<PAGE> 1
Rule 424(b)5
Registration Statement No. 333-56333
PROSPECTUS SUPPLEMENT
- ---------------------
(To Prospectus Dated June 17, 1998)
$55,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
6.85% SENIOR NOTES DUE 2039
------------------------
The Senior Notes bear interest at the rate of 6.85% per year. Interest on
the Senior Notes is payable quarterly on March 1, June 1, September 1 and
December 1 of each year, beginning on September 1, 1999. The Senior Notes will
mature on June 1, 2039. We can redeem the Senior Notes on or after June 1, 2004.
We will issue collateral first mortgage bonds to secure the Senior Notes.
On the date that we have retired all of our first mortgage bonds, other than
collateral mortgage bonds, the Senior Notes will either become unsecured and
rank equally with all of our other unsecured senior indebtedness or be secured
by substitute collateral mortgage bonds.
The timely payment of the regularly scheduled principal and interest on the
Senior Notes will be insured by a financial guaranty insurance policy issued by
MBIA Insurance Corporation.
[MBIA LOGO]
Concurrently with the offering of these Senior Notes, we are offering
$55,000,000 aggregate principal amount of senior debt securities pursuant to a
separate Prospectus Supplement. These two debt offerings are independent of each
other and each offering may be consummated whether or not the other offering is
consummated.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- -----
<S> <C> <C>
Public Offering Price(1).................................... $25.00 $55,000,000
Underwriting Discount....................................... $.7875 $1,732,500
Proceeds, before expenses, to Michigan Consolidated Gas
Company................................................... $24.2125 $53,267,500
</TABLE>
(1) Interest will accrue from the date of original issuance of the Senior Notes,
which is expected to be June 9, 1999.
The expenses associated with the offer and sale of the Senior Notes are
expected to be $100,000.
The Senior Notes will be ready for delivery in book-entry form only through
The Depository Trust Company ("DTC"), on or about June 9, 1999.
------------------------
MERRILL LYNCH & CO. A.G. EDWARDS & SONS, INC.
------------------------
The date of this prospectus supplement is June 4, 1999.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
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<S> <C>
Forward-Looking Statements............ S-3
Summary of the Offer.................. S-4
Use of Proceeds....................... S-6
Capitalization........................ S-6
Ratio of Earnings to Fixed Charges.... S-6
Description of the Senior Notes....... S-7
The Policy and the Insurer............ S-10
Ratings............................... S-13
Experts............................... S-13
Underwriting.......................... S-14
Legal Opinions........................ S-15
Appendix A -- Form of Policy.......... S-16
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS PAGE
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<S> <C>
Available Information................. 2
Incorporation of Certain Documents by
Reference........................... 2
Forward-Looking Statements............ 3
The Company........................... 4
Use of Proceeds....................... 4
Ratio of Earnings to Fixed Charges.... 4
Securities............................ 4
Description of the Senior Debt
Securities.......................... 5
Description of the First Mortgage
Bonds............................... 12
Plan of Distribution.................. 16
Validity of Securities................ 17
Experts............................... 17
</TABLE>
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement or the accompanying Prospectus. We have
not, and the Underwriters have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
Underwriters are not, making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this Prospectus Supplement and the accompanying
Prospectus, as well as information we previously filed with the Securities and
Exchange Commission and incorporated by reference, is accurate as of the date on
the front cover of those documents only. Our business, financial condition,
results of operations and prospects may have changed since that date. In this
Prospectus Supplement and the accompanying Prospectus, "MichCon", "we" and "our"
refer to Michigan Consolidated Gas Company.
S-2
<PAGE> 3
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this Prospectus
Supplement or the accompanying Prospectus include forward-looking statements
within meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements involve certain risks and uncertainties that may cause future results
to differ materially from those contemplated, projected, estimated or budgeted
in such forward-looking statements. Factors that may impact forward-looking
statements include, but are not limited to, the following:
- the effects of weather and other natural phenomena;
- increased competition from other energy suppliers as well as alternative
forms of energy;
- the capital intensive nature of MichCon's businesses;
- economic climate and growth in the geographic areas in which MichCon does
business;
- the uncertainty of gas reserve estimates;
- the timing and extent of changes in commodity prices for natural gas,
electricity, crude oil, propane and other energy sources;
- conditions of capital markets and equity markets;
- the timing, nature and impact of Year 2000 activities; and
- the effects of changes in governmental policies and regulatory actions,
including income taxes, environmental compliance and authorized rates.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
S-3
<PAGE> 4
SUMMARY OF THE OFFER
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus.
THE COMPANY
MichCon is a Michigan corporation that was organized in 1898 and, with its
predecessors, has been in business for 150 years. MichCon is a natural gas
utility primarily engaged in the distribution and transmission of natural gas in
the state of Michigan. MichCon also has subsidiaries involved in the gathering
and transmission of natural gas in northern Michigan. MichCon operates one of
the largest natural gas distribution and transmission systems in the United
States and the largest in Michigan.
MichCon serves 1.2 million customers in 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 -- The sale and delivery of natural gas to residential and
small-volume commercial customers.
- End User Transportation -- Through this service, large-volume commercial
and industrial customers that purchase natural gas directly from
producers or brokerage companies utilize MichCon's network to transport
the gas to their facilities.
- Intermediate Transportation -- Provides transportation service through
MichCon's gathering and high pressure transmission system to producers,
brokers and other local distribution companies that own the natural gas,
but are not the ultimate consumer.
MichCon is a wholly-owned subsidiary of MCN Energy Group Inc. ("MCN"), a
New York Stock Exchange-listed company (ticker symbol: MCN). MCN's other
principal operating subsidiary is MCN Investment Corporation, a subsidiary
holding company for various diversified energy businesses.
THE NOTES OFFERING
Senior Notes Offered....... MichCon is offering $55,000,000 aggregate principal
amount of Senior Notes. The Senior Notes will bear
interest at a rate of 6.85% per year, which will be
payable quarterly in arrears on March 1, June 1,
September 1 and December 1 of each year beginning
on September 1, 1999.
Date of Maturity........... The Senior Notes will mature on June 1, 2039.
Record Date................ MichCon will make payments to the holder of record
on the 15th calendar day of the month prior to each
March 1, June 1, September 1 and December 1.
MichCon's Optional
Redemption............... MichCon will have the option to redeem the Senior
Notes, in whole or in part, from time to time on or
after June 1, 2004. If MichCon redeems the Senior
Notes, it will pay 100% of the principal amount
plus the accrued interest through the redemption
date.
Insurance.................. The timely payment of the regularly scheduled
principal and interest on the Senior Notes will be
insured by a financial guaranty insurance policy
issued by MBIA Insurance Corporation that will be
issued at the same time the Senior Notes are
delivered.
S-4
<PAGE> 5
Security................... MichCon will issue first mortgage bonds to secure
the Senior Notes. On the date that we have retired
all of our first mortgage bonds, other than
collateral bonds, the Senior Notes will either
become unsecured and rank equally with all of our
other unsecured senior indebtedness or be secured
by substitute collateral mortgage bonds.
Separate Notes Offering.... Concurrently with the offering of these Senior
Notes, MichCon is offering $55,000,000 aggregate
principal amount of senior debt securities pursuant
to a separate Prospectus Supplement. These two debt
offerings are independent of each other and each
offering may be consummated whether or not the
other offering is consummated.
Ratings.................... MichCon anticipates that the Senior Notes will be
rated "AAA" by Standard & Poor's Ratings Group,
"Aaa" by Moody's Investors Services, Inc., "AAA" by
Fitch IBCA, Inc. and "AAA" by Duff & Phelps Rating
Co.
Use of Proceeds............ MichCon estimates that the net proceeds of the
offering will be approximately $53,267,500. MichCon
intends to use these proceeds from the offering of
the Senior Notes to refinance maturing long-term
debt, to repay short-term debt obligations and for
general corporate purposes.
Ratio of Earnings to Fixed
Charges.................. MichCon's historical ratio of earnings to fixed
charges for the twelve months ended on March 31,
1999 and each of the preceding years ended December
31, 1998, 1997, 1996, 1995 and 1994 was 3.46x,
2.87x, 3.17x, 3.27x, 3.47x, and 3.26x,
respectively.
S-5
<PAGE> 6
USE OF PROCEEDS
MichCon will use the proceeds from the sale of the Senior Notes to
refinance maturing long-term debt, repay short-term debt obligations and for
general corporate purposes.
CAPITALIZATION
The following table sets forth MichCon's capitalization at March 31, 1999,
as adjusted to reflect the issuance of the Senior Notes and use of proceeds and
further adjusted to reflect the concurrent separate notes offering and use of
proceeds from such offering. The following data are qualified in their entirety
by reference to, and should be read together with, the detailed information and
financial statements appearing in the documents incorporated in this Prospectus
Supplement and the accompanying Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1999
--------------------------------------------------
AS AS FURTHER
ACTUAL ADJUSTED(2) ADJUSTED(3)
---------- ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Long-Term Debt (including capital leases and
excluding current maturities)(1)............ $ 613,945 $ 668,945 48.4% $ 723,945 50.4%
Common Shareholders' Equity................... $ 713,139 713,139 51.6 713,139 49.6
---------- ---------- ---- ---------- ----
Total Capitalization................ $1,327,084 $1,382,084 100% $1,437,084 100%
========== ========== ==== ========== ====
Short-Term Debt (including current maturities
of long-term debt)(1)....................... $ 166,111 $ 111,111 $ 56,111
========== ==========
</TABLE>
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(1) Current maturities of long-term debt were $58,211,000.
(2) Adjusted for the sale of the Senior Notes at par. MichCon targets an average
ratio of 50% long-term debt to total capitalization and anticipates
retaining future earnings to achieve this ratio.
(3) Further adjusted for the sale of senior notes to be offered concurrently in
a separate offering at par.
