UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT
(DATE OF EARLIEST EVENT REPORTED): November 18, 2011
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IRS Employer |
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Registrant; State of Incorporation; |
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Identification |
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Address; and Telephone Number |
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1-13739
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UNISOURCE
ENERGY CORPORATION
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86-0786732 |
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(An Arizona corporation) |
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88 East Broadway Boulevard |
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Tucson, AZ 85701 |
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(520) 571-4000 |
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1-5924
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TUCSON ELECTRIC POWER COMPANY
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86-0062700 |
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(An Arizona corporation) |
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88 East Broadway Boulevard |
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Tucson, AZ 85701 |
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(520) 571-4000 |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
This combined Form 8-K is separately filed by UniSource Energy Corporation and Tucson Electric
Power Company. Information contained in this document relating to Tucson Electric Power Company is
filed by UniSource Energy Corporation and separately by Tucson Electric Power Company on its own
behalf. Tucson Electric Power Company makes no representation as to information relating to
UniSource Energy Corporation or its subsidiaries, except as it may relate to Tucson Electric Power
Company.
Item 8.01 — Other Events.
UniSource Energy Corporation
(“UniSource Energy”) and certain of its subsidiaries are completing
various financing activities that will (i) lower interest rate risk by
reducing the amount of variable rate debt outstanding and (ii) enhance
liquidity through the extension and re-pricing of various credit agreements.
As previously reported, on
November 8, 2011, Tucson Electric Power Company (“TEP”) issued
and sold $250 million aggregate principal amount of its 5.15% Notes due
2021 (the “Notes”). TEP used the net proceeds from the sale of the
Notes to (i) purchase $130 million of its tax-exempt variable rate
debt and (ii) repay $78 million on its revolving credit facility. TEP
expects to use the remaining proceeds from the sale of the Notes by the end of
2011 to (i) purchase an additional $20 million of its tax-exempt variable
rate debt and (ii) redeem approximately $22 million of an outstanding
series of its fixed rate debt bearing an interest rate of 6.1%.
On November 18, 2011, UniSource
Energy and certain of its subsidiaries amended their credit agreements as
described below to, among other things, extend the maturity and expiration
dates and reduce the interest rates and fees payable under such agreements.
As a result of these financing
activities, (i) the maturities of all of our revolving credit facilities
were extended by two years to November 2016, (ii) TEP reduced the
percentage of its total debt outstanding that is unhedged variable rate
debt, and (iii) UniSource
Energy’s consolidated interest expense on long-term and short-term debt
is expected to increase by $4 million to $6 million in 2012 compared
to 2011.
UniSource Energy Corporation Credit Agreement
On November 18, 2011, UniSource Energy amended its existing credit agreement with Union Bank, N.A.
(“Union Bank”), as administrative agent, lead arranger and lender, and a group of lenders (the
“UniSource Credit Agreement”). The UniSource Credit Agreement consists of a $125 million revolving
credit and revolving letter of credit facility. The amendment extended the term of the UniSource
Credit Agreement by two years so that it will now expire on November 9, 2016, at which time all
outstanding amounts thereunder will be due and payable.
Interest rates and fees under the UniSource Credit Agreement are based on a pricing grid tied to
UniSource Energy’s credit ratings. Borrowings bear interest at a variable interest rate consisting
of a spread over LIBOR or Alternate Base Rate. The amendment reduced the spread. The per annum
rate currently in effect on borrowings is LIBOR plus 1.75% for Eurodollar loans or Alternate Base
Rate plus 0.75% for Alternate Base Rate loans.
Tucson Electric Power Company Credit Agreement
On November 18, 2011, TEP amended its existing credit agreement with Union Bank, as administrative
agent, lead arranger and lender, and a group of lenders (the “TEP Credit Agreement”). The TEP
Credit Agreement consists of a $200 million revolving credit and revolving letter of credit
facility and a $341 million letter of credit facility to support tax-exempt bonds. The amendment
extended the term of the TEP Credit Agreement by two years so that it will now expire on November
9, 2016, at which time all outstanding amounts thereunder will be due and payable.
Interest rates and fees under the TEP Credit Agreement are based on a pricing grid tied to TEP’s
credit ratings. Borrowings bear interest at a variable interest rate consisting of a spread over
LIBOR or Alternate Base Rate. The amendment reduced the spread. The per annum rate currently in
effect on borrowings is LIBOR plus 1.125% for Eurodollar loans or Alternate Base Rate plus 0.125%
for Alternate Base Rate loans.
UNS Electric, Inc./UNS Gas, Inc. Credit Agreement
On November 18, 2011, UNS Electric, Inc. and UNS Gas, Inc., each as a borrower (the “Borrowers”),
and UniSource Energy Services Inc. (“UES”), as guarantor, amended their existing unsecured credit
agreement with Union Bank, as administrative agent, lead arranger and lender, and a group of
lenders (the “UNS Electric/UNS Gas Credit Agreement”). The UNS Electric/UNS Gas Credit Agreement
consists of a $100 million revolving credit and revolving letter of credit facility. The maximum
borrowings
outstanding at any one time for a Borrower under the agreement may not exceed $70 million. The
amendment extended the term of the UNS Electric/UNS Gas Credit Agreement by two years so that it
will now expire on November 9, 2016, at which time all outstanding amounts thereunder will be due
and payable.
Each Borrower will be severally liable for its borrowings under the UNS Electric/UNS Gas Credit
Agreement, with UES guaranteeing the obligations of both Borrowers. The UES guaranty may be
terminated with respect to a Borrower when such Borrower does not have any other indebtedness
guaranteed by UES.
Interest rates and fees under the UNS Electric/UNS Gas Credit Agreement are based on a pricing grid
tied to the Borrower’s credit ratings. Borrowings bear interest at a variable interest rate
consisting of a spread over LIBOR or Alternate Base Rate. The amendment reduced the spread. The
per annum rate currently in effect on borrowings is LIBOR plus 1.50% for Eurodollar loans or
Alternate Base Rate plus 0.50% for Alternate Base Rate loans.
For a description of certain additional terms and conditions of each of the credit agreements
referenced above, see our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. UniSource Energy and TEP are including the following
cautionary statements to make applicable and take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for the forward-looking statements made by or for
UniSource Energy or TEP in this Current Report on Form 8-K. Forward-looking statements may be
identified by the use of words such as “anticipate”, “estimate”, “expect”, “intend”, and similar
expressions. UniSource Energy and TEP disclaim any obligation to update any forward-looking
statements to reflect events or circumstances after the date of this report.
Forward-looking statements involve risks and uncertainties, which could cause actual results or
outcomes to differ materially from those expressed therein. We express our expectations, beliefs
and projections in good faith and believe them to have a reasonable basis. However, we make no
assurances that management’s expectations, beliefs or projections will be achieved or accomplished.
In addition to other factors and matters discussed in Part I, Item 1A. Risk Factors in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2010 (our “Form 10-K”), Part II, Item 7.
Management’s Discussion and Analysis of our Form 10-K and Part I, Item 2. Management’s Discussion
and Analysis of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2011, June 30,
2011 and September 31, 2011, our actual results could differ materially from those discussed in the
forward-looking statements above as a result of changes in credit ratings or levels of outstanding
long-term or short-term debt.