<PAGE> 1
Pursuant to Rule 424 (b)(2)
Registrations No. 33-49281
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This Prospectus Supplement and the accompanying
Prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any
such jurisdiction.
SUBJECT TO COMPLETION, DATED MAY 8, 1995
PROSPECTUS SUPPLEMENT STANDARD & POOR'S RATING: A
- ------------------------------------ MOODY'S RATING: A2
(TO PROSPECTUS DATED FEBRUARY 11, 1993) DUFF & PHELPS RATING: A
FITCH RATING: A
$30,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS
$10,000,000, % SECURED TERM NOTES, SERIES A, DUE MAY 1, 2020
$20,000,000, % SECURED TERM NOTES, SERIES B, DUE MAY 1, 2020
------------------------
Interest on the $10,000,000 % First Mortgage Bonds due May 1, 2020,
designated Secured Term Notes, Series A (the "Series A Bonds") and on the
$20,000,000 % First Mortgage Bonds due May 1, 2020, designated Secured Term
Notes, Series B (the "Series B Bonds") (the Series A Bonds and the Series B
Bonds are collectively referred to as the "Offered Bonds") is payable
semiannually on May 1 and November 1 beginning November 1, 1995. At the option
of the Company, the Offered Bonds will be redeemable, in whole or in part, on or
after May 1, 2000, at the redemption prices set forth herein, plus accrued
interest.
The Offered Bonds will be issued in the form of one Global Security for the
Series A Bonds and one Global Security for the Series B Bonds (individually, a
"Global Security" and collectively, the "Global Securities") registered in the
name of the nominee of The Depository Trust Company, as Depositary (as defined
below) and such nominee will be the sole holder of the Offered Bonds. An owner
of an interest in the Offered Bonds ("Beneficial Owner") will not be entitled to
the delivery of a definitive security except in limited circumstances. A
Beneficial Owner's interest in the Global Security will be indicated on, and
transfers will be effected only through, records maintained by the Depositary
and its participants. See "Description of the Offered Bonds" herein.
At the option of any deceased Beneficial Owner's Representative (as defined
below), interests in the Offered Bonds are redeemable at one hundred percent
(100%) of their principal amount plus accrued interest, at any time, subject to
an annual maximum principal amount of $25,000 per Beneficial Owner and an
aggregate for all Beneficial Owners of three percent (3%) of the aggregate
principal amount of each series of the Offered Bonds originally issued or
$300,000 for the Series A Bonds and $600,000 for the Series B Bonds, within 60
days after presentment to the Depositary of a satisfactory redemption request by
a deceased Beneficial Owner's Representative. Due to such limitations, there can
be no assurance that the interest of a Beneficial Owner will be redeemed before
maturity. The Company may exceed the $25,000 and three percent (3%) limitations
at its discretion. The Offered Bonds are not subject to a sinking fund. See
"Description of the Offered Bonds" herein.
There is currently no market for the Offered Bonds and there is no
assurance that one will develop.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public(1) Discount(2) Company(3)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Series A Bond....................... % % %
Total................................. $ $ $
- ---------------------------------------------------------------------------------------------------------
Per Series B Bond....................... % % %
Total................................. $ $ $
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from May , 1995.
(2) The Company has agreed to indemnify Edward D. Jones & Co., First of Michigan
Corporation and Roney & Co. (the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting".
(3) Before deducting estimated expenses of $75,000 payable by the Company.
------------------------
The Offered Bonds are offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters subject to approval
of certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel, or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Global Securities will be made through the facilities of the
Depositary in New York, New York, on or about May , 1995.
------------------------
EDWARD D. JONES & CO.
FIRST OF MICHIGAN CORPORATION
RONEY & CO.
------------------------
The date of this Prospectus Supplement is May , 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
HEREBY OFFERED AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus Supplement and the
accompanying Prospectus and by the more detailed information and the financial
statements and notes appearing in the incorporated documents.
THE COMPANY
Michigan Consolidated Gas Company ("MichCon" or the "Company") is a
Michigan corporation that was organized in 1898 and, with its predecessors, has
been in the gas utility business for nearly 150 years. MichCon is a public
utility engaged in the distribution and transmission of natural gas in the State
of Michigan. MichCon is one of the largest natural gas distributors in the
United States and the largest in Michigan.
MichCon serves more than 1.1 million customers in the Detroit, Grand
Rapids, Ann Arbor, Traverse City and Muskegon metropolitan areas and in various
other communities throughout the State of Michigan. The following services are
provided by MichCon:
- GAS SALES -- Includes the marketing and delivery of natural gas to
residential, commercial and industrial customers.
- END USER TRANSPORTATION -- Large volume customers that purchase gas
directly from producers or marketers utilize the Company's gas
distribution network to transport the gas to their facilities.
- INTERMEDIATE TRANSPORTATION -- MichCon provides transportation service to
pipelines, gas marketers, Michigan producers and other local distribution
companies in the United States and Canada that own the gas, but are not
the ultimate consumer.
MichCon is a wholly-owned subsidiary of MCN Corporation, a New York Stock
Exchange-listed company (ticker symbol: MCN). MCN Corporation's other principal
operating subsidiary is MCN Investment Corporation, a subsidiary holding company
for various diversified gas businesses and a computer operations management
firm.
THE OFFERING
SECURITIES OFFERED............ $10,000,000 aggregate principal amount of First
Mortgage Bonds, designated Secured Term Notes,
Series A.
$20,000,000 aggregate principal amount of First
Mortgage Bonds, designated Secured Term Notes,
Series B.
MATURITY DATE................. May 1, 2020.
INTEREST...................... % payable semiannually on each May 1 and
November 1, commencing November 1, 1995.
BENEFICIAL OWNER'S OPTION
TO REDEEM................... The Representatives (as defined below) of a
deceased Beneficial Owner may request the
redemption of a Beneficial Owner's interest in
the Offered Bonds subject to an annual maximum
principal amount of $25,000 per Beneficial
Owner and an aggregate for all Beneficial
Owners of three percent (3%) of the aggregate
original principal amount of each series of the
Offered Bonds originally issued or $300,000 for
the Series A Bonds and $600,000 for the Series
B Bonds. See "Description of the Offered Bonds
-- Limited Right of Redemption at Option of
Beneficial Owner."
COMPANY'S OPTION TO REDEEM.... In whole or in part, upon not less than 30 days
notice, on or after May 1, 2000, at a premium
declining from 105%, plus accrued interest. See
"Description of the Offered Bonds -- Redemption
at Option of the Company."
USE OF PROCEEDS............... To repay short-term debt, fund capital
expenditures and for general corporate
purposes.
