e424b5
The
information in this preliminary prospectus supplement and the
accompanying prospectus is not complete and may be changed. This
preliminary prospectus supplement and the accompanying
prospectus are not an offer to sell these securities and are not
soliciting an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted.
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Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-158779
SUBJECT
TO COMPLETION, DATED APRIL 7, 2010
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 24, 2009)
6,000,000 Shares
Common Stock
We are offering 6,000,000 shares of our common stock, no
par value per share.
Our common stock is listed on the New York Stock Exchange under
the symbol PNW. The last reported sale price of our
common stock on the New York Stock Exchange on April 6,
2010 was $39.07 per share.
Investing in our common stock involves risks. See Risk
Factors on
page S-4
of this prospectus supplement, which refers you to the risks
described under Risk Factors contained in our Annual
Report on
Form 10-K
for the year ended December 31, 2009.
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Per Share
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Total
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Public offering price
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$
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$
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Underwriting discounts and commissions
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$
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$
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Proceeds, before expenses, to us
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$
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$
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We have granted the underwriters an option exercisable for up to
30 days after the date of this prospectus supplement to
purchase up to 900,000 additional shares of common stock at the
public offering price less underwriting discounts and
commissions to cover over-allotments, if any. If this option
were exercised in full, we would receive approximately
$ of additional proceeds, before
expenses. See Underwriting.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares on or about
April , 2010.
Joint Book-Running Managers
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Barclays
Capital |
Credit Suisse |
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BofA
Merrill Lynch |
Wells Fargo Securities |
Co-Managers
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KeyBanc
Capital Markets |
Mitsubishi UFJ Securities |
UBS Investment Bank |
The date of this prospectus supplement is
April , 2010.
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement, the
accompanying prospectus and any related free writing prospectus
required to be filed with the Securities and Exchange Commission
(the SEC). Neither we nor the underwriters have
authorized anyone to provide you with different information. We
are not, and the underwriters are not, making an offer of the
common stock in any jurisdiction where the offer or sale is not
permitted. You should not consider this prospectus supplement
and the accompanying prospectus to be an offer to sell, or a
solicitation of an offer to buy, shares of common stock if the
person making the offer or solicitation is not qualified to do
so or if it is unlawful for you to receive the offer or
solicitation. You should assume that the information contained
in this prospectus supplement and the accompanying prospectus is
accurate only as of their respective dates and that the
information incorporated by reference is accurate only as of the
date such information is filed with the SEC, regardless of the
time of delivery of any document or of any sale of common stock.
If anyone provides you with different or inconsistent
information, you should not rely on it. Our business, financial
condition, results of operations and prospects may have changed
since the date on any document.
TABLE OF
CONTENTS
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Page
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Prospectus Supplement
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S-ii
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S-1
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S-4
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S-4
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S-5
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S-6
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S-7
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S-8
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S-8
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S-13
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S-17
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S-17
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Page
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Prospectus
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Risk Factors
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3
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About This Prospectus
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3
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Forward-Looking Statements
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4
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Where You Can Find More Information
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5
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The Companies
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7
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Use Of Proceeds
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7
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General Description Of The Securities
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7
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Description Of Pinnacle West Unsecured Debt Securities
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7
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Description Of Pinnacle West Preferred Stock
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15
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Description Of Pinnacle West Common Stock
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18
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Description Of APS Unsecured Debt Securities
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23
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Experts
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29
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Legal Opinions
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30
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S-i
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is this
prospectus supplement, which describes the terms of the offering
of the common stock and also adds to and updates information
contained in the accompanying prospectus and the documents
incorporated by reference into this prospectus supplement and
the accompanying prospectus. The second part is the accompanying
prospectus, which gives more general information, some of which
will not apply to the common stock. If the description of the
offering varies between this prospectus supplement and the
accompanying prospectus (or information incorporated by
reference into this prospectus supplement or the accompanying
prospectus), you should rely on the information in this
prospectus supplement. The accompanying prospectus also includes
information about certain other securities that we or our
wholly-owned subsidiary, Arizona Public Service Company, may
offer from time to time, which information does not apply to our
common stock. You should read both this prospectus supplement
and the accompanying prospectus together with the additional
information about us described in the section entitled
Where You Can Find More Information.
This prospectus supplement and the accompanying prospectus
are part of a registration statement that we filed jointly with
our wholly-owned subsidiary, Arizona Public Service Company,
with the SEC using a shelf registration process as a
well-known seasoned issuer. Under the shelf
registration process, we may, from time to time, issue and sell
to the public any combination of the securities described in the
accompanying prospectus, including the common stock, up to an
indeterminate amount, of which this offering is a part. In this
prospectus supplement, we provide you with specific information
about the terms of the common stock and this offering.
S-ii
PROSPECTUS
SUPPLEMENT SUMMARY
This summary highlights information contained elsewhere, or
incorporated by reference, in this prospectus supplement and the
accompanying prospectus. As a result, it does not contain all of
the information that may be important to you. You should
carefully read this prospectus supplement and the accompanying
prospectus and the documents incorporated by reference into this
prospectus supplement and the accompanying prospectus in their
entirety before making an investment decision. We describe the
documents that we incorporate by reference under the heading
Where You Can Find More Information in this
prospectus supplement, including in particular the information
referred to under Risk Factors in this prospectus
supplement. The following material is qualified in its entirety
by reference to the detailed information and financial
statements included or incorporated by reference in this
prospectus supplement and the accompanying prospectus. Except as
otherwise indicated, all information in this prospectus
supplement assumes no exercise of the underwriters option
to purchase additional shares of common stock. References in
this prospectus supplement to we, our
and us refer to Pinnacle West Capital Corporation
and, unless the context requires otherwise, its subsidiaries.
Pinnacle
West Capital Corporation
We were incorporated in 1985 under the laws of the State of
Arizona. We are a holding company that conducts business through
our subsidiaries. We derive the majority of our revenues and
earnings from our wholly-owned subsidiary, Arizona Public
Service Company (APS). For the year ended
December 31, 2009, 96% of our operating revenues and all of
our earnings were derived from APS. APS is a
vertically-integrated electric utility that provides either
retail or wholesale electric service to most of the State of
Arizona, with the major exceptions of about one-half of the
Phoenix metropolitan area, the Tucson metropolitan area and
Mohave County in northwestern Arizona. We describe our other
first tier subsidiaries in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 (the 2009
Form 10-K).
Our principal executive offices are located at 400 North Fifth
Street, Phoenix, Arizona 85004 (telephone
602-250-1000).
The
Offering
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Issuer |
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Pinnacle West Capital Corporation. |
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Common stock offered |
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6,000,000 shares. |
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Common stock to be outstanding immediately after the offering |
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107,537,372 shares. |
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Underwriters option to purchase additional shares |
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We have granted the underwriters an option to purchase up to
900,000 additional shares of common stock to cover
over-allotments, if any. |
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Net proceeds |
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The net proceeds of this offering are expected to be
approximately $226,025,300 based on an assumed public offering
price of $39.07 per share. |
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Use of proceeds |
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We anticipate using the aggregate net proceeds from this
offering to make capital contributions to APS. See Use Of
Proceeds. APS anticipates using these capital
contributions to repay short-term indebtedness, to finance
capital expenditures and for other general corporate purposes. |
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Trading symbol |
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Our common stock is listed on the New York Stock Exchange under
the symbol PNW. |
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Current indicated annual dividend rate per share |
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$2.10 per share, payable quarterly. See Price Range Of
Common Stock And Dividend Policy below for information
about historical dividends paid per common share and our
dividend policy. |
S-1
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Transfer agent and registrar |
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The Bank of New York Mellon serves as transfer agent and
registrar for the common stock. |
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Risk factors |
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Your investment in our common stock involves risks. You should
carefully consider the information referred to in the section
entitled Risk Factors and the other information
contained or incorporated by reference in this prospectus
supplement and the accompanying prospectus, including
information under the heading Forward-Looking
Statements, before deciding whether to purchase our common
stock. |
The information regarding shares to be outstanding after this
offering is based on the number of shares outstanding as of
April 5, 2010, and excludes shares issuable (a) upon
exercise of our outstanding options and other awards or
otherwise reserved for issuance under our employee benefit plans
and (b) under our Investors Advantage Plan. As of
April 5, 2010, we have reserved approximately
9,385,943 shares of our common stock for future issuance.
For a complete description of our common stock, please refer to
Description Of Pinnacle West Common Stock in the
accompanying prospectus.
S-2
Selected
Historical Consolidated Financial Data
We are providing the following selected historical consolidated
financial data to assist you in analyzing an investment in our
common stock. We derived the selected historical consolidated
financial data presented below for each of the three years in
the period ended December 31, 2009 and as of
December 31, 2009 and 2008 from our annual consolidated
financial statements, which have been audited by
Deloitte & Touche LLP, an independent registered
public accounting firm. The information below should be read in
conjunction with, and is qualified in its entirety by,
Managements Discussion and Analysis of Financial
Condition and Results of Operations in the 2009
Form 10-K
and the consolidated financial statements, related notes and
other financial or statistical information that we include or
incorporate by reference in this prospectus supplement and the
accompanying prospectus. See Where You Can Find More
Information below.
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Year Ended December 31,
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2009
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2008
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2007
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(In thousands, except per share data)
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Income Statement Data:
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Operating Revenues
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$
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3,297,101
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$
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3,310,558
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$
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3,294,154
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Operating Expenses
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2,975,328
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2,805,350
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2,677,648
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Operating Income
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321,773
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505,208
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616,506
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Interest Charges and Financing Costs
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223,114
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196,864
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184,764
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Income From Continuing Operations, Net of Tax, Attributable to
Common Shareholders
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82,006
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231,304
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300,436
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Net Income Attributable to Common Shareholders
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68,330
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242,125
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307,143
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Earnings Per Weighted-Average Common Share Outstanding From
Continuing Operations Attributable to Common Shareholders
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Basic
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$
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0.81
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$
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2.30
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$
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3.00
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Diluted
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$
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0.81
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$
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2.29
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$
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2.98
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Dividends Declared Per Share
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$
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2.10
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$
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2.10
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$
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2.10
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Weighted-Average Common Shares Outstanding
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Basic
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101,161
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100,691
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100,256
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Diluted
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101,264
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100,965
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100,835
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Cash Flow Data:
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Cash Flows From Operating Activities
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$
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1,031,065
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$
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813,568
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$
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657,936
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Capital Expenditures
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764,609
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935,577
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960,390
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As of December 31,
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2009
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2008
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(In thousands)
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Balance Sheet Data:
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Total Assets
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$
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11,808,155
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$
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11,620,093
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Total Pinnacle West Shareholders Equity
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$
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3,316,109
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$
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3,445,979
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Noncontrolling Real Estate Interests
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29,571
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47,389
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Total Equity
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$
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3,345,680
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$
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3,493,368
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Short-term Borrowings and Current Maturities of Long-term Debt
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$
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431,408
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$
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848,115
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Long-term Debt Less Current Maturities
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3,370,524
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3,031,603
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Total Capitalization
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$
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7,147,612
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$
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7,373,086
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S-3
RISK
FACTORS
See the discussion of risk factors contained in Part I,
Item 1A of the 2009
Form 10-K,
which is incorporated by reference in this prospectus supplement
and the accompanying prospectus, to read about certain risks
relating to our business and an investment in our common stock.
An investment in the common stock involves a significant degree
of risk. Before purchasing our common stock, you should
carefully consider the discussion of those risks and the other
information included or incorporated by reference in this
prospectus supplement and the accompanying prospectus, including
the information under the heading Forward-Looking
Statements below. Although we try to discuss material
risks in these risk factors and other information, please be
aware that other risks may prove to be important in the future.
New risks may emerge at any time and we cannot predict those
risks or estimate the extent to which they may affect our
business, financial condition, cash flows or operating results.
FORWARD-LOOKING
STATEMENTS
The forward-looking statements disclaimer set forth below
supersedes any similarly entitled forward-looking statements
disclaimer contained in the accompanying prospectus.
This prospectus supplement, the accompanying prospectus and the
information incorporated by reference in this prospectus
supplement and the accompanying prospectus may contain
forward-looking statements within the meaning of the safe harbor
of the Private Securities Litigation Reform Act of 1995, and are
based on current expectations. These forward-looking statements
are often identified by words such as estimate,
predict, hope, may,
believe, anticipate, plan,
expect, require, intend,
should, could, plan,
project, forecast, assume
and similar words. Forward-looking statements are not guarantees
of performance. Because actual results may differ materially
from expectations, we caution readers not to place undue
reliance on these statements. A number of factors could cause
future results to differ materially from historical results, or
from outcomes currently expected or sought by us. These factors
include:
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regulatory and judicial decisions, developments and proceedings;
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our ability to achieve timely and adequate rate recovery of our
costs;
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our ability to reduce capital expenditures and other costs while
maintaining reliability and customer service levels;
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variations in demand for electricity, including those due to
weather, the general economy, customer and sales growth (or
decline), and the effects of energy conservation measures;
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power plant performance and outages;
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volatile fuel and purchased power costs;
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fuel and water supply availability;
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new legislation or regulation relating to greenhouse gas
emissions, renewable energy mandates and energy efficiency
standards;
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our ability to meet renewable energy requirements and recover
related costs;
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risks inherent in the operation of nuclear facilities, including
spent fuel disposal uncertainty;
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competition in retail and wholesale power markets;
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the duration and severity of the economic decline in Arizona and
current credit, financial and real estate market conditions;
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the cost of debt and equity capital and the ability to access
capital markets when required;
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restrictions on dividends or other burdensome provisions in our
credit agreements and Arizona Corporation Commission orders;
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our ability to meet debt service obligations;
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S-4
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changes to our credit ratings;
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the investment performance of the assets of our nuclear
decommissioning trust, pension, and other postretirement benefit
plans and the resulting impact on future funding requirements;
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the liquidity of wholesale power markets and the use of
derivative contracts in our business;
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potential shortfalls in insurance coverage;
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new accounting requirements or new interpretations of existing
requirements;
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transmission and distribution system conditions and operating
costs;
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our ability to meet the anticipated future need for additional
baseload generation and associated transmission facilities in
our region;
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the ability of our counterparties and power plant participants
to meet contractual or other obligations;
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technological developments in the electric industry; and
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economic and other conditions affecting the real estate market
in SunCor Development Companys market areas.
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These and other factors are discussed in the risk factors
described in Part I, Item 1A of the 2009
Form 10-K,
which you should review carefully before placing any reliance on
our financial statements or disclosures. We do not assume any
obligation to update any forward-looking statements, even if our
internal estimates change, except as may be required by
applicable law.
We claim the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995 for any forward-looking statements contained in this
prospectus supplement and the accompanying prospectus, including
in the information incorporated by reference in this prospectus
supplement and the accompanying prospectus.
WHERE YOU
CAN FIND MORE INFORMATION
Available
Information
We file annual, quarterly and current reports, proxy statements
and other information with the SEC under File
No. 1-8962.
Our SEC filings are available to the public over the Internet at
the SECs web site:
http://www.sec.gov.
You may also read and copy any materials we file with the SEC at
the SECs public reference room, which is located at
100 F Street, N.E., Washington, D.C. 20549. You
may obtain information on the operation of the public reference
room by calling the SEC at
1-800-SEC-0330.
Our filings with the SEC are also available on our web site at
http://www.pinnaclewest.com.
The information on our web site is not part of this prospectus
supplement or the accompanying prospectus.
Incorporation
by Reference
We are incorporating by reference the information we file with
the SEC, which means that we can disclose important information
to you by referring you to those documents. The information
incorporated by reference is considered to be part of this
prospectus supplement and the accompanying prospectus, except
for information superseded by information in this prospectus
supplement and the accompanying prospectus, and later
information that we file with the SEC will automatically update
and supersede this information. We incorporate by reference the
documents listed below and any future filings we make with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, excluding, in each
case, information deemed furnished and not filed, until all of
the common stock offered by this prospectus supplement is sold:
(i) the 2009
Form 10-K;
(ii) Current Reports on
Form 8-K
filed January 25, 2010, February 19, 2010 and
March 4, 2010;
S-5
(iii) the description of our common stock included in our
registration statement on Form 8-B, File
No. 1-8962,
as filed on July 25, 1985, and any amendment or report that
we have filed (or will file after the date of this prospectus
supplement and prior to the termination of this offering) for
the purpose of updating such description, including our Current
Report on
Form 8-K
filed November 24, 2008; and
(iv) our Preliminary Proxy Statement on Schedule 14A
filed March 15, 2010.
These documents contain important information about us and our
finances.
