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Pursuant to Rule 424(b)(3)
Registration No. 333-18927
PROSPECTUS
SEMCO ENERGY LOGO
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.
This Prospectus describes the Plan effective January 1, 2000.
The Plan is administered by Norwest Bank Minnesota, N.A. ("Norwest Bank").
Shareholders with shares registered in their name may join the Plan without
making an initial investment. Investors who do not have shares registered in
their name may join by enrolling in the Plan, paying a one-time account set-up
fee of $10 and making an initial investment of at least $250 and not more than
$100,000.
Participants in the Plan may:
-- Reinvest all or a portion 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 Common Stock certificates into the Plan for safekeeping;
-- Receive Common Stock certificates for whole Plan shares;
-- Transfer all or a portion of 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.
Under the Plan, shares of the Company's Common Stock are issued on the 15th
of each month ("Investment Date"). Norwest Bank may purchase those shares in the
open market, through private transactions or from the Company. If shares are
purchased on the open market, or through private transactions, the price of the
shares purchased through the Plan will be the weighted average price paid in the
stock market for the particular investment date. If Norwest Bank purchases
shares from the Company, the price paid for those shares will be the average of
the closing prices on the three trading days prior to the 15th of the month.
Participants do not pay any brokerage commission or service charge for purchases
under the Plan. On December 13, 1999 the last trade price as quoted in the
National Association of Securities Dealers Automated Quotation (NASDAQ) System
was $12.00 per share. Trading in the Company's Common Stock is expected to begin
on the New York Stock Exchange in early January, 2000.
The price Participants will receive for shares sold through the Plan is the
weighted average price of shares sold through the Plan on the days when those
shares are sold. Participants will be charged a transaction fee of $10.00 for
each sale request (regardless of the number of shares) and a brokerage fee of
$.06 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 December 22, 1999.
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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.
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Available Information....................................... 3
Incorporation of Certain Information by Reference........... 3
The Company................................................. 4
Description of the Plan
Frequently Used Terms..................................... 5
Purpose................................................... 5
Advantages to Participants................................ 5
Disadvantages to Participants............................. 6
Plan Administration....................................... 6
Limited Liability......................................... 6
Costs..................................................... 7
Participation/Plan Enrollment............................. 7
Dividend Options.......................................... 7
Direct Deposit............................................ 8
Optional Cash Payments.................................... 8
Automatic Optional Cash Payments.......................... 8
Refunds of Cash Payments.................................. 8
Purchase of Plan Shares................................... 8
Sale of Plan Shares....................................... 9
Stock Certificates........................................ 9
Certificate Safekeeping................................... 9
Transfer of Plan Shares................................... 9
Termination of Participation.............................. 10
Statements to Participants................................ 10
Participant Questions, Requests, etc...................... 10
Other Information......................................... 10
Description of Common Stock................................. 11
Federal Income Tax Matters.................................. 12
Use of Proceeds............................................. 13
Experts..................................................... 13
</TABLE>
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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 or Norwest
Bank 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 Shareholder Services, SEMCO Energy, Inc., 405
Water Street, Port Huron, Michigan 48060, Telephone Number 1-(810) 987-2200,
Extension 4178.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company incorporates herein 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, 1998; (b)
the Company's Current Reports on Form 8-K dated March 23, April 22, July 16,
November 12 and November 24 -- all in 1999; (c) the Company's definitive proxy
statement for its Annual Meeting of Shareholders held on April 20, 1999; (d) the
Company's Quarterly Reports on Form 10-Q for the quarters ending March 31, 1999
and June 30, 1999, and September 30, 1999.
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 two direct subsidiaries. Most 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.
On November 1, 1999, the Company acquired the assets of ENSTAR Natural Gas
Company and acquired Alaska Pipeline Company (together known as "ENSTAR") from
OCEAN Energy, Inc. (the "Seller"). The Company bought ENSTAR for approximately
$290,000,000 in cash, which included $58,700,000 (or 100%) of ENSTAR's debt, all
of which was owed to the Seller. The acquisition will be accounted for using the
Purchase Method of accounting. ENSTAR Natural Gas Company is now a division of
the Company and, at the end of 1999 SEMCO Energy Gas Company will also become a
division of the Company Alaska Pipeline Company will remain a subsidiary of
SEMCO Energy, Inc.
ENSTAR Natural Gas Company currently serves more than 100,000 customers in
the Anchorage, Alaska area. Alaska Pipeline Company delivers natural gas from
several producing fields in south central Alaska to ENSTAR Natural Gas Company's
distribution system the Company financed the ENSTAR acquisition through an
unsecured "bridge" loan facility. The facility matures in one year. The Company
anticipates that permanent financing to replace the bridge loan facility will
include combination of equity and debt securities.