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
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, --------------------------------
1999 1998 1997 1996 1995 1994
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges (1).............. 3.46 2.87 3.17 3.27 3.47 3.26
</TABLE>
- ---------------
(1) MichCon 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.
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.
S-6
<PAGE> 7
DESCRIPTION OF THE SENIOR NOTES
Set forth below is a description of the specific terms of the Senior Notes.
This description supplements, and should be read together with, the description
of the general terms and provisions of the Securities set forth in the
accompanying Prospectus under the caption "Description of the Senior Debt
Securities." The following description does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the description in
the accompanying Prospectus and the indenture dated as of June 1, 1998 (the
"Senior Indenture") between MichCon and Citibank N.A., as trustee (the "Senior
Trustee") pursuant to which the Senior Notes will be issued.
GENERAL
The Senior Notes will be issued as a series of Senior Debt Securities under
the Senior Indenture. The Senior Notes will be limited in aggregate principal
amount to $55,000,000.
The entire principal amount of the Senior Notes will mature and become due
and payable, together with any accrued and unpaid interest thereon, on June 1,
2039. The Senior Notes are not subject to any sinking fund provision.
The Senior Notes are available for purchase in denominations of $25 and
integral multiples of $25.
INTEREST
Each Senior Note will bear interest at 6.85% per year from the date of
original issuance, payable quarterly in arrears on March 1, June 1, September 1
and December 1 of each year (each, an "Interest Payment Date") to the person in
whose name such Senior Note is registered at the close of business on the
fifteenth calendar day of the month preceding the respective Interest Payment
Date. The initial Interest Payment Date is September 1, 1999. The amount of
interest payable will be computed on the basis of a 360-day year of twelve
30-day months. In the event that any Interest Payment Date is not a business
day, then payment of the interest will be made on the next business day (and
without any interest or other payment in respect of any such delay), except
that, if such business day is in the next calendar year, the payment will be
made on the immediately preceding business day, in each case with the same force
and effect as if made on the original date.
SPECIAL INSURANCE PROVISIONS OF THE SENIOR INDENTURE
Notwithstanding any other provision of the Senior Indenture, so long as
MBIA Insurance Corporation (the "Insurer") is not in default under the policy,
the Insurer shall be entitled to control and direct the enforcement of all
rights and remedies with respect to the Senior Notes.
No provision of the Senior Indenture may be amended in any manner without
the prior written consent of the Insurer.
OPTIONAL REDEMPTION
MichCon shall have the right to redeem the Senior Notes, in whole or in
part, without premium, from time to time, on or after June 1, 2004, upon not
less than 30 nor more than 60 days' notice, at a redemption price equal to 100%
of the principal amount to be redeemed plus any accrued and unpaid interest to
the redemption date.
If a redemption notice is given as described above, then the Senior Notes
to be redeemed will become due and payable on the redemption date. MichCon will
pay the redemption price plus any accrued interest. From the redemption date,
the redeemed Senior Notes will cease to bear interest, unless MichCon defaults
in the payment of the redemption price and accrued interest. In the event of
such default, the principal amount on the Senior Note called for redemption will
, until paid, continue to bear interest at the rate indicated on the cover.
S-7
<PAGE> 8
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), MichCon or its affiliates
may, at any time and from time to time, purchase outstanding Senior Notes by
tender, in the open market or by private agreement.
SECURITY; RELEASE DATE
Upon the issuance of the Senior Notes, MichCon will simultaneously issue
and deliver to the Senior Trustee as security for the Senior Notes, a series of
First Mortgage Bonds (the "Collateral Bonds"), 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 between
MichCon and Citibank N.A. (the "Mortgage Trustee") and Robert T. Kirchner (the
"Individual Trustee" and, together with the Mortgage Trustee, the "Secured
Trustees"), as supplemented by the Thirty-Fifth Supplemental Indenture relating
to the Collateral Bonds (as so supplemented, the "Mortgage Indenture") in an
aggregate principal amount of $55,000,000. MichCon has agreed to issue the
Collateral Bonds in the name of the Senior Trustee in its capacity as trustee
under the Senior Indenture and the Senior Trustee has agreed to hold the
Collaterals Bonds in such capacity under all circumstances and not transfer the
Collateral Bonds until the earlier of the Release Date or the prior retirement
of the Senior Notes through redemption, repurchase or otherwise. The interest
rates, interest payment dates, method of paying interest, stated maturity date
and redemption provisions for the Collateral Bonds will mirror those of the
Senior Notes.
Prior to the Release Date, MichCon shall make payments of the principal of,
and premium or interest on, the Collateral Bonds to the Senior Trustee, which
payments shall be applied by the Senior Trustee to satisfaction of all
obligations then due on the related Senior Notes.
For a description of the circumstances under which all or part of the
Collateral Bonds will cease to be held by the Senior Trustee as security for the
Senior Notes, see "Description of Senior Debt Securities -- Security; Release
Date" in the accompanying Prospectus. As explained in the Prospectus, the Senior
Notes will cease to be secured by the Collateral Bonds on the Release Date and,
at the option of MichCon either:
- will become unsecured obligations of MichCon; or
- will be secured by first mortgage bonds issued under a mortgage indenture
other than the Mortgage Indenture (the "Substituted Collateral Bonds").
If MichCon does not elect to have the Senior Notes become unsecured on the
Release Date, MichCon will simultaneously issue and deliver to the Senior
Trustee, as security for such Senior Notes, Substituted Collateral Bonds. The
Substituted Collateral Bonds will have the same interest rate, interest payment
dates, stated maturity date and redemption provisions, and will be in the same
aggregate principal amount, as the Senior Notes then issued. MichCon will be
required to give notice to the holders of the Senior Notes of the occurrence of
the Release Date.
In the event MichCon elects to have the Senior Notes become unsecured on
the Release Date, MichCon's ability to create, assume or incur certain liens or
to enter into certain financing transactions will be restricted as described in
"Description of the Senior Debt Securities -- Restrictions" in the accompanying
Prospectus.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as the initial securities depositary for the Senior Notes. The
Senior Notes will be issued only as fully registered securities registered in
the name of Cede & Co., DTC's nominee. One or more fully registered global
Senior Notes will be issued, representing in the aggregate the total principal
amount of Senior Notes, and will be deposited with DTC.
DTC is a limited-purpose trust company organized 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
S-8
<PAGE> 9
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). 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 Participant's accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). 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 Senior Notes within the DTC system must be made by or through
Direct Participants, which will receive a credit for the Senior Notes on DTC's
records. The ownership interest of each actual purchaser of Senior Notes (such
purchaser, or the person to whom such purchaser conveys his or her ownership
interest, a "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 purchases, but Beneficial Owners are expected to
receive written confirmations providing details of the transactions, as well as
periodic statements of their holdings, from the Direct or Indirect Participants
through which the Beneficial Owners purchased Senior Notes. Transfers of
ownership interests in the Senior 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 ownership interests in
Senior Notes, except in the event that use of the book-entry system for the
Senior Notes is discontinued, MichCon determines that Beneficial Owners may
exchange their ownership interests for such certificates or there shall have
occurred an Event of Default.
DTC will have no knowledge of the actual Beneficial Owners of the Senior
Notes. DTC's records reflect only the identity of the Direct Participants to
whose accounts such Senior 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 will be sent to DTC. If less than all of the Senior
Notes are being redeemed, DTC will reduce the amount of the interest of each
Direct Participant in the Senior Notes in accordance with its procedures.
Although voting with respect to the Senior Notes is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to Senior Notes. Under its usual procedures, DTC would mail an
Omnibus Proxy to MichCon 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 Senior Notes are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Payments on the Senior Notes will be made to DTC. DTC's practice is to
credit Direct Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment 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 account of
customers registered in "street name," and will be the responsibility of such
Participant and not of DTC or MichCon, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment to DTC is the
responsibility of MichCon, disbursements of such payments to Direct Participants
is the responsibility of DTC and
S-9
<PAGE> 10
disbursements of such payments to the Beneficial Owners is the responsibility of
Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a global
Senior Note will not be entitled to receive physical delivery of Senior Notes.
Accordingly, each Beneficial Owner must rely on the procedures of DTC to
exercise any rights under the Senior Notes. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of
securities in definitive form. Such laws may impair the ability to transfer
beneficial interests in a global Senior Note.
DTC may discontinue providing its services as security depositary with
respect to the Senior Notes at any time by giving reasonable notice to MichCon.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Senior Note certificates will be printed and delivered to the
holders of record. Additionally, MichCon may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary) with
respect to the Senior Notes. In that event, certificates for the Senior Notes
will be printed and delivered to the holders of record.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that MichCon believes to be reliable, but MichCon
takes no responsibility for the accuracy thereof. MichCon has no responsibility
for the performance by DTC or its Participants of their respective obligations
as described herein or under the rules and procedures governing their respective
operations.
THE POLICY AND THE INSURER
The following information has been furnished by MBIA Insurance Corporation
(the "Insurer") for use in this Prospectus Supplement. Reference is made to
Appendix A for a specimen of the Insurer's policy. The Insurer does not accept
any responsibility for the accuracy or completeness of this Prospectus
Supplement or any information or disclosure contained herein, or omitted
herefrom, other than with respect to the accuracy of the information regarding
the Insurer's policy and Insurer set forth under the heading "The Policy and the
Insurer." Additionally, the Insurer makes no representation regarding the Senior
Notes or the advisability of investing in the Senior Notes.
THE POLICY
The Insurer's policy unconditionally and irrevocably guarantees the full
and complete payment required to be made by or on behalf of MichCon to the
Paying Agent or its successor of an amount equal to (i) the principal of (at the
stated maturity) and interest on, the Senior Notes as such payments shall become
due but shall not be so paid (except that in the event of any acceleration of
the due date of such principal by reason of mandatory or optional redemption or
acceleration resulting from default or otherwise, the payments guaranteed by the
Insurer's policy shall be made in such amounts and at such times as such
payments of principal would have been due had there not been any such
acceleration); and (ii) the reimbursement of any such payment which is
subsequently recovered from any owner of the Senior Notes pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable
bankruptcy law (a "Preference").
