<PAGE> 1
Pursuant to Rule 424(b)(2)
Registration No. 33-59093
PROSPECTUS SUPPLEMENT
- ------------------------------------
(TO PROSPECTUS DATED MAY 31, 1995)
$150,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
FIRST MORTGAGE BONDS DESIGNATED AS
SECURED MEDIUM-TERM NOTES, SERIES B
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
------------------------
Michigan Consolidated Gas Company ("MichCon" or the "Company") may from
time to time offer up to $150,000,000 aggregate initial offering price of a new
series of its First Mortgage Bonds designated as Secured Medium-Term Notes,
Series B (the "Offered Notes"), subject to reduction as a result of the sale of
other securities as described in the accompanying Prospectus. Each Offered Note
will mature on any day nine months or more from its date of issue. Each Offered
Note may also be subject to redemption prior to its Stated Maturity at the
option of the Company or pursuant to a sinking fund, or repayment prior to its
Stated Maturity at the option of the holder of the Offered Notes (the "Holder"),
in each case as set forth in a pricing supplement to this Prospectus Supplement
(a "Pricing Supplement").
(continued on next page)
------------------------
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, ANY PRICING SUPPLEMENT HERETO OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
AGENTS'
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(2)(3)(4)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Offered Note................... 100% .125% - .750% 99.875% - 99.250%
- ---------------------------------------------------------------------------------------------------------
$149,812,500 -
Total.............................. $150,000,000 $187,500 - $1,125,000 $148,875,000
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to the public will be 100% of the principal amount.
(2) The Company will pay to Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated; A.G. Edwards & Sons, Inc.; First Chicago Capital
Markets, Inc. or Lehman Brothers, Lehman Brothers Inc. (including its
affiliate, Lehman Government Securities Inc.) (each, an "Agent" and
collectively, the "Agents") a commission ranging from .125% to .750% of the
principal amount of any Offered Note, depending upon its Stated Maturity,
sold through such Agent. Commissions with respect to Offered Notes with
Stated Maturities in excess of 30 years will be agreed upon by the Company
and the respective Agent at the time of sale. The Company may sell Offered
Notes at a discount to each Agent for its own account or for resale to one
or more investors or other purchasers at varying prices related to
prevailing market prices at the time of the resale as determined by such
Agents, or if so specified in an applicable Pricing Supplement, for resale
at a fixed public offering price. In addition, the Agents may offer the
Offered Notes purchased by them as principal to other dealers. Unless
otherwise specified in an applicable Pricing Supplement, any Offered Note
purchased by an Agent as principal will be purchased at 100% of the
principal amount thereof less a percentage equal to the commission
applicable to an agency sale of an Offered Note of identical Stated
Maturity.
(3) Before deducting estimated expenses of $375,000 payable by the Company.
(4) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
------------------------
The Offered Notes will be offered on a continuous basis by the Company
through the Agents who have agreed to use reasonable efforts to solicit offers
to purchase the Offered Notes. The Company may sell Offered Notes to investors
on its own behalf. Unless otherwise specified in an applicable Pricing
Supplement, the Offered Notes will not be listed on any securities exchange and
there can be no assurance that the Offered Notes will be sold or that there will
be any secondary market for any of the Offered Notes. The Company reserves the
right to withdraw, cancel or modify the offer made hereby without notice. The
Company or an Agent may reject any offer to purchase Offered Notes, whether or
not solicited, in whole or in part. See "Plan of Distribution."
------------------------
MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
LEHMAN BROTHERS
------------------------
The date of this Prospectus Supplement is June 6, 1995.
<PAGE> 2
(continued from previous page)
Each Offered Note will bear interest at a fixed rate as selected by the
purchaser and agreed to by the Company, or selected by the Company and agreed to
by the purchaser. Unless otherwise indicated in the applicable Pricing
Supplement, interest on each Offered Note will be payable semiannually in
arrears on each February 1 and August 1 and on the Maturity Date. The Offered
Notes may also be issued with original issue discount, and such Offered Notes
may or may not pay any interest. See "Description of the Offered Notes".
The interest rate, Issue Price, Stated Maturity, redemption provisions,
provisions for the repayment by the Company of any Offered Note at the option of
the Holder and certain other terms with respect to each Offered Note will be
established by the Company at the time of issuance of such Offered Note and set
forth in the applicable Pricing Supplement.
Each Offered Note will be represented by a global Offered Note ("Global
Note") registered in the name of a nominee of The Depository Trust Company, as
Depositary (such an Offered Note, so represented, being called a "Book-Entry
Note") as set forth in the applicable Pricing Supplement. Beneficial interests
in Global Notes representing Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants. Book-Entry Notes will not be issuable as a certificate issued
in definitive form (a "Certificated Note") except under the circumstances
described herein. See "Description of the New Bonds -- Book-Entry Notes" located
in the Prospectus and "Description of the Offered Notes -- Book-Entry Notes"
located in this Prospectus Supplement.
