<PAGE> 1
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. This Prospectus Supplement and the
accompanying Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these
securities in any jurisdiction in which such offer, solicitation, or sale
would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
SUBJECT TO COMPLETION, DATED FEBRUARY 28, 1995
Pursuant to Rule 424(b)(5)
Registration No. 33-55665
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED OCTOBER 18, 1994)
5,000,000 SHARES
[MCN CORPORATION LOGO]
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------
On February 24, 1995, the last reported sale price of the Common Stock (par
value $.01 per share) of MCN on the New York Stock Exchange (the "NYSE") was $18
per share. The 5,000,000 shares of Common Stock offered hereby (the "Shares")
will be listed on the NYSE trading under the symbol "MCN".
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) MCN(2)
- --------------------------------------------------------------------------------------------------------
Per Share............................ $ $ $
- --------------------------------------------------------------------------------------------------------
Total(3)............................. $ $ $
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) MCN has agreed to indemnify the several Underwriters against certain
liabilities, including certain liabilities under the Securities Act of 1933.
See "Underwriting".
(2) Before deducting expenses payable by MCN estimated at $100,000.
(3) MCN has granted the several Underwriters an option, exercisable within 30
days after the date of this Prospectus Supplement, to purchase up to an
additional 750,000 Shares to cover over-allotments, if any. If all of such
Shares are purchased, the total Price to Public, Underwriting Discount and
Proceeds to MCN will be $ , $ and $ , respectively. See
"Underwriting".
------------------------
The Shares are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them, subject to the approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Shares will be made in New York, New York on or about March ,
1995.
------------------------
MERRILL LYNCH & CO.
SMITH BARNEY INC.
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
------------------------
The date of this Prospectus Supplement is March , 1995.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMPANY'S
COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 3
SUMMARY INFORMATION
The following summary is qualified in its entirety by, and should be
considered in conjunction with, the detailed information and financial
statements appearing elsewhere in this Prospectus Supplement, the accompanying
Prospectus and in documents incorporated by reference in this Prospectus
Supplement and the accompanying Prospectus.
THE COMPANY AND ITS SUBSIDIARIES
MCN is a diversified natural gas holding company. Its principal operating
subsidiaries are Michigan Consolidated Gas Company, a natural gas distribution
and intrastate transmission company serving 1.1 million customers in more than
500 communities throughout Michigan and MCN Investment Corporation. MCN
Investment Corporation owns subsidiaries involved in gas marketing and
cogeneration, exploration and production, gathering and processing, gas storage
and a computer operations management firm.
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered............................. 5,000,000 shares of MCN Common Stock (par
value $.01 per share)*
Use of Proceeds.................................. General corporate purposes, including
capital expenditures, investment in
subsidiaries, working capital, repayment
of loans under bank credit agreements and
repayment of other short-term borrowings.
Common Shares Outstanding on February 24, 1995... 59,874,033
NYSE Listing Symbol.............................. MCN
Price Range from March 1, 1994 to
February 24, 1995.............................. $16.38 to $20.25
Closing Sale Price on February 24, 1995.......... $18.00
Indicated Annual Dividend Per Share.............. $.89
</TABLE>
- -------------------------
* Assumes the over-allotment option is not exercised. See "Underwriting".