The Company operates four business segments: gas distribution, engineering
services, pipeline construction services and propane, pipelines and storage.
Prior to the ENSTAR acquisition, the Company's gas distribution segment
distributed and transported natural gas to approximately 250,000 customers
within the state of Michigan. The engineering services segment has offices in
New Jersey, Michigan, Louisiana and Texas and provides a variety of energy
related engineering and quality assurance services in several states. The
pipeline construction services segment provides primarily pipeline construction
services in Georgia, Iowa, Kansas, Michigan, Missouri, Nebraska, Tennessee and
Texas. The propane, pipelines and storage segment sells approximately 5 million
gallons of propane annually to retail customers in Michigan's Upper Peninsula
and northeast Wisconsin and operated natural gas transmission, gathering and
storage facilities in Michigan. On November 24, 1999, the Company filed a form
8-K with the Securities and Exchange Commission containing proforma combined
financial statements reflecting the acquisition of ENSTAR.
The above information about the Company is 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
-- ACCOUNT AUTHORIZATION FORM: the application to begin Plan participation for
initial investors and not Record Shareholders.
-- COMMON SHAREHOLDER: an owner of the Company's Common Stock.
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-- DIVIDEND: a cash dividend paid on the Common Stock.
-- DIVIDEND PAYMENT DATE: the 15th of February, May, August and November.
-- ELECTION FORM: the application to change Plan participation for investors
who are Record Shareholders.
-- INDEPENDENT AGENT: Norwest Bank or a brokerage firm acting on behalf of
Norwest Bank.
-- INVESTMENT DATES: the 15th of each month. The effective date on which
shares will be credited to a participant's account.
-- INVESTMENT STATEMENT: the statement sent to a Participant reflecting
purchases and sales of Plan Shares and Dividends.
-- INVESTMENT STATEMENT FORM: the detachable top portion of the Investment
Statement used to submit cash payments, request a sale of Plan Shares,
request issuance of certificate(s), and implement other Plan transactions.
-- PARTICIPANT: any person participating in the Plan.
-- PLAN: this Direct Stock Purchase and Dividend Reinvestment Plan.
-- PLAN SHARES: Common Stock held in the Plan for Participants.
-- RECORD SHARES: Plan Shares and shares registered in a shareholder's name.
-- RECORD SHAREHOLDER: Common Shareholder with Record Shares.
PURPOSE
The purpose of the Plan is to encourage long-term investment by providing a
convenient method of making periodic Common Stock purchases without paying a
brokerage commission or service charge.
ADVANTAGES TO PARTICIPANTS
Investment is Simple and Easy. Participants may:
-- reinvest all or a percentage 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
-- There is no brokerage commission or service charge to purchase Plan
Shares.
Simplified Safekeeping. Participants:
-- Avoid the necessity of safekeeping certificates.
-- May deposit Common Stock certificates they hold into the Plan.
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Transfer of Plan Shares.
-- Participants may transfer all or a portion of Plan Shares as a gift,
a private sale or for any other purpose.
Simplified Record-Keeping.
-- Investment Statement will be mailed for each month in which the
Participant purchases Plan Shares.
Simplified Sales. Participants
-- May sell their Plan Shares through the Plan.
-- Are charged a transaction fee of $10.00 for each sale through the
Plan plus a brokerage commission of $.06 per share. (For example, the
total fee to sell 1,000 Plan Shares would be $70.)
Telephone Transactions.
-- Participants may establish telephone privileges for their Plan
accounts, enabling them to execute certain Plan orders by phone.
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 Norwest Bank. Initial
investments and optional cash payments received by Norwest Bank four
business days prior to the Investment Date will be invested as of the
15th day of that month. Otherwise, such payments will be invested the
following month.
PLAN ADMINISTRATION
Administration of Plan activities will be carried out by Norwest Bank.
Norwest Bank is also the Transfer Agent and Registrar for the Common Stock.
Limited liability.
Neither the Company, Norwest Bank, nor their agents will be liable for any
act done in good faith or for any good faith failure to act.
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Participants should recognize that no one can assure them of a profit or
protect them against a loss on their Plan Shares.
Costs.
Costs and expenses of Plan administration will be, except as otherwise
described in this Prospectus, paid by the Company, including brokerage fees or
commissions in connection with the purchase of Plan Shares.
However, Participants are charged an enrollment fee of $10.00 for
non-shareholders sending their initial cash investment a transaction fee of
$10.00 and a brokerage commission of 6c per share for sales of Plan Shares.
PARTICIPATION/PLAN ENROLLMENT
Any person may become a Participant.
Participants who wish to change their participation in any way may do so by
letter or by submitting an Election Form.