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<PAGE> 3
IN CONNECTION WITH THE OFFERING OF OFFERED NOTES, THE AGENTS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
OFFERED NOTES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
USE OF PROCEEDS
Proceeds from the sale of the Offered Notes, 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.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth MichCon's ratio of earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
TWELVE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------
MARCH 31, 1995 1994 1993 1992 1991 1990
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)(2)......... 2.77 3.26 3.58 2.99 2.53 2.37
</TABLE>
- -------------------------
(1) 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.
(2) For the purpose of computing these ratios, earnings consists 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.
DESCRIPTION OF THE OFFERED NOTES
The following description of the particular terms of the Offered Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Offered Notes set forth under
"Description of the New Bonds" in the accompanying Prospectus, to which
description reference is hereby made. Unless otherwise specified in an
applicable Pricing Supplement, the following description of the Offered Notes
shall apply.
The Offered Notes will be issued as part of a new series of the Company's
First Mortgage Bonds designated Secured Medium-Term Notes, Series B, under the
Twenty-ninth Supplemental Indenture dated as of July 15, 1989 providing for the
restatement of the Indenture of Mortgage and Deed of Trust dated as of March 1,
1944, as supplemented, which became effective on April 1, 1994 (the "Indenture")
as supplemented by the Thirty-third Supplemental Indenture dated as of May 1,
1995 relating to the Offered Notes.
GENERAL
The Offered Notes will be issued as a series of debt securities under the
Indenture. The Offered Notes will be limited to $150,000,000 aggregate initial
offering price, subject to reduction as a result of the sale of other securities
as described in the accompanying Prospectus.
The Offered Notes will be issued in fully registered form only, without
coupons. Except as set forth herein under "Book-Entry Notes" or in any Pricing
Supplement relating to specific Offered Notes, the Offered Notes will not be
issuable as Certificated Notes. Unless otherwise specified in an applicable
Pricing Supplement, the authorized denominations of Offered Notes will be $1,000
and any larger amount that is an integral multiple of $1,000.
Each Offered Note will mature on any day nine months or more from its date
of issue, as selected by the purchaser and agreed to by the Company, or selected
by the Company and agreed to by the purchaser. Each Offered Note may also be
subject to redemption at the option of the Company or to repayment by the
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<PAGE> 4
Company at the option of the Holder prior to its Stated Maturity (as defined
below). The Offered Notes may also be issued with original issue discount
("Original Issue Discount Notes") and such Offered Notes may or may not bear any
interest.
The Pricing Supplement relating to an Offered Note will describe the
following terms: (i) the price (which may be expressed as a percentage of the
aggregate principal amount thereof at which such Offered Note will be issued
(the "Issue Price")); (ii) the date on which such Offered Note will be issued
(the "Original Issue Date"); (iii) the date on which such Offered Note will
mature (the "Stated Maturity"); (iv) the rate per annum at which such Offered
Note will bear interest, if any, and the Interest Payment Dates; (v) whether
such Offered Note may be redeemed at the option of the Company prior to Stated
Maturity as described under "Redemption" below and, if so, the provisions
relating to such redemption; (vi) any sinking fund or other mandatory redemption
provisions applicable to such Offered Note; (vii) any provisions for the
repayment by the Company of such Offered Note at the option of the Holder; and
(viii) any other terms of such Offered Note not inconsistent with the provisions
of the Indenture under which such Offered Note will be issued.
The Indenture does not contain any debt covenants or provisions which would
afford Holders protection in the event of a highly leveraged transaction.
The term "Business Day" as used herein shall mean any day other than a
Saturday or Sunday or a day on which the offices of the Trustee in the Borough
of Manhattan, The City and State of New York, are authorized or required to be
closed pursuant to authorization of law.
PAYMENT OF PRINCIPAL AND INTEREST
Payments of interest on the Offered Notes (other than interest payable at
Stated Maturity or upon earlier redemption or repayment, the Stated Maturity or
such prior date, as the case may be, is herein referred to as the "Maturity
Date") will be made, except as provided below, by check mailed, or wire
transfer, to the Holders of such Offered Notes (which, in the case of Global
Notes representing Book-Entry Notes, will be a nominee of the Depositary, as
hereinafter defined) as of the Record Date (as defined below) with respect to
each Interest Payment Date; provided, however, that if the Original Issue Date
of an Offered Note is after a Record Date and before the corresponding Interest
Payment Date, interest for the period from and including the Original Issue Date
for such Offered Note to but excluding such Interest Payment Date will be paid
on the next succeeding Interest Payment Date to the Holder of such Offered Note
on the related Record Date.