The Insurer's policy does not insure against loss of any prepayment premium
which may at any time be payable with respect to any Senior Note. The Insurer's
policy does not, under any circumstance, insure against loss relating to: (i)
optional or mandatory redemptions (other than mandatory sinking fund
redemptions); (ii) any payments to be made on an accelerated basis; (iii)
payments of the purchase price of the Senior Notes upon tender by an owner
thereof; or (iv) any Preference relating to (i) through (iii) above. The
Insurer's policy also does not insure against nonpayment of principal of or
interest on the Senior Notes resulting from the insolvency, negligence or any
other act or omission of the Paying Agent or any other paying agent for the
Senior Notes.
S-10
<PAGE> 11
Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by the Insurer from the Paying Agent or
any owner of Senior Notes the payment of an insured amount for which is then
due, that such required payment has not been made, the Insurer on the due date
of such payment or within one business day after receipt of notice of such
nonpayment, whichever is later, will make a deposit of funds, in an account with
State Street Bank and Trust Company, N.A., in New York, New York, or its
successor, sufficient for the payment of any such insured amounts which are then
due. Upon presentment and surrender of such Senior Notes or presentment of such
other proof of ownership of the Senior Notes, together with any appropriate
instruments of assignment to evidence the assignment of the insured amounts due
on the Senior Notes as are paid by the Insurer, and appropriate instruments to
effect the appointment of the Insurer as agent for such owners of the Senior
Notes in any legal proceeding related to payment of insured amounts on the
Senior Notes, such instruments being in a form satisfactory to State Street Bank
and Trust Company, N.A., State Street Bank and Trust Company, N.A., shall
disburse to such owners or the Paying Agent payment of the insured amounts due
on such Senior Notes, less any amount held by the Paying Agent for the payment
of such insured amounts and legally available therefor.
The Insurer's policy is not covered by the Property/Casualty Insurance
Security Fund specified in Article 76 of the New York Insurance Law.
THE INSURER
The Insurer is the principal operating subsidiary of MBIA Inc., a New York
Stock Exchange listed company. MBIA Inc. is not obligated to pay the debts of or
claims against the Insurer. The Insurer is domiciled in the State of New York
and licensed to do business in and subject to regulation under the laws of all
50 states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. The Insurer has two European branches, one in
the Republic of France and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations of
investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by the Insurer, changes in control and
transactions among affiliates. Additionally, the Insurer is required to maintain
contingency reserves on its liabilities in certain amounts and for certain
periods of time.
INSURER FINANCIAL INFORMATION
The consolidated financial statements of the Insurer, a wholly owned
subsidiary of MBIA Inc., and its subsidiaries as of December 31, 1998 and
December 31, 1997 and for each of the three years in the period ended December
31, 1998, prepared in accordance with generally accepted accounting principles,
included in the Annual Report on Form 10-K of MBIA Inc. for the year ended
December 31, 1998 and the consolidated financial statements of the Insurer and
its subsidiaries as of March 31, 1999 and for the three-month periods ended
March 31, 1999 and March 31, 1998 included in the Quarterly Report on Form 10-Q
of MBIA Inc. for the period ended March 31, 1999 are hereby incorporated by
reference into this Prospectus Supplement and shall be deemed to be a part
hereof. Any statement contained in a document incorporated by reference herein
shall be modified or superseded for purposes of this Prospectus Supplement to
the extent that a statement contained herein or in any other subsequently filed
document which also is incorporated by reference herein 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
Supplement.
All financial statements of the Insurer and its subsidiaries included in
documents filed by MBIA Inc. pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of this Prospectus Supplement and prior
to the termination of the offering of the Senior Notes shall be deemed to be
incorporated by reference into this Prospectus Supplement and to be a part
hereof from the respective dates of filing such documents.
S-11
<PAGE> 12
The tables below present selected financial information of the Insurer
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities ("SAP") and generally accepted
accounting principles ("GAAP"):
<TABLE>
<CAPTION>
SAP
----------------------------------
DECEMBER 31, 1998 MARCH 31, 1999
----------------- --------------
(AUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Admitted Assets............................................. $6,521 $6,742
Liabilities................................................. 4,231 4,412
Capital and Surplus......................................... 2,290 2,330
</TABLE>
<TABLE>
<CAPTION>
GAAP
----------------------------------
DECEMBER 31, 1998 MARCH 31, 1999
----------------- --------------
(AUDITED) (UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Assets...................................................... $7,488 $7,625
Liabilities................................................. 3,211 3,370
Shareholder's Equity........................................ 4,277 4,255
</TABLE>
WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION ABOUT THE INSURER
Copies of the financial statements of the Insurer incorporated by reference
herein and copies of the Insurer's 1998 year-end audited financial statements
prepared in accordance with statutory accounting practices are available,
without charge, from the Insurer. The address of the Insurer is 113 King Street,
Armonk, New York 10504. The telephone number of the Insurer is (914) 273-4545.
FINANCIAL STRENGTH RATINGS OF THE INSURER
Moody's Investors Services, Inc. ("Moody's") rates financial strength of
the Insurer "Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P") rates the financial strength of the Insurer "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.) rates
the financial strength of the Insurer "AAA."
Each rating of the Insurer should be evaluated independently. The ratings
reflect the respective rating agency's current assessment of the
creditworthiness of the Insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Senior
Notes, and such ratings may be subject to revision or withdrawal at any time by
the rating agencies. Any downward revision or withdrawal of any of the above
ratings may have an adverse effect on the market price of the Senior Notes. The
Insurer does not guaranty the market price of the Senior Notes nor does it
guaranty that the ratings on the Senior Notes will not be revised or withdrawn.
YEAR 2000 READINESS DISCLOSURE
MBIA Inc. is actively managing a high-priority Year 2000 ("Y2K") program.
MBIA Inc. has established an independent Y2K testing lab in its Armonk
headquarters, with a committee of business unit managers overseeing the project.
MBIA Inc. has a budget of $1.13 million for its 1998-2000 Y2K efforts.
Expenditures are proceeding as anticipated, and MBIA Inc. does not expect the
project budget to materially exceed this amount. MBIA Inc. has initiated a
comprehensive Y2K plan that includes assessment, remediation, testing and
contingency planning. This plan covers "mission-critical" internally developed
systems, vendor software, hardware and certain third-party entities through
which MBIA Inc. conducts its business. Testing to date indicates that functions
critical to the financial guarantee business,
S-12
<PAGE> 13
both domestic and international, were Y2K-ready as of December 31, 1998.
Additional testing will continue throughout 1999.
RATINGS
It is anticipated that S&P, Moody's and Fitch IBCA will assign the Senior
Notes the ratings of "AAA", "Aaa" and "AAA", respectively, conditioned upon the
issuance and delivery by the Insurer at the time of delivery of the Senior Notes
of the policy, insuring the timely payment of the principal of and interest on
the Senior Notes. It is anticipated that Duff & Phelps will assign the Senior
Notes the rating of "AAA", conditioned upon the issuance and delivery by the
Insurer at the time of delivery of the Senior Notes of the policy, insuring
timely payment of the principal and interest on the Senior Notes and Duff &
Phelps' belief, based on available information, that the claims paying ability
of the Insurer is commensurate with that of guarantors currently rated "AAA" by
Duff & Phelps. Such ratings reflect only the views of such rating agencies, and
an explanation of the significance of such ratings may be obtained only from
such rating agencies at the following addresses: Moody's Investors Service,
Inc., 99 Church Street, New York, New York 10007; and Standard & Poor's, 25
Broadway, New York, New York 10004; Fitch IBCA, Inc., One State Street Plaza,
New York, New York 10004 and Duff & Phelps Rating Co., 55 E. Monroe, Chicago, IL
60603. There is no assurance that such ratings will remain in effect for any
period of time or that they will not be revised downward or withdrawn entirely
by the rating agencies if, in their judgment, circumstances warrant. Neither
MichCon nor the Underwriter has undertaken any responsibility to oppose any
proposed downward revision or withdrawal of a rating on the Senior Notes. Any
such downward revision or withdrawal of such ratings may have an adverse effect
on the market price of the Senior Notes.
At present, each of such rating agencies maintains four categories of
investment grade ratings. They are for S&P, Fitch IBCA and Duff & Phelps -- AAA,
AA, A and BBB and for Moody's -- Aaa, Aa, A and Baa. S&P defines "AAA" as the
highest rating assigned to a debt obligation. Moody's defines "Aaa" as
representing the best quality debt obligation carrying the smallest degree of
investment risk. Fitch IBCA defines "AAA" as representing the highest credit
quality and denoting the lowest expectation of credit risk. Duff & Phelps
defines "AAA" as the highest credit quality.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in the Prospectus by reference to MichCon's Form 10-K have
been audited by Deloitte & Touch LLP, independent auditors, as stated in their
report which is incorporated herein by reference and have been so incorporated
in reliance upon the report of such firm given upon the authority of said firm
as experts in accounting.
The consolidated balance sheets of MBIA Insurance Corporation and
Subsidiaries as of December 31, 1998 and December 31, 1997 and the related
consolidated statements of income, changes in shareholder's equity, and cash
flows for each of the three years in the period ended December 31, 1998,
incorporated by reference in this Prospectus Supplement, have been incorporated
herein in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of that firm as experts in accounting and
auditing.
S-13
<PAGE> 14
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, we have
agreed to sell to each of the Underwriters named below and each of the
Underwriters has severally agreed to purchase from us the respective principal
amount of Senior Notes set forth opposite its name below:
<TABLE>
<CAPTION>
UNDERWRITER PRINCIPAL AMOUNT OF SENIOR NOTES
----------- --------------------------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated................................... $30,000,000
A.G. Edwards & Sons, Inc.................................... 25,000,000
-----------
Total.......................................... $55,000,000
===========
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed to the terms
and conditions to purchase all of the Senior Notes offered if any of the Senior
Notes are purchased.
