Filed by: Public Service Company of New Mexico
pursuant to Rule 425 under the Securities Act
of 1933 and deemed filed pursuant to Rule 14a-12
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of the Securities Exchange Act of 1934
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Public Service Company of New Mexico Commission File No.: 1-6986
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Western Resources, Inc. Commission File No.: 1-3523
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Subject Company: Western Resources, Inc.
PNM Interoffice Correspondence
TO: All Employees July 26, 2001
FROM: Jeff Sterba
Chairman, President and CEO
RE: Discussions Regarding Possible Modifications to Western Deal
Today, in a joint media release with Western Resources, we announced our belief
that if recent orders by the Kansas Corporation Commission (KCC) remain in
effect, the proposed transaction to acquire Western and combine the companies'
electric operations will be difficult to complete as currently structured.
Yesterday, the KCC issued an order that would reduce Western's rates by $22.7
million. Last Friday, the commission ordered Western to halt its corporate
restructuring efforts. We don't believe that the split-off and other
transactions envisioned in our Merger Agreement with Western Resources can be
accomplished on the agreed terms if the KCC's orders remain in effect.
I continue to believe in the strategic benefits of bringing our two companies
together. We are hopeful a transaction can be structured that would benefit
customers and shareholders of both companies and could obtain the approval of
necessary regulatory authorities, including those in Kansas and New Mexico.
Over the next several weeks we will meet with Western officials to discuss
modifications to the transaction that will make it possible to obtain necessary
regulatory approvals.