S-3
<PAGE> 4
SELECTED FINANCIAL AND OPERATING INFORMATION
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1994 1993 1992 1991 1990
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS
Operating Revenues........................... $1,545,800 $1,479,654 $1,447,252 $1,284,551 $1,217,028
Operating Income............................. 154,531 143,886 125,493 98,641 84,964
Net Income................................... 77,768 72,790 57,118 35,078 32,336
Earnings Per Share........................... 1.31 1.24 1.05 .71 .69
Average Number of Common Shares Outstanding
(000's).................................... 59,394 58,642 54,216 49,386 47,032
GAS MARKETS (VOLUMES IN MMCF*)(1)
Gas Distribution
Gas sales.................................. 204,384 205,372 203,110 192,770 188,066
End user transportation.................... 140,020 128,643 129,722 119,846 111,373
Intermediate transportation................ 303,617 281,116 183,978 105,496 73,330
---------- ---------- ---------- ---------- ----------
Total.................................... 648,021 615,131 516,810 418,112 372,769
========== ========== ========== ========== ==========
Diversified Services
Gas sales
Gas marketing and cogeneration........... 142,352 122,782 112,263 91,968 74,380
Exploration and production(2)............ 7,459 67 -- -- --
Transportation............................. 20,546 21,840 25,382 25,335 --
---------- ---------- ---------- ---------- ----------
Total.................................... 170,357 144,689 137,645 117,303 74,380
========== ========== ========== ========== ==========
GAS DISTRIBUTION CUSTOMERS..................... 1,154,545 1,141,986 1,130,165 1,124,792 1,116,924
CAPITAL INVESTMENTS(3)
Gas Distribution............................. $ 146,701 $ 142,428 $ 129,423 $ 118,245 $ 114,987
Diversified Services......................... 214,846 66,248 41,445 21,637 53,757
MCN's Share of Joint Ventures................ 40,422 36,502 31,203 5,139 8,923
---------- ---------- ---------- ---------- ----------
Total.................................... $ 401,969 $ 245,178 $ 202,071 $ 145,021 $ 177,667
========== ========== ========== ========== ==========
TOTAL ASSETS................................... $2,244,624 $1,881,900 $1,648,989 $1,517,387 $1,500,360
========== ========== ========== ========== ==========
LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS(4)............................... $ 685,519 $ 494,821 $ 379,811 $ 328,052 $ 320,516
========== ========== ========== ========== ==========
REDEEMABLE CUMULATIVE PREFERRED SECURITIES
OF SUBSIDIARIES(4)........................... $ 102,618 $ 5,618 $ 9,000 $ 12,000 $ 15,000
========== ========== ========== ========== ==========
COMMON STOCK
Market Price Per Share (end of period)....... $ 18.00 $ 17.38 $ 15.44 $ 12.19 $ 10.75
Dividends Paid Per Share..................... $ .8675 $ .8450 $ .8250 $ .8200 $ .7950
</TABLE>
- -------------------------
* MMcf -- One million cubic feet.
(1) Includes intercompany volumes.
(2) Represents gas sales made directly to third parties by exploration and
production ("E&P") operations. Other E&P production is sold to affiliated
companies for marketing.
(3) Capital investments represent consolidated capital expenditures,
acquisitions, and MCN's share of capital expenditures of joint ventures,
less the minority partners' share of consolidated capital expenditures.
(4) Excludes current requirements.
S-4
<PAGE> 5
The following information regarding the MCN Common Stock supplements and
should be read in conjunction with the information contained in the accompanying
Prospectus. Capitalized terms used in the Prospectus Supplement have the same
meaning as in the accompanying Prospectus.
MCN CORPORATION
MCN Corporation is a diversified natural gas holding company. Its principal
operating subsidiaries are Michigan Consolidated Gas Company ("MichCon"), a
natural gas distribution and intrastate transmission company serving 1.1 million
customers in more than 500 communities throughout Michigan and MCN Investment
Corporation ("MCNIC"). MCNIC owns subsidiaries involved in gas marketing and
cogeneration, exploration and production, gathering and processing, gas storage
and a computer operations management firm.
MCN's major business segments are Gas Distribution and, within MCNIC's
Diversified Services group, Gas Services and Computer Operations Services. Gas
Technology includes MichCon's and MCNIC's research and development programs.