Record Shareholders may join the Plan at any time by letter or by
completing and signing an Account Authorization Form.
New Record Shareholders automatically receive an Account Authorization
Form.
Any other interested person may become a Participant by completing an
Account Authorization Form, paying the $10 one-time set up fee and making an
initial cash investment of not less than $250 and not more than $100,000.
To request forms, or copies of this Prospectus, contact Norwest Bank. See
"Participant Questions, Requests, Etc." below.
Cash investments may be made by personal check or money order payable to
"Shareowner Services", PLEASE DO NOT SEND CURRENCY.
Any form is received after the dividend record date regarding any requested
Dividend treatment will be effective the next quarter.
DIVIDEND OPTIONS
The Account Authorization Form allows the Participant to choose from the
following three Dividend options:
Full Reinvestment -- All Dividends on Record Shares are reinvested.
Partial Reinvestment -- A percentage of the Dividends on Record Shares are
reinvested.
Cash Payments Only -- No reinvestment of Dividends on Record Shares.
A Participant may change Dividend Options by use of the Election Form.
Regardless of the Dividend Option chosen, Optional Cash Payments may be
made at any time.
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DIRECT DEPOSIT
Participants may request that Dividends which are not reinvested be
deposited in a U.S. bank or credit union.
OPTIONAL CASH PAYMENTS
Initial cash payments must accompany the Account Authorization Form for
non-record holders. Optional Cash Payments may accompany an Investment Statement
Form or be made by electing the Automatic Optional Cash Payments feature, as
described below. Personal checks or money orders must be made payable to
"Shareowner Services". (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. The same amount of money need not be sent each time and there is no
obligation to make cash payments.
Cash payments received by four business days, prior to the 15th of the
month will be invested that month. Otherwise, such payments will be invested the
next month. Cash payments will be invested only once a month (on the 15th) or
the next business day.
AUTOMATIC OPTIONAL CASH PAYMENTS
Participants may make Optional Cash Payments by automatic deduction from a
checking or savings account. To do so, the Participant must complete an
appropriate Plan form (Account Authorization Form or Election Form).
REFUNDS OF CASH PAYMENTS
Cash payments will be refunded if a written request is received four
business days prior to the 15th of the month in which it would be invested.
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 three decimal places, equal to the
total amount invested divided by the purchase price for that Investment Date.
Purchased Plan Shares will be credited as of the Investment Date.
Norwest Bank may purchase shares in the open market, through private
transactions or from the company. If shares are purchased on the open market or
through private transactions, the price paid by Participants is the weighted
average of prices paid by Norwest Bank for those shares. If Norwest Bank
purchases shares from the Company, the price paid for the shares will be the
average of the closing prices on the three trading days prior to the 15th of the
month.
Participants do not have the ability to order the purchase of a specified
number of Plan Shares or the purchase of Plan Shares at a specified price.
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SALE OF PLAN SHARES
Participants may sell all or part of their Plan Shares by use of an
Investment Statement Form.
Sales for Participants are made as soon as practicable. Requests to sell
Plan Shares will be aggregated and processed periodically 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 $.06
per share and a transaction fee of $10.00.
STOCK CERTIFICATES
All Plan Shares will be held by Norwest Bank. 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. 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.
-- Common Stock certificates deposited for safekeeping will be credited
promptly upon receipt.
TRANSFER OF PLAN SHARES
If Participants wish to change the ownership of Plan Shares through gift,
private sale or otherwise, they may request transfer by mailing a properly
executed stock power, along with a letter of instruction, to Norwest Bank. A
request for transfer is subject to the same requirements applicable to the
transfer of Common Stock certificates including the requirement of an approved
medallion signature-guarantee on the stock power. Norwest Bank will provide a
form of stock power upon request.
No certificate for Plan Shares transferred to another Participant will be
issued unless requested. Otherwise, transferred Plan Shares will be credited to
the transferee's Plan account. If the transferee is not a Participant, a Plan
account will be opened for the transferee. Both the transferring Participant and
the transferee participant will be sent confirmation.
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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 dividend record date and the
dividend payable date. In addition, if a participant sends in notice of
termination or a request to sell to Norwest Bank between the record date and
payable date for a stock distribution, the request will not be processed until
the stock distribution is credited to the participant's account.
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.
All correspondence regarding the Plan should be addressed to:
Norwest Bank Minnesota, N.A.
P.O. Box 64863
St. Paul, MN 55164-0863
Telephone inquiries may also be made to Norwest Bank at 1-877-536-3549 or
1-651-450-4064 between 7:00 a.m. and 7:00 p.m. Central Time.
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.
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.
If a participant sends notice of termination or a request to sell to
Norwest Bank between the record date and the payable date for a stock
distribution, the request will not be processed until the stock distribution is
credited to the participant's account.