S-3
<PAGE> 4
CONSOLIDATED FINANCIAL INFORMATION
(THOUSANDS, EXCEPT RATIOS AND PERCENTAGES)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
12 MONTHS ENDED --------------------------------------------------------------
MARCH 31, 1995 1994 1993 1992 1991 1990
---------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues(1)..... $999,134 $1,111,678 $1,223,515 $1,357,785 $1,190,116 $1,160,620
Operating Income(2)....... 114,258 126,318 125,611 107,635 91,373 84,291
Net Income(3)............. 50,516 59,868 62,376 50,821 37,302 31,709
Net Income Available for
Common Stock............ 50,097 59,387 61,649 49,848 36,082 30,239
Interest Charges.......... 39,486 37,041 33,555 35,971 34,980 34,312
Ratio of Earnings to Fixed
Charges(4)(5)........... 2.77 3.26 3.58 2.99 2.53 2.37
Long-Term Debt (including
capital leases and
excluding current
maturities) as
Percentage of Total
Capitalization.......... 49.0% 51.6% 50.0% 45.6% 48.2% 48.8%
</TABLE>
- -------------------------
(1) Commencing with the financial statements for the year ended December 31,
1994, certain revenues, which previously had been recorded as an offset to
operations and maintenance expense, were reclassified to Operating Revenues.
The amounts of Operating Revenues for the years ended December 31, 1990,
1991, 1992 and 1993 have been restated in the Prospectus Supplement in
accordance with this new classification.
(2) Commencing with the financial statements for the year ended December 31,
1991, income taxes are not deducted in determining Operating Income. The
amount of Operating Income for the year ending December 31, 1990 has been
restated in this Prospectus Supplement in accordance with this new
classification.
(3) On June 30, 1993, MichCon discontinued the business of its gas marketing
subsidiary, MichCon Trading Company ("Trading Company"), and sold the net
assets to subsidiaries of MCN Corporation, its parent company. MichCon
accounted for the transaction as a sale of a part of a line of business. The
final sales price of the transaction equaled the book value of Trading
Company's net assets, approximately $42,000,000. Trading Company's net
income included in MichCon's consolidated net income above was approximately
$2,879,000, $4,590,000, $2,001,000 and $579,000 for the twelve-month periods
ended December 31, 1990, 1991, 1992 and 1993, respectively. MichCon paid a
$21,000,000 special dividend to MCN in July 1993, out of the sale proceeds.
(4) For the purpose of computing these ratios, earnings consist of net income
plus income taxes and fixed charges. Fixed charges consist of total
interest, amortization of debt discount, premium and expense and the
estimated portion of interest implicit in rentals.
(5) The Company is a guarantor of certain other debt. Fixed charges related to
such debt, deemed to be immaterial, have been excluded in computing the
above ratios.
CAPITALIZATION AT MARCH 31, 1995
(THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED(2)
----------------- -----------------
<S> <C> <C> <C> <C>
Long-Term Debt (including capital leases and excluding
current maturities)(1).................................. $447,858 49.0% $477,858 50.6%
Common Shareholder's Equity............................... 466,869 51.0 466,869 49.4%
-------- ----- -------- -----
Total Capitalization................................. $914,727 100.0% $944,727 100.0%
======== ===== ======== =====
</TABLE>
- -------------------------
Note: The outstanding amount of Redeemable Preferred Stock, $2,618,300, is
classified as current maturities.
(1) Current maturities of Long-Term Debt were $58,000.
(2) Adjusted for the sale of the Offered Bonds at par. The Company targets an
average ratio of 50% long-term debt to total capitalization and anticipates
retaining future earnings to achieve this ratio.
S-4
<PAGE> 5
USE OF PROCEEDS
Proceeds from the sale of the Offered Bonds, in respect of which this
Prospectus Supplement is being delivered, will be used to repay short-term debt,
fund capital expenditures and for general corporate purposes.
DESCRIPTION OF THE OFFERED BONDS
The following description of the particular terms of the Offered Bonds
(referred to in the Prospectus as the "Description of the New Bonds")
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the New Bonds set forth in the
Prospectus, to which description reference is hereby made. Capitalized terms
defined in the Prospectus have the same meanings when used herein.
GENERAL
The Offered Bonds will be issued as part of two existing series of the
Company's First Mortgage Bonds designated Secured Term Notes, Series A, and
Secured Term Notes, Series B, both series issued under the Twenty-Ninth
supplemental indenture dated as of July 15, 1989 (the "New Restating
Supplemental Indenture") as supplemented by the Thirty-First Supplemental
Indenture dated as of December 15, 1991 relating to the Series A Bonds and the
Thirty-Second Supplemental Indenture dated as of January 5, 1993 relating to the
Series B Bonds. The following statements relating to the Offered Bonds and
certain provisions of the New Restating Supplemental Indenture are summaries, do
not purport to be complete, and are subject to and are qualified in their
entirety by reference to the provisions of the New Restating Supplemental
Indenture and the Thirty-First and Thirty-Second Supplemental Indentures.
NEW RESTATING SUPPLEMENTAL INDENTURE
The New Restating Supplemental Indenture includes a restatement of the
Indenture originally written in 1944 as subsequently supplemented. The New
Restating Supplemental Indenture is designed to make the Indenture consistent
with modern industry practice and to permit various economies of operation. The
terms of the New Restating Supplemental Indenture became effective on April 1,
1994 upon the retirement of all bonds issued prior to March 1, 1987 and upon the
filing of the required certificates with the Trustee by the Company. See
"Description of the New Bonds" in the accompanying Prospectus for a description
of these terms.
BOOK-ENTRY ONLY SYSTEM
Except under the circumstances described below, the Offered Bonds will be
issued in whole or in part in the form of one or more Global Securities that
will be deposited with, or on behalf of, The Depository Trust Company, New York,
New York ("DTC"), or such other depositary as may be subsequently designated
(the "Depositary"), and registered in the name of the Depositary.
So long as the Depositary, or its nominee, is the registered owner of a
Global Security, such Depositary or such nominee, as the case may be, will be
considered the sole holder of the individual Offered Bonds represented by such
Global Security for all purposes under the Indenture. Payments of principal of
and premium, if any, and any interest on individual Offered Bonds represented by
a Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder of such Global Security. Except as set forth below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Offered Bonds represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Offered Bonds and will not be considered the Holders thereof under the
Indenture, including, without limitation, for purposes of consenting to any
amendment thereof or supplement thereto.
S-5
<PAGE> 6
The following is based on information furnished by DTC:
DTC will act as securities depository for the Global Securities
representing the Offered Bonds. The Offered Bonds will be issued as
fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee). The Offered Bonds will be issued as one or more
fully-registered Global Securities certificate(s) in the aggregate
principal amount of such issue, and will be deposited with DTC.