We will provide to each person, including any beneficial owner,
to whom this prospectus supplement and the accompanying
prospectus is delivered, a copy of any or all of the information
that has been incorporated by reference in this prospectus
supplement and the accompanying prospectus but not delivered
with this prospectus supplement and the accompanying prospectus.
You may request a copy of these filings, at no cost, by writing,
telephoning or contacting us through our website at the
following address:
Pinnacle West Capital Corporation
Office of the Secretary
Station 9068
P. O. Box 53999
Phoenix, Arizona
85072-3999
(602) 250-3252
www.pinnaclewest.com
USE OF
PROCEEDS
We expect that our net proceeds from the sale of the
6,000,000 shares of our common stock offered by this
prospectus supplement will be approximately $226,025,300, after
deducting underwriting discounts and commissions and our other
expenses in connection with this offering (based on an assumed
public offering price of $39.07 per share). If the
underwriters option to purchase additional shares is
exercised in full, we estimate that our net proceeds will be
approximately $259,957,595 (based on an assumed public offering
price of $39.07 per share).
We anticipate using the aggregate net proceeds from this
offering to make capital contributions to APS, which will, in
turn, use such funds (a) to repay short-term debt in an
aggregate principal amount outstanding of approximately
$159,830,000 and with an estimated weighted average interest
rate of 0.714% as of April 6, 2010, which was incurred
subsequent to December 31, 2009 to fund capital
expenditures and for other corporate purposes, and (b) for
other general corporate purposes, including to finance capital
expenditures expected to be incurred to meet the growing needs
of APS service territory. Until we use the proceeds for
these purposes, we or APS will temporarily invest the proceeds
in U.S. government or agency obligations, commercial paper,
bank certificates of deposit, repurchase agreements
collateralized by U.S. government or agency obligations,
institutional money market mutual funds or other tax-exempt
securities or deposit the proceeds with banks.
A $1.00 decrease (or increase) in the assumed public offering
price of $39.07 per share would decrease (increase) the net
proceeds to us from this offering by approximately $5,790,000,
assuming the number of shares offered by us, as set forth on the
cover page of this preliminary prospectus supplement, remains
the same, and after deducting the underwriting discounts and
commissions and our other expenses in connection with this
offering. The actual public offering price is subject to market
conditions.
S-6
CAPITALIZATION
The following table sets forth our consolidated cash and cash
equivalents and capitalization, including short-term borrowings,
as of December 31, 2009, on an actual basis and on an as
adjusted basis, reflecting the sale of 6,000,000 shares of
our common stock offered pursuant to this prospectus supplement,
after deducting the underwriting discounts and commissions and
our other expenses in connection with this offering, and the
application of the net proceeds as described in this prospectus
supplement under the caption Use Of Proceeds (based
on an assumed public offering price of $39.07 per share).
The following table should be read in conjunction with our
consolidated financial statements and the related notes
incorporated by reference in this prospectus supplement and the
accompanying prospectus.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2009
|
|
|
|
|
|
|
% of Actual
|
|
|
|
|
|
% of As Adjusted
|
|
|
|
Actual
|
|
|
Capitalization
|
|
|
As Adjusted
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|
|
Capitalization
|
|
|
|
(In millions)
|
|
|
|
|
|
(In millions)
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
145
|
|
|
|
|
|
|
$
|
211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Pinnacle West shareholders equity
|
|
$
|
3,316
|
|
|
|
46.4
|
%
|
|
$
|
3,542
|
|
|
|
48.0
|
%
|
Noncontrolling real estate interests
|
|
|
30
|
|
|
|
0.4
|
%
|
|
|
30
|
|
|
|
0.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
3,346
|
|
|
|
46.8
|
%
|
|
$
|
3,572
|
|
|
|
48.4
|
%
|
Short-term borrowings and current maturities of long-term debt
|
|
$
|
431
|
|
|
|
6.0
|
%
|
|
$
|
431
|
|
|
|
5.9
|
%
|
Long-term debt less current maturities
|
|
|
3,371
|
|
|
|
47.2
|
%
|
|
|
3,371
|
|
|
|
45.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
7,148
|
|
|
|
100.0
|
%
|
|
$
|
7,374
|
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-7
PRICE
RANGE OF COMMON STOCK AND DIVIDEND POLICY
Our common stock is currently listed on the New York Stock
Exchange and trades under the symbol PNW. The
following table sets forth the high and low sales prices for
transactions involving our common stock for each calendar
quarter and related dividends paid per common share during such
periods.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividend
|
|
|
|
High
|
|
|
Low
|
|
|
Per Share
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter (through April 6, 2010)
|
|
$
|
39.10
|
|
|
$
|
37.86
|
|
|
$
|
|
|
First Quarter
|
|
|
38.37
|
|
|
|
34.62
|
|
|
|
0.525
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
37.96
|
|
|
$
|
31.08
|
|
|
$
|
0.525
|
|
Third Quarter
|
|
|
33.71
|
|
|
|
28.87
|
|
|
|
0.525
|
|
Second Quarter
|
|
|
30.30
|
|
|
|
25.28
|
|
|
|
0.525
|
|
First Quarter
|
|
|
35.13
|
|
|
|
22.32
|
|
|
|
0.525
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter
|
|
$
|
35.83
|
|
|
$
|
26.27
|
|
|
$
|
0.525
|
|
Third Quarter
|
|
|
37.88
|
|
|
|
30.34
|
|
|
|
0.525
|
|
Second Quarter
|
|
|
37.39
|
|
|
|
30.26
|
|
|
|
0.525
|
|
First Quarter
|
|
|
42.92
|
|
|
|
34.08
|
|
|
|
0.525
|
|
On April 6, 2010, the last reported sale price of our
common stock on the New York Stock Exchange was $39.07 per
share. As of April 5, 2010, there were approximately 28,037
holders of record of our common stock.
Subject to any preferential rights of any series of preferred
stock, holders of shares of common stock will be entitled to
receive dividends on the common stock out of assets legally
available for distribution when, as and if authorized and
declared by our board of directors. There is currently no
preferred stock outstanding. The payment of dividends on the
common stock will be a business decision to be made by our board
of directors from time to time based upon results of our
operations and our financial condition and any other factors
that our board of directors considers relevant. Our ability to
pay dividends depends upon the earnings and cash flows of our
subsidiaries and the ability of our subsidiaries to pay
dividends or otherwise transfer funds to us. The ability of
certain of our subsidiaries to pay dividends or make other
distributions to us may from time to time be subject to
contractual, statutory and regulatory restrictions. See
Note 6 to our consolidated financial statements in the 2009
Form 10-K.
CERTAIN
U.S. FEDERAL TAX CONSIDERATIONS FOR
NON-U.S.
HOLDERS
The following discussion summarizes certain U.S. federal
income and estate tax considerations with respect to the
acquisition, ownership and disposition of shares of our common
stock by a
non-U.S. holder
that acquires such shares pursuant to this offering and holds
the shares of common stock as capital assets within
the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the Code). For purposes of this
discussion, a
non-U.S. holder
is a beneficial owner (other than a partnership) of shares of
our common stock that is not:
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|
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|
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an individual citizen or resident of the United States;
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|
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|
a corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, created or organized in,
or under the laws of, the United States or any political
subdivision of or in the United States;
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|
|
an estate, the income of which is subject to U.S. federal
income taxation regardless of its source;
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|
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|
a trust, if (i) a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust or (ii) the
trust existed on August 20, 1996, was treated as a
U.S. person on August 19, 1996 and has a valid
election in effect to be treated as a U.S. person; or
|
S-8
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|
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|
|
an entity that for U.S. federal income tax purposes is
disregarded as separate from its owner if all of its interests
are owned by a single person described above.
|
Unless an applicable income tax treaty provides otherwise, an
individual may be treated, for U.S. federal income tax
purposes, as a resident of the United States in any calendar
year by being present in the United States on at least
31 days in that calendar year and for an aggregate of at
least 183 days during a three-year period ending in the
current calendar year. The
183-day test
is determined by counting all of the days the individual is
treated as being present in the current year, one-third of such
days in the immediately preceding year and one-sixth of such
days in the second preceding year. Residents are generally
subject to U.S. federal income tax as if they were
U.S. citizens.
If an entity or arrangement treated as a partnership for
U.S. federal income tax purposes holds shares of our common
stock, the U.S. federal income tax treatment of the
partnership and a partner in the partnership generally will
depend upon the status of the partner and the activities of the
partnership. Partnerships holding shares of our common stock and
partners in such partnerships should consult their tax advisors
regarding the U.S. federal income tax consequences to them
of the acquisition, ownership and disposition of shares of our
common stock.
This discussion does not address all aspects of
U.S. federal income and estate taxes. Among other matters,
this discussion does not consider:
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|
|
|
|
foreign, state, local or other tax considerations that may be
relevant to holders in light of their personal
circumstances; or
|
|
|
|
U.S. federal income and estate tax consequences applicable
to holders of shares of common stock that are subject to special
tax treatment under the federal income tax laws, including
partnerships or other pass-through entities, regulated
investment companies or real estate investment trusts, banks and
insurance companies, brokers or dealers in securities, holders
of securities held as part of a straddle,
hedge, conversion transaction or other
risk-reduction transaction, controlled foreign corporations,
passive foreign investment companies, companies that accumulate
earnings to avoid U.S. federal income tax, tax-exempt
organizations, persons who received shares of our common stock
as compensation, former U.S. citizens or residents, holders
subject to the alternative minimum tax, and persons who hold or
receive shares of our common stock as compensation.
|
This summary is based on current provisions of the Code,
Treasury regulations thereunder, judicial opinions, published
positions of the Internal Revenue Service (the IRS)
and other applicable authorities, all of which are subject to
change, possibly with retroactive effect, or to differing
interpretations. This summary is not intended, and should not be
construed, as tax advice. There can be no assurance that the IRS
will not take a contrary position to the tax consequences
described herein or that such position will not be sustained by
a court. No ruling from the IRS or opinion of counsel has been
obtained with respect to the U.S. federal income or estate
tax consequences to a
non-U.S. holder
of the acquisition, ownership or disposition of our common stock.
We urge prospective
non-U.S. holders
to consult their tax advisors regarding the U.S. federal,
state, local and
non-U.S. income
and other tax considerations with respect to the acquisition,
ownership and disposition of shares of our common stock.
Dividends
In general, any distributions that we make to a
non-U.S. holder
with respect to our common stock that constitute dividends for
U.S. federal income tax purposes will be subject to
U.S. withholding tax at a rate of 30% of the gross amount,
unless the
non-U.S. holder
is eligible for an exemption from, or a reduced rate of,
withholding tax under an applicable income tax treaty and the
non-U.S. holder
provides proper certification of the
non-U.S. holders
eligibility for such exemption or reduced rate. A distribution
will constitute a dividend for U.S. federal income tax
purposes to the extent paid from our current or accumulated
earnings and profits as determined under the Code. Any
distribution not constituting a dividend will be treated first
as reducing the
non-U.S. holders
basis in its shares of our common stock and, to the extent it
exceeds such basis, as gain from the disposition of shares of
our common stock.
S-9
Dividends that we pay to a
non-U.S. holder
that are effectively connected with the
non-U.S. holders
conduct of a trade or business within the United States and, if
the
non-U.S. holder
is entitled to benefits under an applicable tax treaty,
dividends that are effectively connected with such a trade or
business and also attributable to a U.S. permanent
establishment or fixed base maintained by the
non-U.S. holder,
generally will not be subject to U.S. withholding tax if
the
non-U.S. holder
complies with applicable certification and disclosure
requirements. Instead, such dividends generally will be subject
to U.S. federal income tax, net of certain deductions, at
the same rates applicable to U.S. persons. In the case of
non-U.S. holders
that are corporations, effectively connected income may also be
subject to a branch profits tax at a rate of 30%, or
a lower rate specified by an applicable income tax treaty.
Dividends that are effectively connected with a
non-U.S. holders
conduct of a trade or business but that, under an applicable
income tax treaty, are not attributable to a U.S. permanent
establishment or fixed base maintained by the
non-U.S. holder
may be eligible for a reduced rate of U.S. withholding tax
under such treaty, provided the
non-U.S. holder
complies with certification and disclosure requirements
necessary to obtain treaty benefits.
To claim the benefits of an income tax treaty or to claim
exemption from withholding because income is effectively
connected with the conduct of a U.S. trade or business, the
non-U.S. holder
must timely provide the appropriate, properly executed IRS
forms. Certification to claim income is effectively connected
with a U.S. trade or business is generally made prior to
the payment of the dividends on IRS
Form W-8ECI.
Certification to claim the benefits of an income tax treaty is
generally made prior to the payment of the dividends on IRS
Form W-8BEN.
These forms may be required to be periodically updated.
Non-U.S. holders
should consult their tax advisors on their eligibility, and the
procedures, to claim the benefits of an income tax treaty or to
claim exemption from withholding because income is effectively
connected with the conduct of a U.S. trade or business.
A
non-U.S. holder
that is eligible for a reduced rate of U.S. withholding tax
under an applicable income tax treaty may obtain a refund of any
excess amounts withheld by filing an appropriate claim for
refund with the IRS.
Sale or
Other Disposition of Shares of Our Common Stock
A
non-U.S. holder
generally will not be subject to U.S. federal income tax on
any gain realized upon the sale or other disposition of shares
of our common stock unless:
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|
|
|
|
the gain is effectively connected with the
non-U.S. holders
conduct of a trade or business within the United States
and, if the
non-U.S. holder
is entitled to benefits under an applicable income tax treaty,
is attributable to a U.S. permanent establishment or fixed
base maintained by the
non-U.S. holder;
|
|
|
|
the
non-U.S. holder
is an individual present in the United States for 183 days
or more in the taxable year of disposition and meets certain
other conditions, and the
non-U.S. holder
is not eligible for relief under an applicable income tax
treaty; or
|
|
|
|
shares of our common stock constitute a U.S. real property
interest within the meaning of the Foreign Investment in Real
Property Tax Act (FIRPTA).
|
Shares of our common stock will constitute a U.S. real
property interest under FIRPTA if we are or have been a
U.S. real property holding corporation for
U.S. federal income tax purposes at any time within the
shorter of the five-year period preceding the sale or other
disposition or the period during which the
non-U.S. holder
held shares of our common stock. We do not believe that we are,
have been or will become a U.S. real property holding
corporation for U.S. federal income tax purposes.
Even if we were a U.S. real property holding corporation
under FIRPTA, gain arising from a sale or other disposition of
shares of our common stock still would not be subject to FIRPTA
tax if shares of our common stock were considered under
applicable Treasury regulations to be regularly traded on an
established securities market, such as the New York Stock
Exchange, and the
non-U.S. holder
did not own, actually or constructively, more than 5% of the
total fair market value of our common stock at any time during
the applicable period ending on the date of disposition. If a
non-U.S. holder
were subject to FIRPTA tax on a sale or other disposition of
shares of our common stock, any gain or loss would generally be
treated as effectively connected gain or loss and subject to
U.S. federal income tax on a net income basis although gain
derived by a foreign corporation from such disposition would not
be subject to the branch profits tax.
Gain that is effectively connected with a
non-U.S. holders
conduct of a trade or business within the United States
generally will be subject to U.S. federal income tax, net
of certain deductions, at the same rates
S-10
applicable to U.S. persons. If the
non-U.S. holder
is a corporation, the branch profits tax, as discussed above,
also may apply to such effectively connected gain. If the gain
from the sale or disposition of the
non-U.S. holders
shares of our common stock is effectively connected with the
non-U.S. holders
conduct of a trade or business in the United States but under an
applicable income tax treaty is not attributable to a permanent
establishment or fixed base maintained by the
non-U.S. holder
in the United States, the
non-U.S. holders
gain may be exempt from U.S. tax under the treaty. If the
non-U.S. holder
is an individual present in the United States for 183 days
or more in the taxable year of disposition and meets certain
other conditions, and the
non-U.S. holder
is not eligible for relief under an applicable income tax
treaty, the
non-U.S. holder
generally will be subject to U.S. tax at a rate of 30% on
the gain recognized, although the gain may be offset by some
U.S. source capital losses recognized during the same
taxable year.
Information
Reporting and Backup Withholding
We must report annually to the IRS and to the
non-U.S. holder
the amount of dividends or other distributions we pay to the
non-U.S. holder
and the tax withheld, if any, from those payments. These
reporting requirements apply regardless of whether withholding
was reduced or eliminated by any applicable income tax treaty.
Copies of the information returns reporting those dividends and
amounts withheld may also be made available to the tax
authorities in the country in which the
non-U.S. holder
resides pursuant to the provisions of an applicable income tax
treaty or exchange of information treaty.
