APS 2011 Annual Report Download - page 61

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 anti-greenmail provisions of Arizona law and our bylaws that prohibit us from
purchasing shares of our voting stock from beneficial owners of more than 5% of our
outstanding shares unless specified conditions are satisfied;
 the ability of the Board of Directors to increase the size of the Board and fill vacancies
on the Board, whether resulting from such increase, or from death, resignation,
disqualification or otherwise; and
 the ability of our Board of Directors to issue additional shares of common stock and
shares of preferred stock and to determine the price and, with respect to preferred stock,
the other terms, including preferences and voting rights, of those shares without
shareholder approval.
While these provisions have the effect of encouraging persons seeking to acquire control of us
to negotiate with our Board of Directors, they could enable the Board to hinder or frustrate a
transaction that some, or a majority, of our shareholders might believe to be in their best interests and,
in that case, may prevent or discourage attempts to remove and replace incumbent directors.
SunCor’s continuing wind-down of its real estate business may give rise to various claims.
Since 2009, SunCor has been engaged in a program to dispose of its homebuilding operations,
master-planned communities, land parcels, commercial assets and golf courses in order to eliminate its
outstanding debt. SunCor is focusing on concluding an orderly wind-down of its business. This effort
includes addressing contingent liabilities, such as warranty and construction claims that may be
brought by property owners and potential funding obligations to local taxing districts that financed
infrastructure at certain of its real estate developments.
Pinnacle West has not guaranteed any of SunCor’s obligations. SunCor’s remaining business
operations, and its ability to generate cash from operations, are minimal. In February 2012, SunCor
filed for protection under the United States Bankruptcy Code to complete an orderly liquidation of its
business. Pinnacle West could be exposed to the uncertainties and complexities inherent for parent
companies in such proceedings.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Neither Pinnacle West nor APS has received written comments regarding its periodic or current
reports from the SEC staff that were issued 180 days or more preceding the end of its 2011 fiscal year
and that remain unresolved.