Unless otherwise specified in the applicable Pricing Supplement, the
principal of the Offered Notes and any premium and interest thereon payable at
the Maturity Date will be paid upon surrender thereof at the principal corporate
trust office of Citibank, N.A. in New York, New York. Payment of interest due on
the Maturity Date will be made to the person to whom payment of the principal
and premium, if any, shall be made.
If any Interest Payment Date or the Maturity Date falls on a day that is
not a Business Day, the required payment of principal, premium, if any, and/or
interest will be made on the next succeeding Business Day as if made on the date
such payment was due, and no interest will accrue on such payment for the period
from and after such Interest Payment Date or the Maturity Date, as the case may
be, to the date of such payment on the next succeeding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described in the accompanying Prospectus under "Description of
the New Bonds -- Default and Notice Thereof to Bondholders", the amount of
principal due and payable with respect to such Offered Note shall be limited to
the sum of the aggregate stated principal amount at maturity of such Offered
Note multiplied by the Issue Price (expressed as a percentage of the aggregate
principal amount) plus the original issue discount accrued from the date of
issue to the date of declaration, which accrual shall be calculated using the
"interest method" (computed in accordance with generally accepted accounting
principles) in effect on the date of declaration.
S-4
<PAGE> 5
The "Record Date" with respect to any Interest Payment Date shall mean the
last business day which is more than ten (10) calendar days prior to such
Interest Payment Date.
Each Offered Note will bear interest from its Original Issue Date at the
rate per annum stated on the face thereof until the principal amount thereof is
paid or duly made available for payment. Unless otherwise set forth in the
applicable Pricing Supplement, interest on each Offered Note will be payable
semiannually in arrears on each February 1 and August 1 (each such date, an
"Interest Payment Date") and on the Maturity Date. Interest payments in respect
of the Offered Notes will equal the amount of interest accrued from and
including the immediately preceding Interest Payment Date in respect of which
interest has been paid or duly made available for payment (or from and including
the Original Issue Date, if no interest has been paid with respect to the
applicable Offered Note) to but excluding the related Interest Payment Date or
the Maturity Date, as the case may be. Interest on Offered Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
REDEMPTION
Unless otherwise specified in the applicable Pricing Supplement, the
Offered Notes will not be subject to any sinking fund. The Offered Notes will be
redeemable at the option of the Company prior to Stated Maturity only if an
Initial Redemption Date is specified in the applicable Pricing Supplement. If so
specified, the Offered Notes will be subject to redemption at the option of the
Company on any date on and after the applicable Initial Redemption Date in whole
or from time to time in part in increments of $1,000 or the minimum denomination
specified in such Pricing Supplement (provided that any remaining principal
amount thereof shall be at least $1,000 or such minimum denomination), at the
applicable Redemption Price (as defined below) on notice given not less than 30
nor more than 60 days prior to the date of redemption and in accordance with the
provisions of the Indenture. "Redemption Price", with respect to an Offered
Note, means an amount equal to the sum of (i) the Initial Redemption Percentage
specified in such Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable) multiplied by the unpaid principal amount
of the portion to be redeemed plus (ii) accrued interest to the date of
redemption. The Initial Redemption Percentage, if any, applicable to an Offered
Note shall decline at each anniversary of the Initial Redemption Date by an
amount equal to the applicable Annual Redemption Percentage Reduction, if any,
until the Redemption Price is equal to 100% of the unpaid principal amount
thereof or the portion thereof to be redeemed.
REPAYMENT
If so specified in the applicable Pricing Supplement, the Offered Notes
will be repayable by the Company in whole or in part at the option of the
Holders thereof on their respective Repayment Dates specified in such Pricing
Supplement. If no Repayment Date is specified with respect to an Offered Note,
such Offered Note will not be repayable at the option of the Holder thereof
prior to Stated Maturity. Any repayment in part will be in increments of $1,000
or the minimum denomination specified in the applicable Pricing Supplement
(provided that any remaining principal amount thereof shall be at least $1,000
or such minimum denomination). Unless otherwise specified in the applicable
Pricing Supplement, the repayment price for any Offered Note to be repaid means
an amount equal to the sum of (i) 100% of the unpaid principal amount thereof or
the portion thereof plus (ii) accrued interest to the date of repayment. For any
Offered Note to be repaid, such Offered Note must be received, together with the
form thereon entitled "Option to Elect Repayment" duly completed, by the Trustee
at its Corporate Trust Office (or such other address of which the Company shall
from time to time notify the Holders) not less than 30 nor more than 60 days
prior to the date of repayment. Exercise of such repayment option by the Holder
will be irrevocable.