The United States imposes a backup withholding tax on dividends
and certain other types of payments to U.S. persons
currently at a rate of 28% of the gross amount. A
non-U.S. holder
will not be subject to backup withholding tax or additional
information reporting on dividends received on shares of our
common stock if the
non-U.S. holder
provides proper certification (usually on an IRS
Form W-8BEN)
as to the
non-U.S. holders
status as a
non-U.S. person
or if the
non-U.S. holder
is a corporation or one of several types of entities and
organizations that qualify for an exemption.
Information reporting and backup withholding generally are not
required with respect to the amount of any proceeds from a
non-U.S. holders
sale of shares of our common stock outside the United States
through a foreign office of a foreign broker that does not have
certain specified connections to the United States. However, if
the
non-U.S. holder
sells shares of our common stock through a U.S. broker or
the U.S. office of a foreign broker, the broker will be
required to report to the IRS the amount of proceeds paid to the
non-U.S. holder
and also backup withhold at a rate of 28% of that amount unless
the
non-U.S. holder
provides appropriate certification (usually on an IRS
Form W-8BEN)
to the broker of the
non-U.S. holders
status as a
non-U.S. person
or the
non-U.S. holder
is a corporation or one of several types of entities and
organizations that qualify for exemption. If the appropriate
certification is not provided, the amount of proceeds paid to
the
non-U.S. holder
will be subject to information reporting, and may be subject to
backup withholding, if the
non-U.S. holder
sells shares of our common stock outside the United States
through the
non-U.S. office
of a U.S. broker or a foreign broker deriving more than a
specified percentage of its income from U.S. sources or
having certain other connections to the United States.
Any amounts withheld under the backup withholding rules do not
constitute a separate U.S. federal income tax. Rather, any
amounts withheld with respect to our common stock under the
backup withholding rules may be refunded to the
non-U.S. holder
or credited against the
non-U.S. holders
U.S. federal income tax liability, if any, by the IRS if
the required information is furnished in a timely manner.
Estate
Tax
Shares of our common stock owned or treated as owned by an
individual who is not a citizen or resident, as specifically
defined for U.S. federal estate tax purposes, of the United
States at the time of his or her death will be subject to
U.S. federal estate tax unless an applicable estate tax
treaty provides otherwise. The test for whether an individual is
a resident of the United States for U.S. federal estate tax
purposes differs from the test used for U.S. federal income
tax purposes. Some individuals, therefore, may be
non-U.S. holders
for U.S. federal income tax purposes, but not for
U.S. federal estate tax purposes, or vice versa.
S-11
New
Legislation Relating to Foreign Accounts
Newly enacted legislation may impose withholding taxes on
certain types of payments made to foreign financial
institutions and certain other
non-U.S. entities.
Under this legislation, the failure to comply with additional
certification, information reporting and other specified
requirements could result in withholding tax being imposed on
payments of dividends and sales proceeds to foreign
intermediaries and certain
non-U.S. holders.
The legislation imposes a 30% withholding tax on dividends on,
or gross proceeds from the sale or other disposition of, our
common stock paid to a foreign financial institution or to a
foreign non-financial entity, unless (i) the foreign
financial institution undertakes certain diligence and reporting
obligations or (ii) the foreign non-financial entity either
certifies it does not have any substantial U.S. owners or
furnishes identifying information regarding each substantial
U.S. owner. If the payee is a foreign financial
institution, it must enter into an agreement with the
U.S. Treasury requiring, among other things, that it
undertake to identify accounts held by certain U.S. persons
or
U.S.-owned
foreign entities, annually report certain information about such
accounts, and withhold 30% on payments to account holders whose
actions prevent it from complying with these reporting and other
requirements. The legislation applies to payments made after
December 31, 2012. Prospective investors should consult
their tax advisors regarding this legislation.
S-12
UNDERWRITING
Barclays Capital Inc., Credit Suisse Securities (USA) LLC,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Wells Fargo Securities, LLC are acting as the representatives of
the underwriters and as joint book-running managers. Under the
terms and subject to the conditions of an underwriting agreement
dated the date of this prospectus supplement, which will be
filed as an exhibit to a current report on
Form 8-K
and incorporated by reference in this prospectus supplement and
the accompanying prospectus, each of the underwriters named
below has severally agreed to purchase from us, and we have
agreed to sell to them, severally, the number of shares of
common stock shown opposite its respective name below:
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|
|
|
|
|
|
Number of
|
|
Underwriters
|
|
Shares
|
|
|
Barclays Capital Inc.
|
|
|
|
|
Credit Suisse Securities (USA) LLC
|
|
|
|
|
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
|
|
|
|
|
Wells Fargo Securities, LLC
|
|
|
|
|
KeyBanc Capital Markets Inc.
|
|
|
|
|
Mitsubishi UFJ Securities (USA), Inc.
|
|
|
|
|
UBS Securities LLC
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,000,000
|
|
The underwriting agreement provides that the obligations of the
underwriters to purchase the common stock included in this
offering are several and not joint and are subject to approval
of legal matters by counsel and to other conditions. The
underwriters are obligated to purchase all of the common stock
if they purchase any of the common stock.
Our common stock is listed on the New York Stock Exchange under
the symbol PNW.
Option to
Purchase Additional Shares
We have granted the underwriters an option, exercisable for
30 days after the date of this prospectus supplement, to
purchase, from time to time, in whole or in part, up to an
aggregate of 900,000 shares at the public offering price
less underwriting discounts and commissions on the same terms
and conditions as set forth above. The underwriters may exercise
this option solely for the purpose of covering over-allotments,
if any, made in connection with the offering of the common stock
offered by this prospectus supplement. To the extent that this
option is exercised, each underwriter will be obligated, subject
to certain conditions, to purchase its pro rata portion of these
additional shares based on the underwriters percentage
underwriting commitment in this offering as indicated in the
preceding table.
Commissions
and Expenses
The underwriters have advised us that they propose to offer the
common stock directly to the public at the public offering price
presented on the cover page of this prospectus supplement and
may offer the common stock to selected dealers, which may
include the underwriters, at the public offering price less a
selling concession not in excess of
$ per share. After the initial
offering of the common stock to the public, the underwriters may
change the offering price and other selling terms.
The following table summarizes the underwriting discounts and
commissions to be paid to the underwriters by us. The
underwriting discount is the difference between the offering
price and the amount the underwriters pay to purchase the shares
from us. These amounts are shown assuming both no exercise and
full exercise of the
S-13
underwriters option to purchase up to an additional
900,000 shares. The underwriting discounts and commissions
equal % of the public offering
price.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
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Per Share
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No Exercise
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Full Exercise
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Public offering price
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$
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$
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Underwriting discounts and commissions
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$
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Proceeds, before expenses, to us
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$
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$
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$
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We estimate that the total expenses of the offering payable by
us, excluding underwriting discounts and commissions, will be
approximately $190,000.
Lock-Up
Agreements
For a period of ninety (90) days after the date of this
prospectus supplement (the
Lock-up
Period), we have agreed not to offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, or
file with the SEC a registration statement under the Securities
Act of 1933 relating to, any shares of our common stock (other
than the shares of common stock to be issued in connection with
this offering) or securities convertible into or exchangeable or
exercisable for any shares of our common stock or publicly
disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of
Barclays Capital Inc. and Credit Suisse Securities (USA) LLC.
These restrictions do not apply to sales of common stock or to
stock option grants and other stock-based awards we may make
under our existing equity incentive and compensation plans, our
savings plan and our direct stock purchase and dividend
reinvestment plan.
During the
Lock-up
Period, all of our directors and executive officers have agreed,
subject to certain exceptions, not to offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly,
any shares of our common stock or securities convertible into or
exchangeable or exercisable for any shares of our common stock,
enter into a transaction that would have the same effect, or
enter into any swap, hedge or other arrangement that transfers,
in whole or in part, any of the economic consequences of
ownership of our common stock, whether any of these transactions
are to be settled by delivery of our common stock or such other
securities, in cash or otherwise, or publicly disclose the
intention to make any such offer, sale, pledge or disposition,
or to enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of
Barclays Capital Inc. and Credit Suisse Securities (USA) LLC.
Any common stock received upon exercise of options granted to
our directors and executive officers is also subject to these
restrictions. These restrictions do not apply to
(i) withholding of a portion of common stock to which a
director or executive officer would otherwise be entitled upon
the vesting or exercise of an equity incentive award to satisfy
applicable tax withholding requirements, (ii) a bona fide
gift or a transfer of common stock to a family member or trust
if the gift recipient or transferee agrees to be bound by the
restrictions mentioned above or (iii) any common stock
acquired in the open market after the closing of this offering.
Our directors and executive officers have also agreed not to
make any demand for or exercise any right with respect to the
registration of any common stock or any security convertible
into or exercisable or exchangeable for common stock during the
Lock-up
Period, without the prior written consent of Barclays Capital
Inc. and Credit Suisse Securities (USA) LLC.
Indemnification
We have agreed to indemnify the underwriters against certain
liabilities relating to the offering, including liabilities
under the Securities Act of 1933, and to contribute to payments
that the underwriters may be required to make for these
liabilities.
Stabilization,
Short Positions and Penalty Bids
The underwriters may engage in stabilizing transactions, short
sales and purchases to cover positions created by short sales,
and penalty bids or purchases for the purpose of pegging, fixing
or maintaining the price of the common stock, in accordance with
Regulation M under the Securities Exchange Act of 1934.
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Stabilizing transactions permit bids to purchase the underlying
security so long as the stabilizing bids do not exceed a
specified maximum.
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A short position involves a sale by the underwriters of shares
in excess of the number of shares the underwriters are obligated
to purchase in the offering, which creates a syndicate short
position. This short position may be either a covered short
position or a naked short position. In a covered short position,
the number of shares involved in the sales made by the
underwriters in excess of the number of shares they are
obligated to purchase is not greater than the number of shares
that they may purchase by exercising their option to purchase
additional shares. In a naked short position, the number of
shares involved is greater than the number of shares in their
option to purchase additional shares. The underwriters may close
out any short position by either exercising their option to
purchase additional shares
and/or
purchasing shares in the open market. In determining the source
of shares to close out the short position, the underwriters will
consider, among other things, the price of shares available for
purchase in the open market as compared to the price at which
they may purchase shares through their option to purchase
additional shares. A naked short position is more likely to be
created if the underwriters are concerned that there could be
downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase
in the offering.
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Syndicate covering transactions involve purchases of common
stock in the open market after the distribution has been
completed in order to cover syndicate short positions.
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Penalty bids permit the underwriters to reclaim a selling
concession from a syndicate member when the common stock
originally sold by the syndicate member is purchased in a
stabilizing or syndicate covering transaction to cover syndicate
short positions.
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These stabilizing transactions, syndicate covering transactions
and penalty bids may have the effect of raising or maintaining
the market price of our common stock or preventing or retarding
a decline in the market price of the common stock. As a result,
the price of the common stock may be higher than the price that
might otherwise exist in the open market. These transactions may
be effected on the New York Stock Exchange or otherwise and, if
commenced, may be discontinued at any time.
Neither we nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of
the common stock. In addition, neither we nor the underwriters
make any representation that the underwriters will engage in
these stabilizing transactions or that any transaction, once
commenced, will not be discontinued without notice.
Stamp
Taxes
If you purchase shares of common stock offered in this
prospectus supplement and the accompanying prospectus, you may
be required to pay stamp taxes and other charges under the laws
and practices of the country of purchase, in addition to the
offering price listed on the cover page of this prospectus
supplement and the accompanying prospectus.
Relationships
The underwriters
and/or their
affiliates have performed investment banking, commercial banking
and advisory services for us and our affiliates from time to
time for which they have received customary fees and expenses.
The underwriters
and/or their
affiliates may, from time to time, engage in transactions with
and perform services for us and our affiliates in the ordinary
course of their business. For example, affiliates of certain of
the underwriters are lenders under our revolving credit facility
and certain credit facilities of APS and SunCor Development
Company.
Electronic
Distribution
A prospectus in electronic format may be made available on
Internet sites or through other online services maintained by
one or more of the underwriters
and/or
selling group members participating in this offering, or by
their affiliates. In those cases, prospective investors may view
offering terms online and, depending upon the particular
underwriter or selling group member, prospective investors may
be allowed to place orders online. The
S-15
underwriters may agree with us to allocate a specific number of
shares for sale to online brokerage account holders. Any such
allocation for online distributions will be made by the
representatives on the same basis as other allocations. Other
than this prospectus supplement and the accompanying prospectus
in electronic format, the information on any underwriters
or selling group members web site and any information
contained in any other web site maintained by an underwriter or
selling group member is not part of this prospectus supplement
or the accompanying prospectus or the registration statement of
which this prospectus supplement and the accompanying prospectus
form a part, has not been approved
and/or
endorsed by us or any underwriter or selling group member in its
capacity as underwriter or selling group member and should not
be relied upon by investors.
European
Economic Area
In relation to each member state of the European Economic Area
that has implemented the Prospectus Directive (each, a
Relevant Member State), with effect from and
including the date on which the Prospectus Directive is
implemented in that Relevant Member State, an offer of the
securities offered by this prospectus supplement described in
this prospectus supplement and the accompanying prospectus may
not be made to the public in that Relevant Member State, except
that an offer of the securities offered by this prospectus
supplement to the public in a Relevant Member State may be made
at any time under the following exemptions pursuant to the
Prospectus Directive, if the exemptions have been implemented in
that Relevant Member State:
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to any legal entity that is authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
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to any legal entity that has two or more of (i) an average
of at least 250 employees during the last financial year,
(ii) a total balance sheet of more than 43,000,000
and (iii) an annual net turnover of more than
50,000,000, as shown in its last annual or consolidated
accounts;
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to fewer than 100 natural or legal persons (other than qualified
investors as defined in the Prospectus Directive) subject to
obtaining the prior consent of the underwriter for any such
offer; or
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in any other circumstances that do not require the publication
of a prospectus pursuant to Article 3(2) of the Prospectus
Directive;
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provided, that no such offer of securities shall require us or
any underwriter to publish a prospectus pursuant to
Article 3 of the Prospectus Directive.
For purposes of this provision, the expression offer of
the securities offered by this prospectus supplement in
relation to any securities offered by this prospectus supplement
in any Relevant Member State means the communication in any form
and by any means of sufficient information on the terms of the
offer and the securities to be offered so as to enable an
investor to decide to purchase or subscribe for the securities
offered by this prospectus supplement, as the expression may be
varied in that member state by any measure implementing the
Prospectus Directive in that member state, and the expression
Prospectus Directive means Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant
Member State.
United
Kingdom
This prospectus supplement and the accompanying prospectus are
only being distributed to, and are only directed at, persons in
the United Kingdom that are qualified investors within the
meaning of Article 2(1)(e) of the Prospectus Directive that
are also (i) investment professionals falling
within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005, as amended (the
Order), or (ii) high net worth bodies
corporate, unincorporated associations and partnerships and the
trustees of high value trusts, as described in
Article 49(2)(a) to (d) of the Order, and other
persons to whom it may lawfully be communicated (all such
persons together being referred to as relevant
persons). The securities offered by this prospectus
supplement and the accompanying prospectus are only available
to, and any invitation, offer or agreement to subscribe,
purchase or otherwise acquire such securities will be engaged in
only with, relevant persons. Any person in the United Kingdom
that is not a relevant person should not act or rely on this
prospectus supplement and the accompanying prospectus or any of
their contents.
S-16
Switzerland
We have not and will not register with the Swiss Financial
Market Supervisory Authority (FINMA) as a foreign collective
investment scheme pursuant to Article 119 of the Federal
Act on Collective Investment Scheme of 23 June 2006, as
amended (CISA), and accordingly the shares being offered
pursuant to this prospectus have not and will not be approved,
and may not be licenseable, with FINMA. Therefore, the shares
have not been authorized for distribution by FINMA as a foreign
collective investment scheme pursuant to Article 119 CISA
and the shares offered hereby may not be offered to the public
(as this term is defined in Article 3 CISA) in or from
Switzerland. The shares may solely be offered to qualified
investors, as this term is defined in Article 10
CISA, and in the circumstances set out in Article 3 of the
Ordinance on Collective Investment Scheme of 22 November
2006, as amended (CISO), such that there is no public offer.
Investors, however, do not benefit from protection under CISA or
CISO or supervision by FINMA. This prospectus and any other
materials relating to the shares are strictly personal and
confidential to each offeree and do not constitute an offer to
any other person. This prospectus may only be used by those
qualified investors to whom it has been handed out in connection
with the offer described herein and may neither directly or
indirectly be distributed or made available to any person or
entity other than its recipients. It may not be used in
connection with any other offer and shall in particular not be
copied
and/or
distributed to the public in Switzerland or from Switzerland.
