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): March 1, 2005
IRS Employer
Commission Registrant; State of Incorporation; Identification
File Number Address; and Telephone Number Number
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1-13739 UNISOURCE ENERGY CORPORATION 86-0786732
(An Arizona Corporation)
One South Church Avenue, Suite 100
Tucson, AZ 85701
(520) 571-4000
1-5924 TUCSON ELECTRIC POWER COMPANY 86-0062700
(An Arizona Corporation)
One South Church Avenue, Suite 100
Tucson, AZ 85701
(520) 571-4000
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:
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 - ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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On March 1, 2005, UniSource Energy Corporation ("UniSource Energy")
completed an offering of $150 million aggregate principal amount of its 4.50%
Convertible Senior Notes due 2035 (the "Notes") through a domestic offering to
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), and to persons in offshore transactions
in reliance on Regulation S under the Securities Act.
The Indenture and the Notes
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The Notes were issued under an indenture, dated as of March 1, 2005 (the
"Indenture"), between UniSource Energy and The Bank of New York, as trustee.
The Notes bear interest at the rate of 4.50% per annum and mature on March
1, 2035. Interest is payable semi-annually in arrears on each March 1 and
September 1, commencing on September 1, 2005. Beginning on March 1, 2015, the
Notes will bear contingent interest at the rate of 0.35% per annum during any
six-month period from March 1 to, and including, August 31 and from September 1
to, and including, the last day of February if the average price of a Note prior
to the beginning of the relevant six-month period equals 120% or more of the
principal amount of such Note. The Notes are senior unsecured obligations of
UniSource Energy and will rank equally with all of UniSource Energy's other
existing and future senior unsecured indebtedness.
Each $1,000 principal amount of Notes is convertible into 26.6667 shares of
UniSource Energy common stock at any time, representing a conversion price of
approximately $37.50 per share of UniSource Energy common stock, subject to
adjustment in certain circumstances. Beginning on March 5, 2010, UniSource
Energy will have the option to redeem the Notes, in whole or in part, for cash,
at a price equal to 100% of the principal amount plus accrued and unpaid
interest. Holders of the Notes will have the ability to require UniSource Energy
to repurchase the Notes, in whole or in part, for cash on March 1, 2015, 2020,
2025 and 2030, or if certain specified fundamental changes involving UniSource
Energy occur. The repurchase price will be 100% of the principal amount of the
Notes plus accrued and unpaid interest. In the event of a fundamental change
that occurs prior to March 5, 2010, UniSource Energy may be required to pay a
make-whole premium on notes converted in connection with the fundamental change.
The make-whole premium will be payable in shares of UniSource Energy common
stock or the consideration into which UniSource Energy common stock has been
converted or exchanged in connection with such fundamental change.
A fundamental change involving UniSource Energy will be deemed to have
occurred if (1) certain transactions occur as a result of which there is a
change of control of UniSource Energy; or (2) UniSource Energy common stock
ceases to be listed on a national securities exchange or quoted on The Nasdaq
National Market or another established automated over-the-counter trading market
in the United States.
The Notes may be accelerated upon the occurrence and continuance of an
event of default under the Indenture. The failure to make required payments on
the Notes or comply with the terms of the Indenture may constitute an event of
default. In addition, events of default may arise upon the acceleration of $50
million of indebtedness for borrowed money of UniSource Energy or Tucson
Electric Power Company ("TEP"), UniSource Energy's principal subsidiary, or
certain events of bankruptcy involving UniSource Energy or TEP. Neither TEP nor
any other subsidiary of UniSource Energy has guaranteed UniSource Energy's
obligations on the Notes.
UniSource Energy and its affiliates maintain trustee, lending and other
normal banking relationships with The Bank of New York, which is also the
transfer agent for UniSource Energy's common stock.
Registration Rights Agreement
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In connection with the offering of the Notes, UniSource Energy entered into
a registration rights agreement, dated March 1, 2005 (the "Registration Rights
Agreement"), for the benefit of the holders of the Notes.
Pursuant to the terms of the Registration Rights Agreement, UniSource
Energy has agreed, among other things, to (1) file a registration statement (the
"Shelf Registration Statement") with the Securities and Exchange Commission
relating to the Notes within 120 days of original issuance of the Notes; and (2)
use its commercially reasonable efforts to cause the Shelf Registration
Statement to be declared effective under the Securities Act within 210 days
following the date of original issuance of the Notes. If a registration default
(as defined in the Registration Rights Agreement, including the failure by
UniSource Energy to meet the deadlines set forth above) occurs, UniSource Energy
has agreed to pay additional interest on the Notes during the period from the
date on which the registration default occurs until, but excluding, the date on
which the registration default has been cured. Additional interest will accrue
on the Notes at the rate of 0.50% per annum. Additional interest will cease to
accrue on any Note that is distributed to the public pursuant to Rule 144 under
the Securities Act or is eligible to be resold pursuant to Rule 144(k) under the
Securities Act.
ITEM 2.03 - CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
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OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
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Reference is made to the information set forth under Item 1.01 above, which
information is incorporated into this Item 2.03 by reference.
ITEM 8.01 - OTHER EVENTS.
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On March 1, 2005, UniSource Energy used approximately $106 million of the
net proceeds of approximately $146 million from the offering of the Notes to
repay a UniSource Energy debt obligation to TEP in the principal amount of $95
million plus accrued interest of approximately $11 million and will use the
remainder of the net proceeds for other general corporate purposes, including
making capital contributions to TEP and UniSource Energy Services, Inc., a
direct subsidiary of UniSource Energy and the holding company of UNS Electric,
Inc. and UNS Gas, Inc. TEP expects to use the proceeds of the UniSource Energy
note repayment and any capital contributions received by it from UniSource
Energy to redeem or repurchase certain of TEP's existing indebtedness through
transactions that may include negotiated or market purchases, tender offers and
redemptions. TEP has not determined the series of debt to be repaid or
repurchased.
ITEM 9.01 - FINANCIAL STATEMENTS AND EXHIBITS.
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Exhibit 4.1 Indenture, dated as of March 1, 2005
Exhibit 4.2 Registration Rights Agreement, dated March 1, 2005
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.
Date: March 3, 2005 UNISOURCE ENERGY CORPORATION
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(Registrant)
/s/ Kevin P. Larson
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Vice President and Principal
Financial Officer
Date: March 3, 2005 TUCSON ELECTRIC POWER COMPANY
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(Registrant)
/s/ Kevin P. Larson
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Vice President and Principal
Financial Officer