While the Book-Entry Notes are represented by the Global Notes held by or
on behalf of the Depositary, and registered in the name of the Depositary or the
Depositary's nominee, the option for repayment may be exercised by the
applicable Participant that has an account with the Depositary, on behalf of the
beneficial owners of the Global Note or Notes representing such Book-Entry
Notes, by delivering a written notice substantially similar to the above
mentioned form to the Trustee at its Corporate Trust Office (or such other
address of which the Company shall from time to time notify the Holders), not
less than 30 nor more than 60
S-5
<PAGE> 6
days prior to the date of repayment. Notices of elections from Participants on
behalf of beneficial owners of the Global Note or Notes representing such
Book-Entry Notes to exercise their option to have such Book-Entry Notes repaid
must be received by the Trustee by 5:00 P.M., New York City time, on the last
day for giving such notice. In order to ensure that a notice is received by the
Trustee on a particular day, the beneficial owner of the Global Note or Notes
representing such Book-Entry Notes must so direct the applicable Participant
before such Participant's deadline for accepting instructions for that day.
Different firms may have different deadlines for accepting instructions from
their customers. Accordingly, beneficial owners of the Global Note or Notes
representing Book-Entry Notes should consult the Participants through which they
own their interest therein for the respective deadlines for such Participants.
All notices shall be executed by a duly authorized officer of such Participant
(with signature guaranteed) and shall be irrevocable. In addition, beneficial
owners of the Global Note or Notes representing Book-Entry Notes shall effect
delivery at the time such notices of election are given to the Depositary by
causing the applicable Participant to transfer such beneficial owner's interest
in the Global Note or Notes representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. See "Book-Entry Notes".
BOOK-ENTRY NOTES
Except under the circumstances described below, the Offered Notes will be
issued in whole or in part in the form of one or more Global Notes 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.
Upon issuance, all Book-Entry Notes having the same Original Issue Date,
interest rate, redemption provisions, provisions for repayment or purchase by
the Company at the option of the Holder and Stated Maturity will be represented
by one or more Global Notes. Except as set forth below, Book-Entry Notes
represented by a Global Note will not be exchangeable for Certificated Notes and
will not otherwise be issuable as Certificated Notes.
So long as the Depositary, or its nominee, is the registered owner of a
Global Note, such Depositary or such nominee, as the case may be, will be
considered the sole holder of the individual Book-Entry Notes represented by
such Global Note for all purposes under the Indenture. Payments of principal of
and premium, if any, and any interest on individual Book-Entry Notes represented
by a Global Note will be made to the Depositary or its nominee, as the case may
be, as the Holder of such Global Note. Except as set forth below, owners of
beneficial interests in a Global Note will not be entitled to have any of the
individual Book-Entry Notes represented by such Global Note registered in their
names, will not receive or be entitled to receive physical delivery of any such
Book-Entry Notes 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.
The following is based on information furnished by DTC:
DTC will act as securities depository for the Global Securities
representing the Offered Notes. The Offered Notes will be issued as
fully-registered securities registered in the name of Cede & Co. (DTC's
partnership nominee). The Offered Notes 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
S-6
<PAGE> 7
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 Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Offered
Notes on DTC's records. The ownership interest of each actual purchaser of
each Offered Note ("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 Notes 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 Notes, except in the event that use of the book-entry system
for the Offered Notes is discontinued.
To facilitate subsequent transfers, all the Offered Notes deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of Offered Notes 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 Notes; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Offered Notes 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 Notes 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 Notes. 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 whose accounts the Offered Notes are credited on the record
date (identified in a listing attached to the "Omnibus Proxy").
Principal and interest payments on the Offered Notes 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.
A Beneficial Owner shall give notice to elect to have its Book-Entry
Notes repaid by the Company, through its Participant, to the Trustee and
shall effect delivery of such Book-Entry Notes by causing the Direct
Participant to transfer the Participant's interest in the Global Note or
Notes representing such
S-7
<PAGE> 8
Book-Entry Notes, on the Depositary's records, to the Trustee. The
requirement for physical delivery of Book-Entry Notes in connection with a
demand for repayment will be deemed satisfied when the ownership rights in
the Global Note or Notes representing such Book-Entry Notes are transferred
by Direct Participants on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes 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,
Certificated Notes 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 Notes 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.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes certain United States federal income tax
consequences of the ownership of Offered Notes as of the date hereof. Except
where noted, it deals only with Offered Notes held as capital assets by initial
purchasers and does not deal with special situations, such as those of dealers
in securities, financial institutions, individual retirement or other
tax-deferred accounts, tax-exempt organizations, insurance companies, persons
who hold Offered Notes as a hedge against currency risk, persons who hold
Offered Notes as part of a straddle with other investments or who have otherwise
hedged the risk of ownership of the Offered Notes, or United States Holders (as
defined below) whose "functional currency" is not the U.S. dollar. Persons
considering the purchase, ownership or disposition of Offered Notes should
consult their own tax advisors concerning the federal income tax consequences in
light of their particular situations as well as any consequences arising under
the laws of any other taxing jurisdiction, Furthermore, the discussion below is
based upon provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), and regulations, rulings and judicial decisions thereunder as of the
date hereof, and such authorities may be repealed, revoked or modified so as to
result in federal income tax consequences different from those discussed below.
