8-KMaterial AgreementsExhibits & Filings

CMS ENERGY CORP 8-K Report, Material Agreement (Apr 3, 2007)

Filed April 3, 2007For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

CMS Energy Corporation (CMS) and its subsidiary Consumers Energy Company have entered into new, extended credit facilities. Consumers Energy secured a $500 million revolving credit facility maturing in five years, led by J.P. Morgan and Barclays. CMS Energy subsequently entered into a $300 million revolving credit facility, also with a five-year term, arranged by Citigroup and Union Bank. These new facilities replace existing ones and, importantly, introduce more favorable terms. Specifically, dividend restrictions have been removed, and the Consumers Energy facility no longer includes an interest coverage financial covenant. The CMS Energy facility also sees a change in collateral, with certain subsidiary stock no longer serving as security. These updates suggest an improved financial position or a strategic move by CMS Energy to enhance its financial flexibility.

Key Highlights

  • 1Consumers Energy Company entered into a $500 million Secured Revolving Credit Facility on March 30, 2007, with a 5-year term.
  • 2CMS Energy Corporation entered into a $300 million Secured Revolving Credit Facility on April 2, 2007, also with a 5-year term.
  • 3Both new facilities replace existing revolving credit facilities with similar amounts and terms.
  • 4Key changes in the new agreements include the elimination of dividend restrictions for both CMS Energy and Consumers Energy.
  • 5The Consumers Energy facility has also eliminated the interest coverage financial covenant.
  • 6The CMS Energy facility is no longer secured by stock of CMS Enterprises Company and other indirect subsidiaries.
  • 7These actions indicate a potential improvement in the companies' financial flexibility and creditworthiness.

Frequently Asked Questions

This 8-K filing announces the entry into material definitive agreements related to new, substantially larger revolving credit facilities for both CMS Energy Corporation and its subsidiary, Consumers Energy Company. These agreements update and extend the companies' borrowing capacity.

The new facilities have 5-year terms, replacing older ones expiring in 2010. Importantly, dividend restrictions have been removed from both facilities. The Consumers Energy facility also had its interest coverage financial covenant eliminated, and the CMS Energy facility is no longer secured by stock of certain subsidiaries.

No, the filing suggests the opposite. The renegotiation of credit facilities with more favorable terms, such as the elimination of dividend restrictions and financial covenants, generally indicates an improved financial position or a strategic effort to enhance financial flexibility. It reflects the company's ability to secure better terms on its debt.

For Consumers Energy's $500 million facility, the lead banks are J.P. Morgan Securities Inc. and Barclays Capital. For CMS Energy's $300 million facility, the lead banks are Citigroup Global Markets, Inc. and Union Bank of California.