8-KOther Events

CMS ENERGY CORP 8-K Report (May 1, 2003)

Filed May 1, 2003For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corporation (CMS) filed an 8-K report on May 1, 2003, detailing significant financing activities for both its parent company and its subsidiary, Consumers Energy Company. CMS Enterprises Company secured a $75 million revolving credit facility with a one-year maturity, carrying an approximate 10% annual cost, to be used for general corporate purposes. Notably, proceeds from asset sales or equity/debt issuances (excluding Consumers Energy) are earmarked for prepaying this facility, with the expected sale of Panhandle Eastern Pipe Line Company being a primary source for such prepayment. Concurrently, Consumers Energy Company successfully issued $625 million in First Mortgage Bonds across two series. The $250 million Series A bonds mature in 2008 at 4.25% interest, while the $375 million Series B bonds mature in 2013 at 5.375% interest. These proceeds will be primarily used to redeem existing Senior Notes due 2008 and cover associated call payments, with any remaining funds allocated to general corporate purposes, potentially including further debt reduction. These actions indicate a strategic effort to manage and refinance existing debt obligations.

Key Highlights

  • 1CMS Enterprises Company entered into a $75 million revolving credit facility maturing April 30, 2004.
  • 2The CMS Enterprises credit facility has an approximate total annual cost of 10%, including commitment fees.
  • 3Proceeds from the CMS Enterprises facility are for general corporate purposes and will be prepaid by asset sales or other debt/equity issuances (excluding Consumers Energy).
  • 4Consumers Energy Company issued $625 million in First Mortgage Bonds ($250M Series A, $375M Series B).
  • 5Series A bonds ($250M) mature April 15, 2008, with a 4.25% interest rate.
  • 6Series B bonds ($375M) mature April 15, 2013, with a 5.375% interest rate.
  • 7Consumers Energy will use bond proceeds to redeem $250 million of Senior Notes due 2008 and pay a $32 million call premium.

Frequently Asked Questions

The $75 million revolving credit facility for CMS Enterprises Company is intended for general corporate purposes. However, a key condition is that any proceeds from specific equity issuances, asset sales, or debt issuances by CMS Energy and its subsidiaries (other than Consumers Energy) must be used to prepay this facility. The sale of Panhandle Eastern Pipe Line Company is expected to be used for this purpose.

Consumers Energy Company will use the net proceeds from the $625 million bond issuance primarily to redeem $250 million of its Senior Notes due in 2008 and to pay an associated $32 million option call payment. Any remaining funds will be used for general corporate purposes, which may include further debt reduction.

The revolving credit facility for CMS Enterprises Company is for $75 million and has a maturity date of April 30, 2004. The total annual cost to CMS Energy Corporation is approximately ten percent, which includes the initial commitment fee.

Consumers Energy issued two series of First Mortgage Bonds. The Series A bonds total $250 million, mature on April 15, 2008, and carry an interest rate of 4.25%. The Series B bonds total $375 million, mature on April 15, 2013, and carry an interest rate of 5.375%.