DTC is a limited-purpose trust company under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants
("Participants") deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Direct Participants ("Direct
Participants") include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The Rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
Purchases of Offered Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Offered
Bonds on DTC's records. The ownership interest of each actual purchaser of
each Offered Bond ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' records. Beneficial Owners will not
receive written confirmation from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmation providing details of
the transaction, as well as periodic statements of their holdings, from the
Direct or Indirect Participants through which the Beneficial Owner entered
into the transaction. Transfers of beneficial ownership interest in the
Offered Bonds are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will
not receive certificates representing their beneficial ownership interest
in the Offered Bonds, except in the event that use of the book-entry system
for the Offered Bonds is discontinued.
To facilitate subsequent transfers, all of the Offered Bonds deposited
by Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Offered Bonds with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Offered Bonds; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Offered Bonds are credited, which may
or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. If less than all of the
Offered Bonds within an issue are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in
such issue to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to the
Offered Bonds. Under its usual procedures, DTC mails an "Omnibus Proxy" to
the Company as soon as possible after the record date. The "Omnibus Proxy"
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to
S-6
<PAGE> 7
whose accounts the Offered Bonds are credited on the record date
(identified in a listing attached to the "Omnibus Proxy").
Principal and interest payments on the Offered Bonds will be made to
DTC. DTC's practice is to credit Direct Participants' accounts on the
payable date(s) in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment
on the payable date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
Participant and not of DTC, the Trustee, or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payment of principal and interest to DTC is the responsibility of the
Company or the Trustee, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.
The Depositary may discontinue providing its services as Securities
depository with respect to the Offered Bonds at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Offered Bonds in certificated form ("Certificated Bonds") are required to
be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depositary). In that
event, Certificated Bonds will be printed and delivered.
The information provided under this caption concerning DTC and DTC's
book-entry system has been obtained from sources that the Company believes
to be reliable, but the Company takes no responsibility for the accuracy
thereof.
NONE OF THE COMPANY, THE INDENTURE TRUSTEE OR ANY AGENT FOR PAYMENT ON OR
REGISTRATION OF TRANSFER OR EXCHANGE OF SUCH OFFERED NOTES WILL HAVE ANY
RESPONSIBILITY OR LIABILITY FOR ANY ASPECT OF THE RECORDS RELATING TO OR
PAYMENTS MADE ON ACCOUNT OF BENEFICIAL INTERESTS IN SUCH GLOBAL NOTE OR FOR
MAINTAINING, SUPERVISING OR REVIEWING ANY RECORDS RELATING TO SUCH BENEFICIAL
INTEREST.
INTEREST AND MATURITY
The Offered Bonds will bear interest at the rate per annum shown on the
front cover of this Prospectus Supplement, payable semiannually on May 1 and
November 1 of each year, beginning November 1, 1995. The Offered Bonds will
mature on May 1, 2020. The Offered Bonds will be issued in the form of one
Global Security for the Series A Bonds and one Global Security for the Series B
Bonds and will be in denominations of $1,000 and integral multiples thereof.
REDEMPTION AT OPTION OF THE COMPANY
The Offered Bonds are not redeemable at the option of the Company, prior to
May 1, 2000. On or after May 1, 2000, the Offered Bonds will be redeemable, in
whole or from time to time in part, at the option of the Company, on not less
than 30 days' notice to registered owners. In case the Company shall elect to
redeem less than all of the outstanding Offered Bonds, then the Trustee shall
select by such method as the Trustee shall deem fair and appropriate, the
Offered Bonds to be redeemed subject to the provisions of the Thirty-First
Supplemental Indenture relating to the Series A Bonds and the provisions of the
Thirty-Second Supplemental Indenture relating to the Series B Bonds.
S-7
<PAGE> 8
Set forth below are the redemption prices of the Offered Bonds, expressed
in percentages of the principal amount, in each case plus interest accrued and
unpaid to the date of redemption, if redeemed at the option of the Company
during the twelve-month period beginning May 1 of the year indicated:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
- ----------------------------------------------
<S> <C>
2000................................ 105%
2001................................ 104%
2002................................ 103%
<CAPTION>
REDEMPTION
YEAR PRICE
- ----------------------------------------------
<S> <C>
2003................................ 102%
2004................................ 101%
2005 until stated maturity.......... 100%
</TABLE>
LIMITED RIGHT OF REDEMPTION AT OPTION OF BENEFICIAL OWNER
Unless the Offered Bonds have been declared due and payable prior to their
maturity by reason of an Event of Default, the Representative of a deceased
Beneficial Owner has the right to request redemption of all or part of his or
her interest in the Offered Bonds, expressed in integral multiples of $1,000,
for payment prior to maturity, and the Company will redeem the same subject to
the limitations that the Company will not be obligated to redeem during the
period beginning with the original issuance of the Offered Bonds and ending May
1, 1996, and during any twelve-month period ending May 1 thereafter, (i) on
behalf of a deceased Beneficial Owner any interest in the Offered Bonds which
exceeds an aggregate principal amount of $25,000 and (ii) interests in the
Offered Bonds in an aggregate principal amount exceeding three percent (3%) of
the aggregate principal amount of each series of the Offered Bonds originally
issued, or $300,000 for the Series A Bonds and $600,000 for the Series B Bonds.
In the case of interests in the Offered Bonds owned by a deceased Beneficial
Owner, a request for redemption may be presented to the Trustee at any time and
in any principal amount. If the Company, although not obligated to do so,
chooses to redeem interests of a deceased Beneficial Owner in the Offered Bonds
in any such period in excess of the $25,000 limitation, such redemption, to the
extent that it exceeds the $25,000 limitation for any Beneficial Owner, shall
not be included in the computation of the three percent (3%) limitation for such
period or any succeeding period.
Subject to the $25,000 and three percent (3%) limitations, the Company will
upon the death of any Beneficial Owner redeem the interest of the Beneficial
Owner in the Offered Bonds within 60 days following receipt by the Trustee of a
Redemption Request, as hereinafter defined, from such Beneficial Owner's
personal representative, or surviving joint tenant(s), tenant(s) by the entirety
or tenant(s) in common, or other persons entitled to effect such a Redemption
Request (each, a "Representative"). If Redemption Requests exceed the aggregate
principal amount of interest in the Series A or the Series B Bonds required to
be redeemed in the initial or any subsequent twelve-month period, then such
excess Redemption Requests will be applied to successive periods, regardless of
the number of periods required to redeem such interests.
A request for redemption of an interest in the Offered Bonds may be made by
delivering a request to the Depositary, in the case of a Participant which is
the Beneficial Owner of such interest, or to the Participant through whom the
Beneficial Owner owns such interest, in form satisfactory to the Participant,
together with, evidence of death of the Beneficial Owner and authority of the
representative satisfactory to the Participant and the Trustee. A Representative
of a deceased Beneficial Owner may make the request for redemption and shall
submit such other evidence of the right to such redemption as the Participant or
Trustee shall require. The request shall specify the principal amount of the
Offered Bonds to be redeemed. A request for redemption in form satisfactory to
the Participant and accompanied by the documents relevant to the request as
above provided, together with a certification by the Participant that it holds
the interest on behalf of the deceased Beneficial Owner with respect to whom the
request for redemption is being made (the "Redemption Request") shall be
provided to the Depositary by a Participant and the Depositary will forward the
request to the Trustee. Redemption Requests shall be in form satisfactory to the
Trustee.
