P R O S P E C T U S
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SEMCO ENERGY, INC.
Common Stock
Direct Stock Purchase and Dividend Reinvestment Plan
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The Direct Stock Purchase and Dividend Reinvestment Plan ("Plan") of
SEMCO Energy, Inc.* (the "Company") provides investors with a
convenient way to purchase shares of Common Stock of the Company by making
cash payments and/or by reinvesting dividends. Participants do not pay any
brokerage commission or service charge for purchases under the Plan.
This Plan replaces the Company's Dividend Reinvestment and Common Stock
Purchase Plan. If you are already a participant in the Company's Dividend
Reinvestment and Common Stock Purchase Plan, your participation in this Plan is
automatic.
You do not have to be a shareholder in the Company to participate in the
Plan. You may become a shareholder, and Participant in the Plan, by making an
initial investment in the Plan of at least $250 and not more than $100,000.
Participants in the Plan may:
-- begin participation by making an initial investment of $250 or
more (not more than $100,000);
-- reinvest all or a percentage (25% or greater) of Common
Stock dividends;
-- enroll in direct deposit of dividends not reinvested;
-- make optional cash payments of not less than $25.00 per payment
and not more than $100,000 per year;
-- make optional payments by automatic deductions from checking or
savings;
-- deposit certificates of Common Stock into the Plan for
safekeeping;
-- receive certificates for whole shares of Common Stock credited
to their Plan accounts;
-- transfer all or a portion of their Plan shares to make a gift, a
private sale, or for any other purpose;
-- sell Plan Shares through the Plan;
-- terminate participation in the Plan .
*Prior to April 24, 1997, the Company's name was Southeastern Michigan Gas
Enterprises, Inc.
Under the Plan, shares of the Company's Common Stock are issued on the 1st
and 15th of each month ("Investment Dates"). The price paid by Participants is
the average of over-the-counter closing ask prices for three trading days. On
May 14 , 1997, the closing ask price of the Common Shares as quoted in
the National Association of Securities Dealers Automated Quotation (NASDAQ)
System was $19.25 per share.
The price Participants will receive for shares sold through the Plan is
the weighted average price of shares sold through the Plan during the
applicable sales period (the period between Investment Dates when the shares
are sold). Participants will be charged a transaction fee of $5.00 for each
sale request (regardless of the number of shares) and a brokerage fee of $.05
per share sold.
It is suggested that this Prospectus be retained for future reference.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS ANY SUCH COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is May 15 , 1997.
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This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer in such jurisdiction. The
delivery of this Prospectus at any time does not imply that the information
herein is correct as of any time subsequent to its date.
TABLE OF CONTENTS
Page
Available Information.......................................... 3
Incorporation of Certain Information by Reference.............. 3
The Company.................................................... 4
Description of the Plan
Frequently Used Terms..................................... 4
Purpose................................................... 5
Advantages to Participants................................ 5
Disadvantages to Participants............................. 6
Plan Administration....................................... 6
Participation/Plan Enrollment............................. 7
Dividend Options.......................................... 8
Direct Deposit............................................ 8
Investment Dates.......................................... 8
Cash Payments............................................. 8
Automatic Optional Cash Payments.......................... 9
Refunds of Cash Payments.................................. 9
Purchase of Plan Shares................................... 9
Sale of Plan Shares....................................... 9
Stock Certificates........................................ 10
Certificate Safekeeping................................... 10
Transfer of Plan Shares................................... 10
Termination of Participation.............................. 11
Statements to Participants................................ 11
Participant Questions, Requests, Etc...................... 11
Other Information......................................... 11
Description of Common Stock.................................... 12
Federal Income Tax Matters..................................... 12
Use of Proceeds................................................ 13
Experts........................................................ 13
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission. Such reports, proxy
and information statements, and other information can be inspected and copied
at the public reference room of the Commission at its principal office:
450 Fifth Street, NW, Room 1024, Washington, DC 20549. Upon request, such
material will be sent to the Commission's regional office in New York at
7 World Trade Center, Suite 1300, New York, NY 10048 and in Chicago at 500 West
Madison Street, Suite 1400, Chicago, IL 60661. Copies of such material can
also be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal office. This Prospectus does not contain all
information set forth in the Registration Statement and Exhibits thereto which
the Company has filed with the Commission under the Securities Act of 1933 and
to which reference is made hereby. The Commission maintains a Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding the Company.