This prospectus does not constitute an issue prospectus as that
term is understood pursuant to Article 652a
and/or 1156
of the Swiss Federal Code of Obligations. We have not applied
for a listing of the shares on the SIX Swiss Exchange or any
other regulated securities market in Switzerland, and
consequently, the information presented in this prospectus does
not necessarily comply with the information standards set out in
the listing rules of the SIX Swiss Exchange and corresponding
prospectus schemes annexed to the listing rules of the SIX Swiss
Exchange.
EXPERTS
The consolidated financial statements of Pinnacle West Capital
Corporation, and the related financial statement schedules,
incorporated in this prospectus supplement and the accompanying
prospectus by reference from Pinnacle West Capital
Corporations Annual Report on
Form 10-K
for the year ended December 31, 2009, and the effectiveness
of Pinnacle West Capital Corporations internal control
over financial reporting, have been audited by
Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their report, which is
incorporated herein by reference. Such financial statements and
financial statement schedules have been so incorporated in
reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
LEGAL
MATTERS
Certain legal matters with respect to the offering of common
stock described in this prospectus supplement will be passed
upon for us by Snell & Wilmer L.L.P., Phoenix, Arizona
and for the underwriters by Pillsbury Winthrop Shaw Pittman LLP,
New York, New York. In giving its opinion, Snell &
Wilmer L.L.P. may rely as to all matters under the Public
Utility Holding Company Act of 2005, as amended, and the Federal
Power Act, as amended, upon the opinion of Morgan,
Lewis & Bockius LLP, Washington, D.C.
S-17
Prospectus
PINNACLE
WEST CAPITAL CORPORATION
Unsecured Debt Securities
Preferred Stock
Common Stock
ARIZONA
PUBLIC SERVICE COMPANY
Unsecured Debt
Securities
We may offer and sell these securities from time to time in one
or more offerings. This prospectus provides you with a general
description of the securities we may offer.
Each time we sell these securities, we will provide a supplement
to this prospectus that contains specific information about the
offering and the terms of the securities, including the plan of
distribution for the securities. You should carefully read this
prospectus and any supplement, as well as the documents
incorporated by reference in this prospectus, before you invest
in any of these securities.
See Risk Factors beginning on page 3 of this
prospectus where we describe certain factors you should consider
in making an investment decision.
Our principal executive offices are located at 400 North Fifth
Street, P.O. Box 53999, Phoenix, Arizona
85072-3999.
Our telephone number is
(602) 250-1000.
Pinnacle Wests common stock is listed on the New York
Stock Exchange under the symbol PNW. Unless
otherwise indicated in a supplement to this prospectus, the
other securities offered hereby will not be listed on a national
securities exchange.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
We may offer and sell these securities directly to purchasers,
through agents, dealers, or underwriters as designated from time
to time, or through a combination of these methods. If any
agents, dealers or underwriters are involved in the sale of any
securities, the relevant prospectus supplement will set forth
any applicable commissions or discounts.
The date of this prospectus is April 24, 2009
TABLE OF
CONTENTS
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2
RISK
FACTORS
We include a discussion of risk factors relating to our business
and an investment in our securities in our Annual Reports on
Form 10-K
and Quarterly Reports on
Form 10-Q
filed from time to time by us with the Securities and Exchange
Commission (the SEC). These reports are incorporated
by reference in this prospectus. See Where You Can Find
More Information. We describe additional risks of
investment in our securities below. We may also describe
additional risks related to our securities in a prospectus
supplement from time to time. Before purchasing our securities,
you should carefully consider the risk factors we describe in
those reports, in this prospectus and in any prospectus
supplement. Although we try to discuss key risks in the risk
factor descriptions, please be aware that other risks may prove
to be important in the future. New risks may emerge at any time
and we cannot predict these risks or estimate the extent to
which they may affect our business, financial condition, cash
flows or operating results.
In addition to the general risks that we describe in our SEC
reports, you should consider the following additional risks
before investing in our securities.
Risk
Factors Relating to Unsecured Debt Securities
You
may be unable to sell your unsecured debt securities if a
trading market for the unsecured debt securities does not
develop.
An established trading market for the unsecured debt securities
does not exist and may not develop. Unless the applicable
prospectus supplement specifies otherwise, we do not intend to
apply for listing of the unsecured debt securities on any
securities exchange or for quotation on any automated dealer
quotation system. The liquidity of any market for the unsecured
debt securities will depend on the number of holders of the
securities, the interest of securities dealers in making a
market in the unsecured debt securities, and other factors. If
an active trading market does not develop, the market price and
liquidity of the unsecured debt securities may be adversely
affected. If the unsecured debt securities are traded, they may
trade at a discount from their initial offering price depending
upon prevailing interest rates, the market for similar
securities, general economic conditions, our performance and
business prospects, and certain other factors.
You
may have only limited ability to control remedies upon an event
of default.
Upon the occurrence of an event of default, the trustee has the
right to exercise remedies under the applicable indenture. The
trustee will take certain actions if requested to do so by the
holders of a specified percentage of the aggregate principal
amount of the securities then outstanding under the applicable
indenture only if certain conditions are satisfied. See
Description of Pinnacle West Unsecured Debt
Securities Events of Default and
Description of APS Unsecured Debt Securities
Events of Default below. Thus, you may not be able to
exercise any control over the trustees exercise of
remedies unless you can obtain the consent of holders of the
specified percentage of the total amount of securities
outstanding under the applicable indenture and satisfy all other
conditions precedent.
ABOUT
THIS PROSPECTUS
This prospectus is part of a shelf registration statement that
we filed with the SEC. By using a shelf registration statement,
we may sell, from time to time, in one or more offerings, any
combination of the securities described in this prospectus. In
this prospectus we may refer to the unsecured debt securities,
preferred stock and common stock that may be offered by Pinnacle
West Capital Corporation (Pinnacle West) and the
unsecured debt securities that may be offered by Arizona Public
Service Company (APS) collectively as the
securities.
This prospectus provides you with a general description of the
securities we may offer. Each time we offer securities, we will
provide you with a prospectus supplement and, if applicable, a
pricing supplement. The prospectus supplement and any applicable
pricing supplement will describe the specific terms of the
securities being offered. The prospectus supplement and any
applicable pricing supplement may also add to, update or change
the information in this prospectus. If there is any
inconsistency between the information in this prospectus and in
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any supplement, you should rely on the information in the
supplement. In addition, the registration statement we filed
with the SEC includes exhibits that provide more details about
the securities.
You should rely only on the information contained or
incorporated by reference in this prospectus, any prospectus
supplement and any pricing supplement. See Where You Can
Find More Information. We have not authorized anyone to
provide you with different information. If anyone provides you
with different or inconsistent information, you should not rely
on it. We are not making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this
prospectus and any supplement to this prospectus is accurate
only as of the dates on their covers and that information
incorporated by reference is accurate only as of the date of the
report that is incorporated, unless, in either case, the
information is given as of another specific date. Our business,
financial condition, results of operations, and prospects may
have changed since those dates.
FORWARD-LOOKING
STATEMENTS
This prospectus, any accompanying prospectus supplement, and the
information contained or incorporated by reference in this
prospectus may contain forward-looking statements based on
current expectations, and we assume no obligation to update
these statements or make any further statements on any of these
issues, except as required by applicable law. These
forward-looking statements are often identified by words such as
estimate, predict, hope,
may, believe, anticipate,
plan, expect, require,
intend, assume and similar words.
Because actual results may differ materially from expectations,
we caution readers not to place undue reliance on these
statements. A number of factors could cause future results to
differ materially from historical results, or from results or
outcomes currently expected or sought by us. In addition to the
Risk Factors described above, these factors include, but are not
limited to:
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state and federal regulatory and legislative decisions and
actions, including the outcome or timing of the pending rate
case of APS;
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increases in our capital expenditures and operating costs and
our ability to achieve timely and adequate rate recovery of
these increased costs;
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our ability to reduce capital expenditures and other costs while
maintaining reliability and customer service levels, and
unexpected developments that would limit us from achieving all
or some of our planned capital expenditure reductions;
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volatile fuel and purchased power costs, including fluctuations
in market prices for natural gas, coal, uranium and other fuels
used in our generating facilities, availability of supplies of
such commodities, and our ability to recover the costs of such
commodities;
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the outcome and resulting costs of regulatory, legislative and
judicial proceedings, both current and future, including those
related to environmental matters and climate change;
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the availability of sufficient water supplies to operate our
generation facilities, including as the result of drought
conditions;
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the potential for additional restructuring of the electric
industry, including decisions impacting wholesale competition
and the introduction of retail electric competition in Arizona;
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regional, national and international economic and market
conditions, including the strength of the real estate, credit
and financial markets;
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the potential adverse impact of current economic conditions on
our results of operations;
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the cost of debt and equity capital and access to capital
markets;
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changes in the market price of our common stock;
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restrictions on dividends or other burdensome provisions in new
or existing credit agreements;
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our ability, or the ability of our subsidiaries, to meet debt
service obligations;
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current credit ratings remaining in effect for any given period
of time;
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the performance of the stock market and the changing interest
rate environment, which affect the value of our nuclear
decommissioning trust, pension, and other postretirement benefit
plan assets, the amount of required contributions to our pension
plan and contributions to APS nuclear decommissioning
trust funds, as well as the reported costs of providing pension
and other postretirement benefits and our ability to recover
such costs;
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volatile market liquidity, any deteriorating counterparty credit
and the use of derivative contracts in our business (including
the interpretation of the subjective and complex accounting
rules related to these contracts);
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changes in accounting principles generally accepted in the
United States of America, the interpretation of those principles
and the impact of the adoption of new accounting standards;
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customer growth and energy usage;
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weather variations affecting local and regional customer energy
usage;
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power plant performance and outages;
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transmission outages and constraints;
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the completion of generation and transmission construction in
the region, which could affect customer growth and the cost of
power supplies;
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risks inherent in the operation of nuclear facilities, such as
environmental, regulatory, health and financial risks, risk of
terrorist attack, planned and unplanned outages, and unfunded
decommissioning costs;
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the ability of our power plant participants to meet contractual
or other obligations;
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technological developments in the electric industry;
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the results of litigation and other proceedings resulting from
the California and Pacific Northwest energy situations;
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the performance of our subsidiaries and any resulting effects on
our cash flow;
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the strength of the real estate and credit markets and economic
and other conditions affecting the real estate and credit
markets in the market areas of Pinnacle Wests subsidiary,
SunCor Development Company (SunCor), which include
Arizona, Idaho, New Mexico and Utah; and
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other uncertainties, all of which are difficult to predict and
many of which are beyond our control.
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We generally update these factors in each of our Annual Reports
on
Form 10-K
and Quarterly Reports on
Form 10-Q
filed with the SEC. We caution you not to place undue reliance
on any forward-looking statements. We claim the protection of
the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995 for any
forward-looking statements contained or incorporated by
reference in this prospectus or any prospectus supplement.
WHERE YOU
CAN FIND MORE INFORMATION
Available
Information
We file annual, quarterly, and current reports and other
information with the SEC. Our SEC filings are available to the
public over the Internet at the SECs website:
http://www.sec.gov.
You may also read and copy any materials we file with the SEC at
the SECs public reference room, at 100 F Street,
N.E., Washington, D.C. 20549. You may obtain information on
the operation of the public reference room by calling the SEC at
1-800-SEC-0330.
Reports and other information concerning Pinnacle West can also
be inspected and copied at the offices of the New
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York Stock Exchange at 20 Broad Street, New York, New York
10005. Our filings with the SEC are also available on Pinnacle
Wests website at
http://www.pinnaclewest.com.
The other information on Pinnacle Wests website is not
part of this prospectus, any prospectus supplement or any
pricing supplement.
Incorporation
by Reference
The SEC allows us to incorporate by reference the information we
file with them, which means that we can disclose important
information to you by referring you to those documents. The
information incorporated by reference is considered to be part
of this prospectus, except for information superseded by
information in this prospectus, and later information that we
file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the Exchange Act),
(SEC file
No. 1-8962
for Pinnacle West and
No. 1-4473
for APS) prior to the termination of this offering, excluding,
in each case, information deemed furnished and not filed.
Pinnacle
West Capital Corporation:
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Pinnacle West Capital Corporations Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008;
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Pinnacle West Capital Corporations Current Reports on
Form 8-K
filed January 26, 2009, February 25, 2009,
March 24, 2009 (two filings), April 2, 2009 and
April 22, 2009; and
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The description of Pinnacle Wests common stock included in
its registration statement on
Form 8-B,
File
No. 1-8962,
as filed on July 25, 1985, and any amendment or report that
we have filed (or will file after the date of this prospectus
and prior to the termination of this offering) for the purpose
of updating such description, including Pinnacle Wests
Current Report on
Form 8-K
filed with the SEC on November 24, 2008.
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Arizona
Public Service Company:
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Arizona Public Service Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008; and
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Arizona Public Service Companys Current Reports on
Form 8-K
filed January 26, 2009, February 25, 2009,
March 24, 2009 (two filings) and April 22, 2009.
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These documents contain important information about us and our
financials. We will provide to each person, including any
beneficial owner, to whom a prospectus is delivered, a copy of
any or all of the information that has been incorporated by
reference in this prospectus but not delivered with this
prospectus. You may request a copy of these filings, at no cost,
by writing, telephoning or contacting us through our website at
the following:
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Pinnacle West Capital Corporation
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Arizona Public Service Company
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Office of the Secretary
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Office of the Secretary
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Station 9068
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Station 9068
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P.O. Box 53999
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P.O. Box 53999
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Phoenix, Arizona
85072-3999
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Phoenix, Arizona 85072-3999
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(602)
250-3252
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(602) 250-3252
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Or online at www.pinnaclewest.com.
6
THE
COMPANIES
Pinnacle West was incorporated in 1985 under the laws of the
State of Arizona and owns all of the outstanding equity
securities of APS, its major subsidiary. APS is a
vertically-integrated electric utility that provides either
retail or wholesale electric service to most of the state of
Arizona, with the major exceptions of about one-half of the
Phoenix metropolitan area, the Tucson metropolitan area and
Mohave County in northwestern Arizona. Pinnacle Wests
other principal subsidiary is SunCor, which is engaged in real
estate development activities in the western United States.
The principal executive offices of Pinnacle West and APS are
located at 400 North Fifth Street, P.O. Box 53999,
Phoenix, Arizona
85072-3999,
and the telephone number is
602-250-1000.
USE OF
PROCEEDS
Pinnacle West intends to use the proceeds from the sale of these
securities for general corporate purposes, which may include the
repayment of indebtedness, capital expenditures, the funding of
working capital, and acquisitions, and for stock repurchases
and/or
capital infusions into one or more of its subsidiaries for any
of those purposes. APS intends to use the proceeds from the sale
of these securities to finance its construction, resource
acquisition and maintenance programs, to redeem or retire
outstanding securities and to repay or refund other outstanding
long-term or short-term debt. The specific use of proceeds from
the sale of securities will be set forth in the prospectus
supplement relating to each offering of these securities.
GENERAL
DESCRIPTION OF THE SECURITIES
Pinnacle West, directly or through agents, dealers or
underwriters that it designates, may offer and sell, from time
to time, an indeterminate amount of:
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its unsecured debt securities, in one or more series, which may
be senior unsecured debt securities or subordinated unsecured
debt securities, in each case consisting of notes or other
unsecured evidences of indebtedness;
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shares of its preferred stock;
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shares of its common stock; or
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any combination of these securities.
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APS, directly or through agents, dealers or underwriters that it
designates, may offer and sell, from time to time, an
indeterminate amount of its senior unsecured debt securities, in
one or more series, consisting of notes or other unsecured
evidences of indebtedness.
Pinnacle West and APS may offer and sell these securities either
individually or as units consisting of one or more of these
securities, each on terms to be determined at the time of sale.
Pinnacle West may issue unsecured debt securities
and/or
shares of preferred stock that are exchangeable for
and/or
convertible into common stock or any of the other securities
that it may sell under this prospectus. When particular
securities are offered, a supplement to this prospectus will be
delivered with this prospectus, which will describe the terms of
the offering and sale of the offered securities.
DESCRIPTION
OF PINNACLE WEST UNSECURED DEBT SECURITIES
General
The following description highlights the general terms of the
unsecured debt securities that Pinnacle West may offer. In this
description, we will refer to the unsecured debt securities as
debt securities. When we use the terms
we, us, our, and like terms
in this description, we are referring to Pinnacle West. When we
offer debt securities in the future, the prospectus supplement
will explain the particular terms of those securities and the
extent to which any of these general provisions will not apply.