The Underwriters propose to offer the Senior Notes in part directly to the
public at the initial public offering price set forth on the cover page of this
prospectus and in part to certain securities dealers at such price less a
concession not in excess of .50% per Senior Note. The Underwriters may allow,
and such dealers may reallow, a concession not in excess of .40% per Senior Note
to certain brokers and dealers. After the Senior Notes are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the Representative.
Prior to this offering, there has been no public market for the Senior
Notes. The Senior Notes will not be listed on any securities exchange. The
Representative has advised us that it intends to make a market in the Senior
Notes. The Representative will have no obligation to make a market in the Senior
Notes, however, and may cease market making activities, if commenced, at any
time. There can be no assurance of a secondary market for the Senior Notes, or
that the Senior Notes may be resold.
We have agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
In connection with the offering, the Underwriters may purchase and sell the
Senior Notes in the open market. These transactions may include over-allotment
and stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offering. Stabilizing transactions consist of
certain bids or purchases for the purposes of preventing or retarding a decline
in the market price of the Senior Notes and syndicate short positions involve
the sale by the Underwriters of a greater number of Senior Notes than they are
required to purchase from us in the offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker dealers in respect of the securities sold in the offering for their
account may be reclaimed by the syndicate if such Senior Notes are repurchased
by the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Senior Notes,
which may be higher than the price that might otherwise prevail in the open
market; and these activities, if commenced, may be discontinued at any time.
These transactions may be effected in the over-the-counter market or otherwise.
Other than the concurrent offering of senior debt securities discussed
below, to which the Underwriters have consented, MichCon has agreed, during the
period of 15 days from the date on which the Senior Notes are purchased by the
Underwriters, not to sell, offer to sell, grant any option for the sale of, or
otherwise dispose of any Senior Notes, any security convertible into or
exchangeable into or exercisable for Senior Notes or any debt securities
substantially similar to the Senior Notes, without the prior written consent of
the Underwriters.
Concurrently with the offering of these Senior Notes, MichCon is offering
$55,000,000 aggregate principal amount of senior debt securities pursuant to a
separate Prospectus Supplement. These two debt offerings are independent of each
other and each offering may be consummated whether or not the other offering is
consummated.
Some of the Underwriters engage in transactions with, and have performed
services for, us and our affiliates in the ordinary course of business.
S-14
<PAGE> 15
LEGAL OPINIONS
The validity of the Indentures and the Senior Notes will be passed upon for
MichCon by Ronald E. Christian, Vice President, General Council and Secretary of
MichCon. Certain matters will be passed upon 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 services
to MichCon and its affiliates.
S-15
<PAGE> 16
APPENDIX A -- FORM OF POLICY
FINANCIAL GUARANTY INSURANCE POLICY
MBIA Insurance Corporation
Armonk, New York 10504
[NUMBER]
MBIA Insurance Corporation (the "Insurer"), in consideration of
the payment of the premium and subject to the terms of this policy, hereby
unconditionally and irrevocably guarantees to any owner, as hereinafter defined,
of the following described obligations, the full and complete payment required
to be made by or on behalf of the Issuer to or its successor (the
"Paying Agent") of an amount equal to (i) the principal of (either at the stated
maturity or by any advancement of maturity pursuant to a mandatory sinking fund
payment) and interest on, the Obligations (as that term is defined below) as
such payments shall become due but shall not be so paid (except that in the
event of any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory
sinking fund payment, the payments guaranteed hereby shall be made in such
amounts and at such times as such payments of principal would have been due had
there not been any such acceleration); and (ii) the reimbursement of any such
payment which is subsequently recovered from any owner pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable
bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding
sentence shall be referred to herein collectively as the "Insured Amounts."
"Obligations" shall mean:
[PAR]
[LEGAL NAME OF ISSUE]
Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by the Insurer from the Paying Agent or
any owner of an Obligation the payment of an Insured Amount for which is then
due, that such required payment has not been made, the Insurer on the due date
of such payment or within one business day after receipt of notice of such
nonpayment, whichever is later, will make a deposit of funds, in an account with
State Street Bank and Trust Company, N.A., in New York, New York, or its
successor, sufficient for the payment of any such Insured Amounts which are then
due. Upon presentment and surrender of such Obligations or presentment of such
other proof of ownership of the Obligations, together with any appropriate
instruments of assignment to evidence the assignment of the Insured Amounts due
on the Obligations as are paid by the Insurer, and appropriate instruments to
effect the appointment of the Insurer as agent for such owners of the
Obligations in any legal proceeding related to payment of Insured Amounts on the
Obligations, such instruments being in a form satisfactory to State Street Bank
and Trust Company, N.A., State Street Bank and Trust Company, N.A. shall
disburse to such owners, or the Paying Agent payment of the Insured Amounts due
on such Obligations, less any amount held by the Paying Agent for the payment of
such Insured Amounts and legally available therefor. This policy does not insure
against loss of any prepayment premium which may at any time be payable with
respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any
Obligation as indicated in the books maintained by the Paying Agent, the Issuer,
or any designee of the Issuer for such purpose. The term owner shall not include
the Issuer or any party whose agreement with the Issuer constitutes the
underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its
offices located at 113 King Street, Armonk, New York 10504 and such service of
process shall be valid and binding.
S-16
<PAGE> 17
This policy is non-cancellable for any reason. The premium on this policy
is not refundable for any reason including the payment prior to maturity of the
Obligations.
This policy is not covered by the Property/Casualty Insurance Security Fund
specified in Article 76 of the New York Insurance Law.
IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in
facsimile on its behalf by its duly authorized officers, this [DAY] day of
[MONTH, YEAR].
MBIA Insurance Corporation
--------------------------------------
President
Attest:
-------------------------------
Assistant Secretary
S-17
<PAGE> 18
PROSPECTUS
$400,000,000
MICHIGAN CONSOLIDATED GAS COMPANY
SENIOR DEBT SECURITIES
------------------------
Michigan Consolidated Gas Company ("MichCon" or the "Company") from time to
time may offer, in an aggregate principal amount not to exceed $400,000,000, in
one or more series, its senior debt securities (the "Senior Debt Securities").
Prior to the Release Date (as defined below), the Senior Debt Securities will be
secured by the issuance and delivery to the Senior Trustee (as defined below) in
trust for the benefit of the holders of Senior Debt Securities first mortgage
bonds (the "First Mortgage Bonds") issued under the Company's Mortgage Indenture
(as defined below). The Senior Debt Securities will be issued under the
indenture (the "Senior Indenture") to be entered into between MichCon and
Citibank, N.A., as trustee (the "Senior Trustee"). The Senior Debt Securities
may be offered in amounts, at prices and on terms to be determined at the time
of sale. Certain terms of the Senior Debt Securities 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 the Senior Debt Securities 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 Senior Debt Securities to or through underwriters,
through dealers, directly to purchasers or through agents. See "Plan of
Distribution". 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.
This Prospectus may not be used to consummate sales of the Senior Debt
Securities unless accompanied by a Prospectus Supplement applicable to the
Senior Debt Securities being sold.
------------------------
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 June 17, 1998.
<PAGE> 19
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 and other information with the Securities and Exchange Commission
(the "SEC"). Such reports 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 Northwestern
Atrium Center, 5000 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. The Commission also maintains a Web Site on the
Internet that contains reports and other information regarding registrants that
file electronically with the Commission (http://www.sec.gov).
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by MichCon with the SEC under the Securities Act of 1933, as
amended (the "1933 Act"), with respect to the Senior Debt Securities. This
Prospectus does not contain all of the information set forth in such
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the SEC. Reference is made to such Registration
Statement and to the exhibits relating thereto for further information with
respect to MichCon and the Senior Debt Securities. Any statements contained
herein concerning the provisions of any document filed as an exhibit to the
Registration Statement or otherwise filed with the SEC or incorporated by
reference herein are not necessarily complete, and in each instance reference is
made to the copy of such document so filed for a more complete description of
the matter involved. Each such statement is qualified in its entirety by such
reference.
-------------------------
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. MichCon's Annual Report on Form 10-K for the year ended December
31, 1997 ("Form 10-K").
2. MichCon's Quarterly Report on Form 10-Q for the quarter ended March
31, 1998.
3. MichCon's Current Report on Form 8-K dated June 2, 1998.
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 and to be a part hereof from the
date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus or in any Prospectus Supplement
shall be deemed to be modified or superseded for purposes of this Prospectus or
any Prospectus Supplement to the extent that a statement contained in this
Prospectus or in any Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus or in any Prospectus Supplement 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 or any
Prospectus Supplement.
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 Energy Group Inc., 500 Griswold Street, Detroit,
Michigan 48226; telephone 1-800-548-4655.
2
<PAGE> 20
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.
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this Prospectus
which are not historical in nature are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve certain risks and uncertainties that may cause actual future
results to differ materially from those contemplated, projected, estimated or
budgeted in such forward-looking statements. Factors that may impact
forward-looking statements include, but are not limited to, the following: (i)
the effects of weather and other natural phenomena; (ii) increased competition
from other energy suppliers as well as alternative forms of energy; (iii) the
capital intensive nature of the Company's business; (iv) the economic climate
and growth in the geographic areas in which the Company does business; (v) the
uncertainty of gas reserve estimates; (vi) the timing and extent of changes in
prices for natural gas, electricity and crude oil; (vii) conditions of capital
markets and equity markets; and (viii) the effects of changes in governmental
policies and regulatory actions, including income taxes, environmental
compliance and authorized rates. See "Incorporation of Certain Documents by
Reference" above.
