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SPS ANNOUNCES SUPPORT OF SECOND MAJOR GROUP IN EPE BANKRUPTCY

 AMARILLO, Texas, July 14 /PRNewswire/ -- Southwestern Public Service Company (NYSE: SPS) announced today that a second major group of constituents has announced support for SPS's approximately $2.2 billion proposal to acquire El Paso Electric Company (NASDAQ-NS: ELPAQ).
 SPS said it has reached an agreement, with the equity holders of EPE's leased portion of the Palo Verde Nuclear Generating Station, on the terms of the treatment of their interests under SPS's proposal. Agreement with the equity holders (called "owner participants") is considered essential because -- as the owners -- they control the disposition of this leased interest, unless the courts were to rule otherwise following lengthy and complex litigation.
 The equity holders and the lease debt holders of Palo Verde constitute the groups necessary to approve the proposed restructuring of the Palo Verde leases. Separately, the holders of a majority in principal amount of the lease debt announced two days ago their intention to support the SPS proposal.
 "This agreement between SPS and the owner participants -- combined with the support of the lease debt holders -- indicates the growing momentum for our plan," said SPS Chairman Bill D. Helton. "In addition, if the bankruptcy court approves, it would end all the potentially lengthy and costly litigation about Palo Verde. We believe this approach would bring about a faster resolution of the EPE bankruptcy.
 EPE's interest in Palo Verde amounts to 600 megawatts. EPE sold and leased back 280 MW of its interest from the owner participants. The lease debt holders provided approximately 80 percent of the funds for the sale-lease back arrangement, with the owner participants providing the equity amounting to approximately 20 percent.
 Among the other advantages the SPS plan offers are more cash (approximately $700 million) and higher-quality debt. Helton said SPS will raise the cash as follows: approximately $300 million from funds generated internally by the combining companies, and approximately $400 million from the issuance of preferred stock, common stock and new debt. The company may also increase its credit lines and has received expressions of interest from several commercial banks in providing funding up to the full amount as may be required.
 SPS primarily provides electric service to a population of more than one million in a 52,000-square-mile area comprising eastern and southeastern New Mexico, the South Plains and Panhandle of Texas, the Oklahoma Panhandle and southwestern Kansas.
 -0- 7/14/93
 /CONTACT: Phil Roth, public information supervisor, 806-378-2120, or Jim Steinhilper (investors), group manager of finance, 806-378-2843, both of Southwestern Public Service Company/
 (SPS ELPAQ)


CO: Southwestern Public Service Company; El Paso Electric Company ST: Texas IN: UTI SU: TNM

SH -- NY021 -- 1253 07/14/93 09:29 EDT
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Publication:PR Newswire
Date:Jul 14, 1993
Words:442
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