<PAGE>
PROSPECTUS
3,000,000 SHARES
CMS ENERGY CORPORATION
COMMON STOCK
This Prospectus relates to 3,000,000 shares of common stock, par
value $.01 per share (the "CMS Energy Common Stock"), which may be offered
and issued by CMS Energy Corporation ("CMS Energy" or the "Company") from
time to time in connection with acquisitions of other businesses or
properties.
It is anticipated that such acquisitions will consist principally of
businesses (or the assets thereof) complementary to and related to the
Company's current businesses. The consideration for acquisitions will
consist of shares of CMS Energy Common Stock, cash, notes or other
evidences of indebtedness, guarantees, assumption of liabilities or a
combination thereof, as determined from time to time by negotiations
between the Company and the owners or controlling persons of the
businesses or properties to be acquired. In addition, the Company may
lease property from and enter into management or consulting agreements and
non-competition agreements with the former owners and key executive
personnel of the businesses to be acquired.
It is contemplated that the terms of an acquisition will be
determined by negotiations between the Company's representatives and the
owners or controlling persons of the businesses or properties to be
acquired. Factors taken into account in acquisitions include, among other
relevant factors, the quality and reputation of the business, its
management and personnel, earning power, cash flow, growth potential,
patents, licenses, equipment, locations of the business to be acquired and
the market value of the CMS Energy Common Stock when pertinent. It is
anticipated that shares of CMS Energy Common Stock issued in any such
acquisition will be valued at a price reasonably related to the current
market value of the CMS Energy Common Stock, either at the time the terms
of the acquisition are tentatively agreed upon, or at or about the time of
closing, or during the period or periods prior to delivery of the shares.
The CMS Energy Common Stock offered hereby is expected to be listed
on the New York Stock Exchange.
________________
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 30, 1995.<PAGE>
<PAGE> 2
It is not expected that underwriting discounts or commissions will
be paid by CMS Energy except that finders fees may be paid to persons from
time to time in connection with specific acquisitions. Any person
receiving any such fees may be deemed to be an underwriter within the
meaning of the Securities Act of 1933.
No person is authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made,
such information or representation should not be relied upon as having
been authorized by the Company. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to purchase, the securities
offered by this Prospectus in any jurisdiction in which, or to or from any
person to or from whom, it is unlawful to make such an offer, or
solicitations of an offer. Neither the delivery of this Prospectus nor
any distribution of the securities offered pursuant to this Prospectus
shall, under any circumstances, create any implication that there has been
no change in the information set forth herein or in the affairs of the
Company since the date of this Prospectus or that the information herein
is correct as of any time subsequent to its date.
____________________<PAGE>
<PAGE> 3
AVAILABLE INFORMATION
CMS Energy is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's Regional Offices located at 500 West Madison, 14th Floor,
Chicago, Illinois 60661 and at 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such materials can be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The CMS Energy Common Stock
is listed on the New York Stock Exchange and reports, proxy statements and
other information concerning CMS Energy may also be inspected and copied
at the offices of such exchange at 20 Broad Street, New York, New York
10005.
____________________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by CMS Energy with the Commission
(File No. 1-9513) pursuant to the Exchange Act are hereby incorporated by
reference in this Prospectus and shall be deemed to be a part hereof:
(1) CMS Energy's Annual Report on Form 10-K for the year ended
December 31, 1994;
(2) CMS Energy's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1995;
(3) CMS Energy's Current Report on Form 8-K dated January 10,
1995; and
(4) CMS Energy's Current Report on Form 8-K dated February 2,
1995.
All documents subsequently filed by CMS Energy pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference herein and shall be deemed to be a part hereof
from the date of filing of such documents (such documents, and the
documents enumerated above, being hereinafter referred to as "Incorporated
Documents").
Any statement contained in an Incorporated Document shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
AS INDICATED ABOVE, THIS PROSPECTUS INCORPORATES DOCUMENTS BY
REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
CMS ENERGY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING
ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, UPON 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 IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO SUCH DOCUMENTS). REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO
CMS ENERGY CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICES LOCATED AT
FAIRLANE PLAZA SOUTH, SUITE 1100, 330 TOWN CENTER DRIVE, DEARBORN,
MICHIGAN 48126, ATTENTION: INVESTOR RELATIONS DEPARTMENT, TELEPHONE:
(517) 788-2590. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY FIVE BUSINESS DAYS PRIOR TO THE DATE TO WHICH
THE FINAL INVESTMENT DECISION MUST BE MADE.