3
<PAGE> 21
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 a public
utility engaged in the distribution and transmission of natural gas in the State
of Michigan. The Company serves 1.2 million residential, commercial and
industrial customers in the Detroit, Grand Rapids, Ann Arbor, Traverse City and
Muskegon metropolitan areas and in various other communities throughout the
state of Michigan. MichCon's gas sales and transportation markets were
approximately 937 billion cubic feet (Bcf) for the twelve months ended December
31, 1997. MichCon is a wholly-owned subsidiary of MCN Energy Group Inc., a
Michigan corporation.
At December 31, 1997, MichCon and its subsidiaries employed 2,867 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 Senior Debt Securities 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 ratio of earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
1998 1997 1996 1995 1994 1993
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)(2)......... 3.17 3.17 3.27 3.47 3.26 3.58
</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.
SECURITIES
The Senior Debt Securities may be issued, from time to time, in one or more
series (i) secured by the Company's First Mortgage Bonds issued and delivered to
the Senior Trustee 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 between the Company and Citibank, N.A.
("Citibank" or the "Mortgage Trustee") and Robert T. Kirchner (the "Individual
Trustee" and, together with Citibank, the "Secured Trustees") which became
effective on April 1, 1994, as supplemented and amended by the supplemental
indentures thereto (collectively, the "Mortgage Indenture") or (ii) following
the Release Date (as defined below), as either unsecured senior notes or as
senior notes secured by first mortgage bonds issued under a mortgage indenture
other than the Mortgage Indenture. On the Release Date, any outstanding Senior
Debt Securities secured by the Company's First Mortgage Bonds when issued will
cease to be secured by First Mortgage Bonds issued under the Company's Mortgage
Indenture and, at the Company's option, either (a) will become unsecured general
obligations of the Company or
4
<PAGE> 22
(b) will be secured by first mortgage bonds issued under a mortgage indenture
other than the Mortgage Indenture.
Senior Debt Securities will be issued under the Senior Indenture, the form
of which is an exhibit to the Registration Statement, and are described below
under the caption "Description of the Senior Debt Securities." Prior to the
Release Date, First Mortgage Bonds securing the Senior Debt Securities (the
"Collateral Bonds") will be issued under the Mortgage Indenture.
There is no requirement, under either the Senior Indenture or the Mortgage
Indenture (collectively, the "Indentures"), that future issues of debt
securities of the Company be issued under the Indentures, and, subject to
certain restrictions following the Release Date which are described in
"Description of the Senior Debt Securities--Restrictions," the Company will be
free to employ other indentures or documentation, containing provisions
different from those included in the Indentures or applicable to one or more
issues of Senior Debt Securities, in connection with future issues of such other
debt securities. Certain capitalized terms herein are defined in the Indentures.
DESCRIPTION OF THE SENIOR DEBT SECURITIES
GENERAL
Until the Release Date (as defined below), the Senior Debt Securities will
be secured by one or more series of Collateral Bonds issued and delivered to the
Senior Trustee under the Mortgage Indenture. See "-- Security; Release Date." ON
THE RELEASE DATE (AS DEFINED BELOW), THE SENIOR DEBT SECURITIES WILL CEASE TO BE
SECURED BY THE COLLATERAL BONDS AND, AT THE COMPANY'S OPTION, EITHER (I) WILL
BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (II) WILL BE SECURED BY
FIRST MORTGAGE BONDS (THE "SUBSTITUTED COLLATERAL BONDS") ISSUED UNDER A
MORTGAGE INDENTURE OTHER THAN THE MORTGAGE INDENTURE. The Senior Indenture
provides that, in addition to the Senior Debt Securities offered hereby,
additional Senior Debt Securities may be issued thereunder, without limitation
as to aggregate principal amount, from time to time, in one or more series,
provided that, prior to the Release Date, the amount of Senior Debt Securities
that may be issued cannot exceed the aggregate principal amount of First
Mortgage Bonds that the Company is able to issue under its Mortgage Indenture.
The Senior Indenture does not contain any debt covenants or provisions
which would afford holders of Senior Debt Securities protection in the event of
a highly leveraged transaction.
Reference is made to the Prospectus Supplement relating to the Senior Debt
Securities being offered (the "Offered Senior Debt Securities") for, among other
things, the following terms thereof: (1) the title of the Offered Senior Debt
Securities; (2) any limit on the aggregate principal amount of the Offered
Senior Debt Securities; (3) the date or dates on which the Offered Senior Debt
Securities will mature; (4) the rate or rates (which may be fixed or variable)
per annum at which the Offered Senior Debt Securities will bear interest or the
method by which such rate or rates shall be determined and the date from which
such interest will accrue or the method by which such date or dates shall be
determined; (5) the dates on which such interest will be payable and the Regular
Record Dates for such Interest Payment Dates; (6) the dates, if any, on which,
and the price or prices at which, the Offered Senior Debt Securities may,
pursuant to any mandatory or optional sinking fund provisions, be redeemed by
the Company and other detailed terms and provisions of such sinking funds; (7)
the date, if any, after which, and the price or prices at which, the Offered
Senior Debt Securities may, pursuant to any optional redemption provisions, be
redeemed at the option of the Company or of the Holder thereof and other
detailed terms and provisions of such optional redemption; and (8) any other
terms of the Offered Senior Debt Securities (which terms shall not be
inconsistent with the Senior Indenture). For a description of the terms of the
Offered Senior Debt Securities, reference must be made to both the Prospectus
Supplement relating thereto and to the description of Senior Debt Securities set
forth herein.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the principal of, and any premium or interest on, the Offered Senior Debt
Securities will be payable, and the Offered Senior Debt
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Securities will be exchangeable and transfers thereof will be registrable, at
the Place of Payment, provided that, at the option of the Company, payment of
interest may be made by check mailed or wire transferred to the address of the
person entitled thereto as it appears in the Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered Senior Debt Securities will be issued in United States dollars in
fully registered form, without coupons, in denominations of $1,000 or any
integral multiple thereof. No service charge will be made for any transfer or
exchange of the Offered Senior Debt Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
For purposes of the descriptions of the Senior Debt Securities, certain
defined terms have the following meanings:
"Indebtedness" of any Person means, without duplication, (i) the principal
of and premium (if any) in respect of (A) indebtedness of such Person for money
borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit); (v) all obligations of the type referred to in clauses
(i) through (iv) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Significant Subsidiary" means a Subsidiary or Subsidiaries of the Company
possessing assets (including the assets of its own Subsidiaries but without
regard to the Company or any other Subsidiary) having a book value, in the
aggregate, equal to not less than 10% of the book value of the aggregate assets
of the Company and its Subsidiaries calculated on a consolidated basis.
"Capitalized Lease Obligations" means an obligation under a lease that is
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with such
principles.
"Project Finance Indebtedness" means Indebtedness of a Subsidiary secured
by a Lien on any property, acquired, constructed or improved by such Subsidiary
after the date of the Indenture which Lien is created or assumed
contemporaneously with, or within 120 days after, such acquisition or completion
of such construction or improvement, or within six months thereafter pursuant to
a firm commitment for financing arranged with a lender or investor within such
120-day period, to secure or provide for the payment of all or any part of the
purchase price of such property or the cost of such construction or improvement,
or on any property existing at the time of acquisition thereof; provided that
such a Lien shall not apply to any property theretofore owned by any such
Subsidiary other than, in the case of any such construction or improvement, any
theretofore unimproved real property on which the property so constructed or the
improvement is located; and provided further that such Indebtedness, by its
terms, shall limit the recourse of any holder of such Indebtedness (or trustee
on such holder's behalf) in the event of any default in such Indebtedness to the
assets subject to such Liens and the capital stock of the Subsidiary issuing
such Indebtedness. Notwithstanding the foregoing, Project Finance Indebtedness
shall include all Indebtedness that would constitute Project Finance
Indebtedness but for the fact that such Indebtedness
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was issued prior to the date of the Indenture and taking into account the fact
that the property subject to the Lien may have been acquired prior to the date
of the Indenture.
The Senior Debt Securities may be issued under the Senior Indenture as
Original Issue Discount Securities to be offered and sold at a substantial
discount below their principal amount. Special federal income tax, accounting
and other considerations applicable to any such Original Issue Discount
Securities will be described in any Prospectus Supplement relating thereto.
"Original Issue Discount Security" means any security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the maturity thereof as a result of the
occurrence of an Event of Default and the continuation thereof.
SECURITY; RELEASE DATE
Until the Release Date (as defined below), the Senior Debt Securities will
be secured by one or more series of the Collateral Bonds issued and delivered by
the Company to the Senior Trustee. See "Description of the First Mortgage
Bonds." Upon the issuance of Senior Debt Securities prior to the Release Date,
the Company will simultaneously issue and deliver Collateral Bonds to the Senior
Trustee, as security for such Senior Debt Securities. Such Collateral Bonds will
have the same stated rate or rates of interest (or interest calculated in the
same manner), interest payment dates, stated maturity date and redemption
provisions, and will be in the same aggregate principal amount as the Senior
Debt Securities being issued. The Company has agreed to issue a related series
of Collateral Bonds in the name of the Senior Trustee in its capacity as trustee
under the Senior Indenture concurrently with the issuance of each series of
Senior Debt Securities and the Senior Trustee has agreed to hold each series of
Collateral Bonds in such capacity under all circumstances and not transfer such
Collateral Bonds until the earlier of the Release Date or the prior retirement
of the related series of Senior Debt Securities through redemption, repurchase
or otherwise. Prior to the Release Date, the Company shall make payments of the
principal of, and premium or interest on, each series of Collateral Bonds to the
Senior Trustee, which payments shall be applied by the Senior Trustee to
satisfaction of all obligations then due on the related series of Senior Debt
Securities.