The price to be paid by the Company for an interest in the Offered Bonds to
be redeemed pursuant to a request from a deceased Beneficial Owner's
Representative is one hundred percent (100%) of the principal amount thereof
plus accrued but unpaid interest to the date of redemption. Subject to
arrangements with the Depositary, payment for interests in the Offered Bonds
which are to be redeemed shall be made to the
S-8
<PAGE> 9
Depositary upon presentation of the Offered Bonds to the Trustee for redemption
in the aggregate principal amount specified in the Redemption Requests submitted
to the Trustee by the Depositary which are to be fulfilled in connection with
such payment. Any acquisition of Offered Bonds by the Company or its
subsidiaries other than by redemption at the option of any Representative of a
deceased Beneficial Owner shall not be included in the computation of either the
$25,000 or three percent (3%) limitations for any period.
Interests in the Offered Bonds held in tenancy by the entirety, joint
tenancy or by tenants in common will be deemed to be held by a single Beneficial
Owner and the death of a tenant in common, tenant by the entirety or joint
tenant will be deemed the death of a Beneficial Owner. The death of a person
who, during such person's lifetime, was entitled to substantially all of the
rights of a Beneficial Owner of an interest in the Offered Bonds will be deemed
the death of the Beneficial Owner, regardless of the recordation of such
interest on the records of the Participant, if such rights can be established to
the satisfaction of the Participant and the Trustee. Such interests shall be
deemed to exist in typical cases of nominee ownership, ownership under the
Uniform Gifts to Minors Act or the Uniform Transfers to Minors Act, community
property or other joint ownership arrangements between a husband and wife
(including individual retirement accounts or Keogh [H.R. 10] plans maintained
solely by or for the decedent or by or for the decedent and any spouse), and
trust and certain other arrangements where one person has substantially all of
the rights of a Beneficial Owner during such person's lifetime.
In the case of a Redemption Request which is presented on behalf of a
Beneficial Owner and which has not been fulfilled at the time the Company gives
notice of its election to redeem the Offered Bonds, the Offered Bonds that are
the subject of such Redemption Request shall not be eligible for redemption
pursuant to the Company's option to redeem but shall remain subject to
fulfillment pursuant to the Beneficial Owner's Redemption Request.
Any Redemption Request may be withdrawn upon delivery of a written request
for such withdrawal given to the Trustee by the Depositary prior to payment for
redemption of the interest in the Offered Bonds.
Because of the limitations on the Company's requirement to redeem interests
in the Offered Bonds as described above, no Beneficial Owner can have any
assurance that his interest in the Offered Bonds will be paid prior to maturity.
SINKING FUND
The Offered Bonds are not subject to a sinking fund.
UNDERWRITING
The Underwriters named below have severally agreed, subject to the terms
and conditions of the Underwriting Agreement dated May , 1995, to purchase
from the Company the principal amount of the Offered Bonds set forth opposite
their respective names.
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
UNDERWRITER SERIES A BONDS SERIES B BONDS
- ------------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Edward D. Jones & Co.............................................. $ $
First of Michigan Corporation.....................................
Roney & Co........................................................
-------------- --------------
Total........................................................ $ 10,000,000 $ 20,000,000
=========== ===========
</TABLE>
The Underwriters are committed to purchase all of the Offered Bonds if any
are purchased.
The Underwriters have advised the Company that they propose initially to
offer the Offered Bonds to the public at the public offering prices set forth on
the cover page of this Prospectus Supplement and in part to certain securities
dealers, which are members of the National Association of Securities Dealers,
Inc., at such prices less concessions as they may determine within their
discretion. After the initial public offering of the Offered Bonds, the public
offering prices and concessions may be changed.
S-9
<PAGE> 10
The Offered Bonds are new issues of securities with no established trading
market. The Company currently has no intention to list the Offered Bonds on any
securities exchange. The Company has been advised by the Underwriters that they
intend to make a market in the Offered Bonds, but are not obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the existence of a trading market for the Offered Bonds.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
LEGAL OPINIONS
The legality of the Offered Bonds will be passed upon for the Company by
Susan K. McNish, General Counsel and Secretary of MichCon and for the
Underwriters by LeBoeuf, Lamb, Greene and MacRae, L.L.P., a limited liability
partnership including professional corporations, 125 West 55th Street, New York,
New York 10019-5389. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to time
renders legal service to MCN Corporation.
S-10
<PAGE> 11
PROSPECTUS
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS
-------------------
Michigan Consolidated Gas Company ("MichCon" or the "Company") from time to
time may offer, in an aggregate principal amount not to exceed $230,000,000, its
First Mortgage Bonds. First Mortgage Bonds aggregating $30,000,000 have been
designated Secured Term Notes, Series A and will be issued under the Company's
Thirty-First Supplemental Indenture and First Mortgage Bonds aggregating
$200,000,000 have been designated Secured Term Notes, Series B and will be
issued under the Company's Thirty-Second Supplemental Indenture. The combination
of Secured Term Notes, Series A and Secured Term Notes, Series B (the "New
Bonds") may be offered in amounts, at prices and on terms to be determined at
the time of sale. The principal amount, interest rate, interest payment dates,
maturity, public offering price, any redemption terms or other specific terms of
the series of New Bonds in respect of which this Prospectus is being delivered
will be set forth in the accompanying Prospectus Supplement or Supplements (the
"Prospectus Supplement").
MichCon may sell the New Bonds through underwriters, through dealers,
directly to one or more institutional purchasers or through agents. See "Plan of
Distribution". Underwriters may include Merrill Lynch & Co. (Merrill Lynch,
Pierce, Fenner & Smith Incorporated) or such other underwriter or underwriters
as may be designated by MichCon, or an underwriting syndicate represented by one
or more of such firms. Such firms may also act as agents. The Prospectus
Supplement will set forth the names of such underwriters, dealers or agents, if
any, any applicable commissions or discounts and the proceeds to MichCon from
such sale.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
-------------------
THE DATE OF THIS PROSPECTUS IS FEBRUARY 11, 1993.
<PAGE> 12
AVAILABLE INFORMATION
MichCon is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, (the "1934 Act") and in accordance therewith
files reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). Information as of particular dates concerning
directors and officers, their remuneration and any material interest of such
persons in transactions with the Company is disclosed in proxy statements
distributed to stockholders of the Company and filed with the SEC. Such reports,
proxy statements and other information can be inspected and copied at the SEC's
Public Reference Room; Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as the following Regional Offices of the SEC: 75 Park Place, 14th
Floor, New York, New York 10007; and 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549, at prescribed rates. In addition, certain MichCon
securities are listed on the New York Stock Exchange where reports, proxy
statements and other information concerning MichCon may be inspected. This
Prospectus does not contain all information set forth in the Registration
Statements and Exhibits thereto which the Company has filed with the SEC under
the Securities Act of 1933 and to which reference is hereby made.