Certain information contained in this Prospectus summarizes, is
based upon, or refers to information and financial statements contained in
one or more Incorporated Documents; accordingly, such information
contained herein is qualified in its entirety by reference to such
documents and should be read in conjunction therewith.
____________________
TABLE OF CONTENTS
Page Page
Available Information . . . 3 Dividends and Price Range of
Incorporation of Certain CMS Energy Common Stock . . 7
Documents by Reference . . 3 Selected Consolidated
The Company . . . . . . . . 5 Financial Data . . . . . . . 8
Offered Securities . . . . . 6 Description of Capital
Use of Proceeds . . . . . . 6 Stock . . . . . . . . . . . 9
Legal Opinions . . . . . . . . 14
Experts . . . . . . . . . . . 14
____________________<PAGE>
<PAGE> 5
THE COMPANY
CMS Energy, incorporated in 1987, is the parent holding company of
Consumers Power Company ("Consumers") and CMS Enterprises Company
("Enterprises"). Consumers, a combination electric and gas utility
company serving most of Michigan's Lower Peninsula, is CMS Energy's
largest subsidiary. Consumers' customer base includes a mix of
residential, commercial and diversified industrial customers, the largest
of which is the automotive industry. Enterprises is engaged in several
non-utility energy-related businesses including: (i) oil and gas
exploration and production, (ii) development and operation of independent
power production facilities, (iii) gas marketing services to utility,
commercial and industrial customers and (iv) transmission and storage of
natural gas.
CMS Energy conducts its principal operations through the following
five business segments: (i) electric utility operations; (ii) natural gas
utility operations; (iii) gas transmission and marketing; (iv) oil and gas
exploration and production operations; and (v) independent power
production. Consumers or Consumers' subsidiaries are engaged in two
segments: electric operations and gas operations. Consumers' electric
and gas businesses are principally regulated utility operations.
At December 31, 1994, CMS Energy had total consolidated assets of
$7,384 million. CMS Energy's 1994 consolidated operating revenue was
$3,619 million. This consolidated operating revenue was derived from
Consumers' sales of electric energy (approximately 61% or $2,189 million),
Consumers' gas operations (approximately 32% or $1,151 million), gas
transmission and marketing (approximately 4% or $145 million), oil and gas
exploration and production activities (approximately 2% or $85 million)
and independent power production activities (approximately 1% or $45
million). Consumers' consolidated operations in the electric and gas
utility businesses account for the major share of CMS Energy's total
assets, revenue and income. CMS Energy's share of 1994 unconsolidated
non-utility independent power production revenue was $385 million.
On May 30, 1995, Nomeco Oil & Gas Co. ("NOMECO"), an indirect
wholly-owned subsidiary of CMS Energy, executed a non-binding letter of
intent which calls for a newly formed subsidiary of CMS Energy to merge
with and into Terra Energy, Ltd., a Michigan corporation ("Terra"),
thereby making Terra a wholly-owned subsidiary of CMS Energy. Terra is a
privately held corporation primarily engaged in U.S. gas and oil
exploration and production and activities related thereto. Terra's
principal office is located at Traverse City, Michigan. It is possible
that this transaction may be completed in the future. In such event, the
Company intends to use shares of CMS Energy Common Stock registered
hereunder for such acquisition. The letter of intent contemplates that
the holders of Terra common stock would receive shares of CMS Energy
Common Stock with an aggregate market value of approximately $58.5
million. If consummated, this acquisition would not be material to
CMS Energy.
The foregoing information concerning CMS Energy and its subsidiaries
does not purport to be comprehensive. For additional information
concerning CMS Energy and its subsidiaries' business and affairs,
including their capital requirements and external financing plans, pending
legal and regulatory proceedings and descriptions of certain laws and
regulations to which those companies are subject, prospective purchasers
should refer to the Incorporated Documents. See "Incorporation of Certain
Documents by Reference."
OFFERED SECURITIES
The securities of CMS Energy which may be offered from time to time
by this Prospectus consist of up to 3,000,000 shares of CMS Energy Common
Stock, which CMS Energy proposes to issue in connection with acquisitions
of other businesses or properties. The CMS Energy Common Stock to be
issued hereunder will be freely transferable under the Securities Act of
1933, as amended (the "Securities Act"), except for shares of CMS Energy
Common Stock issued in connection with an acquisition to any person deemed
to be an affiliate of any acquired company for purposes of Rule 145 under
the Securities Act at the time of any such acquisition. Generally, such
affiliates may not sell their shares of CMS Energy Common Stock acquired
in connection with an acquisition except pursuant to an effective
registration statement under the Securities Act covering such shares, or
in compliance with Rule 145 under the Securities Act or another applicable
exemption from the registration requirements of the Securities Act.
