8-KOther Events

CMS ENERGY CORP 8-K Report (Mar 13, 2003)

Filed March 13, 2003For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corporation (CMS) filed an 8-K on March 13, 2003, to report significant developments concerning the sale of its subsidiary, Panhandle Eastern Pipe Line Company (Panhandle), to Southern Union Company. The Federal Trade Commission (FTC) issued a "Second Request" for additional information under the Hart-Scott-Rodino Antitrust Improvements Act, which is expected to delay the closing of the transaction beyond the previously planned March 31, 2003 deadline, unless resolved through a consent order. This delay has implications for CMS Energy's liquidity. The company has a $295.8 million revolving credit facility with approximately $124 million outstanding, maturing on March 31, 2003. CMS Energy had intended to use the Panhandle sale proceeds to pay down this debt. In anticipation of the potential delay, CMS Energy has requested an extension of the credit facility's maturity date to June 30, 2003, or the closing date of the Panhandle sale, whichever is earlier. While the company states it has adequate cash reserves to retire the facility if needed, the requested amendment aims to maintain current liquidity.

Key Highlights

  • 1FTC issues "Second Request" for additional information regarding Southern Union's acquisition of Panhandle Eastern Pipe Line Company, delaying the transaction's closing.
  • 2The sale of Panhandle to Southern Union is now expected to close after March 31, 2003, unless an FTC consent order is reached.
  • 3CMS Energy has a $295.8 million revolving credit facility with $124 million outstanding, maturing on March 31, 2003.
  • 4Sale proceeds from Panhandle were intended to repay the credit facility.
  • 5CMS Energy has requested an amendment to extend the credit facility's maturity date to the earlier of June 30, 2003, or the Panhandle sale closing date.
  • 6CMS Energy asserts it has sufficient cash reserves to cover the credit facility if the sale is delayed beyond the maturity date.
  • 7Regulatory approval from the Massachusetts Department of Telecommunications and Energy has been obtained; approval from the Missouri Public Service Commission is still pending.

Frequently Asked Questions

The 8-K filing is to inform investors that the Federal Trade Commission (FTC) has issued a "Second Request" for additional information regarding the proposed sale of Panhandle Eastern Pipe Line Company to Southern Union Company. This request is expected to delay the closing of the transaction beyond the original March 31, 2003 target date.

CMS Energy has a revolving credit facility of $295.8 million with $124 million outstanding, which matures on March 31, 2003. The company had planned to use the proceeds from the Panhandle sale to repay this debt. Due to the potential delay, CMS Energy has requested an extension of the credit facility's maturity date to maintain liquidity.

Yes, CMS Energy stated in the filing that it has adequate cash reserves to retire the credit facility if the sale of Panhandle is not closed by its maturity date of March 31, 2003. However, the company is seeking to amend the facility to extend its maturity to maintain current liquidity.

The sale has received approval from the Massachusetts Department of Telecommunications and Energy. However, it is still pending approval from the Missouri Public Service Commission.