Any person, receiving a copy of this Prospectus from the Company may
obtain without charge, upon written or oral request, a copy of any of the
documents incorporated by reference herein, except for the exhibits to such
documents. See "INCORPORATION OF CERTAIN INFORMATION BY REFERENCE" below.
Requests should be directed to Dolores E. Noble, Director of Investor
Relations of SEMCO Energy, Inc. , 405 Water Street, Port Huron,
Michigan 48060, telephone number (810) 989-4104.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates herein by this reference the following documents
which also have been filed with the Securities and Exchange Commission
("Commission"): (a) the Company's Annual Report on Form 10-K for the year
ended December 31, 1996 ; (b) the Company's Current Report on
Form 8-K dated February 18, 1997; (c) the Company's definitive proxy
statement for its Annual Meeting of Shareholders held on April 15,
1997 .
All documents subsequently filed pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, prior to the termination of this
offering of the Company's Common Stock shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. The Company's file number with the Commission is 0-8503.
The Prospectus does not set forth all material and information included in
the Registration Statement filed with the Commission of which it is a part.
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THE COMPANY
The Company is a Michigan corporation with its principal executive offices
at 405 Water Street, Port Huron, Michigan 48060 and its telephone number is
(810) 987-2200.
The Company was established as a holding company in 1977 and is the parent
company of three direct subsidiaries. Substantially all of the
Company's assets are invested in natural gas operations which are subject to
regulation by various regulatory bodies. Weather has a significant impact
on the Company's revenues.
The Company's 1996 consolidated operating revenue was $548 million and its
net income was $12.0 million or $.97 per share.
SEMCO Energy Gas Company
SEMCO Energy Gas Company ("the Gas Company") purchases, distributes and
transports natural gas to approximately 235,000 customers in twenty-four
counties in the lower and upper peninsulas of Michigan. During the last four
years, its customer base has grown at an average rate of approximately 6,000
customers, or 3.0%, per year. The Gas Company has generally provided over 90%
of consolidated net income. On April 1, 1997, Michigan Gas Company and Battle
Creek Gas Company were merged into Southeastern Michigan Gas Company;
Southeastern's name was changed to SEMCO Energy Gas Company on April 30, 1997.
SEMCO Energy Services, Inc.
SEMCO Energy Services, Inc. ("Energy Services") is primarily a gas
marketing company. It currently has marketing offices in Michigan, Illinois,
New York, Kentucky and West Virginia.
SEMCO Energy Ventures, Inc.
SEMCO Energy Ventures, Inc. ("Ventures") is an asset-based company with
investments in many segments of the natural gas industry. Ventures has
investments in gas transmission and gathering (including NOARK), and
underground natural gas storage.
The above information about the Company is, of course, not comprehensive.
For significant detail about the business of the Company and its subsidiaries,
please refer to the documents incorporated into this Prospectus. See
"Incorporation of Certain Information by Reference" above.
DESCRIPTION OF THE PLAN
Frequently Used Terms
- - Authorization Form: the application to begin Plan participation for
investors who are Record Shareholders and to effect other Plan
transactions.
- - Common Shareholder: an owner of the Company's Common Stock.
- - Dividend: any cash dividends paid on the Common Stock.
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- - Dividend Payment Date: the 15th of February, May, August and November.
- - Independent Agent: a brokerage firm buying and selling Common Stock for
the Plan in the open market.
- - Investment Dates: the 1st and 15th of each month.
- - Investment Periods: between the 11th day of a month and the 25th day of
that month for transactions on the 1st day of the next month. Between the
26th day of a month and the 10th day of the next month for transactions on
the 15th day of that latter month.