The consideration for any acquisition may consist of cash, notes or
other evidences of debt, assumptions of liabilities, equity securities, or
a combination thereof, as determined from time to time by negotiations
between CMS Energy and the owners of businesses or properties to be
acquired. CMS Energy will attempt to make acquisitions which are
complementary to its present operations. In general, the terms of any
acquisitions will be determined by direct negotiations between the
representatives of CMS Energy and the owners of the businesses or
properties to be acquired or, in the case of entities more widely held,
through exchange offers to stockholders or documents soliciting approval
of statutory mergers, consolidations or sales of assets. Underwriting
discounts or commissions will generally not be paid by CMS Energy.
However, under some circumstances, the Company may issue CMS Energy Common
Stock covered by this Prospectus to pay brokers' commissions incurred in
connection with acquisitions.
USE OF PROCEEDS
This Prospectus relates to shares of CMS Energy Common Stock which
may be offered and issued by the Company from time to time in the
acquisition of other businesses or properties. Other than the business or
properties acquired, there will be no proceeds to the Company from these
offerings.
____________________<PAGE>
<PAGE> 7
DIVIDENDS AND PRICE RANGE OF CMS ENERGY COMMON STOCK
CMS Energy Common Stock is listed on the New York Stock Exchange
under the symbol "CMS". CMS Energy has paid dividends on its Common Stock
each year since its inception except 1988. Future dividends will depend
upon CMS Energy's earnings, financial condition and other factors.
Reference is made to "Description of Capital Stock" regarding limitations
upon payment of dividends on the Company's Common Stock.
The following table indicates the high and low sales prices of the
CMS Energy Common Stock for the calendar quarters indicated, as reported
in The Wall Street Journal under "New York Stock Exchange Composite
Transactions," and the quarterly cash dividends declared per share of the
CMS Energy Common Stock, for the calendar quarters indicated.
Common Stock
Calendar Period High Low Dividend
1990
First Quarter . . . . . . . . . $38 1/2 $31 3/8 $.10
Second Quarter . . . . . . . . . 32 1/2 27 1/4 .10
Third Quarter . . . . . . . . . 33 25 1/2 .10
Fourth Quarter . . . . . . . . . 28 3/4 24 7/8 .12
1991
First Quarter . . . . . . . . . $33 $26 1/2 $.12
Second Quarter . . . . . . . . . 30 3/4 23 3/4 .12
Third Quarter . . . . . . . . . 25 7/8 18 .12
Fourth Quarter . . . . . . . . . 19 3/4 16 5/8 .12
1992
First Quarter . . . . . . . . . $22 3/4 $17 7/8 $.12
Second Quarter . . . . . . . . . 21 7/8 14 7/8 .12
Third Quarter . . . . . . . . . 17 1/2 15 1/4 .12
Fourth Quarter . . . . . . . . . 18 3/8 16 3/4 .12
1993
First Quarter . . . . . . . . . $20 7/8 $17 7/8 $.12
Second Quarter . . . . . . . . . 25 1/2 19 1/2 .12
Third Quarter . . . . . . . . . 27 1/2 24 7/8 .18
Fourth Quarter . . . . . . . . . 27 1/8 23 .18
1994
First Quarter . . . . . . . . . $25 $21 1/8 $.18
Second Quarter . . . . . . . . . 22 7/8 19 5/8 .18
Third Quarter . . . . . . . . . 23 3/8 20 5/8 .21
Fourth Quarter . . . . . . . . . 23 1/4 20 7/8 .21
1995
First Quarter . . . . . . . . . $24 3/4 $22 5/8 $.21
Second Quarter (through June 2,
1995) . . . . . . . . . . . . . 24 7/8 22 1/2 .21
On June 2, 1995, the closing price of the CMS Energy Common Stock on
The New York Stock Exchange was $24 3/4 per share. On June 2, 1995, there
were 61,986 record holders of CMS Energy Common Stock.<PAGE>
<PAGE> 8
SELECTED CONSOLIDATED FINANCIAL DATA
The following is a summary of certain financial information of the
Company and its consolidated subsidiaries and is qualified in its entirety
by, and should be read in conjunction with, the detailed information and
consolidated financial statements, including notes thereto, included in
the Company's Annual Report on Form 10-K for the year ended December 31,
1994, and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995. The unaudited consolidated interim period financial
statement includes, in the opinion of the Company's management, all
adjustments necessary to present fairly the data for such period. The
results of operations for interim periods are not necessarily indicative
of results to be achieved for full fiscal years..
