8-KFinancial EventsExhibits & Filings

CMS ENERGY CORP 8-K Report, Financial Obligation (Nov 15, 2017)

Filed November 15, 2017For Securities:CMSCMS-PCCMSACMSCCMSD

Summary

This 8-K filing from CMS Energy Corp. (CMS) on November 15, 2017, details the closing of the second and final private placement of First Mortgage Bonds (FMBs) by its principal subsidiary, Consumers Energy Company. This issuance adds $290 million in aggregate principal amount of FMBs, consisting of $60 million of 3.18% bonds due 2032, $210 million of 3.52% bonds due 2037, and $30 million of 3.86% bonds due 2052. This completes the previously announced aggregate issuance of $485 million in FMBs. For investors, this filing signifies an increase in the company's long-term debt obligations. The new bonds are secured by Consumers Energy's assets under an indenture and carry specific interest rates and maturity dates. While this issuance contributes to the company's financing strategy, investors should consider the implications of this increased leverage on the company's financial flexibility and risk profile, as well as the associated interest expense.

Key Highlights

  • 1Consumers Energy Company closed on the second and final private placement of First Mortgage Bonds (FMBs) on November 15, 2017.
  • 2A total of $290 million in aggregate principal amount of FMBs was issued in this tranche.
  • 3The issuance comprises $60 million of 3.18% FMBs due 2032, $210 million of 3.52% FMBs due 2037, and $30 million of 3.86% FMBs due 2052.
  • 4This issuance completes the total aggregate principal amount of $485 million of FMBs to be sold in two private placements.
  • 5The bonds are secured under a First Mortgage Indenture and are obligations of Consumers Energy, a principal subsidiary of CMS Energy.
  • 6Interest is payable semi-annually, with redemption options available to Consumers Energy prior to maturity, subject to applicable premiums.

Frequently Asked Questions

In this specific filing dated November 15, 2017, Consumers Energy issued an additional $290 million in aggregate principal amount of First Mortgage Bonds. This issuance completes the total aggregate of $485 million announced earlier.

The newly issued bonds consist of $60 million of 3.18% bonds due November 15, 2032; $210 million of 3.52% bonds due November 15, 2037; and $30 million of 3.86% bonds due November 15, 2052.

Yes, the bonds are issued under and secured by a First Mortgage Indenture dated as of September 1, 1945, between Consumers Energy and The Bank of New York Mellon, as trustee, as supplemented by the 130th Supplemental Indenture dated November 15, 2017.

This issuance increases CMS Energy's overall long-term debt. Investors should consider this additional leverage when evaluating the company's financial risk, debt-to-equity ratios, and interest coverage capabilities.