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We can issue an unlimited amount of debt securities under the
indentures listed below. We can issue debt securities from time
to time and in one or more series as determined by us. In
addition, we can issue debt securities of any series with terms
different from the terms of debt securities of any other series
and the terms of particular debt securities within any series
may differ from each other, all without the consent of the
holders of previously issued series of debt securities. If
specified in a prospectus supplement relating to an offering of
debt securities, from time to time, without notice to, or the
consent of, the existing holders of any series of debt
securities then outstanding, we may create and issue additional
debt securities equal in rank and having the same maturity,
payment terms, redemption features, and other terms as the debt
securities of such series, except for the issue date of the
additional debt securities, the public offering price of the
additional debt securities, the payment of interest accruing
prior to the issue date of the additional debt securities and
(under some circumstances) the first payment of interest
following the issue date of the additional debt securities. The
additional debt securities may be consolidated and form a single
series with previously issued debt securities of the affected
series.
The debt securities will be our direct, unsecured obligations.
The debt securities may be issued in one or more series under:
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an Indenture, dated as of December 1, 2000, between The
Bank of New York Mellon Trust Company, N.A., successor to
The Bank of New York Mellon, as trustee, and us, as amended from
time to time, in the case of senior debt securities; or
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an Indenture, dated as of December 1, 2000, as amended from
time to time, between The Bank of New York Mellon
Trust Company, N.A., successor to The Bank of New York
Mellon, as trustee, and us, in the case of subordinated debt
securities.
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Because we are structured as a holding company, all existing and
future indebtedness and other liabilities of our subsidiaries
will be effectively senior in right of payment to our debt
securities, whether senior debt securities or subordinated debt
securities. Neither of the above Indentures limits our ability
or the ability of our subsidiaries to incur additional
indebtedness in the future. The assets and cash flows of our
subsidiaries will be available, in the first instance, to
service their own debt and other obligations and our ability to
have the benefit of their assets and cash flows, particularly in
the case of any insolvency or financial distress affecting our
subsidiaries, would arise only through our equity ownership
interests in our subsidiaries and only after their creditors had
been satisfied.
We have summarized the material provisions of the Indentures
below. We have filed the senior and subordinated Indentures as
exhibits to the registration statement. You should read the
Indentures in their entirety, including the definitions,
together with this prospectus and the prospectus supplement
before you make any investment decision in our debt securities.
Although separate Indentures are used for subordinated debt
securities and senior debt securities, references to the
Indenture and the description of the
Indenture in this section apply to both Indentures,
unless otherwise noted.
You should refer to the prospectus supplement used in connection
with the offering of any debt securities for information about a
series of debt securities, including:
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title of the debt securities;
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the aggregate principal amount of the debt securities or the
series of which they are a part;
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the date on which the debt securities mature;
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the interest rate;
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when the interest on the debt securities accrues and is payable;
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the record dates for the payment of interest;
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places where principal, premium, or interest will be payable;
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periods within which, prices at which, and terms upon which we
can redeem debt securities at our option;
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any obligation on our part to redeem or purchase debt securities
pursuant to a sinking fund or at the option of the holder;
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denominations and multiples at which debt securities will be
issued if other than $1,000;
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any index or formula from which the amount of principal or any
premium or interest may be determined;
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any allowance for alternative currencies and determination of
value;
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whether the debt securities are defeasible under the terms of
the Indenture;
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whether we are issuing the debt securities as global securities;
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any additional or different events of default and any change in
the right of the trustee or the holders to declare the principal
amount due and payable if there is any default;
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any addition to or change in the covenants in the
Indenture; and
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any other terms.
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We may sell the debt securities at a substantial discount below
their principal amount. The prospectus supplement may describe
special federal income tax considerations that apply to debt
securities sold at an original issue discount or to debt
securities that are denominated in a currency other than United
States dollars.
Unless the applicable prospectus supplement specifies otherwise,
we do not intend to list the debt securities on any securities
exchange.
Other than the protections described in this prospectus and in
the prospectus supplement, holders of debt securities would not
be protected by the covenants in the Indenture from a
highly-leveraged transaction.
Subordination
The Indenture relating to the subordinated debt securities
states that, unless otherwise provided in a supplemental
indenture or a board resolution or officers certificate
establishing a series of debt securities, the debt securities
will be subordinate to all senior debt. This is true whether the
senior debt is outstanding as of the date of the Indenture or is
incurred afterwards. The balance of the information under this
heading assumes that a supplemental indenture or a board
resolution results in a series of debt securities being
subordinated obligations.
The Indenture states that we cannot make payments of principal,
premium, or interest on the subordinated debt if:
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the principal, premium or interest on senior debt is not paid
when due and the applicable grace period for the default has
ended and the default has not been cured or waived; or
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the maturity of any senior debt has been accelerated because of
a default.
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The Indenture provides that we must pay all senior debt in full
before the holders of the subordinated debt securities may
receive or retain any payment if we make any payment to our
creditors or our assets are distributed to our creditors, with
certain exceptions, upon any of the following:
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dissolution;
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winding up;
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liquidation;
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reorganization, whether voluntary or involuntary;
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bankruptcy;
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insolvency;
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receivership; or
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any other proceedings.
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The Indenture provides that when all amounts owing on the senior
debt are paid in full, the holders of the subordinated debt
securities will be subrogated to the rights of the holders of
senior debt to receive payments or distributions applicable to
senior debt.
The Indenture defines senior debt as the principal, premium,
interest and any other payment due under any of the following,
whether outstanding at the date of the Indenture or thereafter
incurred, created or assumed:
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all of our debt evidenced by notes, debentures, bonds, or other
securities we sell for money;
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all debt of others of the kinds described in the preceding
bullet point that we assume or guarantee in any manner; and
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all renewals, extensions, or refundings of debt of the kinds
described in either of the two preceding bullet points.
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However, the preceding will not be considered senior debt if the
document creating the debt or the assumption or guarantee of the
debt states that it is not superior to or that it is on equal
footing with the subordinated debt securities.
The Indenture does not limit the aggregate amount of senior debt
that we may issue.
Form,
Exchange, and Transfer
Each series of debt securities will be issuable only in fully
registered form and without coupons. In addition, unless
otherwise specified in a prospectus supplement, the debt
securities will be issued in denominations of $1,000 and
multiples of $1,000. We, the trustee, and any of our agents may
treat the registered holder of a debt security as the absolute
owner for the purpose of making payments, giving notices, and
for all other purposes.
The holders of debt securities may exchange them for any other
debt securities of the same series, in authorized denominations
and equal principal amount. However, this type of exchange will
be subject to the terms of the Indenture and any limitations
that apply to global securities.
A holder may transfer debt securities by presenting the endorsed
security at the office of a security registrar or transfer agent
we designate. The holder will not be charged for any exchange or
registration of transfer, but we may require payment to cover
any tax or other governmental charge in connection with the
transaction. We have appointed the trustee under each Indenture
as security registrar. A prospectus supplement will name any
transfer agent we designate for any debt securities if different
from the security registrar. We may designate additional
transfer agents or rescind the designation of any transfer agent
or approve a change in the office through which any transfer
agent acts at any time, except that we will maintain a transfer
agent in each place of payment for debt securities.
If the debt securities of any series
and/or
specified tenor are to be redeemed, we will not be required to
do any of the following:
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issue, register the transfer of, or exchange any debt securities
of that series
and/or tenor
beginning 15 days before the day of mailing of a notice of
redemption of any such debt security that may be selected for
redemption and ending at the close of business on the day of the
mailing; or
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register the transfer of or exchange any debt security selected
for redemption, except for the unredeemed portion of a debt
security that is being redeemed in part.
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Payment
and Paying Agents
Unless otherwise indicated in the applicable prospectus
supplement, we will pay interest on a debt security on any
interest payment date to the person in whose name the debt
security is registered on the regular record date for such
interest payment date.
Unless otherwise indicated in the applicable prospectus
supplement, the principal, premium, and interest on the debt
securities of a particular series will be payable at the office
of the paying agents that we may designate. However, we may pay
any interest by check mailed to the address, as it appears in
the security register, of the person entitled to that interest.
Also, unless otherwise indicated in the applicable prospectus
supplement, the corporate trust office of the
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trustee in The City of New York will be our sole paying agent
for payments with respect to debt securities of each series. Any
other paying agent that we initially designate for the debt
securities of a particular series will be named in the
applicable prospectus supplement. We may at any time designate
additional paying agents or rescind the designation of any
paying agent or approve a change in the office through which any
paying agent acts, except that we will maintain a paying agent
in each place of payment for the debt securities of a particular
series.
All money that we pay to a paying agent for the payment of the
principal, premium, or interest on any debt security that
remains unclaimed at the end of two years after the principal,
premium, or interest has become due and payable will be repaid
to us, and the holder of the debt security may look only to us
for payment.
Consolidation,
Merger, and Sale of Assets
Unless otherwise indicated in the applicable prospectus
supplement, we may not:
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consolidate with or merge into any other entity;
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convey, transfer, or lease our properties and assets
substantially as an entirety to any entity; or
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permit any entity to consolidate with or merge into us or
convey, transfer, or lease its properties and assets
substantially as an entirety to us,
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unless the following conditions are met:
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the successor entity is a corporation, partnership,
unincorporated organization or trust organized and validly
existing under the laws of any domestic jurisdiction and assumes
our obligations on the debt securities and under the Indenture;
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immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time or
both, would become an event of default, shall have occurred and
be continuing; and
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other conditions are met.
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Upon any such merger, consolidation, or transfer or lease of
properties, the successor person will be substituted for us
under the Indenture, and, thereafter, except in the case of a
lease, we will be relieved of all obligations and covenants
under the Indenture and the debt securities.
Events of
Default
Each of the following will be an event of default under the
Indenture with respect to debt securities of any series:
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our failure to pay principal of or any premium on any debt
security of that series when due;
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our failure to pay any interest on any debt securities of that
series when due, and the continuance of that failure for
30 days;
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our failure to deposit any sinking fund payment, when due, in
respect of any debt securities of that series;
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our failure to perform any of our other covenants in the
Indenture relating to that series and the continuance of that
failure for 90 days after written notice has been given by
the trustee or the holders of at least 25% in principal amount
of the outstanding debt securities of that series;
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bankruptcy, insolvency, or reorganization events involving
us; and
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any other event of default for that series described in the
applicable prospectus supplement.
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If an event of default occurs and is continuing, other than an
event of default relating to bankruptcy, insolvency, or
reorganization, either the trustee or the holders of at least
25% in aggregate principal amount of the outstanding debt
securities of the affected series may declare the principal
amount of the debt securities of that series to be due and
payable immediately. In the case of any debt security that is an
original issue discount security, the trustee or the holders of
at least 25% in aggregate principal amount of the outstanding
debt securities of that series may declare the portion of the
principal amount of the debt security specified in the terms of
such debt security to be immediately due and payable upon an
event of default.
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If an event of default involving bankruptcy, insolvency, or
reorganization occurs, the principal amount of all the debt
securities of the affected series will automatically, and
without any action by the trustee or any holder, become
immediately due and payable. After any acceleration, but before
a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount of the outstanding debt
securities of that series may rescind and annul the acceleration
if all events of default, other than the non-payment of
accelerated principal, have been cured or waived as provided in
the Indenture.
The trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction
of any of the holders, unless the holders have offered the
trustee reasonable indemnity. The holders of a majority in
principal amount of the outstanding debt securities of any
series will have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the
trustee, or exercising any trust or power conferred on the
trustee, with respect to the debt securities of that series,
provided that:
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such direction shall not be in conflict with law or the
Indenture;
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the trustee may take any other action not inconsistent with such
direction; and
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subject to the provisions of the Indenture, the trustee may
decline to follow such direction if it determines in good faith
that the proceedings so directed would involve the trustee in
personal liability.
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No holder of a debt security of any series will have any right
to institute any proceeding under the Indenture, or for the
appointment of a receiver or a trustee, or for any other remedy
under the Indenture, unless:
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the holder has previously given the trustee written notice of a
continuing event of default with respect to the debt securities
of that series;
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the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made written
request, and the holder or holders have offered reasonable
indemnity, to the trustee to institute the proceeding as
trustee; and
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the trustee has failed to institute the proceeding, and has not
received from the holders of a majority in aggregate principal
amount of the outstanding debt securities of that series a
direction inconsistent with the request within 60 days
after the notice, request, and offer of indemnity.
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The limitations provided above do not apply to a suit instituted
by a holder of a debt security for the enforcement of payment of
the principal, premium, or interest on the debt security on or
after the applicable due date.
We are required to furnish to the trustee annually a certificate
of various officers stating whether or not we are in default in
the performance or observance of any of the terms, provisions,
and conditions of the Indenture and, if so, specifying all known
defaults.
Modification
and Waiver
In limited cases, we and the trustee may make modifications and
amendments to the Indenture without the consent of the holders
of any series of debt securities, including to cure any
ambiguity, to correct or supplement any provision in the
Indenture that is defective or inconsistent with any other
provision, or to make other provisions with respect to matters
or questions arising under the Indenture, but such action shall
not adversely affect the interests of the holders of the debt
securities of any series in any material respect. We and the
trustee may also make modifications and amendments to the
Indenture with the consent of the holders of not less than
662/3%
in aggregate principal amount of the outstanding debt securities
of each series affected by the modification or amendment.
However, without the consent of the holder of each outstanding
debt security affected, no modification or amendment may:
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change the stated maturity of principal of or interest on any
debt security;
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reduce the principal amount of any debt security or the rate of
interest thereon or any premium payable on redemption thereof;
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reduce the amount of principal of an original issue discount
security or any other debt security payable upon acceleration of
the maturity of the security;
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change the stated maturity of the principal of, or any
installment of principal of or interest on, any debt security;
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change the place or currency of payment of principal of, or any
premium or interest on, any debt security;
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impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security; or
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reduce the percentage in principal amount of outstanding debt
securities of any series, the consent of whose holders is
required for modification or amendment of the Indenture or is
necessary for waiver of compliance with certain provisions of
the Indenture or of certain defaults, or modify the provisions
of the Indenture relating to modification and waiver.
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In general, compliance with certain restrictive provisions of
the Indenture may be waived by the holders of not less than
662/3%
in aggregate principal amount of the outstanding debt securities
of any series. The holders of a majority in aggregate principal
amount of the outstanding debt securities of any series may
waive any past default under the Indenture, except:
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a default in the payment of principal, premium, or
interest; and
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a default under covenants and provisions of the Indenture which
cannot be amended without the consent of the holder of each
outstanding debt security of the affected series.
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In determining whether the holders of the requisite principal
amount of the outstanding debt securities have given or taken
any direction, notice, consent, waiver, or other action under
the Indenture as of any date:
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the principal amount of an outstanding original issue discount
security will be the amount of the principal that would be due
and payable upon acceleration of the maturity on that date,
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if the principal amount payable at the stated maturity of a debt
security is not determinable, the principal amount of the
outstanding debt security will be an amount determined in the
manner prescribed for the debt security; and
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the principal amount of an outstanding debt security denominated
in one or more foreign currencies will be the U.S. dollar
equivalent of the principal amount of the debt security or, in
the case of a debt security described in the previous bullet
points above, the amount described in those bullet points.
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If debt securities have been fully defeased or if we have
deposited money with the trustee to redeem debt securities, they
will not be considered outstanding.
Except in limited circumstances, we will be entitled to set any
day as a record date for the purpose of determining the holders
of outstanding debt securities of any series entitled to give or
take any direction, notice, consent, waiver, or other action
under the Indenture. In limited circumstances, the trustee will
be entitled to set a record date for action by holders. If a
record date is set for any action to be taken by holders of a
particular series, the action may be taken only by persons who
are holders of outstanding debt securities of that series on the
record date. To be effective, the action must be taken by
holders of the requisite principal amount of the debt securities
within a specified period following the record date. For any
particular record date, this period will be 180 days or any
other shorter period that we may specify. The period may be
shortened or lengthened, but not beyond 180 days.
Defeasance
and Covenant Defeasance
We may elect to have the provisions of the Indenture relating to
defeasance and discharge of indebtedness, or defeasance of
restrictive covenants in the Indenture, applied to the debt
securities of any series, or to any specified part of a series.
The prospectus supplement used in connection with the offering
of any debt securities will state whether we have made these
elections for that series.
Defeasance
and Discharge
We will be discharged from all of our obligations with respect
to the debt securities of a series if we deposit with the
trustee money in an amount sufficient to pay the principal,
premium, and interest on the debt securities of that series when
due in accordance with the terms of the Indenture and the debt
securities. We can also deposit
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securities that will provide the necessary monies. However, we
will not be discharged from the obligations to exchange or
register the transfer of debt securities, to replace stolen,
lost, or mutilated debt securities, to maintain paying agencies,
and to hold monies for payment in trust. The defeasance or
discharge may occur only if we satisfy certain requirements,
including that we deliver to the trustee an opinion of counsel
stating that we have received from, or there has been published
by, the United States Internal Revenue Service a ruling, or
there has been a change in tax law, in either case to the effect
that holders of such debt securities:
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will not recognize gain or loss for federal income tax purposes
as a result of the deposit, defeasance, and discharge; and
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will be subject to federal income tax on the same amount, in the
same manner, and at the same times as would have been the case
if the deposit, defeasance, and discharge were not to occur.
