Filed by: Public Service Company of New Mexico
pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-12
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of the Securities Exchange Act of 1934
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Public Service Company of New Mexico Commission File No.: 1-6986
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Western Resources, Inc. Commission File No.: 1-3523
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Subject Company: Western Resources, Inc.
PNM Interoffice Correspondence
TO: All Employees August 13, 2001
FROM: Jeff Sterba
Chairman, President and CEO
RE: Talks To Modify Western Transaction Discontinued
Today, we announced that Western Resources has elected to discontinue
discussions with our company over possible modifications to our proposed
transaction. I am disappointed that the talks have been discontinued.
On July 26, we entered into these discussions because we believe that, if
recent orders by the Kansas Corporation Commission (KCC) stand unchanged, the
proposed transaction to acquire Western and combine the companies' electric
operations cannot be completed as currently structured. Western disagrees with
us over the need to make modifications to the agreement to address the KCC's
concerns.
I continue to believe in the strategic benefits of bringing our two
companies together. We are not saying that the proposed transaction has been
canceled nor are we saying that we intend to terminate the agreement with
Western Resources. What we are saying is that important conditions necessary to
close will not have been fulfilled by Western when the time for closing arrives
and, therefore, closing cannot occur. We remain willing to discuss how the
companies might restructure the transaction so that it benefits all stakeholders
and is likely to obtain regulatory approvals.
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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
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Statements made in this correspondence that relate to future events are made
pursuant to the Private Securities Litigation Reform Act of 1995. These
forward-looking statements are based upon current expectations and the company
assumes no obligation to update this information. Because actual results may
differ materially from expectations, the company cautions readers not to place
undue reliance on these statements. A number of factors, including rulings
issued by the New Mexico Public Regulation Commission pursuant to the Electric
Utility Industry Restructuring Act of 1999 (as amended), and in other cases now
pending or which may be brought before the commission, and decisions of
regulatory agencies involving or affecting the proposed transaction to acquire
Western Resources' electric utility operations could cause future events to
differ from those forecast in this press release. For a detailed discussion of
the important factors affecting PNM, please see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's Form
10-K, as amended, for the year ended December 31, 2000, as amended, Form 10-Q
for the quarter ended June 30, 2001, and Form 8-K filings with the Securities
and Exchange Commission.
Additional Information
In connection with the proposed transaction with Western Resources, PNM and
Western Resources will file a joint proxy statement / prospectus with the
Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED
TO READ THE JOINT PROXY STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
may obtain a free copy of the joint proxy statement / prospectus (when
available) and other documents filed by PNM and Western Resources with the SEC
at the SEC's web site at http://www.sec.gov. Free copies of the joint proxy
statement / prospectus, when available, and each company's other filings with
the SEC may also be obtained from the respective companies. Free copies of PNM's
filings may be obtained by directing a request to PNM, Alvarado Square,
Albuquerque, New Mexico.
Participants in Solicitation
PNM, Western Resources and certain of their respective directors, executive
officers and other members of their management and employees, each of whom may
be considered participants in the PNM/Western Resources transaction under
applicable securities laws, may be soliciting proxies from their respective
stockholders in favor of the transaction. Information concerning PNM's directors
and executive officers participating in the solicitation is set forth in PNM's
Annual Report on Form 10-K filed with the SEC on February 22, 2001,as amended on
April 30, 2001, and information concerning Western Resources' directors and
executive officers participating in the solicitation is set forth in Western
Resources' Annual Report on Form 10-K filed with the SEC on April 2, 2001, as
amended on April 30, 2001. Certain directors and executive officers of PNM and
Western Resources may have direct or indirect interests in the transaction due
to securities holdings, vesting of options, and rights to severance payments if
their employment is terminated following the transaction. In addition, directors
and officers, after the transaction, will be indemnified by PNM and Western
Resources, and benefit from insurance coverage for liabilities that may arise
from their service as directors and officers of PNM or Western Resources prior
to the transaction. Additional information regarding PNM's and Western
Resources' respective participants in the solicitation will be contained in the
joint proxy statement/prospectus.
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