- - Investment Statement: the statement sent to a Participant reflecting any
purchases of Plan Shares and Dividends.
- - Investment Statement Form: the detachable bottom portion of the
Investment Statement used to submit cash payments, change Dividend
treatment, request a sale of Plan Shares, request issuance of
certificate(s), and implement other Plan transactions.
- - New Account Enrollment Form: the application to begin Plan participation
for investors who are not Record Shareholders.
- - Participant: any person participating in the Plan.
- - Plan: this Direct Stock Purchase and Dividend Reinvestment Plan.
- - Plan Administrator: an independent company responsible for carrying out
Plan activities.
- - Plan Shares: Common Stock held in the Plan for Participants.
- - Record Shareholder: a Common Shareholder with shares registered in his
name or Plan Shares held for his account.
Purpose
The purpose of the Plan is to encourage long-term investment by providing
current and potential shareholders with a convenient method of purchasing
Common Stock without paying any brokerage commission or service charge.
Advantages to Participants
Investment is Simple and Easy. Participants may:
-- reinvest all or a percentage (25% or greater) of
Dividends automatically.
-- invest optional cash payments of not less than $25 per payment
and not more than $100,000 per year.
-- invest amounts deducted automatically from a checking or savings
account.
Automatic Deposit of Dividends.
-- Participants may have Dividends which they do not reinvest
deposited directly into a checking or savings account.
No Commission for Purchases.
-- No brokerage commission or service charge is paid by
Participants in connection with purchases of Plan Shares.
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Simplified Safekeeping. Participants:
-- avoid the necessity of safekeeping certificates for Plan Shares.
-- may deposit Common Stock certificates that they hold into the
Plan.
Transfer of Plan Shares.
-- Participants may transfer all or a portion of their Plan Shares
to make a gift, to make a private sale or for any other purpose.
Simplified Recordkeeping.
-- An Investment Statement will be mailed to a Participant for each
month in which the Participant has a Plan transaction.
Simplified Sales. Participants
-- may sell Plan Shares credited to their Plan account.
-- pay a transaction fee of $5.00 for each sale plus a brokerage
commission of $.05 per share. (For example, the total fee to
sell 1,000 shares would be $55.)
Disadvantages to Participants
Price Uncertainty.
-- Participants have no control over the purchase price or sale
price of Plan Shares.
No Interest.
-- No interest is paid on cash received by the Plan Administrator.
Initial investments and optional cash payments received by the
Plan Administrator at least five business days before an
Investment Date will be invested as of that Investment Date.
Otherwise, such payments will be invested as of the next
Investment Date.
Plan Administration
Administration of all Plan activities will be carried out by the Plan
Administrator. The Plan Administrator will make purchases (and sales) of Plan
Shares, keep records, send statements of account to Participants and perform
other duties relating to the Plan. Plan Shares will be registered in the name
of the Plan Administrator or its nominee as agent for Participants.
The Plan Administrator is Continental Stock Transfer & Trust Company
("Continental"). For Continental's address, telephone number and fax number,
see "Participant Questions, Requests, Etc." below.
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Limited liability.
Neither the Company, the Plan Administrator nor any other person
empowered to help effectuate the Plan will be liable for any act done in good
faith or for any good faith omission to act, including, without limitation, any
claim of liability arising out of failure to terminate a Participant's account
upon such Participant's death or disability, with respect to the prices at
which Plan Shares are purchased or sold, with respect to the times when such
purchases and sales are made or with respect to fluctuations in market value of
Plan Shares.
Participants should recognize that no one can assure them of a profit
or protect them against a loss on their Plan Shares.
Costs.
All costs and expenses of administration of the Plan are paid by the
Company. There are no brokerage fees or commissions in connection with the
purchase of Plan Shares nor are there any costs to Participants upon
termination of participation in the Plan.
As discussed below, Participants are charged a transaction fee and
brokerage commission for sales of Plan Shares.
Participation/Plan Enrollment
Any person may become a Participant.