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Defeasance
of Covenants
We may elect to omit compliance with restrictive covenants in
the Indenture and any additional covenants that may be described
in the applicable prospectus supplement for a series of debt
securities. This election will preclude some actions from being
considered defaults under the Indenture for the applicable
series. In order to exercise this option, we will be required to
deposit, in trust for the benefit of the holders of debt
securities, funds in an amount sufficient to pay the principal,
premium and interest on the debt securities of the applicable
series. We may also deposit securities that will provide the
necessary monies. We will also be required to satisfy certain
requirements, including that we deliver to the trustee an
opinion of counsel to the effect that holders of the debt
securities will not recognize gain or loss for federal income
tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on
the same amount, in the same manner and at the same times as
would have been the case if the deposit and defeasance were not
to occur. If we exercise this option with respect to any debt
securities and the debt securities are declared due and payable
because of the occurrence of any event of default, the amount of
funds deposited in trust would be sufficient to pay amounts due
on the debt securities at the time of their respective stated
maturities but may not be sufficient to pay amounts due on the
debt securities on any acceleration resulting from an event of
default. In that case, we would remain liable for the additional
payments.
Governing
Law
The law of the State of New York will govern the Indenture and
the debt securities.
Global
Securities
Some or all of the debt securities of any series may be
represented, in whole or in part, by one or more global
securities, which will have an aggregate principal amount equal
to that of the debt securities they represent. We will register
each global security in the name of a depositary or nominee
identified in a prospectus supplement and deposit the global
security with the depositary or nominee. Each global security
will bear a legend regarding the restrictions on exchanges and
registration of transfer referred to below and other matters
specified in a supplemental indenture to the Indenture.
No global security may be exchanged for debt securities
registered, and no transfer of a global security may be
registered, in the name of any person other than the depositary
for the global security or any nominee of the depositary, unless:
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the depositary has notified us that it is unwilling or unable to
continue as depositary for the global security or has ceased to
be a clearing agency registered under the Exchange Act;
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an event of default has occurred and is continuing with respect
to the debt securities represented by the global
security; or
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any other circumstances exist that may be described in the
applicable supplemental indenture and prospectus supplement.
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We will register all securities issued in exchange for a global
security or any portion of a global security in the names
specified by the depositary.
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As long as the depositary or its nominee is the registered
holder of a global security, the depositary or nominee will be
considered the sole owner and holder of the global security and
the debt securities that it represents. Except in the limited
circumstances referred to above, owners of beneficial interests
in a global security will not:
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be entitled to have the global security or debt securities
registered in their names;
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receive or be entitled to receive physical delivery of
certificated debt securities in exchange for a global
security; and
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be considered to be the owners or holders of the global security
or any debt securities for any purpose under the Indenture.
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We will make all payments of principal, premium, and interest on
a global security to the depositary or its nominee. The laws of
some jurisdictions require that purchasers of securities take
physical delivery of securities in definitive form. These laws
make it difficult to transfer beneficial interests in a global
security.
Ownership of beneficial interests in a global security will be
limited to institutions that have accounts with the depositary
or its nominee, referred to as Participants, and to
persons that may hold beneficial interests through Participants.
In connection with the issuance of any global security, the
depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of debt
securities represented by the global security to the accounts of
its Participants. Ownership of beneficial interests in a global
security will only be shown on records maintained by the
depositary or the Participant. Likewise, the transfer of
ownership interests will be effected only through the same
records. Payments, transfers, exchanges, and other matters
relating to beneficial interests in a global security may be
subject to various policies and procedures adopted by the
depositary from time to time. Neither we, the trustee, nor any
of our agents will have responsibility or liability for any
aspect of the depositarys or any Participants
records relating to, or for payments made on account of,
beneficial interests in a global security, or for maintaining,
supervising, or reviewing any records relating to the beneficial
interests.
Regarding
the Trustee
The Bank of New York Mellon Trust Company, N.A., successor
to The Bank of New York Mellon, is the trustee under our
Indentures relating to the senior debt securities and the
subordinated debt securities. It or its affiliate, The Bank of
New York Mellon, is also trustee under various indentures
covering securities issued by APS or on APS behalf or on
which APS is the ultimate obligor and also acts as auction agent
for certain of that debt. The Bank of New York Mellon also acts
as transfer agent for our common stock. We and our affiliates
maintain normal commercial and banking relationships with The
Bank of New York Mellon Trust Company, N.A., and its
affiliates. In the future, The Bank of New York Mellon
Trust Company, N.A. and its affiliates, including The Bank
of New York Mellon, may provide banking, investment and other
services to us and our affiliates.
DESCRIPTION
OF PINNACLE WEST PREFERRED STOCK
Pinnacle West may issue, from time to time, shares of one or
more series of its preferred stock. When we use the terms
we, us, our, and like terms
in this description, we are referring to Pinnacle West. The
following description sets forth certain general terms and
provisions of the preferred stock to which any prospectus
supplement may relate. The particular terms of any series of
preferred stock and the extent, if any, to which these general
provisions may apply to the series of preferred stock offered
will be described in the prospectus supplement relating to that
preferred stock.
The following summary of provisions of the preferred stock does
not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the provisions of our articles
of incorporation, bylaws, and the amendment to our articles
relating to a specific series of the preferred stock (the
statement of preferred stock designations), which
will be in the form filed as an exhibit to, or incorporated by
reference in, the registration statement of which this
prospectus is a part. Before investing in any series of our
preferred stock, you should read our articles and bylaws.
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General
Under our articles of incorporation, we have the authority to
issue up to 10,000,000 shares of preferred stock. As of
April 24, 2009, no shares of preferred stock were
outstanding. Our Board of Directors is authorized to issue
shares of preferred stock in one or more series and to fix for
each series voting powers and those preferences and relative,
participating, optional or other special rights and those
qualifications, limitations or restrictions as are permitted by
the Arizona Business Corporation Act (the ABCA). For
a description of provisions in our articles and bylaws or under
Arizona law that could delay, defer or prevent a change in
control, see Description of Pinnacle West Common
Stock Certain Anti-takeover Effects.
Our Board of Directors is authorized to determine the terms for
each series of preferred stock, and the prospectus supplement
will describe the terms of any series of preferred stock being
offered, including:
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the designation of the shares and the number of shares that
constitute the series;
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the dividend rate (or the method of calculation thereof), if
any, on the shares of the series and the priority as to payment
of dividends with respect to other classes or series of our
capital stock;
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the dividend periods (or the method of calculation thereof);
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the voting rights of the shares;
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the liquidation preference and the priority as to payment of the
liquidation preference with respect to other classes or series
of our capital stock and any other rights of the shares of the
series upon our liquidation or winding up;
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whether and on what terms the shares of the series will be
subject to redemption or repurchase at our option or at the
option of the holders thereof;
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whether and on what terms the shares of the series will be
convertible into or exchangeable for other securities;
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whether the shares of the series of preferred stock will be
listed on a securities exchange;
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any special United States federal income tax considerations
applicable to the series; and
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the other rights and privileges and any qualifications,
limitations or restrictions of the rights or privileges of the
series.
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Dividends
Holders of shares of preferred stock will be entitled to
receive, when and as declared by our Board of Directors out of
our funds legally available therefor, a cash dividend payable at
the dates and at the rates, if any, per share as set forth in
the applicable prospectus supplement.
Convertibility
No series of preferred stock will be convertible into, or
exchangeable for, other securities or property except as set
forth in the applicable prospectus supplement.
Redemption
and Sinking Fund
No series of preferred stock will be redeemable or receive the
benefit of a sinking fund except as set forth in the applicable
prospectus supplement.
Liquidation
Rights
Unless otherwise set forth in the applicable prospectus
supplement, in the event of our liquidation, dissolution or
winding up, the holders of shares of each series of preferred
stock are entitled to receive distributions out of our assets
available for distribution to shareholders, before any
distribution of assets is made to holders of (i) any other
shares of preferred stock ranking junior to that series of
preferred stock as to rights upon liquidation and
(ii) shares
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of common stock. The amount of liquidating distributions
received by holders of preferred stock will generally equal the
liquidation preference specified in the applicable prospectus
supplement for that series of preferred stock, plus any
dividends accrued and accumulated but unpaid to the date of
final distribution. The holders of each series of preferred
stock will not be entitled to receive the liquidating
distribution of, plus such dividends on, those shares until the
liquidation preference of any shares of our capital stock
ranking senior to that series of the preferred stock as to the
rights upon liquidation shall have been paid or set aside for
payment in full.
If upon our liquidation, dissolution or winding up, the amounts
payable with respect to the preferred stock, and any other
preferred stock ranking as to any distribution on a parity with
the preferred stock are not paid in full, then the holders of
the preferred stock and the other parity preferred stock will
share ratably in any distribution of assets in proportion to the
full respective preferential amount to which they are entitled.
Unless otherwise specified in a prospectus supplement for a
series of preferred stock, after payment of the full amount of
the liquidating distribution to which they are entitled, the
holders of shares of preferred stock will not be entitled to any
further participation in any distribution of our assets. Neither
a consolidation or merger of us with another corporation nor a
sale of securities shall be considered a liquidation,
dissolution or winding up of us.
Voting
Rights
The holders of each series of preferred stock we may issue will
have no voting rights, except as required by law and as
described below or in the applicable prospectus supplement. Our
Board of Directors may, upon issuance of a series of preferred
stock, grant voting rights to the holders of that series,
including rights to elect additional board members if we fail to
pay dividends in a timely fashion.
Arizona law provides for certain voting rights for holders of a
class of stock, even if the stock does not have other voting
rights. Thus, the holders of all shares of a class would be
entitled to vote on any amendment to our articles of
incorporation that would:
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increase or decrease the aggregate number of authorized shares
of the class;
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effect an exchange or reclassification of all or part of the
shares of the class into shares of another class;
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effect an exchange or reclassification, or create the right of
exchange of all or part of the shares of another class into
shares of the class;
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change the designations, rights, obligations, preferences, or
limitations of all or part of the shares of the class;
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change the shares of all or part of the class into a different
number of shares of the same class;
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create a new class of shares having rights or preferences with
respect to distributions or to dissolution that are prior,
superior or substantially equal to the shares of the class;
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increase rights, preferences or number of authorized shares of
any class that, after giving effect to the amendment, have
rights or preferences with respect to distributions or to
dissolution that are prior, superior or substantially equal to
the shares of the class;
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limit or deny an existing preemptive right of all or part of the
class; and
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cancel or otherwise affect rights to distributions or dividends
that have accumulated but have not yet been declared on all or
part of the shares of the class.
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If the proposed amendment would affect a series of the class,
but not the entire class, in one or more of the ways described
in the bullets above, then the shares of the affected series
will have the right to vote on the amendment as a separate
voting group. However, if a proposed amendment that would
entitle two or more series of the class to vote as separate
voting groups would affect those series in the same or a
substantially similar way, the shares of all the series so
affected must vote together as a single voting group on the
proposed amendment.
Unless the articles of incorporation, Arizona law or the Board
of Directors would require a greater vote or unless the articles
or Arizona law would require a different quorum, if an amendment
to the articles would allow the
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preferred stock or one or more series of the preferred stock to
vote as voting groups, the vote required by each voting group
would be:
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a majority of the votes entitled to be cast by the voting group,
if the amendment would create dissenters rights for that
voting group; and
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in any other case, if a quorum is present in person or by proxy
consisting of a majority of the votes entitled to be cast on the
matter by the voting group, the votes cast by the voting group
in favor of the amendment must exceed the votes cast against the
amendment by the voting group.
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Arizona law may also require that the preferred stock be
entitled to vote on certain other extraordinary transactions.
Miscellaneous
The holders of our preferred stock will have no preemptive
rights. All shares of preferred stock being offered by the
applicable prospectus supplement will be fully paid and not
liable to further calls or assessment by us. If we should redeem
or otherwise reacquire shares of our preferred stock, then these
shares will resume the status of authorized and unissued shares
of preferred stock undesignated as to series, and will be
available for subsequent issuance. There are no restrictions on
repurchase or redemption of the preferred stock while there is
any arrearage on sinking fund installments except as may be set
forth in an applicable prospectus supplement. Payment of
dividends on any series of preferred stock may be restricted by
loan agreements, indentures and other transactions entered into
by us. Any material contractual restrictions on dividend
payments that exist at the time of the offer of any preferred
stock will be described or incorporated by reference in the
applicable prospectus supplement.
When we offer to sell a series of preferred stock, we will
describe the specific terms of the series in the applicable
prospectus supplement. If any particular terms of a series of
preferred stock described in a prospectus supplement differ from
any of the terms described in this prospectus, then the terms
described in the applicable prospectus supplement will be deemed
to supersede the terms described in this prospectus.
No Other
Rights
The shares of a series of preferred stock will not have any
preferences, voting powers or relative, participating, optional
or other special rights except as set forth above or in the
applicable prospectus supplement, our articles of incorporation
or the applicable statement of preferred stock designations or
as otherwise required by law.
Transfer
Agent and Registrar
The transfer agent and registrar for each series of preferred
stock will be designated in the applicable prospectus supplement.
DESCRIPTION
OF PINNACLE WEST COMMON STOCK
Pinnacle West may issue, from time to time, shares of its common
stock, the general terms and provisions of which are summarized
below. When we use the terms we, us,
our, and like terms in this description, we are
referring to Pinnacle West. This summary does not purport to be
complete and is subject to, and is qualified in its entirety by
express reference to, the provisions of our articles of
incorporation, our bylaws and the applicable prospectus
supplement.
Authorized
Shares
Under our articles of incorporation, we have the authority to
issue 150,000,000 shares of common stock.
Dividends
Subject to any preferential rights of any series of preferred
stock, holders of shares of common stock will be entitled to
receive dividends on the stock out of assets legally available
for distribution when, as and if authorized
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and declared by our Board of Directors. The payment of dividends
on the common stock will be a business decision to be made by
our Board of Directors from time to time based upon results of
our operations and our financial condition and any other factors
as our Board of Directors considers relevant. Payment of
dividends on the common stock may be restricted by loan
agreements, indentures and other transactions entered into by us
from time to time. Any material contractual restrictions on
dividend payments that exist at the time of the offer of any
common stock will be described in the applicable prospectus
supplement. In addition, our principal income consists of
dividends paid to us by our subsidiaries, primarily APS.
APS ability to pay dividends could be limited or
restricted from time to time by loan agreements, indentures and
other transactions or by law or regulatory authorities.
Voting
Rights
Holders of common stock are entitled to one vote per share on
all matters voted on generally by the shareholders, including
the election of directors, and, except as otherwise required by
law or except as provided with respect to any series of
preferred stock, the holders of the shares possess all voting
power. Arizona law provides for cumulative voting for the
election of directors. As a result, any shareholder may cumulate
his or her votes by casting them all for any one director
nominee or by distributing them among two or more nominees.
Liquidation
Rights
Subject to any preferential rights of any series of preferred
stock, holders of shares of common stock are entitled to share
ratably in our assets legally available for distribution to our
shareholders in the event of our liquidation, dissolution or
winding up.
Absence
of Other Rights
Holders of our common stock have no preferential, preemptive,
conversion or exchange rights.
Miscellaneous
All shares of common stock being offered by the applicable
prospectus supplement will be fully paid and not liable to
further calls or assessment by us.
Transfer
Agent and Registrar
The Bank of New York Mellon is the principal transfer agent and
registrar for the common stock.
Preferred
Stock
Our Board of Directors has the authority, without any further
action by our shareholders, to issue from time to time up to
10,000,000 shares of preferred stock, in one or more series
and to fix the designations, preferences, rights,
qualifications, limitations and restrictions thereof, including
voting rights, dividend rights, dividend rates, conversion
rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series.
The issuance of preferred stock with voting rights could have an
adverse effect on the voting power of holders of common stock by
increasing the number of outstanding shares having voting
rights. In addition, if our Board of Directors authorizes
preferred stock with conversion rights, the number of shares of
common stock outstanding could potentially be increased up to
the authorized amount. The issuance of preferred stock could
decrease the amount of earnings and assets available for
distribution to holders of common stock. Any such issuance could
also have the effect of delaying, deterring or preventing a
change in control of us and may adversely affect the rights of
holders of our common stock. See also Description of
Pinnacle West Preferred Stock above.