<TABLE>
<CAPTION>
Three Months Ended
Ended March 31, Year Ended December 31,
1995 1994 1994 1993 1992 1991 1990
(unaudited) (In Millions, Except Per Share Amounts)
<C> <S> <S> <S> <S> <S> <S> <S>
Income Statement Data:
Operating Revenue . . . . . . . . . . . $ 1,119 $ 1,142 $ 3,619 $ 3,482 $ 3,146 $ 2,998 $ 3,028
Pretax operating income . . . . . . . . $ 206 $ 175 $ 504 $ 439 $ 231 $ 261 $ 506
Net income (loss) (1) . . . . . . . . . $ 86 $ 78 $ 179 $ 155 $ (297) $ (276) $ (494)
Earnings (loss) per average common
share (1) . . . . . . . . . . . . . . $ .99 $ .92 $ 2.09 $ 1.90 $ (3.72) $ (3.44) $ (6.07)
Average common shares outstanding
(in thousands) . . . . . . . . . . . . 86,918 85,302 85,888 81,251 79,877 79,988 81,339
Cash dividends declared per common
share . . . . . . . . . . . . . . . . $ .21 $ .18 $ .78 $ .60 $ .48 $ .48 $ .42
Balance Sheet Data:
Net plant and property . . . . . . . . . $ 4,826 $ 4,602 $ 4,814 $ 4,583 $ 4,326 $ 4,121 $ 4,033
Total assets . . . . . . . . . . . . . . $ 7,344 $ 6,825 $ 7,384 $ 6,964 $ 6,848 $ 6,194 $ 7,917
Long-term debt, excluding current
maturities . . . . . . . . . . . . . . $ 2,787 $ 2,376 $ 2,709 $ 2,405 $ 2,725 $ 1,941 $ 3,321
Notes payable . . . . . . . . . . . . . $ 135 -- $ 339 $ 259 $ 215 $ 708 $ 337
Other liabilities . . . . . . . . . . . $ 2,857 $ 3,051 $ 2,873 $ 3,171 $ 3,018 $ 2,322 $ 2,701
Preferred stock of subsidiary . . . . . $ 356 $ 356 $ 356 $ 163 $ 163 $ 163 $ 156
Common stockholders' equity . . . . . . $ 1,209 $ 1,042 $ 1,107 $ 966 $ 727 $ 1,060 $ 1,420
<FN>
(1) Amount in 1991 included an extraordinary loss of $14 million, after tax or $.18 per average common share.
</TABLE>
<PAGE>
<PAGE> 9
DESCRIPTION OF CAPITAL STOCK
The following outline of certain rights of the holders of CMS Energy
capital stock does not purport to be complete and is qualified in its
entirety by express reference to Article III of the Restated Articles of
Incorporation of CMS Energy (the "Articles of Incorporation"), the
CMS Energy Indenture dated as of September 15, 1992, as amended and
supplemented (the "Senior Debt Indenture") to NBD Bank, N.A., as Trustee,
the Credit Agreement dated as of July 29, 1994 (the "Credit Facility")
among CMS Energy, Citibank, N.A. and Union Bank, as co-agents, and certain
banks named therein, and CMS Energy's Indenture dated as of January 15,
1994 (the "GTN Indenture") to The Chase Manhattan Bank, N.A., as Trustee,
copies of which are filed as exhibits to the Registration Statement of
which this Prospectus is a part.
General
The Articles of Incorporation currently authorize 320 million shares
of capital stock, of which 250 million are shares of CMS Energy Common
Stock, par value $.01 per share, 60 million are shares of Class G Common
Stock, no par value ("Class G Common Stock"), and 10 million are shares of
preferred stock, $.01 par value ("Preferred Stock"). The CMS Energy
Common Stock and the Class G Common Stock are together referred to herein
as the "Common Stock." As of June 2, 1995, 88,079,758 shares of
CMS Energy Common Stock were issued and outstanding and there were no
shares of Preferred Stock or Class G Common Stock issued or outstanding.
The outstanding shares of the CMS Energy Common Stock are fully paid and
non-assessable, and the additional CMS Energy Common Stock offered hereby,
when issued and paid for, will be fully paid and non-assessable.
The shares of Common Stock may be issued from time to time as the
Board of Directors shall determine for such consideration as shall be
fixed by the Board of Directors.