UNITED STATES HOLDERS
As used herein, a "United States Holder" of an Offered Note means a holder
that is a citizen or resident of the United States, a corporation, partnership
or other entity created or organized in or under the laws of the Untied States
or any political subdivision thereof, or an estate or trust the income of which
is subject to United States federal income taxation regardless of its source. A
"Non-United States Holder" is a holder that is not a United States Holder.
PAYMENTS OF INTEREST. Except as set forth below, interest on an Offered
Note will generally be taxable to a United States Holder as ordinary income at
the time it is paid or accrued in accordance with the holder's method of
accounting for federal income tax purposes.
ORIGINAL ISSUE DISCOUNT. An Offered Note will be treated as having been
issued with "original issue discount" ("OID") if the excess of its "stated
redemption price at maturity" over its "issue price" (for these purposes the
first price at which a substantial amount of the Offered Notes is sold to the
public) equals or
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<PAGE> 9
exceeds a de minimis amount (0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity). (Offered Notes
issued with OID shall be referred to as "OID Notes.") For this purpose, "stated
redemption price at maturity" means the sum of all payments under the Offered
Notes other than "qualified stated interest" payments. In general, "qualified
stated interest" includes stated interest that is unconditionally payable at
least annually at a single fixed rate.
Unless the Offered Notes are issued with stated interest that is entirely
qualified stated interest, all payments or portions of payments that do not
constitute qualified stated interest would constitute a portion of the stated
redemption price at maturity of the Offered Notes. Any such Offered Notes may
therefore possess OID subject to the consequences described herein, even if the
issue price of the Offered Notes equals (or exceeds) the principal amount of
such Notes.
United States Holders are required to include OID in income in advance of
the receipt of some or all of the related cash payments. For OID Notes having a
term in excess of one year, OID will be included in income currently as interest
as it accrues over the life of the Offered Note under a formula based upon the
compounding of interest at a rate that provides for a constant yield to
maturity. Under this formula, United States Holders must include in income
increasingly greater amounts of OID in each successive accrual period.
The Company is required to report the amount of OID accrued on Offered
Notes held of record by persons other than corporations and other exempt
holders; however, the amount reported by the Company may not equal the amount of
OID required to be included in income by a holder that is not an initial
purchaser of the Offered Notes or who does not purchase the Offered Notes at
their issue price.
In the event that the Company determines to issue Offered Notes that are
OID Notes (including certain Offered Notes not denominated in U.S. dollars or
providing for contingent payments), and the federal income tax consequences of
such features would be material to United States Holders, notice thereof and
additional information will be provided in the appropriate supplement hereto.
SHORT-TERM NOTES. In the case of Offered Notes with a maturity of one year
or less ("Short-Term Notes"), all payments (including all stated interest
however calculated) will be included in the stated redemption price at maturity,
thus, United States Holders will be taxable on OID in lieu of stated interest.
Accrual method United Stated Holders and certain other United States Holders,
including banks and dealers in securities, are required to include OID on a
Short-Term Note in income as it accrues either on a straight line basis or, if
the holder so elects, under the constant yield method. In general, individuals
and other cash method United States Holder's are not required to include OID in
income as it accrues unless they elect to do so. In the case of an individual or
cash method holder who does not elect to include OID on a Short-Term Note in
income as it accrues, however, any gain realized on the disposition of a
Short-Term Note will be treated as ordinary income to the extent of the OID
accrued on a straight-line basis (or, if elected, on a constant yield basis).
Furthermore, such a non-electing holder will be required to defer deductions for
a portion of the holder's interest expenses with respect to any indebtedness
incurred or maintained to purchase or carry such Short-Term Notes, in an amount
not exceeding the deferred interest income, until the deferred interest income
is realized. In the case of a holder who includes OID on a Short-Term Note in
income as it accrues, the amount so included will be added to the holder's tax
basis in the Short-Term Note.
