirmation far more feasible for our plan than for any plan SPS could offer." Brooks said that Southwestern Public Service has obtained only conditional support for its proposal. "SPS first announced it was interested in acquiring El Paso Electric in March 1992," Brooks said. "Sixteen months later, SPS has yet to reveal the details of a formal plan or to demonstrate to the court a firm commitment on the record from a major creditor group." he said. In addition, Brooks noted, Duff & Phelps Credit Rating Co. and Moody's Investors Service have placed on review lists for possible downgrading the credit ratings of SPS's fixed-income securities as a result of the company's proposal to acquire El Paso Electric. "Central and South West has guaranteed that El Paso Electric's bonds would be rated triple -B at a minimum. The bond ratings of our present four electric operating subsidiaries are not expected to be affected, and the financial strength of parent company should not be impaired," Brooks said. "Conversely, SPS would incur significant pressure on its bond ratings and it likely would face substantial dilution of its common shares or else would have to cross-subsidize rates at the expense of its current customers. "SPS claims its plan is better than ours because it has a non- binding letter of stipulation for a rate path with the staff of the Public Utility Commission of Texas," Brooks said. "In Texas, the PUC staff has no authority other than to participate in a rate case. The three commissioners decide rate cases, and they have publicly stated they have no bias in this matter. "SPS's agreement with the Texas PUC staff calls for an initial rate increase of $43 million and a three-year freeze on rates. Our plan with El Paso Electric calls for a $25 million increase and a three-year freeze," Brooks said. "We doubt the PUC commissioners would favor such a stipulation that would cost El Paso Electric's customers $54 million more during the three-year period under the SPS plan," Brooks said. "We believe it is timely for the bankruptcy court to set a hearing," Brooks said. "A few large financial institutions are continuing to buy the original claims of El Paso Electric creditors at a discount for speculation. Their goal is to restart the auction for this company in order to achieve greater profits for themselves without regard for the other creditors and communities affected. "Attempts to end exclusivity for El Paso Electric can only further delay and frustrate the fair resolution of the bankruptcy for all El Paso Electric creditors and constituents," Brooks said. Central and South West said it is continuing to negotiate with creditor groups that have not announced support for its plan. Central and South West Corporation is a public utility holding company based in Dallas. It owns Central Power and Light Company, Public Service Company of Oklahoma, Southwestern Electric Power Company and West Texas Utilities Company. These four subsidiaries provide electric utility service to 1.6 million customers in Texas, Oklahoma, Louisiana and Arkansas. Central and South West also owns Transok, Inc., and Oklahoma intrastate gas pipeline company, and four other subsidiaries. -0- 7/13/93 /CONTACT: Gerald R. Hunter, director - corporate communications, of Central and South West Services, Inc., 214-754-1165. (CSR)
CO: Central and South West Corporation ST: Texas IN: OIL SU:
LD -- NY078 -- 1144 07/13/93 19:38 EDT
|Printer friendly Cite/link Email Feedback|
|Date:||Jul 13, 1993|
|Previous Article:||HIDDEN COSTS AWAIT UNWARY CONSUMERS;FREE FINANCIAL SOFTWARE NOT ALWAYS FREE|
|Next Article:||SOUTHEASTERN MANUFACTURERS IN JUNE: PRODUCTION UP BUT OUTLOOK WEAKER|