Class G Common Stock is intended to reflect the separate performance
of the gas distribution, storage and transportation businesses conducted
by Consumers and Michigan Gas Storage, a subsidiary of Consumers (such
businesses, collectively, will be attributed to the "Consumers Gas
Group"). Effective January 1, 1995, the management and operations of the
Consumers Gas Group were reorganized as a business unit separate from the
electric utility operations of the Consumers. The existing CMS Energy
Common Stock will continue to be outstanding and, if and after any shares
of Class G Common Stock were issued by CMS Energy, will reflect the
performance of all of the businesses of CMS Energy and its subsidiaries,
including the business of the Consumers Gas Group, except for the interest
in the Consumers Gas Group attributable to the outstanding shares of
Class G Common Stock. Authorized but unissued shares of Class G Common
Stock will be available for issuance by CMS Energy from time to time, as
determined by the Board of Directors, for any proper corporate purpose,
which could include raising capital for use by CMS Energy or for
attribution to the Consumers Gas Group, payment of dividends, providing
compensation or benefits to employees or acquiring companies or
businesses. The issuance of such shares of Class G Common Stock would not
be subject to approval by the shareholders of CMS Energy unless deemed
advisable by the Board of Directors or required by applicable law,
regulation or stock exchange listing requirements.
Preferred Stock. The authorized Preferred Stock may be issued
without the approval of the holders of Common Stock in one or more series,
from time to time, with each such series to have such designation, powers,
preferences and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof, as shall be
stated in a resolution providing for the issue of any such series adopted
by the Board of Directors. The specific terms of Preferred Stock will be
described in a prospectus supplement relating thereto if, and when,
issued. Unless otherwise provided in a prospectus supplement, the holder
of any shares of any series of Preferred Stock shall be entitled to vote
in the election of directors or in respect of any other matter except as
may be required by the Michigan Business Corporation Act, as amended.
Unless otherwise provided in a prospectus supplement, holders of Preferred
Stock will not have any preemptive rights to subscribe for or purchase any
additional shares of the capital stock of CMS Energy of any class now or
hereafter authorized, or any Preferred Stock or other securities or other
right or option convertible into or exchangeable for or entitling the
holder or owner to subscribe for or purchase any shares of capital stock.
The future issuance of Preferred Stock may have the effect of delaying,
deterring or preventing a change in control of CMS Energy.
Dividend Rights and Policy
Dividends on the CMS Energy Common Stock will be paid at the
discretion of the Board of Directors based primarily upon the earnings and
financial condition of CMS Energy, including the Consumers Gas Group,
except for the interest in the Consumers Gas Group attributable to the
outstanding shares of the Class G Common Stock, and other factors. The
holders of the Company's Common Stock are entitled to receive dividends
when and as declared by the Board of Directors of the Company out of funds
legally available therefor, subject to the terms of any CMS Energy
Preferred Stock which may in the future be issued and at the time be
outstanding. CMS Energy, in the sole discretion of its Board of
Directors, could pay dividends exclusively to the holders of CMS Energy
Common Stock, exclusively to the holders of Class G Common Stock, or to
the holders of both of such classes in equal or unequal amounts.
CMS Energy is a legal entity separate and distinct from its various
subsidiaries. As a holding company with no significant operations of its
own, the principal sources of its funds are dividends or other
distributions from its operating subsidiaries, in particular, Consumers,
borrowings and sales of equity. The ability of Consumers and other
subsidiaries of CMS Energy to pay dividends or make distributions to
CMS Energy, and accordingly, the ability of CMS Energy to pay dividends on
its capital stock will depend on the earnings, financial requirements,
contractual restrictions of the subsidiaries of CMS Energy, in particular,
Consumers, and other factors. See "Primary Source of Funds of CMS Energy;
Restrictions on Sources of Dividends" below.
There are restrictions on CMS Energy's ability to pay dividends
contained in its Credit Facility, the Senior Debt Indenture and the GTN
Indenture.