Certain
Anti-takeover Effects
General. Certain provisions of our articles of
incorporation, bylaws, and the Arizona Revised Statutes
(ARS) may have an anti-takeover effect and may delay
or prevent a tender offer or other acquisition transaction that
a shareholder might consider to be in his or her best interest,
including a transaction that results in a premium over the
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market price of the common stock. The summary of the provisions
of our articles, bylaws and the ARS set forth below does not
purport to be complete and is qualified in its entirety by
reference to our articles, bylaws and the ARS.
Business Combinations. ARS
§ 10-2741
through 2743 and Article XII of our bylaws restrict a wide
range of transactions (collectively, business
combinations) between us or, in certain cases, one of our
subsidiaries, and an interested shareholder (or any affiliate or
associate of the interested shareholder). An interested
shareholder is, generally, any person who beneficially
owns, directly or indirectly, 10% or more of our outstanding
voting power or any of our affiliates or associates who at any
time within the prior three years was such a beneficial owner.
The statute broadly defines business combinations to
include, among other things and with certain exceptions:
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mergers and consolidations with an interested shareholder or an
affiliate or associate of the interested shareholder;
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share exchanges with an interested shareholder or an affiliate
or associate of the interested shareholder;
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any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets to an interested shareholder or an
affiliate or associate of the interested shareholder,
representing 10% or more of (i) the aggregate market value
of all of our consolidated assets as of the end of the most
recent fiscal quarter, (ii) the aggregate market value of
all our outstanding shares, or (iii) our consolidated
revenues or net income for the four most recent fiscal quarters;
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the issuance or transfer of shares of stock having an aggregate
market value of 5% or more of the aggregate market value of all
of our outstanding shares to an interested shareholder or an
affiliate or associate of the interested shareholder;
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the adoption of a plan or proposal for our liquidation or
dissolution or reincorporation in another state or jurisdiction
pursuant to an agreement or arrangement with an interested
shareholder or an affiliate or associate of the interested
shareholder;
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corporate actions, such as stock splits and stock dividends, and
other transactions resulting in an increase in the proportionate
share of the outstanding shares of any series or class of stock
of us or any of our subsidiaries owned by an interested
shareholder or an affiliate or associate of the interested
shareholder; and
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the receipt by an interested shareholder or an affiliate or
associate of the interested shareholder of the benefit (other
than proportionately as a shareholder) of any loans, advances,
guarantees, pledges or other financial assistance or any tax
credits or other tax advantages provided by or through us or any
of our subsidiaries.
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The ARS and our bylaws provide that, subject to certain
exceptions, we may not engage in a business combination with an
interested shareholder (or any affiliate or associate of the
interested shareholder) or authorize one of our subsidiaries to
do so, for a period of three years after the date on which the
interested shareholder first acquired the shares that qualify
such person as an interested shareholder (the share
acquisition date), unless either the business combination
or the interested shareholders acquisition of shares on
the share acquisition date is approved by a committee of our
Board of Directors (comprised solely of disinterested directors
or other disinterested persons) prior to the interested
shareholders share acquisition date.
In addition, after such three-year period, the ARS and our
bylaws prohibit us from engaging in any business combination
with an interested shareholder (or any affiliate or associate of
the interested shareholder), subject to certain exceptions,
unless:
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the business combination or acquisition of shares by the
interested shareholder on the share acquisition date was
approved by our Board of Directors prior to the share
acquisition date;
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the business combination is approved by holders of a majority of
our outstanding shares (excluding shares beneficially owned by
the interested shareholder or any affiliate or associate of the
interested shareholder) at a meeting called after such
three-year period; or
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the business combination satisfies specified price and other
requirements.
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Anti-Greenmail Provisions. ARS
§ 10-2704
and Article XIII of our bylaws prohibit us from purchasing
any shares of our voting stock from any beneficial owner (or
group of beneficial owners acting together to acquire, own
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or vote our shares) of more than 5% of the voting power of our
outstanding shares at a price per share in excess of the average
closing sale price during the 30 trading days preceding the
purchase or if the person or persons have commenced a tender
offer or announced an intention to seek control of us, during
the 30 trading days prior to the commencement of the tender
offer or the making of the announcement, if the 5% beneficial
owner has beneficially owned the shares to be purchased for a
period of less than three years, unless:
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holders of a majority of our voting power (excluding shares held
by the 5% beneficial owner or its affiliates or associates or by
any of our officers and directors) approve the purchase; or
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we make the repurchase offer available to all holders of the
class or series of securities to be purchased and to all holders
of other securities convertible into that class or series.
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Control Share Acquisition Statute. Through a
provision in our bylaws, we have opted out of ARS
§ 10-2721
through 2727, the Arizona statutory provisions regulating
control share acquisitions. As a result, potential acquirors are
not subject to the limitations imposed by that statute.
Special Meetings of Shareholders. Pursuant to
ARS
§ 10-702,
except with respect to certain business combinations, as
required by Arizona law, a special meeting of shareholders may
be called by a corporations Board of Directors or any
other person authorized to do so in its articles of
incorporation or bylaws. Our bylaws provide that, except as
required by law, special meetings of shareholders may only be
called by a majority of our Board of Directors, the Chairman of
the Board, or the President.
Election and Removal of Directors. Each member
of our Board of Directors is elected annually to hold office
until the next annual meeting of the shareholders or until his
or her earlier death, resignation or removal or until his or her
successor is duly elected and qualified. Arizona law provides
for cumulative voting in the election of directors, which makes
it easier for minority shareholders to obtain representation on
the Board of Directors.
Our bylaws provide that any director may be removed with or
without cause, but only at a special meeting of shareholders
called for that purpose, if the votes cast in favor of such
removal exceed the votes cast against such removal. However, if
less than the entire Board of Directors is to be removed, no one
director may be removed if the votes cast against the
directors removal would be sufficient to elect the
director if then cumulatively voted at an election of directors.
On January 21, 2009, our Board of Directors approved an
amendment to our bylaws to require directors to tender their
resignation to the Corporate Governance Committee for
consideration in the event, in an uncontested election, the
director receives a greater number of votes cast
withheld for his or her election than
for such election. The Corporate Governance
Committee will evaluate the directors tendered
resignation, taking into account the best interests of Pinnacle
West and its shareholders and will recommend to our Board of
Directors whether to accept or reject the resignation. In making
its recommendation, the Corporate Governance Committee may
consider, among other things, the effect of the exercise of
cumulative voting in the election. Our Board of Directors will
act within 120 days following certification of the
shareholder vote and publicly disclose its decision and the
underlying rationale. Any director who tenders his or her
resignation pursuant to this bylaw provision will not
participate in any committee or Board of Director consideration
of his or her resignation. Prior to the amendment, this
requirement was included in our Corporate Governance Guidelines.
Shareholder Proposals and Director
Nominations. A shareholder can submit shareholder
proposals and nominate candidates for election to our Board of
Directors if he or she follows the advance notice provisions set
forth in our bylaws.
With respect to shareholder proposals to bring business before
the annual meeting, shareholders must submit a written notice to
the Secretary of Pinnacle West not fewer than 90 nor more than
120 days prior to the first anniversary of the date of our
previous years annual meeting of shareholders. However, if
we have changed the date of the annual meeting by more than
30 days from the date of the previous years annual
meeting, the written notice must be submitted no earlier than
120 days before the annual meeting and not later than
90 days before the annual meeting or ten days after the day
we make public the date of the annual meeting. The written
notice must briefly describe the business the shareholder
desires to bring before the meeting, the text of the proposal or
business, the
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reasons for conducting such business at the meeting, and any
material interest in the proposal of the shareholder and the
beneficial owner, if any, on whose behalf the proposal is made.
With respect to director nominations, shareholders must submit
written notice to the Secretary of Pinnacle West at least
180 days prior to the date of the annual meeting. This
requirement is also contained in our articles of incorporation.
Our bylaws require that the written notice must contain all
information relating to the director nominee that is required to
be included in a proxy statement pursuant to Regulation 14A
under the Securities Exchange Act of 1934, as well as the
written consent of the proposed nominee to be named in the proxy
statement as a nominee and to serving as a director if elected.
All written notices delivered pursuant to the advance notice
provisions of our bylaws are required to state (i) the name
and address as they appear on our books of the sponsoring
shareholder and the beneficial owner, if any, on whose behalf
the proposal or nomination is made, (ii) the class and
number of shares that are owned beneficially and of record by
the shareholder and such beneficial owner, (iii) a
representation that the shareholder is a holder of record
entitled to vote at the meeting and intends to appear in person
or by proxy at the meeting to propose such business or
nomination, and (iv) whether the shareholder or beneficial
owner intends or is part of a group that intends to deliver a
proxy statement to holders of at least the number of shares
required to adopt the proposal or elect the nominee or otherwise
solicit proxies in favor of the proposal or nomination.
Shareholder proposals and director nominations that are late or
that do not include all required information may be rejected.
This could prevent shareholders from bringing certain matters
before an annual meeting, including proposing the election of
non-incumbent directors.
A shareholder must also comply with all applicable laws in
proposing business to be conducted and in nominating directors.
The notice provisions of the bylaws do not affect rights of
shareholders to request inclusion of proposals in our proxy
statement pursuant to
Rule 14a-8
of the Securities Exchange Act of 1934.
Additional Authorized Shares of Capital
Stock. The authorized but unissued shares of
common stock and preferred stock available for issuance under
our articles of incorporation could be issued at such times,
under such circumstances, and with such terms and conditions as
to impede an acquisition transaction.
Amendment to Articles of Incorporation and
Bylaws. ARS
§ 10-1001
through 1003 generally provide that both the Board of Directors
and the shareholders must approve amendments to an Arizona
corporations articles of incorporation, except that the
Board of Directors may adopt specified ministerial amendments
without shareholder approval. Unless the articles of
incorporation, Arizona law or the Board of Directors would
require a greater vote or unless the articles of incorporation
or Arizona law would require a different quorum, the vote
required by each voting group allowed or required to vote on the
amendment would be:
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a majority of the votes entitled to be cast by the voting group,
if the amendment would create dissenters rights for that
voting group; and
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in any other case, if a quorum is present in person or by proxy
consisting of a majority of the votes entitled to be cast on the
matter by the voting group, the votes cast by the voting group
in favor of the amendment must exceed the votes cast against the
amendment by the voting group.
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ARS
§ 10-1020
provides that the Board of Directors may amend the
corporations bylaws unless either: (i) the articles
or applicable law reserves this power exclusively to
shareholders in whole or in part or (ii) the shareholders
in amending or repealing a particular bylaw provide expressly
that the Board may not amend or repeal that bylaw. An Arizona
corporations shareholders may amend the corporations
bylaws even though they may also be amended by the Board of
Directors. Our bylaws may not be amended or repealed without the
vote of a majority of the Board of Directors or the affirmative
vote of a majority of votes cast on the matter at a meeting of
shareholders.
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DESCRIPTION
OF APS UNSECURED DEBT SECURITIES
General
The following description highlights the general terms of the
unsecured debt securities that APS may offer. In this
description, we will refer to the unsecured debt securities as
debt securities. When we use the terms
we, us, our, and like terms
in this description, we are referring to APS. When we offer debt
securities in the future, the prospectus supplement will explain
the particular terms of those securities and the extent to which
any of these general provisions will not apply.
We can issue an unlimited amount of debt securities under the
indenture listed below. We can issue debt securities from time
to time and in one or more series as determined by us. In
addition, we can issue debt securities of any series with terms
different from the terms of debt securities of any other series
and the terms of particular debt securities within any series
may differ from each other, all without the consent of the
holders of previously issued series of debt securities. If
specified in a prospectus supplement relating to an offering of
debt securities, from time to time, without notice to, or the
consent of, the existing holders of any series of debt
securities then outstanding, we may create and issue additional
debt securities equal in rank and having the same maturity,
payment terms, redemption features, and other terms as the debt
securities of such series, except for the issue date of the
additional debt securities, the public offering price of the
additional debt securities, the payment of interest accruing
prior to the issue date of the additional debt securities and
(under some circumstances) the first payment of interest
following the issue date of the additional debt securities. The
additional debt securities may be consolidated and form a single
series with previously issued debt securities of the affected
series.
The debt securities will be our direct, unsecured obligations.
The debt securities may be issued in one or more series under an
Indenture, dated as of January 15, 1998, as amended from
time to time, between The Bank of New York Mellon
Trust Company, N.A., successor to JPMorgan Chase Bank,
N.A., and us.
We have summarized the material provisions of the Indenture
below. We have filed the Indenture as an exhibit to the
registration statement. You should read the Indenture in its
entirety, including the definitions, together with this
prospectus and the prospectus supplement before you make any
investment decision in our debt securities.
You should refer to the prospectus supplement used in connection
with the offering of any debt securities for information about a
series of debt securities, including:
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title of the debt securities;
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the aggregate principal amount of the debt securities or the
series of which they are a part;
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the date on which the debt securities mature;
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the interest rate;
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when the interest on the debt securities accrues and is payable;
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the record dates for the payment of interest;
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places where principal, premium, or interest will be payable;
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periods within which, prices at which, and terms upon which we
can redeem debt securities at our option;
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any obligation on our part to redeem or purchase debt securities
pursuant to a sinking fund or at the option of the holder;
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denominations and multiples at which debt securities will be
issued if other than $1,000;
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any index or formula from which the amount of principal or any
premium or interest may be determined;
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any allowance for alternative currencies and determination of
value;
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whether the debt securities are defeasible under the terms of
the Indenture;
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whether we are issuing the debt securities as global securities;
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any additional or different events of default and any change in
the right of the trustee or the holders to declare the principal
amount due and payable if there is any default;
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any addition to or change in the covenants in the
Indenture; and
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any other terms.
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We may sell the debt securities at a substantial discount below
their principal amount. The prospectus supplement may describe
special federal income tax considerations that apply to debt
securities sold at an original issue discount or to debt
securities that are denominated in a currency other than United
States dollars.
We must obtain the approval of the Arizona Corporation
Commission (ACC), before incurring long-term debt.
An existing ACC order allows us to have approximately
$4.2 billion in principal amount of long-term debt
outstanding at any one time, subject to the satisfaction of
certain conditions, including the satisfaction of a minimum
common equity test and a debt service coverage test. We do not
expect this order to limit our ability to meet our capital
requirements.
Unless the applicable prospectus supplement specifies otherwise,
we do not intend to list the debt securities on any securities
exchange.
Other than the protections described in this prospectus and in
the related prospectus supplement, holders of debt securities
would not be protected by the covenants in the Indenture from a
highly-leveraged transaction.
Form,
Exchange, and Transfer
Each series of debt securities will be issuable only in fully
registered form and without coupons. In addition, unless
otherwise specified in a prospectus supplement, the debt
securities will be issued in denominations of $1,000 and
multiples of $1,000. We, the trustee, and any of our agents may
treat the registered holder of a debt security as the absolute
owner for the purpose of making payments, giving notices, and
for all other purposes.
The holders of debt securities may exchange them for any other
debt securities of the same series, in authorized denominations
and equal principal amount. However, this type of exchange will
be subject to the terms of the Indenture and any limitations
that apply to global securities.
A holder may transfer debt securities by presenting the endorsed
security at the office of a security registrar or transfer agent
we designate. The holder will not be charged for any exchange or
registration of transfer, but we may require payment to cover
any tax or other governmental charge in connection with the
transaction. We have appointed the trustee under the Indenture
as security registrar. A prospectus supplement will name any
transfer agent we designate for any debt securities if different
from the security registrar. We may designate additional
transfer agents or rescind the designation of any transfer agent
or approve a change in the office through which any transfer
agent acts at any time, except that we will maintain a transfer
agent in each place of payment for debt securities.
If the debt securities of any series
and/or
specified tenor are to be redeemed, we will not be required to
do any of the following:
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issue, register the transfer of, or exchange any debt securities
of that series
and/or tenor
beginning 15 days before the day of mailing of a notice of
redemption of any such debt security that may be selected for
redemption and ending at the close of business on the day of the
mailing; or
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register the transfer of or exchange any debt security selected
for redemption, except for the unredeemed portion of a debt
security that is being redeemed in part.
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Payment
and Paying Agents
Unless otherwise indicated in the applicable prospectus
supplement, we will pay interest on a debt security on any
interest payment date to the person in whose name the debt
security is registered on the regular record date for such
interest payment date.
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Unless otherwise indicated in the applicable prospectus
supplement, the principal, premium, and interest on the debt
securities of a particular series will be payable at the office
of the paying agents that we may designate. However, we may pay
any interest by check mailed to the address, as it appears in
the security register, of the person entitled to that interest.
