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 25, 2002
Commission Registrant; State of Incorporation; IRS Employer
File Number Address; and Telephone Number Identification Number
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1-13739 UNISOURCE ENERGY CORPORATION 86-0786732
(An Arizona Corporation)
One South Church, Suite 100
Tucson, AZ 85701
(520) 571-4000
1-5924 TUCSON ELECTRIC POWER COMPANY 86-0062700
(An Arizona Corporation)
One South Church, Suite 100
Tucson, AZ 85701
(520) 571-4000
Item 5. Other Events
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On November 25, 2002, Tucson Electric Power Company (TEP) entered into a
new $401 million credit agreement to replace the credit facilities provided
under its existing $441 million credit agreement that would have expired
December 30, 2002. The new credit agreement consists of a $60 million
Revolving Credit Facility (reduced from $100 million) for general corporate
purposes, and two letter of credit facilities (Tranche A and Tranche B)
totaling $341 million, to support $329 million aggregate principal amount of
tax-exempt variable rate debt obligations.
The Revolving Credit Facility is a 364-day facility. The Tranche A
letters of credit, totaling $135 million, expire in January 2006, and the
Tranche B letters of credit, totaling $206 million, expire in November 2006.
The new facilities are secured by $401 million in aggregate principal amount
of Second Mortgage Bonds issued under TEP's General Second Mortgage
Indenture.
The new credit agreement contains a number of restrictive covenants that
are similar to those in TEP's previous credit agreement, including
restrictions on additional indebtedness, liens, sale of assets or mergers,
and sale-leasebacks. The new credit agreement, like the prior agreement,
also contains several financial covenants including (a) a minimum net worth
test, (b) a minimum cash flow to interest coverage ratio, and (c) a maximum
leverage (total indebtedness to cash flow) ratio. Under the terms of the new
credit agreement, TEP may pay dividends so long as it maintains compliance
with the credit agreement. The amount of such dividends is restricted to 65%
of Consolidated Net Income so long as the Tranche B letters of credit are
outstanding. The new credit agreement also provides that under certain
circumstances, certain regulatory actions could result in a required
amortization of the commitments.
The $329 million in aggregate principal amount of tax-exempt variable
rate debt that is supported by the letter of credit facilities has been
classified as Current Maturities of Long-Term Debt on TEP's Balance Sheet
since December 31, 2001 because the previous Letter of Credit Facility
matured on December 30, 2002. When the new letters of credit were issued on
November 25, 2002, TEP classified the bonds as Long-Term Debt because the
maturities of the new letters of credit are in January 2006 and
November 2006.
The amount of interest and fees that TEP will pay on its new credit
facilities is significantly higher than that of its previous credit
agreement. Due to prevailing market conditions for bank financings,
particularly in the energy sector, TEP's annual interest expense related to
its credit agreement will increase from approximately $6 million to
approximately $19 million. TEP's total interest expense, including letter of
credit fees, during the prior 12 months was approximately $153 million.
Item 7. Financial Statements and Exhibits
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Exhibit 99.1 Credit Agreement Dated as of November 14, 2002.
Exhibit 99.2 Supplemental Indenture No. 4, Supplemental to Indenture of
Mortgage and Deed of Trust, dated as of December 1, 1992.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized. The signature for each
undersigned company shall be deemed to relate only to matters having
reference to such company or its subsidiary.
UNISOURCE ENERGY CORPORATION
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(Registrant)
Date: November 27, 2002 /s/ Kevin Larson
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Kevin Larson
Vice President and Principal
Financial Officer
TUCSON ELECTRIC POWER COMPANY
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(Registrant)
Date: November 27, 2002 /s/ Kevin Larson
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Kevin Larson
Vice President and Principal
Financial Officer