------------------------
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents heretofore filed with the SEC pursuant to the 1934 Act:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1991.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1992, June 30, 1992 and September 30, 1992.
3. The Company's Reports on Form 8-K, dated February 28, 1992, August
27, 1992 and September 1, 1992.
All documents filed by MichCon pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act after the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus.
MichCon hereby undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, on the written or oral request of
any such person, a copy of any or all of the documents referred to above which
have been or may be incorporated by reference in this Prospectus, other than
exhibits to such documents. Requests for such copies should be directed to Mr.
David R. Nowakowski, Controller, Treasurer and Chief Accounting Officer,
Michigan Consolidated Gas Company, 500 Griswold Street, 28th Floor, Detroit,
Michigan 48226 (Telephone: (313) 256-6746).
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR
THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
2
<PAGE> 13
SELECTED INFORMATION
The following material is qualified in its entirety by the detailed
information and consolidated financial statements appearing elsewhere in this
Prospectus or the Prospectus Supplement, including the documents incorporated by
reference in this Prospectus. Documents filed after the date of this Prospectus
and incorporated by reference herein may contain more recent financial
information and it will be necessary to review such information to put the
historical information into proper perspective.
THE COMPANY
<TABLE>
<S> <C>
Business...................... Natural gas distribution utility.
Service Area.................. Serves more than one million customers in the State of
Michigan, including metropolitan Detroit, Grand Rapids and
Ann Arbor.
</TABLE>
CONSOLIDATED FINANCIAL INFORMATION
(THOUSANDS, EXCEPT RATIOS AND PERCENTAGES)
<TABLE>
<CAPTION>
12 MONTHS
YEAR ENDED DECEMBER 31 ENDED
-------------------------------------------------------------- SEPTEMBER 30,
1987 1988 1989 1990 1991 1992
---------- ---------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues........... $1,242,907 $1,281,319 $1,285,021 $1,152,931 $1,181,844 $1,295,894
Operating Income............. 100,711 108,692 101,007 84,291 91,373 98,668
Net Income(1)................ 48,797 49,406 52,021 31,709 37,302 43,025
Net Income Applicable to
Common Stock(1)............ 47,002 47,736 50,535 30,239 36,082 41,990
Interest Charges............. 28,484 28,626 24,139 34,312 34,980 35,999
Ratio of Earnings to Fixed
Charges(2 and 3)........... 3.11 3.20 3.90 2.37 2.53 2.74
Long-Term Debt including
Capital Leases (excluding
current maturities) as
Percentage of Total
Capitalization............. 50.7% 48.1% 48.6% 48.8% 48.2% 46.4%
</TABLE>
- -------------------------
(1) 1988 excludes the Extraordinary Item -- Loss on Bond Redemption which
decreased net income by $3,170,000.
(2) For the purpose of computing these ratios, earnings consist of net income
(excluding the Extraordinary Item -- Loss on Bond Redemption in 1988
referred to in (1) above) plus income taxes and fixed charges. Fixed
charges consist of total interest, amortization of debt discount, premium
and expense and the estimated portion of interest implicit in rentals.
(3) The Company is a guarantor of certain other debt. Fixed charges related to
such debt, deemed to be immaterial, have been excluded in computing the
above ratios.
CAPITALIZATION AT SEPTEMBER 30, 1992
(THOUSANDS, EXCEPT PERCENTAGES)
<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED(3)
----------------- -----------------
<S> <C> <C> <C> <C>
Long-Term Debt (including capital leases and excluding
current maturities)(1)................................ $327,510 46.4% $557,510 59.6%
Redeemable Preferred Stock (excluding current
maturities)(2)........................................ 10,500 1.5 10,500 1.1
Common Shareholder's Equity............................. 367,939 52.1 367,939 39.3
-------- ----- -------- -----
Total Capitalization.................................. $705,949 100.0% $935,949 100.0%
======== ===== ======== =====
</TABLE>
- -------------------------
(1) Current maturities of Long-Term Debt were $4,279,000.
(2) Current maturities for Preferred Stock amounted to $1,118,000 as of
September 30, 1992 and were increased to $3,000,000 on December 3, 1992 when
MichCon's Board of Directors authorized the redemption, for sinking fund
purposes, of 120,000 shares on January 31, 1993.
(3) Adjusted for the sale of the New Bonds at par.
3
<PAGE> 14
THE COMPANY
MichCon is a Michigan corporation that was organized in 1898 and, with its
predecessors, has been in business for over 140 years. The Company is engaged in
the natural gas distribution, transmission and storage business in the State of
Michigan and serves more than one million customers. MichCon is a wholly-owned
subsidiary of MCN Corporation, a Michigan corporation.
At January 1, 1993, MichCon and its subsidiaries employed approximately
3,500 persons.
The mailing address of MichCon's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226, and its telephone number is (313) 965-2430.
USE OF PROCEEDS
Except as otherwise stated in the Prospectus Supplement, net proceeds from
the sale of the New Bonds offered hereby will be used to repurchase or otherwise
refund outstanding securities, to support increases in working capital
requirements, to finance construction expenditures, and for other corporate
purposes. Specific allocations of proceeds for such purposes have not been made
at this time. Funds may be borrowed in anticipation of future requirements.
DESCRIPTION OF THE NEW BONDS
The following description sets forth certain general terms and provisions
of the New Bonds to which any Prospectus Supplement will relate. The particular
terms of the New Bonds offered by any Prospectus Supplement will be described in
such Prospectus Supplement. The statements made herein are a summary only, do
not purport to be complete, and are subject to the detailed provisions of
MichCon's Indenture of Mortgage and Deed of Trust dated as of March 1, 1944 (the
"Indenture") and indentures supplemental thereto (copies of which are filed as
exhibits to the Registration Statement) to which reference is hereby made. The
Indenture has been supplemented by thirty-one supplemental indentures, including
the Twenty-ninth Supplemental Indenture dated as of July 15, 1989 (the "New
Restating Supplemental Indenture"). The bonds of all series issued, or which may
be issued, under the Indenture are hereinafter referred to as the "Bonds".
The New Restating Supplemental Indenture includes a restatement of the
Indenture originally written in 1944 designed to make it consistent with modern
industry practice and to permit various economies of operation. These new terms
will become effective when all bonds issued prior to March 1, 1987 are either
retired, the latest year being 2017, or the new terms are consented to by
holders of such prior bonds. (Certain other new terms such as "Meetings and
Consents of Bondholders"; "Possession, Use, Release and Transfer of Property";
and certain Definitions which were added by the Twenty-eighth Supplemental
Indenture will become effective when all bonds issued prior to 1984 are no
longer outstanding, the latest year being 1998.) This summary incorporates by
reference certain Articles and Sections of the Indenture and the supplemental
indentures referred to below and is qualified in its entirety by such reference.