THE "RELEASE DATE" WILL BE THE DATE THAT ALL FIRST MORTGAGE BONDS OF THE
COMPANY ISSUED AND OUTSTANDING UNDER THE MORTGAGE INDENTURE, OTHER THAN THE
COLLATERAL BONDS, HAVE BEEN RETIRED (AT, BEFORE OR AFTER THE MATURITY THEREOF)
THROUGH PAYMENT, REDEMPTION OR OTHERWISE. ON THE RELEASE DATE, THE SENIOR
TRUSTEE WILL DELIVER TO THE COMPANY FOR CANCELLATION ALL COLLATERAL BONDS, AND
THE COMPANY WILL CAUSE THE SENIOR TRUSTEE TO PROVIDE NOTICE TO ALL HOLDERS OF
SENIOR DEBT SECURITIES OF THE OCCURRENCE OF THE RELEASE DATE. AS A RESULT, ON
THE RELEASE DATE, THE COLLATERAL BONDS WILL CEASE TO SECURE THE SENIOR DEBT
SECURITIES, AND, AT THE OPTION OF THE COMPANY, THE SENIOR DEBT SECURITIES,
EITHER (I) WILL BECOME UNSECURED GENERAL OBLIGATIONS OF THE COMPANY OR (II) WILL
BE SECURED BY SUBSTITUTED COLLATERAL BONDS. Each issue of Collateral Bonds will
be secured by a lien on certain property owned by the Company. In certain
circumstances prior to the Release Date, the Company is permitted to reduce the
aggregate principal amount of an issue of Collateral Bonds held by the Senior
Trustee, but in no event to an amount lower than the aggregate outstanding
principal amount of the Senior Debt Securities initially issued
contemporaneously with such Collateral Bonds. Following the Release Date, the
Company will cause the Mortgage Indenture to be closed, and the Company will not
issue any additional bonds under such Mortgage Indenture.
RESTRICTIONS
The Senior Indenture provides that the Company shall not consolidate with,
merge with or into any other corporation (whether or not the Company shall be
the surviving corporation), or sell, assign, transfer or lease all or
substantially all of its properties and assets as an entirety or substantially
as an entirety to any Person or group of affiliated Persons, in one transaction
or a series of related transactions, unless: (1) either the Company shall be the
continuing Person or the Person (if other than the Company) formed by such
consolidation or with which or into which the Company is merged or the Person
(or group of affiliated Persons) to which all or substantially all the
properties and assets of the Company are sold,
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<PAGE> 25
assigned, transferred or leased is a corporation (or constitute corporations)
organized under the laws of the United States or any State thereof or the
District of Columbia and expressly assumes, by an indenture supplemental to the
Senior Indenture, all the obligations of the Company under the Senior Debt
Securities and the Senior Indenture, executed and delivered to the Trustee in
form satisfactory to the Trustee; (2) immediately before and after giving effect
to such transaction or series of transactions, no Event of Default, and no
Default, with respect to the Senior Debt Securities shall have occurred and be
continuing; and (3) the Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indentures comply with the Senior
Indenture.
The Senior Indenture also provides that, except as described below and
unless Substituted Pledged Bonds are issued to secure the Senior Debt Securities
from and after the Release Date, the Company will not, nor will it permit any
Significant Subsidiary to, issue, assume or guarantee any Indebtedness that is
secured by any Lien in, of or on the property of the Company or any of its
Subsidiaries, without effectively securing all Senior Debt Securities (other
than such Senior Debt Securities, if any, which by their terms, are expressly
excluded from this provision), equally and ratably with such Indebtedness;
except that this restriction shall not apply to: (i) Liens for taxes,
assessments or governmental charges or levies on its property if the same shall
not at the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings; (ii) Liens imposed
by law, such as carriers', warehousemen's and mechanics' liens and other similar
liens arising in the ordinary course of business which secure payment of
obligations not more than 60 days past due or which are being contested in good
faith by appropriate proceedings; (iii) Liens arising out of pledges or deposits
under worker's compensation laws, unemployment insurance, old age pensions, or
other social security or retirement benefits, or similar legislation; (iv)
utility easements, rights of way, exceptions, agreements for the joint or common
use of property, restrictions and such other encumbrances or charges against
property as are of a nature generally existing with respect to properties of a
similar character and which do not in any material way affect the marketability
of the same or interfere with the use thereof in the business of the Company or
its Subsidiaries; (v) Liens on the capital stock, partnership interest, or other
evidence of ownership of any Subsidiary or such Subsidiary's assets that secure
project financing for such Subsidiary; (vi) purchase money liens upon or in
property now owned or hereafter acquired in the ordinary course of business
(consistent with the Company's business practices) to secure (A) the purchase
price of such property or (B) Indebtedness incurred solely for the purpose of
financing the acquisition, construction, or improvement of any such property to
be subject to such liens, or Liens existing on any such property at the time of
acquisition, or extensions, renewals, or replacements of any of the foregoing
for the same or a lesser amount, provided that no such lien shall extend to or
cover any property other than the property being acquired, constructed, or
improved and replacements, modifications, and proceeds of such property, and no
such extension, renewal, or replacement shall extend to or cover any property
not theretofore subject to the Lien being extended, renewed, or replaced; (vii)
Liens existing on the date the Senior Debt Securities are first issued; (viii)
Liens for no more than 90 days arising from a transaction involving accounts
receivable of the Company (including the sale of such accounts receivable),
where such accounts receivable arose in the ordinary course of the Company's
business; (ix) the right reserved to, or vested in, any municipality or public
authority by the terms of any franchise, grant, license or permit, or by any
provision of law, to terminate such franchise, grant, license or permit or to
purchase or appropriate or recapture or to designate a purchaser of any of the
mortgaged property, or to demand and collect from the Company any tax or other
compensation for the use of streets, alleys or other public places; (x) rights
reserved to, or vested in, any municipality or public authority to use, control,
remove or regulate any property of the Company; (xi) zoning laws and ordinances;
(xii) possible adverse rights or interests and inconsequential defects or
irregularities in title which, in the opinion of counsel, may be properly
disregarded; and (xiii) rights reserved to or vested in others to take or
receive any part of the gas, power, oil or other minerals or timber generated,
developed, manufactured or produced by, or grown on, or acquired with, any
property of the Company.
The Senior Indenture provides that, from and after the Release Date, the
Company will not, nor will it permit any Subsidiary to, enter into any
arrangement with any lender or investor (other than the
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<PAGE> 26
Company or a Subsidiary), or to which such lender or investor (other than the
Company or a Subsidiary) is a party, providing for the leasing by the Company or
such Subsidiary for a period, including renewals, in excess of three years of
any real property located within the United States which has been owned by the
Company or such Subsidiary for more than six months and which has been or is to
be sold or transferred by the Company or such Subsidiary to such lender or
investor or to any person to whom funds have been or are to be advanced by such
lender or investor on the security of such real property unless either (a) the
Company or such Subsidiary could create Indebtedness secured by a lien
consistent with the restrictions set forth in the foregoing paragraph on the
real property to be leased in an amount equal to the Value of such transaction
without equally and ratably securing the Senior Debt Securities or (b) the
Company, within six months after the sale or transfer shall have been made,
applies an amount equal to the greater of (i) the net proceeds of the sale of
the real property leased pursuant to such arrangement or (ii) the fair market
value of the real property so leased to the retirement of the Senior Debt
Securities and other obligations of the Company ranking on a parity with the
Senior Debt Securities.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Senior Indenture with respect
to the Senior Debt Securities of any series; (1) failure to pay interest on any
Senior Debt Security of that series when due, continued for 30 days; (2) failure
to pay the principal of (or premium, if any, on) any Senior Debt Security of
that series when due and payable at Maturity, upon redemption or otherwise; (3)
failure to observe or perform any other covenant, warranty or agreement
contained in the Senior Debt Securities of that series or in the Senior
Indenture (other than a covenant, agreement or warranty included in the Senior
Indenture solely for the benefit of Senior Debt Securities other than that
series), continued for a period to 60 days after notice has been given to the
Company by the Trustee or Holders of at least 25% in aggregate principal amount
of the Outstanding Senior Debt Securities of that series; (4) failure to pay at
final maturity, or acceleration of, Indebtedness of the Company having an
aggregate principal amount of more than 1% of the Company's consolidated total
assets (determined as of its most recent fiscal year-end), unless cured within
10 days after notice has been given to the Company by the Trustee or Holders of
at least 10% in aggregate principal amount of the Outstanding Senior Debt
Securities of that series; (5) prior to the Release Date, the occurrence of a
default under the Mortgage Indenture, of which default the Mortgage Trustee or
the Holders of a majority in aggregate principal amount of the outstanding
Senior Debt Securities have given written notice to the Mortgage Trustee; (6) if
any Substituted Collateral Bonds are outstanding, the occurrence of a default
under the Substituted Mortgage, of which default the trustee under such
Substituted Mortgage or the Holders of a majority in aggregate principal amount
of the outstanding Senior Debt Securities have given written notice to the
Senior Trustee; (7) certain events of bankruptcy, insolvency or reorganization
relating to the Company; and (8) any other Event of Default with respect to the
Senior Debt Securities of that series specified in the Prospectus Supplement
relating thereto or Supplemental Indenture under which such series of Senior
Debt Securities is issued.
The Senior Indenture provides that the Trustee shall, within 30 days after
the occurrence of any Default or Event of Default with respect to Senior Debt
Securities of any series, give the Holders of Senior Debt Securities of that
series notice of all uncured Defaults or Events of Default known to it (the term
"Default" includes any event which after notice or passage of time or both would
be an Event of Default); provided, however, that, except in the case of an Event
of Default or a Default in payment on any Senior Debt Securities of any series,
the Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee or directors or responsible officers
of the Trustee in good faith determine that the withholding of such notice is in
the interest of the Holders of Senior Debt Securities of that series.