This Plan replaced the Company's Dividend Reinvestment and Common
Stock Purchase Plan (the "DRIP") in March 1997 . If you were a
participant in the DRIP, you automatically became a Participant in
this Plan at that time .
Participants who wish to change their participation in any way may do so
by submitting an Authorization Form.
Record Shareholders not currently participating in the Plan may join the
Plan at any time by completing and signing an Authorization Form. Requests for
Authorization Forms can be made in writing to the Plan Administrator's address
or by calling the toll free number listed under "Participant Questions,
Requests, Etc." Please note certain restrictions apply.
New Record Shareholders automatically receive an Authorization Form.
Any other interested person may become a Participant by providing a
completed New Account Enrollment Form to the Plan Administrator and returning
it with an initial investment of not less than $250 and not more than $100,000.
To request New Account Enrollment Forms, or copies of this Prospectus,
call toll free 1-800-649-1856.
Investments may be made by personal check or money order payable to
"Continental Stock Transfer & Trust Company." PLEASE DO NOT SEND CASH.
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A Plan form must be received by the Plan Administrator five business days
preceding an Investment Date in order to be applicable to that Investment
Date. Otherwise it will be applied to the next Investment Date.
If any form is received less than five business days before a Dividend
Payment Date, any requested Dividend treatment will begin the next quarter.
Dividend Options
The Enrollment or Authorization Form allows the Participant to choose from
the following three Dividend options:
Full Reinvestment - All Dividends on shares held by the Participant and on
his Plan Shares are reinvested. Optional cash payments may be made at any
time.
Partial Reinvestment - A percentage (at least 25%) of the Dividends on a
Participant's total shares (being shares held by the Participant and his Plan
Shares) are reinvested. Participants may elect to have Dividends that are not
reinvested paid to them by check or through direct deposit (see "Direct
Deposit"). Optional cash payments may be made at any time.
Optional Cash Payments Only - All Dividends on shares held by the
Participant and on his Plan Shares are paid to him (by check or by direct
deposit). Optional cash payments may be made at any time.
A Participant may change the treatment of his Dividends by use of the
Investment Statement Form. Dividends are paid on all whole and fractional Plan
Shares.
Direct Deposit
Participants may request that Dividends which are not reinvested be
deposited in a U.S. bank or credit union by use of the Authorization Form.
Investment Dates
Investment Dates will be the 1st and 15th of each month. The Company's
Dividend Payments Dates are the 15th day of February, May, August and November.
Cash Payments
Initial cash payments may accompany the New Account Enrollment Form by
check or money order. Thereafter, optional cash payments may be made either by
electing the Automatic Optional Cash Payments feature, as described below, or
by mailing a completed Investment Statement Form or Authorization Form and a
personal check or money order payable to the Plan Administrator. The same
amount of money need not be sent each time and there is no obligation to make
cash payments. (DO NOT SEND CURRENCY).
Initial cash payments must be at least $250 and less than $100,000.
Optional cash payments cannot be less than $25 per payment or more than
$100,000 per year.
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Cash payments received at least five business days before an Investment
Date will be invested as of that Investment Date. Otherwise, such payments
will be invested as of the next Investment Date. Plan Shares will be held by
the Administrator. Cash payments will be invested twice a month (1st and
15th).
Automatic Optional Cash Payments
Participants may make optional cash payments of not less than $25 and not
more than the annual limit of $100,000 by automatic deduction from a checking
or savings account. To initiate the Automatic Optional Cash Payments feature,
the Participant must complete an appropriate Plan Form.
Refunds of Cash Payments
The Plan Administrator will refund cash payments if a written request is
received at least five business days prior to an Investment Date.
Purchase of Plan Shares
The number of Plan Shares purchased depends on the amount invested and the
purchase price. Each Participant's account will be credited with that number
of Plan Shares, including fractions computed to four decimal places, equal to
the total amount he invested divided by the purchase price for that Investment
Date.