Terms defined in the Indenture and supplemental indentures are used in this
summary without definition.
GENERAL
The Secured Term Notes, Series B will constitute a new series of Bonds, 6
of which series are currently outstanding. The Trustees under the Indenture are
Citibank, N.A., New York, N.Y. (the "Trustee") and Robert T. Kirchner
(collectively, the "Trustees".)
The Secured Term Notes, Series A will be offered on a continuing basis and
will mature from two years to forty years from the Issue Date (hereinafter
defined) and Secured Term Notes, Series B will be offered on a continuing basis
and will mature from nine months to forty years from the Issue Date (hereinafter
defined), as selected by the purchaser and agreed to by MichCon. Each New Bond
will bear interest at a fixed or variable rate selected by the purchaser and
agreed to by MichCon.
4
<PAGE> 15
The Prospectus Supplement relating to the particular issuance of New Bonds
will describe the following terms: (1) the purchase price of such New Bonds (the
"Issue Price"), which may be expressed as a percentage of the principal amount
at which such New Bonds will be issued; (2) the date on which such New Bonds
will be issued (the "Issue Date"); (3) the date on which the principal of such
New Bonds will be payable (the "Maturity Date"); (4) the rate(s) per annum at
which such New Bonds will bear interest (the "Interest Rate"); (5) the date from
which any such interest shall accrue; (6) the terms of redemption, if any; and
(7) any other terms of such New Bonds not inconsistent with the provisions of
the Indenture.
The New Bonds will be issued as fully registered bonds without coupons in
denominations of $1,000 and any integral multiple thereof or, if so provided in
the Prospectus Supplement, the Company may provide for the issuance of
uncertificated bonds in addition to or in place of certificated bonds. The New
Bonds will be exchangeable by holders for New Bonds of the same aggregate
principal amount, but of different authorized denomination or denominations,
which have the same Issue Date, Maturity Date, Interest Rate, and redemption
provisions, if any. Such exchanges are to be made without service charge (other
than any stamp tax or other governmental charge.)
SECURITY AND PRIORITY
The Indenture constitutes a first mortgage lien (subject to exceptions and
reservations set forth therein, to "permissible encumbrances", and to various
matters specified under "Business; Franchises" and "Properties" in MichCon's
Form 10-K) upon substantially all of the fixed property and franchises of
MichCon, consisting principally of gas distribution and transmission lines and
systems, underground storage fields and buildings, including property of the
character initially mortgaged which has been or may be acquired by MichCon
subsequent to the execution and delivery of the Indenture. It prohibits creation
of prior liens upon the mortgaged property, other than "permissible
encumbrances", but, within specified limitations in certain cases, property may
be acquired subject to preexisting liens or purchase money and other liens
created at the time or in connection with the acquisition of such property. The
property excepted from the lien of the Indenture consists principally of cash
(unless deposited with the Trustee under the Indenture), accounts receivable,
gas stored in reservoirs except to the extent specially pledged, materials and
supplies, securities and vehicles. When all Bonds issued prior to 1984 are no
longer outstanding, leases will no longer be generally subject to the lien of
the Indenture. (Granting Clauses, Article I and Sections 8, 10 and 11 of Article
V of the Indenture and Granting Clauses, Part II, Article I and Sections 5.08,
5.10 and 5.11 of the New Restating Supplemental Indenture.)
So long as any Bonds issued prior to 1984 remain outstanding, there are
various restrictions relating to the acquisition of property subject to liens
prior to the lien of the Indenture, to the issuance of additional securities
under such other liens in certain cases, and to the bonding of such acquired
property under the Indenture.
The New Bonds will rank equally and ratably (except as to sinking fund and
other analogous funds established for the exclusive benefit of a particular
series) with all Bonds, regardless of series, from time to time issued and
outstanding under the Indenture.
RELEASE OF PROPERTY
Unless an event of default shall have occurred and be continuing, the
Company is entitled to possess, use and enjoy all the property and
appurtenances, franchise and rights conveyed by the Indenture. Subject to
various limitations and requirements, property may be released from the lien
under the Indenture on a sale or other disposition upon receipt by the Trustee
of cash equal to the greater of the consideration received by the Company upon
such disposition or fair value of such property, as adjusted. When all Bonds
issued prior to March 1, 1987 are no longer outstanding and subject to various
limitations and requirements, the Company may obtain a release of any part of
the mortgaged property, except prior lien bonds, upon receipt by the Trustee of
cash, as adjusted, equal to the cost of the property to be released (or if the
fair value of such property at the time it became bonded was less than cost,
then such fair value in lieu of cost). (Article VII of the Indenture and Part
II, Article VII of the New Restating Supplemental Indenture).
5
<PAGE> 16
ISSUANCE OF ADDITIONAL BONDS
Additional Bonds may be issued under the Indenture in principal amounts
(unlimited except as provided by law) equal to:
(1) 60% of the cost or fair value to the Company, whichever is less,
of unbonded net property additions made after December 31, 1943 (subject to
deductions in certain cases, if such net property additions secure prior
lien bonds); and
(2) the sum of the principal amount of Bonds previously issued under
the Indenture, and of prior lien bonds theretofore deducted under the
Indenture, which have been retired or are then being retired and have not
theretofore been bonded; and
(3) the amount of cash deposited with the Trustee for such purpose.
Bonds may be issued on the basis of net property additions or deposit of cash
only if net earnings available for interest and depreciation (before deduction
for income taxes) for any specified 12 consecutive calendar months within the
preceding 15 months equal 2 1/2 times (and, pursuant to the terms of certain
supplemental indentures, so long as any Bonds issued prior to 1984 are
outstanding, only if net earnings for the period, calculated on substantially
the same basis and after deduction of a prescribed amount of depreciation and of
provision for amortization of any cost in excess of original cost included in
the Company's accounts, equal 2 times) annual interest charges on the Bonds and
any prior lien bonds. Such earnings requirement need not be met where Bonds are
to be issued against Bonds or prior lien bonds which have been or are being
retired as described in (2) above if the Bonds to be issued bear interest at a
lower rate than the Bonds or prior lien bonds which have been or are to be
retired, or if the proceeds from the Bonds to be issued are used to refund Bonds
or prior lien bonds which have been retired within two years prior to such
issuance unless additional Bonds requiring an earnings certificate have been
issued in the period between the retirement of the retired Bonds and the
issuance of the New Bonds. When all Bonds issued prior to 1984 are no longer
outstanding, "60%" in (1) above will be increased to "70%" and the definition of
property additions broadened to include substantially all utility property
subject to the Indenture. (Articles I, III, and V of the Indenture, Article VI
of the Sixteenth, Seventeenth, Eighteenth, Twentieth, Twenty-first,
Twenty-fourth, and Twenty-fifth Supplemental Indentures, Article V of the
Twenty-eighth Supplemental Indenture and Part II, Article III of the New
Restating Supplemental Indenture.)