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 Company or Norwest Bank 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 40,000,000 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 November 30, 1999, the outstanding Common Stock consisted of
approximately 17,900,000 shares. Two million shares of the Preference Stock are
reserved for issuance pursuant to a Shareholder Rights Plan. No Preferred Stock
and 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 and have
cumulative voting for the election of Directors.
Common Stock is traded in the over-the-counter market and is quoted on the
NASDAQ National Market System under the symbol SMGS. In early January, 2000, the
Common Stock is expected to begin tracing on the New York Stock Exchange under
the symbol SEN.
ANTI-TAKEOVER PROVISIONS
Articles of Incorporation. The following provisions of the Company's
Articles of incorporation may delay, defer or prevent a person from acquiring
the Company or changing control of the Board of Directors. The Articles of
Incorporation divide the Board into three classes with staggered terms; each
Director is elected for a three year term. Approximately one-third of the board
positions are filled by a shareholder vote each year. Directors may be removed
but only for cause, at an annual meeting of shareholders and by the affirmative
vote of a majority of the shares then entitled to vote for the election of
directors. In addition to requirements imposed under Section 7A of the Michigan
business Corporation Act (the "MBCA"), the our Articles of Incorporation provide
that a business combination cannot occur unless a written opinion is obtained
from an independent investment banker that the consideration to be paid to the
shareholders is fair and reasonable; provided, however, the directors may waive
this requirement. The Articles of Incorporation also contain provisions limiting
the personal liability of Directors.
Anti-Takeover Statutes. The Company is subject to Chapter 7A of the MBCA,
which provides that business combinations subject to Chapter 7A between a
Michigan corporation and a beneficial owner of shares entitled to 10% or more of
the voting power of such corporation generally require the affirmative vote of
90% of the votes of each class of stock entitled to vote, and not less than 2/3
of each class of stock entitled to vote (excluding voting shares owned by such
10% owner), voting as a separate class. Such requirements do not apply if (i)
the corporation's board of directors approves the transaction prior to the time
the 10% owner becomes such or (ii) the transaction satisfies certain fairness
standards, certain other conditions are met and the 10% owner has been such for
at least five years.
The Company is also subject to Chapter 7B of the MBCA which provides that,
unless a corporation's articles of incorporation or bylaws provide that Chapter
7B does not apply, "control shares" of a corporation acquired in a control share
acquisition have no voting rights except as granted by the stockholders of the
corporation. "Control shares" are shares which, when added to shares
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previously owned by a stockholder, increase such stockholder's ownership of
voting stock to more than 20% but less than 33 1/3%, more than 33 1/3% but less
than a majority, or more than a majority, of the votes to which all of the
capital stock of the corporation is entitled. Voting rights of control shares
must be approved by the affirmative vote of a majority of all shares entitled to
vote excluding voting share owned by the acquirer and certain officers and
directors. However, no such approval is required for gifts or other transactions
not involving consideration for a merger to which the corporation is a party or
certain other transactions described in Chapter 7B.
Rights to Purchase Preference Stock. In January 1997, the Company adopted a
Shareholders Rights Plan pursuant to which 2,000,000 shares of Series A
preference stock are reserved under the plan for sale to holders of common
stock. The common stock currently trades with a right to purchase such Series A
preference stock. The right is intended to protect shareholders in the event of
an unsolicited attempt to acquire us and becomes exercisable upon the occurrence
of certain triggering events. The right is transferred automatically with the
transfer of the common stock until separate rights certificates are distributed
upon the occurrence of certain events. The right could have the effect of
delaying, deferring or preventing a person from acquiring the Company or
accomplishing a change in control of the Board of Directors.
FEDERAL INCOME TAX MATTERS
Reinvested Dividends are treated for federal income tax purposes in the
same manner as if the participant had received the Dividends in cash on the
applicable Dividend Payment Date. Brokerage commissions paid by SEMCO on behalf
of a participant are treated as taxable dividend income to the participant and
reported accordingly.
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
When Norwest Bank purchases Plan Shares in the open market or otherwise not
from the Company, the Company will receive no proceeds from the Plan. If Norwest
Bank purchases Plan Shares from the Company, the net proceeds will be used for
the Company's (and its subsidiaries') continuing construction program and
general corporate purposes. The Company cannot predict how many such shares, if
any, will be sold to Norwest Bank, and, therefore, cannot estimate the amount of
net proceeds that it will receive.
EXPERTS
The Financial Statements and schedules included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, 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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SEMCO ENERGY LOGO
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DIRECT STOCK PURCHASE
AND
DIVIDEND REINVESTMENT PLAN
--------------------------
PROSPECTUS
DECEMBER 22, 1999
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