Gas Distribution operates the largest natural gas distribution and
intrastate transmission system in Michigan and one of the largest in the United
States. During 1994, operating revenues in the Gas Distribution segment exceeded
$1.1 billion. In addition, at year end, the segment had total assets of
approximately $1.6 billion. Gas Distribution serves 1.1 million customers in
more than 500 communities throughout Michigan with gas sales and transportation
markets of about 650 billion cubic feet. Gas Distribution continues to increase
its markets, reaching customers in new communities, offering new services to
current customers and expanding its intrastate gas transportation network.
Gas Services is an integrated energy group with investments in
cogeneration, exploration and production, gas gathering and processing, and gas
storage fields. It also markets natural gas to large-volume users and utilities.
During 1994, operating revenues for the segment exceeded $357 million and, at
year end, assets totalled approximately $585 million. In 1994, MCN made
significant investments in natural gas reserves by acquiring interests in over
800 gas wells located primarily in Oklahoma, Kansas and Texas. At December 1994,
MCN owned 422 Bcf of proved reserves, 363 Bcf of potential reserves and 1.3
million barrels (equivalent to 8 Bcf) of proved and potential oil reserves.
To manage MCN's exposure to the risk of fluctuating spot market prices on
profit margins, a comprehensive hedging program is in place. This program
utilizes natural gas futures, options and swap agreements to hedge exposure to
the risk of market price fluctuations on gas sales and purchase contracts, gas
production, gas inventories and certain anticipated transactions. At the end of
1994, anticipated gas production for the next ten years was largely hedged.
MCN's objective is to manage its risk exposure from changes in natural gas
prices to increase the likelihood of achieving targeted rates of return on
investments. Although this strategy reduces market price risk, it also limits
potential gains from favorable changes in commodity prices. Expanding
opportunities throughout North America should enable Gas Services to continue to
grow its 170 billion cubic feet markets and asset-based investments.
Computer Operations Services has data centers in three states and is one of
the top ten computer operations management businesses in the United States. The
Genix Group provides computer management, data processing and related services
to more than 100 corporate clients, including many Fortune 500 companies. New
value-added services, aggressive pursuit of new customers and a focus on
customized business solutions should enable The Genix Group to grow its $100
million revenue base.
Gas Technology researches and develops innovative applications for natural
gas in pressurized combustion technologies and as a fuel for vehicles and other
applications. MCNIC's pressurized combustion technology, currently being tested
in industry, has potential applications in residential and commercial markets.
MichCon's patented technology allows natural gas to be stored at lower pressures
than conventional technologies, for use as an alternative fuel in vehicles.
Capital investments are expected to reach $600 million in 1995.
Approximately 40% of these investments will be in gas distribution and
transmission facilities, 30% to develop and acquire gas reserves and the balance
in gas cogeneration, storage and other projects.
S-5
<PAGE> 6
CAPITALIZATION OF MCN AT DECEMBER 31, 1994 (UNAUDITED)
(THOUSANDS, EXCEPT PERCENTAGES)
The following table sets forth the unaudited summary capitalization of MCN
and its consolidated subsidiaries as of December 31, 1994, and as adjusted to
reflect the application of the estimated net proceeds from the sale of 5,000,000
shares of MCN Common Stock. See "Use of Proceeds". The table should be read in
conjunction with MCN's consolidated financial statements and notes thereto and
other financial data incorporated by reference herein. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus.
<TABLE>
<CAPTION>
AT DECEMBER 31, 1994
----------------------------------------------
ACTUAL AS ADJUSTED(1)
--------------------- ---------------------
AMOUNT PERCENT AMOUNT PERCENT
---------- ------- ---------- -------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Long-term Debt (including capital leases)(2)..... $685,519... 52.7% $ 685,519 49.4%
Redeemable Cumulative Preferred Securities of
Subsidiaries(2)................................ 102,618 7.9 102,618 7.4
Common Shareholders' Equity...................... 511,495 39.4 598,995 43.2
---------- ------- ---------- -------
Total.......................................... $1,299,632 100.0% $1,387,132 100.0%
========= ===== ========= =====
</TABLE>
- -------------------------
(1) Adjusted for the sale of the 5,000,000 shares of MCN Common Stock offered
hereby and the application of the estimated net proceeds therefrom. See
"Underwriting" with respect to the 750,000 share over-allotment option
granted to the Underwriters.