If an Event of Default with respect to Senior Debt Securities of any series
(other than due to events of bankruptcy, insolvency or reorganization) occurs
and is continuing, the Trustee or the Holders of at least 25% in aggregate
principal amount of the Outstanding Senior Debt Securities of that series, by
notice in writing to the Company (and to the Trustee if given by the Holders of
at least 25% in aggregate principal amount of the Senior Debt Securities of that
series), may declare the unpaid principal of and accrued interest to the date of
acceleration on all the Outstanding Senior Debt Securities of that series to
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be due and payable immediately and, upon any such declaration, the Senior Debt
Securities of that series shall become immediately due and payable.
If an Event of Default occurs due to bankruptcy, insolvency or
reorganization, all unpaid principal of and accrued interest on the Outstanding
Senior Debt Securities of any series will become immediately due and payable
without any declaration or other act on the part of the Trustee or any Holder of
any Senior Debt Security of that series. Upon any acceleration of the Senior
Debt Securities prior to the Release Date, the Senior Trustee is empowered to
cause the mandatory redemption of the Collateral Bonds or Substituted Collateral
Bonds, as the case may be.
Any such declaration with respect to Senior Debt Securities of any series
may be annulled and past Events of Default and Defaults (except, unless
theretofore cured, an Event of Default or a Default in payment of principal of
or interest on the Senior Debt Securities of that series) may be waived by the
Holders of a majority of the principal amount of the Outstanding Senior Debt
Securities, upon the conditions provided in the Senior Indenture. For purposes
of the provisions described herein, the Company may cure an Event of Default or
Default in payment of principal or interest on the Senior Debt Securities at any
time after an acceleration of the Senior Debt Securities has been declared, but
before a judgment or decree for the immediate payment of the principal amount of
the Senior Debt Securities has been obtained, and, prior to the Release Date, so
long as all first mortgage bonds have not been accelerated, if the Company pays
or deposits with the Trustee a sum sufficient to pay all matured installments of
interest, the principal and any premium which has become due otherwise than by
acceleration and any other amounts due the Trustee, and all defaults shall have
been cured or waived, then such payment or deposit will cause an automatic
rescission and annulment of the acceleration of the Senior Debt Securities.
The Senior Indenture provides that the Company shall periodically file
statements with the Trustee regarding compliance by the Company with certain of
the respective covenants thereof and shall specify any Event of Default or
Defaults with respect to Senior Debt Securities of any series, in performing
such covenants, of which the signers may have knowledge.
MODIFICATION OF THE SENIOR INDENTURE; WAIVER
The Senior Indenture may be modified by the Company and the Trustee without
the consent of any Holders with respect to certain matters, including (i) to
cure any ambiguity, defect or inconsistency or to correct or supplement any
provision which may be inconsistent with any other provision of the Senior
Indenture and (ii) to make any change that does not materially adversely affect
the interests of any Holder of Senior Debt Securities of any series. In
addition, under the Senior Indenture, certain rights and obligations of the
Company and the rights of Holders of the Senior Debt Securities may be modified
by the Company and the Trustee with the written consent of the Holders of at
least a majority in aggregate principal amount of the Outstanding Senior Debt
Securities of each series affected thereby; but no extension of the maturity of
any Senior Debt Securities of any series, reduction in the interest rate or
extension of the time for payment of interest, change in the optional redemption
or repurchase provisions in a manner adverse to any Holder of Senior Debt
Securities of any series, modification that would adversely impair the interest
of the Senior Trustee in the Collateral Bonds held by it or, prior to the
Release Date, reduce the principal amount of any issue of Collateral Bonds
securing the Senior Debt Securities to an amount less than the principal amount
of the related issue of Senior Debt Securities or alter the payment provisions
of such Collateral Bonds in a manner adverse to the holders of the Senior Debt
Securities, other modification in the terms of payment of the principal of, or
interest on, any Senior Debt Securities of any series, or reduction of the
percentage required for modification, will be effective against any Holder of
any Outstanding Senior Debt Security of any series affected thereby without the
Holder's consent. The Senior Indenture does not limit the aggregate amount of
Senior Debt Securities of the Company which may be issued thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Senior Debt Securities of any series may on behalf of the Holders of all Senior
Debt Securities of that series waive, insofar as that series is concerned,
compliance by the Company with certain restrictive covenants of the Senior
Indenture.
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The Holders of not less than a majority in aggregate principal amount of the
Outstanding Senior Debt Securities of any series may on behalf of the Holders of
all Senior Debt Securities of that series waive any past Event of Default or
Default under the Senior Indenture with respect to that series, except an Event
of Default or a Default in the payment of the principal of, or premium, if any,
or any interest on any Senior Debt Security of that series or in respect of a
provision which under the Senior Indenture cannot be modified or amended without
the consent of the Holder of each Outstanding Senior Debt Security of that
series affected.
DEFEASANCE
The Company may terminate its substantive obligations in respect of the
Senior Debt Securities of any series (except for its obligations to pay the
principal of (and premium, if any, on) and the interest on the Senior Debt
Securities of that series) by (i) depositing with the Trustee, under the terms
of an irrevocable trust agreement, money or U.S. Government Obligations
sufficient to pay all remaining indebtedness on the Senior Debt Securities of
that series, (ii) delivering to the Trustee either an Opinion of Counsel or a
ruling directed to the Trustee from the Internal Revenue Service to the effect
that the Holders of the Senior Debt Securities of that series will not recognize
income, gain or loss for federal income tax purposes as a result of such deposit
and termination of obligations, and (iii) complying with certain other
requirements set forth in the Senior Indenture.
VOTING OF COLLATERAL BONDS HELD BY SENIOR TRUSTEE
The Senior Trustee, as holder of Collateral Bonds, will attend any meeting
of holders of First Mortgage Bonds under the Mortgage Indenture, as to which it
receives due notice, or, at its option, will deliver its proxy in connection
therewith. Either at such meeting, or otherwise where the consent of holders of
First Mortgage Bonds is sought without a meeting, the Senior Trustee will vote
all of the Collateral Bonds held by it, or will consent with respect thereto, as
directed by the holders of a majority in aggregate principal amount of the
outstanding Senior Debt Securities; provided, however, that the Senior Trustee
shall not be required to vote the Collateral Bonds of any particular issue in
favor of, or give consent to, any action except upon notification by the Senior
Trustee to the holders of the related issue of Senior Debt Securities of such
proposal and consent thereto of the holders of a majority in principal amount of
the outstanding Senior Debt Securities of such issue.
CONCERNING THE SENIOR TRUSTEE
Citibank is the Senior Trustee under the Senior Indenture. Citibank is also
Trustee under the Mortgage Indenture and a depositary of funds of the Company.
See "Description of the First Mortgage Bonds -- Concerning the Secured
Trustees."
BOOK-ENTRY SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Senior Debt Securities of a series may be issued in whole or in part in the form
of one or more Global Securities (as such term is defined below) that will be
deposited with, or on behalf of, a depositary ("Depositary") or its nominee
identified in the applicable Prospectus Supplement. In such a case, one or more
Global Securities will be issued in a denomination or aggregate denomination
equal to the portion of the aggregate principal amount of outstanding Senior
Debt Securities of the series to be represented by such Global Security or
Global Securities. Unless and until it is exchanged in whole or in part for
Senior Debt Securities in registered form, a Global Security may not be
registered for transfer or exchange except as a whole by the Depositary for such
Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor Depositary or a nominee of such
successor Depositary and except in the circumstances described in the applicable
Prospectus Supplement. The term "Global Security", when used with respect to any
series of Senior Debt Securities, means a Security that is executed by the
Company and authenticated and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, which shall be
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registered in the name of the Depositary or its nominee and which shall
represent, and shall be denominated in an amount equal to the aggregate
principal amount of, all of the Outstanding Securities of such series or any
portion thereof, in either case having the same terms, including, without
limitation, the same original issue date, date or dates on which principal is
due, and interest rate or method of determining interest.
The specific terms of the depositary arrangement with respect to any
portion of a series of Senior Debt Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement. The Company
expects that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Senior
Debt Securities which are to be represented by a Global Security to be deposited
with or on behalf of a Depositary will be represented by a Global Security
registered in the name of such Depositary or its nominee. Upon the issuance of
such Global Security, and the deposit of such Global Security with or on behalf
of the Depositary for such Global Security, the Depositary will credit, on its
book-entry registration and transfer system, the respective principal amounts of
the Senior Debt Securities represented by such Global Security to the accounts
of institutions that have accounts with such Depositary or its nominee
("participants"). The accounts to be credited will be designated by the
underwriters or agents of such Senior Debt Securities or, if such Senior Debt
Securities are offered and sold directly by the Company, by the Company.
Ownership of beneficial interests in such Global Security will be limited to
participants or Persons that may hold interests through participants. Ownership
of beneficial interests by participants in such Global Security will be shown
on, and the transfer of that ownership interest will be effected only through,
records maintained by the Depositary or its nominee for such Global Security.
Ownership of beneficial interests in such Global Security by Persons that hold
through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as the Depositary for a Global Security, or its nominee, is the registered owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or Holder of the Senior Debt Securities
represented by such Global Security for all purposes under the Senior Indenture.
Unless otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have Senior
Debt Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
Senior Debt Securities of such series in certificated form and will not be
considered the Holders thereof for any purposes under the Senior Indenture.
Accordingly, each Person owning a beneficial interest in such Global Security
must rely on the procedures of the Depositary and, if such Person is not a
participant, on the procedures of the participant through which such Person owns
its interest, to exercise any rights of a Holder under the Senior Indenture. The
Company understands that under existing industry practices, if the Company
requests any action of Holders or an owner of a beneficial interest in such
Global Security desires to give any notice or take any action a Holder is
entitled to give or take under the Senior Indenture, the Depositary would
authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
DESCRIPTION OF THE FIRST MORTGAGE BONDS
The following summaries of certain provisions of the First Mortgage Bonds
and the Mortgage Indenture do not purport to be complete and are subject to, and
are qualified in their entirety by express
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reference to, all the provisions of the Mortgage Indenture, including the
definitions therein of certain terms. Certain capitalized terms herein are
defined in the Mortgage Indenture.