Also, unless otherwise indicated in the applicable prospectus
supplement, the corporate trust office of the trustee in The
City of New York will be our sole paying agent for payments with
respect to debt securities of each series. Any other paying
agent that we initially designate for the debt securities of a
particular series will be named in the applicable prospectus
supplement. We may at any time designate additional paying
agents or rescind the designation of any paying agent or approve
a change in the office through which any paying agent acts,
except that we will maintain a paying agent in each place of
payment for the debt securities of a particular series.
All money that we pay to a paying agent for the payment of the
principal, premium, or interest on any debt security that
remains unclaimed at the end of two years after the principal,
premium, or interest has become due and payable will be repaid
to us, and the holder of the debt security may look only to us
for payment.
Consolidation,
Merger, and Sale of Assets
Unless otherwise indicated in the applicable prospectus
supplement, we may not:
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consolidate with or merge into any other entity;
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convey, transfer, or lease our properties and assets
substantially as an entirety to any entity; or
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permit any entity to consolidate with or merge into us or
convey, transfer, or lease its properties and assets
substantially as an entirety to us,
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unless the following conditions are met:
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the successor entity is a corporation, partnership,
unincorporated organization or trust organized and validly
existing under the laws of any domestic jurisdiction and assumes
our obligations on the debt securities and under the Indenture;
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immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time or
both, would become an event of default, shall have occurred and
be continuing; and
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other conditions are met.
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Upon any such merger, consolidation, or transfer or lease of
properties, the successor person will be substituted for us
under the Indenture, and, thereafter, except in the case of a
lease, we will be relieved of all obligations and covenants
under the Indenture and the debt securities.
Events of
Default
Each of the following will be an event of default under the
Indenture with respect to debt securities of any series:
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our failure to pay principal of or any premium on any debt
security of that series when due;
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our failure to pay any interest on any debt securities of that
series when due, and the continuance of that failure for
30 days;
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our failure to deposit any sinking fund payment, when due, in
respect of any debt securities of that series;
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our failure to perform any of our other covenants in the
Indenture relating to that series and the continuance of that
failure for 90 days after written notice has been given by
the trustee or the holders of at least 25% in principal amount
of the outstanding debt securities of that series;
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bankruptcy, insolvency, or reorganization events involving
us; and
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any other event of default for that series described in the
applicable prospectus supplement.
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If an event of default occurs and is continuing, other than an
event of default relating to bankruptcy, insolvency, or
reorganization, either the trustee or the holders of at least
25% in aggregate principal amount of the outstanding debt
securities of the affected series may declare the principal
amount of the debt securities of that series to be due and
payable immediately. In the case of any debt security that is an
original issue discount security, the trustee or the holders of
at least 25% in aggregate principal amount of the outstanding
debt securities of that series may declare the portion of the
principal amount of the debt security specified in the terms of
such debt security to be immediately due and payable upon an
event of default.
If an event of default involving bankruptcy, insolvency, or
reorganization occurs, the principal amount of all the debt
securities of the affected series will automatically, and
without any action by the trustee or any holder, become
immediately due and payable. After any acceleration, but before
a judgment or decree based on acceleration, the holders of a
majority in aggregate principal amount of the outstanding debt
securities of that series may rescind and annul the acceleration
if all events of default, other than the non-payment of
accelerated principal, have been cured or waived as provided in
the Indenture.
The trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request or direction
of any of the holders, unless the holders have offered the
trustee reasonable indemnity. The holders of a majority in
principal amount of the outstanding debt securities of any
series will have the right to direct the time, method, and place
of conducting any proceeding for any remedy available to the
trustee, or exercising any trust or power conferred on the
trustee, with respect to the debt securities of that series,
provided that:
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such direction shall not be in conflict with law or the
Indenture;
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the trustee may take any other action not inconsistent with such
direction; and
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subject to the provisions of the Indenture, the trustee may
decline to follow such direction if it determines in good faith
that the proceedings so directed would involve the trustee in
personal liability.
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No holder of a debt security of any series will have any right
to institute any proceeding under the Indenture, or for the
appointment of a receiver or a trustee, or for any other remedy
under the Indenture, unless:
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the holder has previously given the trustee written notice of a
continuing event of default with respect to the debt securities
of that series;
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the holders of at least 25% in aggregate principal amount of the
outstanding debt securities of that series have made written
request, and the holder or holders have offered reasonable
indemnity, to the trustee to institute the proceeding as
trustee; and
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the trustee has failed to institute the proceeding, and has not
received from the holders of a majority in aggregate principal
amount of the outstanding debt securities of that series a
direction inconsistent with the request within 60 days
after the notice, request, and offer of indemnity.
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The limitations provided above do not apply to a suit instituted
by a holder of a debt security for the enforcement of payment of
the principal, premium, or interest on the debt security on or
after the applicable due date.
We are required to furnish to the trustee annually a certificate
of various officers stating whether or not we are in default in
the performance or observance of any of the terms, provisions,
and conditions of the Indenture and, if so, specifying all known
defaults.
Modification
and Waiver
In limited cases, we and the trustee may make modifications and
amendments to the Indenture without the consent of the holders
of any series of debt securities, including to cure any
ambiguity, to correct or supplement any provision in the
Indenture that is defective or inconsistent with any other
provision, or to make other provisions with respect to matters
or questions arising under the Indenture, but such action shall
not adversely affect the interests of the holders of the debt
securities of any series in any material respect. We and the
trustee may also make modifications and amendments to the
Indenture with the consent of the holders of not less than
662/3%
in aggregate principal amount of the outstanding debt securities
of each series affected by the modification or amendment.
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However, without the consent of the holder of each outstanding
debt security affected, no modification or amendment may:
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change the stated maturity of principal of or interest on any
debt security;
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reduce the principal amount of any debt security or the rate of
interest thereon or any premium payable on redemption thereof;
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reduce the amount of principal of an original issue discount
security or any other debt security payable upon acceleration of
the maturity of the security;
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change the place or currency of payment of principal of, or any
premium or interest on, any debt security;
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impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security; or
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reduce the percentage in principal amount of outstanding debt
securities of any series, the consent of whose holders is
required for modification or amendment of the Indenture or is
necessary for waiver of compliance with certain provisions of
the Indenture or of certain defaults, or modify the provisions
of the Indenture relating to modification and waiver.
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In general, compliance with certain restrictive provisions of
the Indenture may be waived by the holders of not less than
662/3%
in aggregate principal amount of the outstanding debt securities
of any series. The holders of a majority in aggregate principal
amount of the outstanding debt securities of any series may
waive any past default under the Indenture, except:
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a default in the payment of principal, premium, or
interest; and
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a default under covenants and provisions of the Indenture which
cannot be amended without the consent of the holder of each
outstanding debt security of the affected series.
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In determining whether the holders of the requisite principal
amount of the outstanding debt securities have given or taken
any direction, notice, consent, waiver, or other action under
the Indenture as of any date:
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the principal amount of an outstanding original issue discount
security will be the amount of the principal that would be due
and payable upon acceleration of the maturity on that date;
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if the principal amount payable at the stated maturity of a debt
security is not determinable, the principal amount of the
outstanding debt security will be an amount determined in the
manner prescribed for the debt security; and
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the principal amount of an outstanding debt security denominated
in one or more foreign currencies will be the U.S. dollar
equivalent of the principal amount of the debt security or, in
the case of a debt security described in the previous bullet
points above, the amount described in those bullet points.
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If debt securities have been fully defeased or if we have
deposited money with the trustee to redeem debt securities, they
will not be considered outstanding.
Except in limited circumstances, we will be entitled to set any
day as a record date for the purpose of determining the holders
of outstanding debt securities of any series entitled to give or
take any direction, notice, consent, waiver, or other action
under the Indenture. In limited circumstances, the trustee will
be entitled to set a record date for action by holders. If a
record date is set for any action to be taken by holders of a
particular series, the action may be taken only by persons who
are holders of outstanding debt securities of that series on the
record date. To be effective, the action must be taken by
holders of the requisite principal amount of the debt securities
within a specified period following the record date. For any
particular record date, this period will be 180 days or any
other shorter period that we may specify. The period may be
shortened or lengthened, but not beyond 180 days.
Defeasance
and Covenant Defeasance
We may elect to have the provisions of the Indenture relating to
defeasance and discharge of indebtedness, or defeasance of
restrictive covenants in the Indenture, applied to the debt
securities of any series, or to any specified
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part of a series. The prospectus supplement used in connection
with the offering of any debt securities will state whether we
have made these elections for that series.
Defeasance and Discharge. We will be
discharged from all of our obligations with respect to the debt
securities of a series if we deposit with the trustee money in
an amount sufficient to pay the principal, premium, and interest
on the debt securities of that series when due in accordance
with the terms of the Indenture and the debt securities. We can
also deposit securities that will provide the necessary monies.
However, we will not be discharged from the obligations to
exchange or register the transfer of debt securities, to replace
stolen, lost, or mutilated debt securities, to maintain paying
agencies, and to hold monies for payment in trust. The
defeasance or discharge may occur only if we satisfy certain
requirements, including that we deliver to the trustee an
opinion of counsel stating that we have received from, or there
has been published by, the United States Internal Revenue
Service a ruling, or there has been a change in tax law, in
either case to the effect that holders of such debt securities:
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will not recognize gain or loss for federal income tax purposes
as a result of the deposit, defeasance, and discharge; and
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will be subject to federal income tax on the same amount, in the
same manner, and at the same times as would have been the case
if the deposit, defeasance, and discharge were not to occur.
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Defeasance of Covenants. We may elect to omit
compliance with restrictive covenants in the Indenture and any
additional covenants that may be described in the applicable
prospectus supplement for a series of debt securities. This
election will preclude some actions from being considered
defaults under the Indenture for the applicable series. In order
to exercise this option, we will be required to deposit, in
trust for the benefit of the holders of debt securities, funds
in an amount sufficient to pay the principal, premium and
interest on the debt securities of the applicable series. We may
also deposit securities that will provide the necessary monies.
We will also be required to satisfy certain requirements,
including that we deliver to the trustee an opinion of counsel
to the effect that holders of the debt securities will not
recognize gain or loss for federal income tax purposes as a
result of such deposit and defeasance of certain obligations and
will be subject to federal income tax on the same amount, in the
same manner and at the same times as would have been the case if
the deposit and defeasance were not to occur. If we exercise
this option with respect to any debt securities and the debt
securities are declared due and payable because of the
occurrence of any event of default, the amount of funds
deposited in trust would be sufficient to pay amounts due on the
debt securities at the time of their respective stated
maturities but may not be sufficient to pay amounts due on the
debt securities on any acceleration resulting from an event of
default. In that case, we would remain liable for the additional
payments.
Governing
Law
The law of the State of New York will govern the Indenture and
the debt securities.
Global
Securities
Some or all of the debt securities of any series may be
represented, in whole or in part, by one or more global
securities, which will have an aggregate principal amount equal
to that of the debt securities they represent. We will register
each global security in the name of a depositary or nominee
identified in a prospectus supplement and deposit the global
security with the depositary or nominee. Each global security
will bear a legend regarding the restrictions on exchanges and
registration of transfer referred to below and other matters
specified in a supplemental indenture to the Indenture.
No global security may be exchanged for debt securities
registered, and no transfer of a global security may be
registered, in the name of any person other than the depositary
for the global security or any nominee of the depositary, unless:
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the depositary has notified us that it is unwilling or unable to
continue as depositary for the global security or has ceased to
be a clearing agency registered under the Exchange Act;
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an event of default has occurred and is continuing with respect
to the debt securities represented by the global
security; or
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any other circumstances exist that may be described in the
applicable supplemental indenture and prospectus supplement.
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We will register all securities issued in exchange for a global
security or any portion of a global security in the names
specified by the depositary.
As long as the depositary or its nominee is the registered
holder of a global security, the depositary or nominee will be
considered the sole owner and holder of the global security and
the debt securities that it represents. Except in the limited
circumstances referred to above, owners of beneficial interests
in a global security will not:
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be entitled to have the global security or debt securities
registered in their names;
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receive or be entitled to receive physical delivery of
certificated debt securities in exchange for a global
security; and
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be considered to be the owners or holders of the global security
or any debt securities for any purpose under the Indenture.
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We will make all payments of principal, premium, and interest on
a global security to the depositary or its nominee. The laws of
some jurisdictions require that purchasers of securities take
physical delivery of securities in definitive form. These laws
make it difficult to transfer beneficial interests in a global
security.
Ownership of beneficial interests in a global security will be
limited to institutions that have accounts with the depositary
or its nominee, referred to as Participants, and to persons that
may hold beneficial interests through Participants. In
connection with the issuance of any global security, the
depositary will credit, on its book-entry registration and
transfer system, the respective principal amounts of debt
securities represented by the global security to the accounts of
its Participants. Ownership of beneficial interests in a global
security will only be shown on records maintained by the
depositary or the Participant. Likewise, the transfer of
ownership interests will be effected only through the same
records. Payments, transfers, exchanges, and other matters
relating to beneficial interests in a global security may be
subject to various policies and procedures adopted by the
depositary from time to time. Neither we, the trustee, nor any
of our agents will have responsibility or liability for any
aspect of the depositarys or any Participants
records relating to, or for payments made on account of,
beneficial interests in a global security, or for maintaining,
supervising, or reviewing any records relating to the beneficial
interests.
Regarding
the Trustee
The Bank of New York Mellon Trust Company, N.A., successor
to JPMorgan Chase Bank, N.A., is the trustee under the Indenture
relating to the senior debt securities. The Bank of New York
Mellon Trust Company, N.A. or its affiliate, The Bank of
New York Mellon, is also trustee under certain indentures
relating to the sale and leaseback transactions that we entered
into in 1986 with respect to a portion of our interest in Unit 2
of the Palo Verde Nuclear Generating Station and certain related
common facilities and under various other indentures covering
securities issued by us, our affiliates or on our or their
behalf and also acts as auction agent for certain of that debt.
We and our affiliates maintain normal commercial and banking
relationships with The Bank of New York Mellon
Trust Company, N.A. and its affiliates, including The Bank
of New York Mellon serving as transfer agent and registrar for
Pinnacle Wests common stock. In the future, The Bank of
New York Mellon Trust Company, N.A. and its affiliates may
provide banking, investment and other services to us and our
affiliates.
EXPERTS
The consolidated financial statements of Pinnacle West Capital
Corporation and the related financial statement schedules,
incorporated in this prospectus by reference from Pinnacle West
Capital Corporations Annual Report on
Form 10-K,
and the effectiveness of Pinnacle West Capital
Corporations internal control over financial reporting
have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in
their report (which report expresses an unqualified opinion and
includes an explanatory paragraph relating to Pinnacle West
Capital Corporations adoption of Statement of Financial
Accounting Standards No. 158), which is incorporated herein
by reference. Such consolidated financial statements and
financial statement schedules have been so incorporated in
reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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The financial statements of Arizona Public Service Company and
the related financial statement schedule, incorporated in this
prospectus by reference from Arizona Public Service
Companys Annual Report on
Form 10-K,
and the effectiveness of Arizona Public Service Companys
internal control over financial reporting have been audited by
Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their report (which report
expresses an unqualified opinion and includes an explanatory
paragraph relating to Arizona Public Service Companys
adoption of Statement of Financial Accounting Standards
No. 158), which is incorporated herein by reference. Such
financial statements and financial statement schedule have been
so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
LEGAL
OPINIONS
Snell & Wilmer L.L.P., One Arizona Center, Phoenix,
Arizona 85004, will opine on the validity of the offered
securities. We currently anticipate that Pillsbury Winthrop Shaw
Pittman LLP, 1540 Broadway, New York, New York 10036, will
pass on certain legal matters with respect to the offered
securities for any underwriters. Snell & Wilmer L.L.P.
may rely as to all matters of New York law upon the opinion of
Pillsbury Winthrop Shaw Pittman LLP and may rely as to all
matters under the Public Utility Holding Company Act of 2005, as
amended, and the Federal Power Act, as amended, upon the opinion
of Morgan, Lewis & Bockius LLP, 1111 Pennsylvania
Avenue, NW, Washington, DC 20004. Pillsbury Winthrop Shaw
Pittman LLP may rely as to all matters of Arizona law upon the
opinion of Snell & Wilmer L.L.P. and may rely as to
all matters of New Mexico law upon the opinion of
Keleher & McLeod, P.A., 201 Third St. NW, Albuquerque,
New Mexico 87102.
30
6,000,000 Shares
Common Stock
Prospectus Supplement
Barclays Capital
Credit Suisse
BofA Merrill Lynch
Wells Fargo
Securities
KeyBanc Capital
Markets
Mitsubishi UFJ
Securities
UBS Investment Bank
April , 2010