The Credit Facility, provides that CMS Energy will not, and will not
permit certain of its subsidiaries, directly or indirectly, to (i) declare
or pay any cash dividend or distribution on the capital stock of
CMS Energy or such subsidiaries, or (ii) purchase, redeem, retire or
otherwise acquire for value any such capital stock (a" Restricted
Payment"), unless: (1) no event of default under the Credit Facility, or
event that with the lapse of time or giving of notice would constitute
such an event of default, has occurred and is continuing, and (2) after
giving effect to any such Restricted Payment, the aggregate amount of all
such Restricted Payments, since September 30, 1993 shall not have exceeded
the sum of: (a) $120,000,000, (b) 100% of CMS Energy's consolidated net
income (as defined in the Senior Debt Indenture) since September 30, 1993
to the end of the most recent fiscal quarter ending at least 45 days prior
to the date of such Restricted Payment (or, in case such sum shall be a
deficit, minus 100% of the deficit), and (c) any net proceeds (as defined
in the Senior Debt Indenture) received by CMS Energy for the issuance or
sale of its capital stock subsequent to September 30, 1993. At March 31,
1995, CMS Energy could pay cash dividends of $492 million pursuant to this
restriction.
The First and Second Supplemental Indentures to the Senior Debt
Indenture, pursuant to which CMS Energy's Series A Senior Deferred Coupon
Notes due October 1, 1997 and Series B Senior Deferred Coupon Notes due
October 1, 1999 were issued, provide that so long as any of such Notes are
outstanding, CMS Energy will not, and will not permit certain of its
subsidiaries, directly or indirectly, to make a Restricted Payment,
unless: (1) no event of default under the Senior Debt Indenture, or event
that with the lapse of time or giving of notice would constitute such an
event of default, has occurred and is continuing, and (2) after giving
effect to any such Restricted Payment, the aggregate amount of all such
Restricted Payments since September 30, 1992 shall not have exceeded the
sum of: (a) $40,000,000, (b) 100% of CMS Energy's consolidated net income
(as defined in the Senior Debt Indenture) since September 30, 1992 to the
end of the most recent fiscal quarter ending at least 45 days prior to the
date of such Restricted Payment (or, in case such sum shall be a deficit,
minus 100% of the deficit), and (c) any net proceeds (as defined in the
Senior Debt Indenture) received by CMS Energy for the issuance or sale of
its capital stock subsequent to September 15, 1992. At March 31, 1995,
CMS Energy could pay cash dividends of $499 million pursuant to this
restriction.
The GTN Indenture provides that, so long as any of the General Term
Notes, Series A (the "GTNs") issued thereunder are outstanding and are
rated below BBB- by Standard & Poor's or by Duff & Phelps, CMS Energy will
not, and will not permit certain of its subsidiaries, directly or
indirectly, to make any Restricted Payments, if at any time CMS Energy or
such subsidiary makes such Restricted Payment: (1) an Event of Default
(as defined in the GTN Indenture), or an event that with the lapse of time
or the giving of notice or both would constitute such an Event of Default,
has occurred and is continuing (or would result therefrom), or (2) the
aggregate amount of such Restricted Payment and all other Restricted
Payments made since September 30, 1993, would exceed the sum of:
(a) $120,000,000 plus 100% of consolidated net income from September 30,
1993 to the end of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment (or, in case such sum shall
be a deficit, minus 100% of the deficit) and (b) the aggregate net
proceeds received by CMS Energy from the issue or sale of or contribution
with respect to its capital stock after September 30, 1993. At March 31,
1995, CMS Energy could pay cash dividends of $492 million pursuant to this
restriction.
The foregoing provisions do not prohibit: (i) dividends or other
distributions paid by CMS Energy in respect of the capital stock issued in
connection with the acquisition of any business or assets by CMS Energy
where such payments are payable solely from the net earnings of such
business or assets; (ii) any purchase or redemption of capital stock made
by exchange for, or out of the proceeds of the substantially concurrent
sale of, capital stock; (iii) dividends paid within 60 days after the date
of declaration thereof if at such date of declaration such dividends would
have complied with the aforementioned limitations; or (iv) payments
pursuant to the tax sharing agreement among CMS Energy and its
subsidiaries.
In addition, Michigan law prohibits payment of a dividend if, after
giving it effect, CMS Energy would not be able to pay its debts as they
become due in the usual course of business, or its total assets would be
less than the sum of its total liabilities plus, unless the articles
permit otherwise, the amount that would be needed, if CMS Energy were to
be dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are
superior to those receiving the distribution. CMS Energy's net assets
available for payment of dividends under the Michigan Business Corporation
Act at March 31, 1995 were $1,207 million.
Voting Rights
The holders of CMS Energy Common Stock will vote with the holders of
Class G Common Stock as a single class, except on matters which would be
required by law or the Articles of Incorporation to be voted on by class.
