Filed by: Public Service Company of New Mexico
pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-12
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of the Securities Exchange Act of 1934
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Public Service Company of New Mexico Commission File No.: 1-6986
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Western Resources, Inc. Commission File No.: 1-3523
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Subject Company: Western Resources, Inc.
May 16, 2001
Dear Fellow Shareholder,
PNM revenues and earnings for the first quarter of 2001 were substantially
higher than for the same period last year. Earnings per share for the first
three months of this year were $1.60 per share (diluted), compared to earnings
of 55 cents per share in the first quarter of 2000. Driven by high wholesale
prices, revenues from our wholesale business more than tripled during the first
quarter compared to the same period last year.
We expect the present imbalance of supply and demand will continue to affect
wholesale prices in the Western U.S. at least through the remainder of the year.
Federal regulators have placed some limited price controls on wholesale sales in
California, and other more restrictive measures are being debated both in
Congress and in the California Legislature. While it is difficult to accurately
forecast what the impact of regulatory or legislative actions may be on prices
in the short term, only the addition of new generating capacity and increased
efficiency of electricity use in the region will finally ease the upward
pressure on prices.
While PNM today has adequate power to meet our needs, we are preparing to meet
the future needs of our growing communities and expand our presence in the
Western wholesale market. The 132-megawatt Delta-Person plant south of
Albuquerque has been in operation since last summer, and we have more natural
gas-fired turbines on order for future projects. Since 1993, your company has
invested about $36 million to stabilize and expand the PNM transmission system.
In May we launched "Project Power," a coordinated campaign to encourage broad
public participation in planning to serve the needs of PNM customers in
north-central New Mexico. To learn more about that community effort, please
visit the new Project Power web site at www.project-power.org
Although New Mexico has postponed the opening of retail electric competition
here until 2007, we are moving forward with our plans to establish a new holding
company, complete our proposed acquisition of Western Resources' electric
utility operations, and position our company for continued success.
I hope you will be able to attend the PNM annual shareholders meeting on July 3
in the Albuquerque Convention Center. Thank you for your continued confidence in
PNM.
Sincerely,
Jeff Sterba
Chairman, President
And Chief Executive Officer
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements made in this letter that relate to future events are made pursuant to
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based upon current expectations and the company assumes no
obligation to update this information. Because actual results may differ
materially from expectations, the company cautions readers not to place undue
reliance on these statements. A number of factors, including weather, fuel
costs, changes in supply and demand in the market for electric power, the
performance of generating units and transmission system, and state and federal
regulatory and legislative decisions and actions, including rulings issued by
the New Mexico Public Regulation Commission pursuant to the Electric Utility
Industry Restructuring Act of 1999 (as amended), and in other cases now pending
or which may be brought before the commission, federal or state regulatory,
legislative or legal action connected with the California wholesale power
market, and decisions of regulatory agencies involving or affecting the proposed
transaction to acquire Western Resources' electric utility operations, could
cause future events to differ from those forecast in this letter. For a detailed
discussion of the important factors affecting PNM, please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in the
Company's Form 10-K for the year ended December 31, 2000, as amended, Form 10-Q
for the quarter ended March 31, 2001, and Form 8-K filings with the Securities
and Exchange Commission.
Additional Information
In connection with the proposed transaction with Western Resources, PNM and
Western Resources will file a joint proxy statement / prospectus with the
Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE ADVISED
TO READ THE JOINT PROXY STATEMENT / PROSPECTUS WHEN IT BECOMES AVAILABLE,
BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders
may obtain a free copy of the joint proxy statement / prospectus (when
available) and other documents filed by PNM and Western Resources with the SEC
at the SEC's web site at http://www.sec.gov. Free copies of the joint proxy
statement / prospectus, when available, and each company's other filings with
the SEC may also be obtained from the respective companies. Free copies of PNM's
filings may be obtained by directing a request to PNM, Alvarado Square,
Albuquerque, New Mexico.
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Participants in Solicitation
PNM, Western Resources and certain of their respective directors, executive
officers and other members of their management and employees, each of whom may
be considered participants in the PNM/Western Resources transaction under
applicable securities laws, may be soliciting proxies from their respective
stockholders in favor of the transaction. Information concerning PNM's directors
and executive officers participating in the solicitation is set forth in PNM's
Annual Report on Form 10-K filed with the SEC on February 22, 2001,as amended on
April 30, 2001 ,and May 4, 2001, and information concerning Western Resources'
directors and executive officers participating in the solicitation is set forth
in Western Resources'Annual Report on Form 10-K filed with the SEC on April 2,
2001, as amended on April 30, 2001.
Certain directors and executive officers of PNM and Western Resources may have
direct or indirect interests in the transaction due to securities holdings,
vesting of options, and rights to severance payments if their employment is
terminated following the transaction. In addition, directors and officers, after
the transaction, will be indemnified by PNM and Western Resources, and benefit
from insurance coverage for liabilities that may arise from their service as
directors and officers of PNM or Western Resources prior to the transaction.
Additional information regarding PNM's and Western Resources' respective
participants in the solicitation will be contained in the joint proxy
statement/prospectus.
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