Accrual method United States Holders (including holders that are not
initial purchasers) may elect to include all interest that accrues on an Offered
Note by using the constant yield method. For this purpose, "interest" includes
both OID (including OID on Short-Term Notes and de minimis OID) and stated
interest (as such may be adjusted by amortization of premium and acquisition
premium, see "Amortization of Premium" below). If the holder so elects with
respect to an Offered Note that has been purchased at a premium (as opposed to
merely an acquisition premium), this election is also treated as an election
under the amortizable bond premium provisions, described below, and the electing
holder will be required to amortize bond premium currently for all his other
debt instruments with amortizable bond premium. This election is to be made in
the taxable year in which the holder acquired the Offered Note and may not be
revoked without the consent of the Internal Revenue Service ("IRS").
S-9
<PAGE> 10
AMORTIZATION OF PREMIUM. An offered Note may be considered to have been
issued at a "premium" to the extent that the United States Holder's tax basis in
the Offered Note immediately after purchase exceeds its principal amount. A
holder generally may elect to amortize the premium over the remaining term of
the Offered Note on a constant yield method. The amount amortized in any year
will be treated as a reduction of the holder's interest income from the Offered
Note. Premium on an Offered Note held by a holder that does not make such an
election will decrease the gain or increase the loss otherwise recognized on
disposition of the Offered Note.
An Offered Note purchased for an amount that exceeds its issue price but
not the principal amount of the Offered Note will be issued with "acquisition
premium." In that event, the amount of OID otherwise includable on the Offered
Note would be reduced over the term of the Offered Note through amortization of
the acquisition premium. Alternatively, a United States Holder may elect to
compute OID accruals by using his purchase price, rather than the issue price,
together with the constant yield method for accruing the discount. Such an
election may not be revoked unless approved by the IRS.
SALES, EXCHANGE AND RETIREMENT OF OFFERED NOTES. Upon the sale, exchange or
retirement of an Offered Note, a United States Holder will recognize gain or
loss equal to the difference between the amount realized upon the sale, exchange
or retirement and the adjusted tax basis of the Offered Note. A United States
Holder's tax basis in an Offered Note will, in general, equal the United States
Holder's cost for the Offered Note, increased by OID included in income and
reduced by any amortized premium and any cash payments on the Offered Note other
than qualified stated interest payments. Except with respect to certain
Short-Term Notes, as described in "Short-Term Notes" above, such gain or loss
will be capital gain or loss and will be long-term capital gain or loss if the
Offered Note had been held for more than one year at the time of disposition.
Net capital gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income. A United States Holder's ability to
offset capital losses against ordinary income is limited.
NON-UNITED STATES HOLDERS
Non-United States Holders will not be subject to United States federal
income taxes, including withholding taxes, on the interest income (including any
OID) on, or gain from the sale or disposition of any Offered Note provided that:
(i) the interest income or gain is not effectively connected with the conduct by
the Non-United States Holder of a trade or business within the United States;
(ii) the Non-United States Holder is not a controlled foreign corporation
related to the Company through stock ownership; (iii) with respect to any gain,
the Non-United States Holder, if an individual, is not present in the United
States for 183 days or more during the taxable year and (iv) the Non-United
States Holder provides the correct certification of his status (which may
generally be satisfied by providing an Internal Revenue Service Form W-8
certifying that the beneficial owner is not a United States Holder and providing
the name and address of the beneficial owner).
An individual holder of an Offered Note who is not a citizen or resident of
the United States at the time of the holder's death will not be subject to
United States federal estate tax as a result of the holder's death, as long as
any interest received on the Offered Note, if received by the holder at the time
of the holder's death, would not be effectively connected with the conduct of a
trade or business by such individual in the United States.
BACKUP WITHHOLDING
In general, if a non-corporate holder fails to furnish a correct taxpayer
identification number or certification of foreign or other exempt status, fails
to report dividend and interest income in full, or fails to certify that such
holder has provided a correct taxpayer identification number and is not subject
to backup withholding, a 31 percent federal backup withholding tax may be
withheld on amounts paid to the holder. An individual's taxpayer identification
number is his or her social security number. The backup withholding tax is not
an additional tax and may be credited against a holder's regular federal income
tax liability or refunded by the Internal Revenue Service where applicable.
S-10
<PAGE> 11
THE UNITED STATES FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED
FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S
PARTICULAR SITUATION. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT
TO THE TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS
AND THE POSSIBLE EFFECTS OF CHANGES IN UNITED STATES OR OTHER TAX LAWS.