Purchased Plan Shares will be credited as of the Investment Date. Common
Stock certificates deposited with the Plan by Participants will be credited
promptly upon receipt by the Plan Administrator.
The purchase price of Plan Shares will be the average of the three closing
ask prices for Common Stock on the over-the-counter market for the three
trading days prior to the Investment Date as quoted on NASDAQ (the National
Association of Securities Dealers Automated Quotation System). The purchase
price for Participants will not necessarily be the same price paid by the
Independent Agent for Common Stock purchased on the open market. To the extent
that the purchase price exceeds the weighted average cost to the Independent
Agent, the excess will be used to cover the costs of Plan administration and,
if any remains thereafter, become net proceeds to the Company. To the extent
that the Participant's purchase price is less than the weighted average cost of
Common Stock purchased on the open market by the Independent Agent, the Company
will make up the difference.
Under the Plan, Participants do not have the ability to order the purchase
of a specified number of shares or the purchase of shares at a specified price
or on a particular date, as could be done by means of purchasing shares through
a broker.
Sale of Plan Shares
Participants may sell all or part of their Plan Shares by use of an
Investment Statement Form or Authorization Form.
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Sales for Participants are made as soon as practicable. Requests to sell
Plan Shares will be aggregated and processed at least once a week by the
Independent Agent in its sole discretion. Sales will be made at prevailing
market prices.
When a Participant sells Plan Shares, the price per share the Participant
receives will be the average price from all Plan Shares sold by the Independent
Agent during the applicable sales period, less brokerage commission fees of
$.05 per share and a transaction fee of $5.00.
Stock Certificates
All Plan Shares will be held by the Plan Administrator. Participants may
obtain, at any time and without charge, a certificate for all or part of their
Plan Shares by using the Investment Statement Form. Certificates for
fractional shares will not be issued under any circumstances. A Participant
who wishes to pledge Plan Shares must withdraw those shares.
Certificate Safekeeping
A Participant may deposit Common Stock certificates ("deposited shares")
into the Plan by sending them with a properly completed Investment Statement
Form or an Authorization Form. Do NOT endorse the certificates. Some of the
advantages of depositing certificates are:
- Protection against the cost of replacing stock certificates which may
otherwise be lost, stolen or destroyed.
- Deposited shares are treated in the same manner as other Plan Shares
and may be conveniently sold or transferred through the Plan.
- Dividends on deposited shares will continue to be treated the same as
before deposit unless changed by the Participant.
Transfer of Plan Shares
If Participants wish to change the ownership of all or part of their Plan
Shares through gift, private sale or otherwise, they may effect transfer by
mailing a properly executed stock power, along with a letter of instruction, to
the Plan Administrator. A request for transfer is subject to the same
requirements applicable to the transfer of Common Stock certificates including
the requirement of an approved signature-guarantee medallion on the stock
power. The Plan Administrator will provide a form of stock power upon request.
No certificate for Plan Shares transferred to another person will be
issued unless requested. Otherwise, if the transferee is not a Participant, an
account will be opened in the Plan for him. Both the requesting Participant
and the transferee will be sent confirmation. In addition, if the transferee
is a new shareholder, he will be sent a complete shareholder package.
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Termination of Participation
A Participant may use the Investment Statement Form to terminate
participation at any time.
No termination will be processed between the 5th and 15th of February,
May, August and November.
Statements to Participants
Investment Statements will be mailed after the 15th of each month to any
Participant having a Plan transaction that month. These statements should be
retained for income tax purposes.
In addition, each Participant will receive copies of communications sent
to all Common Shareholders.
Participant Questions, Requests, Etc.
To request New Account Enrollment Forms, or copies of this Prospectus,
call toll free 1-800-649-1856.
Participants should direct all questions, requests for other forms, all
completed forms and all other Plan communications to:
Continental Stock Transfer & Trust Company
Attn: Shareholder Services
2 Broadway 19th Floor
New York, NY 10004
Toll Free Number 1-800-509-5586
Fax (212) 509-5152
Other Information
If a Participant sells or transfers all his Common Stock, other than Plan
Shares, his participation in the Plan will generally not be affected. Any Plan
account holding less than one whole share in such circumstance will be
terminated.