Each holder of Common Stock is entitled to one vote for each share of
Common Stock held by such holder on each matter voted upon by the
shareholders. Such right to vote is not cumulative. A majority of the
votes cast by the holders of shares entitled to vote thereon is sufficient
for the adoption of any question presented, except that certain provisions
of the Articles of Incorporation relating to special shareholder meetings,
the removal, indemnification and liability of the Board of Directors and
the requirements for amending these provisions may not be amended,
altered, changed or repealed unless such amendment, alteration, change or
repeal is approved by the affirmative vote of at least 75% of the
outstanding shares entitled to vote thereon.
Under Michigan law, the approval of the holders of a majority of the
outstanding shares of a class of Common Stock, voting as a separate class,
would be necessary for authorizing, effecting or validating the merger or
consolidation of CMS Energy into or with any other corporation if such
merger or consolidation would adversely affect the powers of special
rights of such class of stock, and to authorize any amendment to the
Articles of Incorporation that would increase or decrease the aggregate
number of authorized shares of such class or alter or change the powers,
preferences or special rights of the shares of such class so as to affect
them adversely. The Articles of Incorporation also provide that unless
the vote or consent of a greater number of shares shall then be required
by law, the vote or consent of the holders of a majority of all the shares
of either class of Common Stock then outstanding, voting as a separate
class, will be necessary for authorizing, effecting or validating the
merger or consolidation of CMS Energy into or with any other entity if
such merger or consolidation would adversely affect the powers or special
rights of such class of Common Stock, either directly by amendment to the
Articles of Incorporation or indirectly by requiring the holders of such
class to accept or retain, in such merger or consolidation, anything other
than (i) shares of such class or (ii) shares of the surviving or resulting
corporation, having, in either case, powers and special rights identical
to those of such class prior to such merger or consolidation. In the
event that there is more than one class of Common Stock, the effect of
these provisions may be to permit the holders of a majority of the
outstanding shares of either class of Common Stock to block any such
merger or amendment which would adversely affect the powers or special
rights of holders of such class of Common Stock.
Preemptive Rights
Holders of Common Stock have no preemptive rights to subscribe for
or purchase any additional shares of the capital stock of CMS Energy of
any class now or hereafter authorized, or Preferred Stock, bonds,
debentures, or other obligations or rights or options convertible into or
exchangeable for or entitling the holder or owner to subscribe for or
purchase any shares of capital stock, or any rights to exchange shares
issued for shares to be issued.
Liquidation Rights
In the event of the dissolution, liquidation or winding up of the
Company, whether voluntary or involuntary, after payment or provision for
payment of the debts and other liabilities of the Company and after there
shall have been paid or set apart for the holders of Preferred Stock the
full preferential amounts (including any accumulated and unpaid dividends)
to which they are entitled, the holders of Class G Common Stock and
CMS Energy Common Stock shall be entitled to receive, on a per share
basis, the same portion of all of the assets of the Corporation remaining
for distribution to the holders of Common Stock, regardless of whether or
not any of such assets were attributed to the Consumers Gas Group.
Neither the merger or consolidation of the Company into or with any other
corporation, nor the merger or consolidation of any other corporation into
or with the Company nor any sale, transfer or lease of all or any part of
the assets of the Company, shall be deemed to be a dissolution,
liquidation or winding up.
Because the Company has subsidiaries which have debt obligations and
other liabilities of their own, the Company's rights and the rights of its
creditors and its stockholders to participate in the distribution of
assets of any subsidiary upon the latter's liquidation or recapitalization
will be subject to prior claims of the subsidiary's creditors, except to
the extent that the Company may itself be a creditor with recognized
claims against the subsidiary.
Transfer Agent and Registrar
CMS Energy Common Stock is transferrable at Consumers Power Company,
212 W. Michigan Avenue, Jackson, MI 49201. The registrar for CMS Energy
Common Stock is Consumers Power Company.
Primary Source of Funds for the Company's Common Stock; Restrictions on
Sources of Dividends
The ability of CMS Energy to pay (i) dividends on its capital stock
and (ii) its indebtedness depends and will depend substantially upon
timely receipt of sufficient dividends or other distributions from its
subsidiaries, in particular Consumers. Consumers' ability to pay
dividends on its common stock depends upon its revenues, earnings and
other factors. Consumers' revenues and earnings will depend substantially
upon rates authorized by the Michigan Public Service Commission (the
"MPSC").