PLAN OF DISTRIBUTION
The Offered Notes are being offered on a continuous basis by the Company
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated;
A.G. Edwards & Sons, Inc.; First Chicago Capital Markets, Inc. and Lehman
Brothers, Lehman Brothers Inc. (including its affiliate, Lehman Government
Securities Inc.) (the "Agents"), each of whom has agreed to use reasonable
efforts to solicit offers to purchase the Offered Notes. The Company will pay
each Agent a commission ranging from .125% to .750% of the principal amount of
each Offered Note sold through such Agent, depending upon the Stated Maturity of
the Offered Note. Commissions with respect to Offered Notes with Stated
Maturities in excess of 30 years that are sold through an Agent will be
negotiated between the Company and such Agent at the time of sale. The Company
may sell Offered Notes to any of the Agents, as principal, at a discount for
resale to investors and other purchasers at varying prices related to prevailing
market prices at the time of resale, to be determined by such Agent, or, if so
agreed, at a fixed public offering price. In addition, the Agents may offer the
Offered Notes they have purchased as principal to other dealers. The Agents may
sell Offered Notes to any dealer at a discount and, unless otherwise specified
in the applicable Pricing Supplement, such discount allowed to any dealer will
not be in excess of the discount to be received by such Agent from the Company.
Unless otherwise indicated in the applicable Pricing Supplement, any Offered
Note sold to an Agent as principal will be purchased by each Agent at a price
equal to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable in any agency sale of an Offered Note
of identical maturity, and may be resold by the Agent to investors and other
purchasers, as described above. After the initial public offering of the Offered
Notes, the public offering price (in the case of Offered Notes to be resold at a
fixed public offering price), concession and discount may be changed.
The Company has reserved the right to appoint additional agents to solicit
offers to purchase the Offered Notes. The Company may also sell the Offered
Notes directly to investors on its behalf. In the case of sales made directly by
the Company no commission will be payable. The Company has agreed to reimburse
the Agents for certain expenses.
The Company will have the sole right to accept offers to purchase Offered
Notes and may, in its absolute discretion, reject any proposed purchase of
Offered Notes in whole or in part. Each Agent will have the right, in its
discretion reasonably exercised, to reject any offer to purchase Offered Notes
received by it in whole or in part.
No Offered Note will have an established trading market when issued. The
Offered Notes will not be listed on any securities exchange. The Agents may make
a market in the Offered Notes, but the Agents are not obligated to do so and may
discontinue any market-making at any time without notice. There can be no
assurance of a secondary market for any Offered Notes, or that the Offered Notes
will be sold.
Each Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The Company has agreed to indemnify the Agents against
certain liabilities, including liabilities under the Securities Act, or to
contribute to payments that the Agents may be required to make in respect
thereof.
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<PAGE> 12
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 $150,000,000, its
First Mortgage Bonds (the "New Bonds"). The New Bonds will be issued in one or
more series under one or more future supplemental indentures or as may be
created pursuant to resolutions of the Board of Directors of the Company. In
addition, the New Bonds may be offered with the same or various maturities, and
at prices and terms to be determined at the time of sale. Certain terms of the
New Bonds including, where applicable, the specific designation, aggregate
principal amount, interest rate, interest payment dates, maturity, public
offering price, any redemption terms or other specific terms of each series of
New Bonds in respect of which this Prospectus is being delivered will be set
forth in an accompanying Prospectus Supplement or Supplements (a "Prospectus
Supplement").
MichCon may sell the New Bonds to or 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 REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is May 31, 1995.
<PAGE> 13
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"). 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: 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the SEC at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 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
Statement 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 and made a
part hereof 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, 1994.
2. The Company's Report on Form 8-K, dated March 14, 1995.
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
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.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in this Prospectus modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of 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:
Investor Relations, MCN Corporation, 500 Griswold Street, Detroit, Michigan
48226; telephone 1-800-548-4655.
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.
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<PAGE> 14
THE COMPANY
MichCon is a Michigan corporation that was organized in 1898 and, with its
predecessors, has been in business for nearly 150 years. The Company is engaged
in the natural gas distribution and transmission business in the State of
Michigan and serves more than 1.1 million customers. MichCon is a wholly-owned
subsidiary of MCN Corporation, a Michigan corporation.
At December 31, 1994, MichCon and its subsidiaries employed 3,273 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 applicable Prospectus Supplement, net
proceeds from the sale of the New Bonds offered hereby will be used for the
acquisition of property; the construction, completion, extension or improvement
of facilities; working capital requirements; the improvement or maintenance of
service; the discharge or lawful retirement of short or long-term debt and
borrowings made or expected to be made; 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.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth MichCon's earnings to fixed charges for the
periods indicated.
<TABLE>
<CAPTION>
TWELVE MONTHS YEAR ENDED DECEMBER 31,
ENDED ------------------------------------
MARCH 31, 1995 1994 1993 1992 1991 1990
-------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1) and (2).... 2.77 3.26 3.58 2.99 2.53 2.37
</TABLE>
- -------------------------
(1) 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.