GENERAL
Prior to the Release Date, any series of First Mortgage Bonds issued as
Collateral Bonds will be issued to the Senior Trustee. Each issue of such
Collateral Bonds to the Senior Trustee will be in a principal amount equal to
the principal amount of the Senior Debt Securities issued contemporaneously with
such Collateral Bonds. Prior to the Release Date, the Company shall make
payments of the principal of, and premium or interest on, each series of
Collateral Bonds to the Senior Trustee, which payments shall be applied by the
Senior Trustee to satisfaction of all obligations then due on the related series
of Senior Debt Securities. The Collateral Bonds will be exchangeable for a like
aggregate principal amount of Collateral Bonds of the same series of other
authorized denominations at the office of the Secured Trustees in New York, New
York.
SECURITY AND PRIORITY
The Mortgage 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 Mortgage
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 Mortgage Indenture
consists principally of cash (unless deposited with the Mortgage Trustee under
the Mortgage Indenture), accounts receivable, gas stored in reservoirs except to
the extent specially pledged, materials and supplies, securities, vehicles and
leases.
The Mortgage Indenture does not contain any debt covenants or provisions
which would afford holders of First Mortgage Bonds protection in the event of a
highly leveraged transaction.
The First Mortgage 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 First Mortgage 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 Mortgage 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
Citibank 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 (whichever shall be greater).
ISSUANCE OF ADDITIONAL FIRST MORTGAGE BONDS
Additional First Mortgage Bonds may be issued under the Mortgage 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);
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(2) the sum of the principal amount of First Mortgage 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 Citibank for such purpose.
First Mortgage Bonds may be issued on the basis of net property additions
which include substantially all utility property subject to the Mortgage
Indenture 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 First Mortgage Bonds and any prior lien bonds.
Such earnings requirement need not be met where First Mortgage Bonds are to be
issued against First Mortgage Bonds or prior lien bonds which have been or are
being retired as described in (2) above if the First Mortgage Bonds to be issued
bear interest at a lower rate than the First Mortgage Bonds or prior lien bonds
which have been or are to be retired, or if the proceeds from the First Mortgage
Bonds to be issued are used to refund First Mortgage Bonds or prior lien bonds
which have been retired within two years prior to such issuance unless
additional First Mortgage Bonds requiring an earnings certificate have been
issued in the period between the retirement of the retired First Mortgage Bonds
and the issuance of the First Mortgage Bonds.
As of March 31, 1998, MichCon had approximately $1.235 billion of unbonded
net property additions, which would entitle it to issue approximately $864
million principal amount of additional First Mortgage Bonds on the basis of
unbonded net property additions as discussed under (1) in the second preceding
paragraph.
WITHDRAWAL OF CERTAIN CASH
Cash deposited with the Mortgage Trustee as a basis for the issuance of
additional First Mortgage Bonds may be withdrawn by MichCon in amounts described
in (1) and (2) under "Issuance of Additional Bonds".
DEFEASANCE
The Company may require the discharge of the Mortgage Indenture or treat a
series of First Mortgage Bonds as no longer outstanding thereunder if: (1) the
Company deposits with Citibank 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, as
amended, applicable laws are not violated, and such discharge will not result in
a taxable event with respect to the First Mortgage 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 First Mortgage Bonds shall be completely discharged.
Thereafter, the holders of such First Mortgage Bonds shall be entitled to
payment only out of funds on deposit with Citibank as aforesaid for their
payment.
MODIFICATION OF MORTGAGE INDENTURE
In general, modifications or alterations of the Mortgage Indenture and of
the rights or obligations of the Company and of the holders of First Mortgage
Bonds, as well as waivers of compliance with the Mortgage Indenture, may be made
with the consent of holders of 60% of the First Mortgage Bonds, or, if less than
all series of the First Mortgage Bonds are adversely affected, the consent of
the holders of 60% of the First Mortgage 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 First Mortgage 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 First Mortgage Bond, or
affect the right of any holder of First Mortgage Bonds to institute suit for the
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enforcement of any such payment on or after the due date thereof, (2) otherwise
than as permitted by the Mortgage Indenture, permit the creation of any lien
ranking prior or equal to the lien of the Mortgage Indenture with respect to any
of the mortgaged properties or (3) permit the reduction of the percentage of
First Mortgage Bonds required for the making of any such modification,
alteration or waiver.
CONCERNING THE SECURED TRUSTEES
Citibank is the Mortgage Trustee under the Mortgage Indenture. Citibank has
acted as paying agent on the outstanding First Mortgage Bonds and will act in
the same capacity with respect to any additional First Mortgage Bonds issued
under the Mortgage Indenture. It is also a depositary of funds of the Company.
Robert T. Kirchner, Individual Trustee under the Mortgage Indenture, is an
Officer of Citibank. Citibank also serves as trustee for the Senior Debt
Securities.
DEFAULT AND NOTICE THEREOF TO HOLDERS OF FIRST MORTGAGE BONDS
The Mortgage Indenture provides that, in case of an event of default as
defined therein, Citibank or the holders of not less than 25% in principal
amount of the First Mortgage Bonds may declare the principal and all accrued and
unpaid interest of all First Mortgage Bonds, if not already due, to be
immediately due and payable. Citibank, upon request of the holders of a majority
in principal amount of the outstanding First Mortgage 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 First Mortgage Bonds shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Secured Trustees and of exercising any power or trust
conferred upon the Secured Trustees, but under certain circumstances, the
Secured Trustees may decline to follow such directions or to exercise certain of
their powers.
Holders of First Mortgage Bonds have no right to enforce any remedy under
the Mortgage Indenture unless the Secured Trustees have first had a reasonable
opportunity to do so following notice of default to Citibank and request by the
holders of 25% in principal amount of the First Mortgage Bonds for action by the
Secured Trustees with offer of indemnity satisfactory to the Secured Trustees
against cost, expenses and liabilities that may be incurred thereby, but this
provision does not impair the absolute right of any holder of First Mortgage
Bonds to enforce payment of the principal of and interest on his First Mortgage
Bond when due.
The Mortgage Indenture provides that the following shall constitute events
of default: failure to pay any installment of interest on any First Mortgage
Bond when due and payable, and continuance of such failure for 60 days; failure
to pay the principal of any First Mortgage 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 First Mortgage 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 Mortgage Indenture
or in the First Mortgage Bonds or any prior lien bonds, continuance of such
failure for 90 days after written notice to the Company by Citibank or by the
holders of not less than 25% in principal amount of the First Mortgage 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 Mortgage Indenture provides that the Secured Trustees shall give to the
holders of First Mortgage Bonds 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 First Mortgage Bonds or in the payment of any sinking
fund installment, the Secured Trustees may
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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 Citibank
in good faith determine that the withholding of such notice is in the interest
of the holders of First Mortgage Bonds.
PLAN OF DISTRIBUTION
The Company may sell any series of the Senior Debt Securities (i) to or
through underwriters; (ii) to or through dealers; (iii) directly to purchasers;
or (iv) through agents. A Prospectus Supplement will set forth the terms of the
offering of the Senior Debt Securities; including the name or names of any
underwriters, dealers or agents, the purchase price of such Senior Debt
Securities and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting underwriters' or agents' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchange on which such Senior
Debt Securities 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 Senior Debt Securities 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 Senior Debt
Securities, will not be purchasing any such Senior Debt Securities from the
Company and will have no direct or indirect participation in the underwriting or
other distribution of such Senior Debt Securities, although it may participate
in the distribution of such Senior Debt Securities under circumstances entitling
it to a dealer's commission.
If underwriters are used in the sale, the Senior Debt Securities 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 Senior Debt Securities may be offered to the public either through
underwriting syndicates represented by one or more managing underwriters or
directly by one or more underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Senior Debt Securities will be
named in the Prospectus relating to such offering and, if an underwriting
syndicate is used, the managing underwriter or underwriters will be set forth on
the cover of such Prospectus Supplement. Unless otherwise set forth in the
Prospectus Supplement, the obligations of the underwriters to purchase the
Senior Debt Securities offered thereby will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all of such Senior
Debt Securities if any are purchased.
The Senior Debt Securities may be sold directly by the Company or through
agents 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 Senior
Debt Securities 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.
The Senior Debt Securities may be sold directly by the Company to investors
or others who may be deemed to be underwriters within the meaning of the 1933
Act with respect to any resale thereof. The terms of any such sales will be
described in the Prospectus Supplement relating thereto.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers from certain types of
institutions to purchase the Senior Debt Securities from the Company at the
public offering price set forth in the Prospectus Supplement pursuant to delayed
delivery contracts providing for payment and delivery on a specified date in the
future. Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement, and the Prospectus Supplement will set forth the
commission payable for solicitation of such contracts.
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 1933 Act, or to contribution with
respect to payments which such underwriters, dealers or agents may be required
to
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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.
The Senior Debt Securities may or may not be listed on a national
securities exchange. No assurance can be given that there will be a market for
the Senior Debt Securities.
VALIDITY OF SECURITIES
The validity of the Senior Debt Securities offered hereby will be passed
upon for the Company by Ronald E. Christian, Esq., Vice President, General
Counsel and Secretary of MichCon and for any agents or underwriters by LeBoeuf,
Lamb, Greene & MacRae, L.L.P., a limited liability partnership including
professional corporations, 125 West 55th Street, New York, New York. LeBoeuf,
Lamb, Greene & MacRae, L.L.P. from time to time renders legal services to
MichCon and its affiliates. Certain legal matters with respect to the Senior
Debt Securities will be passed upon for the Company by Skadden, Arps, Slate,
Meagher & Flom LLP, New York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from MichCon's Form 10-K
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
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