As of December 31, 1991, MichCon had approximately $536 million of unbonded
net property additions, which would entitle it to issue approximately $322
million principal amount of additional Bonds on the basis of unbonded net
property additions as discussed under (1) in the preceding paragraph, and had
further additional capacity to issue $226 million principal amount of New Bonds
on the basis of Bonds previously issued under the Indenture, which have been
retired and have not theretofore been bonded as discussed under (2) in the
preceding paragraph. The Secured Term Notes, Series A will be issued upon the
basis of retired Bonds, as discussed under (2) in the preceding paragraph. The
Secured Term Notes, Series B will be issued upon the basis of 60% of the cost or
fair value of unbonded net property additions as discussed under (1) in the
preceding paragraph, upon the basis of retired Bonds, as discussed under (2) in
the preceding paragraph and cash deposited with the Trustee for such purpose, as
discussed under (3) in the preceding paragraph.
WITHDRAWAL OF CERTAIN CASH
Cash deposited with the Trustee as a basis for the issuance of additional
Bonds may be withdrawn by MichCon in amounts described in (1) (including the
amendment thereof referred to above) and (2) under "Issuance of Additional
Bonds". (Section 1 of Article VIII of the Indenture and Part II, Section 8.01 of
the New Restating Supplemental Indenture.)
DIVIDENDS ON COMMON STOCK AND CALCULATION OF NET EARNINGS AVAILABLE FOR PAYMENT
THEREOF
So long as any Bonds issued prior to 1984 remain outstanding, MichCon is
required:
(1) to limit dividends and distributions on, and expenditures for
acquisition of, its common stock to earned surplus of the Company at
December 31, 1982, and subsequent net accumulations thereof.
6
<PAGE> 17
(2) to deduct, for the purpose of calculating net earnings available
for the payment of dividends on common stock:
(i) depreciation in each calendar year subsequent to December 31,
1982, in an amount at least equal to 1 3/4% of the average of the
amounts of the gross property account of the Company, at the beginning
and end of such year; and
(ii) provisions for amortization of any cost in excess of original
cost included in the Company's accounts.
(Article V of the Twenty-seventh Supplemental Indenture.)
DEFEASANCE
When all Bonds issued prior to 1984 are no longer outstanding, the Company
may require the discharge of the Indenture or treat a series of Bonds as no
longer outstanding thereunder if: (1) the Company deposits with the Trustee
monies or certain obligations of the United States of America or certain
securities which are guaranteed by, or backed by obligations of, the United
States of America, in an amount sufficient to pay, when due, the principal,
premium if any, and any interest due and to become due; and (2) the Company
delivers an opinion of counsel to the effect that registration is not required
under the Investment Company Act of 1940, applicable laws are not violated, and
such discharge will not result in a taxable event with respect to the Bonds the
payment of which is being provided for. In such event, the obligation of the
Company duly and punctually to pay and cause to be paid the principal, premium,
if any, and interest in respect of such Bonds shall be completely discharged.
Thereafter, the holders of such Bonds shall be entitled to payment only out of
funds on deposit with the Trustee as aforesaid for their payment. (Article V
Section 5 of the Twenty-eighth Supplemental Indenture, and Part II, Article XVI
of the New Restating Supplemental Indenture.)
MODIFICATION OF INDENTURE
In general, modifications or alterations of the Indenture and indentures
supplemental thereto and of the rights or obligations of the Company and of the
bondholders, as well as waivers of compliance with the Indenture or indentures
supplemental thereto, may be made, with the approval of the Company, at
bondholders' meetings upon the affirmative vote of 66 2/3% in principal amount
of the Bonds entitled to be voted at the meeting with respect to the matters
involved. When all Bonds issued prior to 1984 are no longer outstanding, a
provision will be substituted for the foregoing provision to the effect that
modifications or alterations of the Indenture and indentures supplemental
thereto and of the rights or obligations of the Company and of the bondholders,
as well as waivers of compliance with the Indenture or indentures supplemental
thereto, may be made with the consent of holders of 60% of the Bonds, or, if
less than all series of Bonds are adversely affected, the consent of the holders
of 60% of the Bonds adversely affected and, so long as bonds of the Twenty-fifth
Series remain outstanding, the holders of a majority of all Bonds. No such
modification, alteration or waiver may be made which will (1) permit the
extension of the time or times of payment of the principal of, or the interest
or the premium (if any) on, any Bond, or a reduction in the rate of interest
thereon, or otherwise affect the terms of payment of the principal of, or the
interest or the premium (if any) on, any Bond, or affect the right of any
bondholder to institute suit for the enforcement of any such payment on or after
the due date thereof, (2) otherwise than as permitted by the Indenture, permit
the creation of any lien ranking prior or equal to the lien of the Indenture
with respect to any of the mortgaged properties or (3) permit the reduction of
the percentage of Bonds required for the making of any such modification,
alteration or waiver. (Article XIV of the Indenture, Article V of the
Twenty-eighth Supplemental Indenture, and Part II, Article XIV of the New
Restating Supplemental Indenture.)
CONCERNING THE TRUSTEES
The Trustee (Citibank, N.A.) has acted as paying agent on the outstanding
Bonds and will act in the same capacity with respect to the New Bonds. It is
also a depositary of funds of the Company. Robert T. Kirchner is Individual
Trustee. Mr. Kirchner is an Officer of Citibank, N.A.
7
<PAGE> 18
DEFAULT AND NOTICE THEREOF TO BONDHOLDERS
The Indenture provides that, in case of an event of default as defined
therein, the Trustee or the holders of not less than 25% in principal amount of
the Bonds may declare the principal and all accrued and unpaid interest of all
Bonds, if not already due, to be immediately due and payable. The Trustee, upon
request of the holders of a majority in principal amount of the outstanding
Bonds, shall waive such default and rescind any such declaration if such default
is cured. The holders of a majority in principal amount of the Bonds shall have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustees and of exercising any power or trust
conferred upon the Trustees, but under certain circumstances, the Trustees may
decline to follow such directions or to exercise certain of their powers.
Bondholders have no right to enforce any remedy under the Indenture unless
the Trustees have first had a reasonable opportunity to do so following notice
of default to the Trustee and request by the holders of 25% in principal amount
of the Bonds for action by the Trustees with offer of indemnity satisfactory to
the Trustees against cost, expenses and liabilities that may be incurred
thereby, but this provision does not impair the absolute right of any bondholder
to enforce payment of the principal of and interest on his Bond when due.