(2) Excluding current maturities.
USE OF PROCEEDS
MCN intends to add the net proceeds from the sale of the offered securities
to its general funds, to be used for general corporate purposes, including
capital expenditures, investment in subsidiaries, working capital, repayment of
loans under bank credit agreements and repayment of other short-term borrowings.
DESCRIPTION OF MCN CAPITAL STOCK
In November 1994, a two-for-one split of MCN Common Stock (the "Stock
Split") occurred. All references in the accompanying financial information have
been adjusted for the Stock Split. As of February 24, 1995, there were
59,874,033 shares of MCN Common Stock issued and outstanding.
S-6
<PAGE> 7
PRICE RANGE OF MCN COMMON STOCK AND COMMON STOCK DIVIDENDS
The following table, which sets forth the high and low sales prices, as
reported by the NYSE for the calendar periods indicated, and the cash dividends
paid per share of MCN Common Stock, has been restated to reflect the Stock
Split.
<TABLE>
<CAPTION>
CASH
DIVIDENDS
PAID PER
HIGH LOW SHARE
------ ------- --------
<S> <C> <C> <C>
1992
First Quarter..................................... $12.25 $ 10.88 $.2050
Second Quarter.................................... 12.44 10.81 .2050
Third Quarter..................................... 14.06 12.31 .2050
Fourth Quarter.................................... 15.50 12.63 .2100
1993
First Quarter..................................... 16.81 14.50 .2100
Second Quarter.................................... 17.44 15.44 .2100
Third Quarter..................................... 18.25 16.50 .2100
Fourth Quarter.................................... 18.31 16.94 .2150
1994
First Quarter..................................... 20.00 16.88 .2150
Second Quarter.................................... 20.13 17.63 .2150
Third Quarter..................................... 20.25 17.25 .2150
Fourth Quarter.................................... 19.06 17.13 .2225
1995
First Quarter (through February 24, 1995)......... 18.63 16.38 .2225
</TABLE>
The closing price of MCN Common Stock on February 24, 1995 was $18 per
share. The book value of the Company's Common Stock on December 31, 1994 was
$8.56 per share. The dividend for the first quarter of 1995 was paid on February
24, 1995 to shareholders of record as of February 10, 1995.
The timing and amount of future cash dividends will depend upon the
financial condition of MCN, the income from its subsidiaries, internal cash
requirements and other factors deemed relevant by MCN's Board of Directors.
MCN sponsors a dividend reinvestment and stock purchase plan under which
holders of record of MCN Common Stock and MichCon's $2.05 Series Preferred Stock
may purchase a limited amount of MCN Common Stock without paying brokerage fees
and other expenses. Effective January 1, 1995, MCN Common Stock purchased from
the Company pursuant to the dividend reinvestment and stock purchase plan is
priced at the average of the high and low sales price on the NYSE as of the
investment date.
EXPERTS
In addition to the experts named in the Prospectus, the 1994 Annual Report
on Form 10-K includes various oil and gas reserve information summarized from
reports prepared by the independent petroleum consultants Ryder Scott Company
and Miller and Lents, Ltd. This reserve information and related schedules have
been incorporated herein by reference in reliance upon such reports given upon
the authority of said firms as experts in oil and gas reserve estimation.
