(CORPUS CHRISTI, Texas) Aug. 1, 2013 – AEP Texas, a subsidiary of American Electric Power (NYSE: AEP), today announced a financing partnership that will promote regional economic development while providing necessary capital for the company to connect new customers moving into its service territory and modernize its transmission and distribution system.

AEP Texas teamed up with regional and local banks to develop a senior unsecured term loan facility to provide $175 million in intermediate-term financing to its two operating companies for new customer service and infrastructure development.

“This financing strategy is a true win-win,” said Wade Smith, president and chief operating officer for AEP Texas. “It provides AEP Texas with financing on competitive terms to support our ongoing efforts to provide safe, reliable electric service now and in the future. Working with banks within our region to fund our capital expenditures promotes a stronger local economy, which in turn translates into more jobs and healthy local businesses.”

Twelve banks that have a combined 248 branches across south and west Texas are participating in the financing agreement. Frost Bank served as lead arranger, administrative agent and syndication agent. Other participating banks include:

• BBVA Compass Bancshares, Inc.
 – Corpus Christi, Rio Grande Valley and Abilene
• First Victoria National Bank – Victoria
• Prosperity Bank – Abilene
• American Bank N.A. – Corpus Christi
• First Financial Bank – Abilene
• Texas Community Bank N.A. – Laredo
• First National Bank of Albany – Albany
• First State Bank of Uvalde – Uvalde
• Kleberg First National Bank of Kingsville – Kingsville
• Texas State Bank – San Angelo
• Bank and Trust, SSB – Del Rio

Allowing local banks to provide financing for large-scale capital expenditures expands more traditional financing strategies employed by AEP Texas. In recent years, the opportunity to finance large capital projects was largely limited to financial institutions with global portfolios and the traditional capital markets.

“Raising capital within our service territory makes perfect sense,” remarked Ron Ford, vice president of Regulatory and Finance for AEP Texas. “This transaction allows us to build liquidity and diversify our lender base. In the process, we’ve established new relationships with banks operating within our region. We look forward to growing even stronger relationships with our new banking partners.”

AEP Texas has a stable investment grade credit rating. The company projects that millions of dollars will be needed in the next 3 years to meet the needs of new customers and to expand and modernize its transmission and distribution system. As AEP Texas repays the loans made available through this lending agreement, that money will be directed into the local and regional economy as banks make other loans from those funds.

Mike Carrell, regional president of Frost Bank in Corpus Christi, noted, "We are pleased to participate with AEP Texas and many other community banks in Texas to help grow and modernize the power grid for the long-term. We, along with all of the banks partnering with AEP Texas, are gratified with the electric company’s investment in Texas for the well-being of our citizens, clients and businesses."

CFSD Group LLC served as advisor to AEP Texas in this transaction.

AEP Texas, a unit of American Electric Power, delivers electricity to nearly one million homes, businesses and industries in south and west Texas. AEP Texas provides regulated energy delivery service to consumers, regardless of which Retail Electric Provider (REP) they choose. The region headquarters is in Corpus Christi.

AEP Texas North Company (TNC) delivers electricity on behalf of the REPs in west Texas. AEP Texas Central Company (TCC) delivers electricity on behalf of REPs in south Texas. AEP Texas also builds new power lines, restores service following outages and reads the meters for REPs throughout its service territory. The company also connects or disconnects service upon the orders of the REPs.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5.3 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas.

AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.

Additional information about AEP Texas is available at aeptexas.com