(Sections 2, 18, 19 and 20 of Article IX of the Indenture and Part II, Article
IX of the New Restating Supplemental Indenture.)
The Indenture provides that the following shall constitute events of
default: failure to pay any installment of interest on any Bond when due and
payable, and continuance of such failure for 30 days (60 days when the modified
provision of the New Restating Supplemental Indenture becomes effective);
failure to pay the principal of any Bond when due and payable, whether at
maturity, in connection with any sinking fund payment, or otherwise; failure to
pay any installment of interest on any prior lien bonds, and continuance of such
failure for the period of grace, if any, specified in the prior lien securing
such bonds; failure to pay any installment applied to the purchase or redemption
of any Bond, and continuance of such failure for 60 days (effective when Bonds
issued prior to March 1987 are no longer outstanding); failure to pay the
principal of any prior lien bond when due and payable, whether at maturity or
otherwise; failure on the part of the Company to perform or observe any other
covenant, agreement or condition contained in the Indenture or any indenture
supplemental thereto or in the Bonds or any prior lien bonds, continuance of
such failure for 90 days after written notice to the Company by the Trustee or
by the holders of not less than 25% in principal amount of the Bonds; and
insolvency or bankruptcy, receivership or similar proceedings initiated by the
Company, or initiated against the Company and not dismissed or stayed within 45
days; and failure to renew or extend its corporate charter upon or prior to the
expiration of such under the provision of its Articles of Incorporation or of
law.
The Indenture provides that the Trustees shall give to the bondholders
notice of the happening of a default known to them within 90 days after the
occurrence thereof (disregarding any period of grace in the defaults referred to
above) unless such default shall have been cured, but except in case of default
in the payment of principal, premium, if any, or interest on the Bonds or in the
payment of any sinking fund installment, the Trustees may withhold such notice
if and so long as the board of directors, the executive committee or a trust
committee of directors or responsible officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the
bondholders. (Section 2 of Article IX, Section 3 of Article XII of the Indenture
and Part II, Sections 9.01 and 12.03 of the New Restating Supplemental
Indenture.)
BOOK-ENTRY NOTES
The New Bonds may be issued in whole or in part in the form of one or more
Global Securities (a "Global Note" or "Book-Entry Note") registered in the name
of such depositary as will be specified in the Prospectus Supplement (the
"Depositary"). Upon issuance, all Book-Entry Notes having the same Issue Date,
Maturity Date, Interest Rate and redemption provisions will be represented by a
single Global Note. Each Global Note will be deposited with, or on behalf of,
the Depositary. Book-Entry Notes will not be exchangeable for certificated New
Bonds and will not otherwise be issuable as certificated New Bonds unless the
use of the book-entry system is discontinued. Unless and until it is exchanged
in whole or in part for the
8
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individual New Bonds represented thereby, a Global Note may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor of the Depositary or a
nominee of such successor.
LEGAL OPINIONS
The legality of the New Bonds offered hereby will be passed upon for the
Company by Susan K. McNish, Secretary and General Counsel of MichCon and for the
Underwriters by LeBoeuf, Lamb, Leiby & MacRae (a partnership including
professional corporations), 125 West 55th Street, New York, New York 10019-5389.
LeBoeuf, Lamb, Leiby & MacRae from time to time renders legal service to
MichCon.
EXPERTS
The consolidated financial statements and related schedules of the Company
incorporated in the Prospectus from MichCon's Annual Report on Form 10-K for the
year ended December 31, 1991 have been audited by Deloitte & Touche, independent
auditors, as stated in their report included in such Form 10-K. Such
consolidated financial statements and related financial statement schedules have
been incorporated herein in reliance upon such report given upon the authority
of Deloitte & Touche as experts in accounting and auditing.
PLAN OF DISTRIBUTION
The Company may sell the New Bonds (i) through underwriters; (ii) through
dealers; (iii) directly to one or more institutional purchasers; or (iv) through
agents. A Prospectus Supplement will set forth the terms of the offering of the
New Bonds offered thereby, including the name or names of any underwriters,
dealers, purchasers or agents, the purchase price of such New Bonds and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting underwriters' compensation, any initial public offering
price, any discounts or concessions allowed or reallowed or paid to dealers and
any securities exchange on which such New Bonds may be listed. Any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers may be changed from time to time. Only firms named in the
Prospectus Supplement will be deemed to be underwriters, dealers or agents in
connection with the New Bonds offered thereby, and if any of the firms expressly
referred to below is not named in such Prospectus Supplement, then such firm
will not be a party to the underwriting agreement in respect of such New Bonds,
will not be purchasing any such New Bonds from the Company and will have no
direct or indirect participation in the underwriting of such New Bonds, although
it may participate in the distribution of such New Bonds under circumstances
entitling it to a dealer's commission.
If underwriters are used in the sale, the New Bonds will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The New Bonds may be
offered to the public either through underwriting syndicates represented by one
or more managing underwriters (which may include Merrill Lynch & Co. (Merrill
Lynch, Pierce, Fenner & Smith Incorporated), or such other underwriter or
underwriters as may be designated by the Company) or directly by one or more
underwriters. Unless otherwise set forth in the Prospectus Supplement, the
obligations of the underwriters to purchase the New Bonds offered thereby will
be subject to certain conditions precedent, and the underwriters will be
obligated to purchase all of such New Bonds if any are purchased.
New Bonds may be sold directly by the Company or through any firm
designated by the Company, from time to time. The Prospectus Supplement will set
forth the name of any agent involved in the offer or sale of the New Bonds in
respect of which the Prospectus Supplement is delivered and any commissions
payable by the Company to such agent. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
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Underwriters, dealers and agents may be entitled under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Securities Act of 1933.
Underwriters, dealers and agents may engage in transactions with or perform
services for the Company in the ordinary course of business.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN
ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary..................................... S-3
The Company................................. S-3
The Offering................................ S-3
Consolidated Financial Information.......... S-4
Use of Proceeds............................. S-5
Description of the Offered Bonds............ S-5
Underwriting................................ S-9
Legal Opinions.............................. S-10
PROSPECTUS
Available Information....................... 2
Incorporation of Certain Documents by
Reference................................. 2
Selected Information........................ 3
The Company................................. 4
Use of Proceeds............................. 4
Description of the New Bonds................ 4
Legal Opinions.............................. 9
Experts..................................... 9
Plan of Distribution........................ 9
</TABLE>
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$30,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS,
$10,000,000, % SECURED TERM NOTES, SERIES A, DUE MAY 1, 2020
$20,000,000, % SECURED TERM NOTES,
SERIES B, DUE MAY 1, 2020
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PROSPECTUS SUPPLEMENT
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EDWARD D. JONES & CO.
FIRST OF MICHIGAN CORPORATION
RONEY & CO.
MAY , 1995
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