(2) For the purpose of computing these ratios, earnings consists 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.
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 the
Twenty-ninth Supplemental Indenture dated as of July 15, 1989 providing for the
restatement of the Indenture of Mortgage and Deed of Trust dated as of March 1,
1944 which 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 (the "Indenture"). The bonds of all series
issued, or which may be issued, under the Indenture are hereinafter referred to
as the "Bonds".
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 New Bonds will constitute one or more new series of Bonds under the
Indenture, under which 4 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").
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<PAGE> 15
The New Bonds will be offered on a continuing basis and will mature nine
months or more 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.
Reference is made to the applicable Prospectus Supplement for the following
terms of the New Bonds (1) the specific designation and series of such New
Bonds; (2) 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; (3) the date on which such New Bonds will be issued (the "Issue
Date"); (4) the date or dates on which the principal of such New Bonds will be
payable (the "Maturity Date"); (5) the rate(s) per annum at which such New Bonds
will bear interest (the "Interest Rate") if any, or the method of determination
of such rate; (6) the date from which any such interest shall accrue; (7) the
terms of redemption, if any; and (8) 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. 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, vehicles and leases. (Granting Clauses, Part II, Article I
and Section 5.08, 5.10 and 5.11.)
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, 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 consideration, if any, received or to
be received from the sale, surrender or other disposition of the property to be
released or the then fair value thereof (which ever shall be greater). (Article
VII.)
ISSUANCE OF ADDITIONAL BONDS
Additional Bonds may be issued under the Indenture in principal amounts
(unlimited except as provided by law) equal to:
(1) 70% 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
4
<PAGE> 16
(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 which include
substantially all utility property subject to the Indenture (Part II, Article
III) 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
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.
As of December 31, 1994, MichCon had approximately $796 million of unbonded
net property additions, which would entitle it to issue approximately $557
million principal amount of additional Bonds on the basis of unbonded net
property additions as discussed under (1) in the second preceding paragraph, and
had further additional capacity to issue $145 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
second preceding paragraph. The New Bonds will be issued upon the basis of 70%
of the cost or fair value of unbonded net property additions as discussed under
(1) in the second preceding paragraph, upon the basis of retired Bonds, as
discussed under (2) in the second preceding paragraph and/or cash deposited with
the Trustee for such purpose, as discussed under (3) in the second 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) and (2) under
"Issuance of Additional Bonds". (Part II, Section 8.01.)
DEFEASANCE
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. (Part II,
Article XVI.)
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 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. 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
5
<PAGE> 17
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. (Part
II, Article XIV.)
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.
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. (Part
II, Article IX.)
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 60 days; 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; 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. (Part II, Sections 9.01 and 12.03.)
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
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<PAGE> 18
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 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, General Counsel and Secretary of MichCon and for the
Underwriters by LeBoeuf, Lamb, Greene & 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 MichCon.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from MichCon's Annual
Report on Form 10-K for the year ended December 31, 1994 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference (which report expresses an unqualified opinion
and includes an explanatory paragraph relating to MichCon's adoption of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting For
Postretirement Benefits Other Than Pensions"), and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
PLAN OF DISTRIBUTION
The Company may sell any series of 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 or a related pricing supplement, if applicable,
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 or a related pricing supplement, then
such firm will not be a party to the underwriting or distribution 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 or
other distribution 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
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<PAGE> 19
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.
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, or to
contribution with respect to payments which such underwriters, dealers or agents
may be required to make in respect thereof. 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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<PAGE> 20
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR
THE PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT,
THE APPLICABLE PRICING SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, AGENT OR DEALER. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT, THE APPLICABLE PRICING SUPPLEMENT OR THE 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, THE APPLICABLE PRICING SUPPLEMENT
AND THE 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 WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Use of Proceeds....................... S-3
Ratio of Earnings to Fixed Charges.... S-3
Description of the Offered Notes...... S-3
Certain United States Federal Income
Tax Consequences.................... S-8
Plan of Distribution.................. S-11
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
The Company........................... 3
Use of Proceeds....................... 3
Ratio of Earnings to Fixed Charges.... 3
Description of the New Bonds.......... 3
Legal Opinions........................ 7
Experts............................... 7
Plan of Distribution.................. 7
</TABLE>
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$150,000,000
MICHIGAN CONSOLIDATED
GAS COMPANY
FIRST MORTGAGE BONDS
DESIGNATED AS SECURED
MEDIUM-TERM NOTES,
SERIES B
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
A.G. EDWARDS & SONS, INC.
FIRST CHICAGO CAPITAL MARKETS, INC.
LEHMAN BROTHERS
JUNE 6, 1995
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