Any shares of Common Stock distributed as a result of a stock dividend or
stock split on Plan Shares and on Common Stock otherwise registered in the
Participant's name will be added to the Participant's Plan Shares.
Participants requiring a stock certificate can request one at any time.
Each Participant will be sent a Proxy and Proxy Statement to vote Plan
Shares.
Notwithstanding any other provision of the Plan, the Company reserves the
right to suspend, modify or terminate the Plan at any time. Notice of any such
suspension, modification or termination will be sent to all Participants.
Also, the Plan Administrator may, by written notice, terminate an individual's
participation in the Plan at any time.
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DESCRIPTION OF COMMON STOCK
The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock , 500,000 shares of Cumulative Preferred Stock, issuable
in series , and 3,000,000 shares of Preference Stock, issuable in series.
At April 30 , 1997, the outstanding Common Stock consisted of
approximately 12,400,000 shares and the outstanding Preferred Stock
consisted of approximately 6,000 shares of Convertible Cumulative Preferred
Stock. Each share of Convertible Preferred Stock is currently convertible
into about 4 shares of Common Stock. Two million shares of the Preference
Stock are reserved for issuance pursuant to a Shareholder Rights Plan; no
Preference Stock is outstanding.
Subject to the rights of Preferred and Preference Stockholders
to receive full quarterly dividends, Common Stockholders are entitled to
receive dividends when declared by the Board of Directors in its discretion.
Common Stockholders currently have exclusive voting rights.
Common Stock is traded in the over-the-counter market and is quoted on the
NASDAQ National Market System under the symbol SMGS. In addition to acting as
Plan Administrator, Continental acts as transfer agent and registrar for all of
the Company's stock.
FEDERAL INCOME TAX MATTERS
A Participant will be treated for Federal income tax purposes as having
received, on the Dividend Payment Date, the full amount of his Dividends
whether or not he reinvests Dividends.
For a foreign Participant whose Dividends are subject to United States
income tax withholding or a Participant subject to backup withholding,
Dividends reinvested will reflect a reduction for the amount of tax required to
be withheld.
A Participant will not realize any taxable income when he receives
certificates for whole Plan Shares. However, a Participant who receives a cash
adjustment for a fraction of a Plan Share will realize a gain or loss with
respect to such fraction. Gain or loss will also be realized by the
Participant when he sells Plan Shares. The amount of such gain or loss will be
the difference between the amount which the Participant receives and his tax
basis for the Plan Shares sold.
Participants should retain all Investment Statements because they are the
only record of transaction prices for Plan Shares.
The information set forth above is a summary of federal tax law only and
does not purport to be a complete description of all tax matters regarding
participation in the Plan. The description may be affected by future
legislation, IRS rulings and regulations, or court decisions. In addition, the
taxation of foreign shareholders, except as noted, is not discussed in this
Prospectus. Participants should consult with their own tax advisors with
respect to any tax questions about their participation in the Plan.
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USE OF PROCEEDS
The Company may, from time to time, sell newly issued Common Stock to the
Plan to generate new equity capital in lieu of the Independent Agent making
open market purchases. Otherwise, net proceeds to the Company from operation
of the Plan are expected to be minimal. Any net proceeds will be used for the
Company's general corporate purposes including corporate purposes of one or
more subsidiaries. The Company cannot estimate the amount of net proceeds that
it will receive.
Currently, the Independent Agent purchases Common Stock in the open market
to become Plan Shares. The Company will not sell newly issued Common Stock to
the Plan unless its Board of Directors (or its chief financial officer) makes a
determination that the Company needs additional capital or some other clearly
valid reason makes such sales appropriate. The Company does not expect to
change the source of Plan Shares frequently.
EXPERTS
The Financial Statements and schedules included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 , which are
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated herein by reference in reliance upon the
authority of said firm as experts in giving said report.
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