Summary
CMS Energy Corporation (CMS) announced the completion of the sale of substantially all of its Argentine assets and its northern Michigan non-utility gas gathering, processing, and pipeline businesses on March 13, 2007. The sale to Lucid Energy LLC, for a net amount of $130 million, involved the divestiture of these non-core assets as part of a strategic shift. Additionally, CMS Energy sold its interest in the El Chocon plant in Argentina to Endesa S.A. for $50 million due to a right of first offer. These transactions generated total cash proceeds of $180 million, which are intended for debt reduction. Despite the cash inflow, CMS Energy expects to record a significant after-tax, non-cash loss of approximately $160 million in the first quarter of 2007 related to these sales. The company also anticipates an additional after-tax impairment charge of approximately $140 million for its retained interest in the TGN natural gas business in Argentina, which is still subject to potential sale. Investors should note that these divestitures are being accounted for as discontinued operations, with pro forma financial statements provided to illustrate the impact.
Key Highlights
- 1Completion of sale of Argentine and Michigan non-utility businesses to Lucid Energy for $130 million net proceeds.
- 2Sale of El Chocon plant in Argentina to Endesa for $50 million.
- 3Total cash proceeds from both asset sales amounted to $180 million, earmarked for debt reduction.
- 4Expectation of an after-tax, non-cash loss of approximately $160 million in Q1 2007 related to these divestitures.
- 5Anticipated $140 million after-tax impairment charge for the retained TGN natural gas business in Argentina.
- 6Sales are accounted for as discontinued operations.
- 7Pro forma financial statements are provided to reflect the impact of these transactions.