Consumers' ability to pay dividends is restricted by its First
Mortgage Bond Indenture (the"Mortgage Indenture") and its Articles of
Incorporation (the "Articles"). The Mortgage Indenture provides that
Consumers can only pay dividends on its common stock out of retained
earnings accumulated subsequent to September 30, 1945, provided that upon
such payment, there shall remain of such retained earnings an amount
equivalent to any deficiency in maintenance and replacement expenditures
as compared with maintenance and replacement requirements since
December 31, 1945. Because of restrictions in its Articles and Mortgage
Indenture, Consumers was prohibited from paying dividends on its common
stock from June 1991 to December 31, 1992. However, as of December 31,
1992, Consumers effected a quasi-reorganization in which Consumers'
accumulated deficit of $574 million was eliminated against other paid-in
capital. With the accumulated deficit eliminated, Consumers satisfied the
requirements under its Mortgage Indenture and resumed paying dividends on
its common stock in May 1993.
Consumers' Articles also provide two restrictions on its payment of
dividends on its common stock. First, prior to the payment of any common
stock dividend, Consumers must reserve retained earnings after giving
effect to such dividend payment of at least (i) $7.50 per share on all
then outstanding shares of its preferred stock; (ii) in respect to its
Class A Preferred Stock, 7.5% of the aggregate amount established by its
Board of Directors to be payable on the shares of each series thereof in
the event of involuntary liquidation of Consumers; and (iii) $7.50 per
share on all then outstanding shares of all other stock over which its
preferred stock and Class A Preferred Stock do not have preference as to
the payment of dividends and as to assets. Second, dividend payments
during the 12 month period ending with the month the proposed payment is
to be paid are limited to: (i) 50% of net income available for the
payment of dividends during the base period (hereinafter defined) if the
ratio of common stock and surplus to total capitalization and surplus for
12 consecutive calendar months within the 14 calendar months immediately
preceding the proposed dividend payment (the "base period"), adjusted to
reflect the proposed dividend, is less than 20%; and (ii) 75% of net
income available for the payment of dividends during the base period if
the ratio of common stock and surplus to total capitalization and surplus
for the base period, adjusted to reflect the proposed dividend, is at
least 20% but less than 25%.
Consumers' Articles also prohibit the payment of cash dividends on
its common stock if Consumers is in arrears on preferred stock dividend
payments.
In addition, Michigan law prohibits payment of a dividend if, after
giving it effect, Consumers would not be able to pay its debts as they
become due in the usual course of business, or its total assets would be
less than the sum of its total liabilities plus, unless the articles
permit otherwise, the amount that would be needed, if Consumers were to be
dissolved at the time of the distribution, to satisfy the preferential
rights upon dissolution of shareholders whose preferential rights are
superior to those receiving the distribution. Consumers' net assets
available for payment of dividends under the Michigan Business Corporation
Act at March 31, 1995 were $1,513 million.
Under the most restrictive of these conditions, at March 31, 1995,
$69.9 million of Consumers' retained earnings were available to pay cash
dividends on its common stock. Currently it is Consumers' policy to pay
annual dividends equal to 80% of its annual consolidated net income.
Consumers' Board of Directors reserves the right to change this policy at
any time.
Consumers paid dividends on its common stock of $16.0 million on
February 22, 1994, $65.6 million on May 20, 1994, $31.0 million on
August 19, 1994, $36.0 million on November 4, 1994, $27.4 million on
December 20, 1994 and $69.9 million on May 19, 1995.
LEGAL OPINIONS
An opinion as to the legality of the CMS Energy Common Stock will be
rendered for CMS Energy by Denise M. Sturdy, Esq., Assistant General
Counsel of CMS Energy.
EXPERTS
The consolidated financial statements and schedule of CMS Energy as
of December 31, 1994 and 1993, and for each of the five years in the
period ended December 31, 1994 incorporated by reference in this
Prospectus, have been audited by Arthur Andersen LLP (formerly Arthur
Andersen & Co.), independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving
said reports.
With respect to the unaudited interim consolidated financial
information for the quarterly periods ended March 31, 1994 and 1995,
incorporated by reference in this Prospectus, Arthur Andersen LLP has
applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report thereon states
that they did not audit and they did not express an opinion on that
interim consolidated financial information. Accordingly, the degree of
reliance on their report on that information should be restricted in light
of the limited nature of the review procedures applied. In addition, the
accountants are not subject to the liability provisions of Section 11 of
the Securities Act, for their report on the unaudited interim consolidated
financial information because that report is not a "report" or a "part" of
the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Securities Act.
Future consolidated financial statements of CMS Energy and the
reports thereon of Arthur Andersen LLP also will be incorporated by
reference in this Prospectus in reliance upon the authority of that firm
as experts in giving those reports to the extent that said firm has
audited said consolidated financial statements and consented to the use of
their reports thereon.
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