UNDERWRITING
Subject to the terms and conditions of the purchase agreement (the
"Purchase Agreement"), MCN has agreed to sell to each of the Underwriters named
below, and each of the Underwriters for whom Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Smith Barney Inc., Dean Witter Reynolds Inc., Donaldson,
S-7
<PAGE> 8
Lufkin & Jenrette Securities Corporation, and A.G. Edwards & Sons, Inc., are
acting as representatives (the "Representatives"), has severally agreed to
purchase the total number of Shares set forth opposite its name below. The
several Underwriters have agreed, subject to the terms and conditions set forth
in the Purchase Agreement, to purchase all of the Shares offered hereby if any
of the Shares are purchased (other than those Shares covered by the
Underwriters' over-allotment option described below). In the event of default by
an Underwriter, the Purchase Agreement provides that, in certain circumstances,
purchase commitments of the nondefaulting Underwriters may be increased or the
Purchase Agreement may be terminated.
<TABLE>
<CAPTION>
TOTAL NUMBER OF
SHARES TO BE
UNDERWRITERS PURCHASED
---------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Smith Barney Inc. .............................................
Dean Witter Reynolds Inc. .....................................
Donaldson, Lufkin & Jenrette Securities Corporation............
A.G. Edwards & Sons, Inc. .....................................
---------------
Total............................................. 5,000,000
============
</TABLE>
The Representatives of the Underwriters have advised MCN that they propose
initially to offer the Shares directly to the public at the public offering
price set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ per share to certain other dealers. After the initial public offering,
the public offering price, concession and discount may be changed.
MCN has granted the Underwriters an option, exercisable within 30 days
after the date of this Prospectus Supplement, to purchase up to 750,000
additional shares of MCN Common Stock to cover over-allotments, if any, at the
public offering price set forth on the cover page of this Prospectus Supplement
less the underwriting discount. If the Underwriters exercise this option, each
of the Underwriters will have a firm commitment, subject to certain conditions,
to purchase approximately the same percentage of such additional Shares as the
number set forth next to such Underwriter's name in the preceding table bears to
5,000,000.
MCN has agreed to indemnify the Underwriters against, or contribute to
payments that the Underwriters may be required to make in respect of, certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
Certain of the Underwriters engage in transactions with, and from time to
time, have performed services for, MCN and its subsidiaries in the ordinary
course of business.
S-8
<PAGE> 9
PROSPECTUS
$300,000,000
[MCN LOGO]
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
COMMON STOCK
AND
MCN MICHIGAN LIMITED PARTNERSHIP PREFERRED SECURITIES
------------------------
MCN Corporation, a Michigan Corporation, ("MCN" or the "Company") may offer,
from time to time, (i) unsecured senior debt securities (the "Senior Debt
Securities") consisting of debentures, notes or other unsecured evidences of
indebtedness, (ii) unsecured subordinated debt securities (the "Subordinated
Debt Securities") consisting of debentures, notes and other unsecured evidence
of indebtedness (item (i) or (ii) above being referred to herein as the "Debt
Securities"), (iii) MCN Common Stock $.01 par value ("MCN Common Stock"), and
(iv) its guarantee of MCN Michigan Limited Partnership preferred securities
("Preferred Securities"), or any combination of the foregoing, in each case in
one or more series and in amounts, at prices and on terms to be determined at or
prior to the time of sale.
MCN Michigan Limited Partnership ("MCN Michigan"), a Michigan special
purpose limited partnership in which MCN is the general partner, may offer, from
time to time, its Preferred Securities, representing beneficial interests in
limited partner interests in one or more series. The payment of periodic cash
distributions ("dividends") with respect to Preferred Securities of any series,
out of moneys held by MCN Michigan, and payments on liquidation or redemption
with respect to the Preferred Securities are guaranteed by MCN to the extent
described herein (the "Guarantee"). MCN's obligations under the Guarantee are
subordinate and junior in right of payment to all other liabilities of MCN and
pari passu with the most senior preferred stock issued by MCN. Subordinated Debt
Securities also may be issued and sold from time to time in one or more series
by MCN to MCN Michigan in connection with the investment of the proceeds from
the offering of Preferred Securities. MCN's obligations under the Subordinated
Debt Securities are subordinate to the Senior Indebtedness (as defined herein)
and pari passu with MCN trade creditors. The Subordinated Debt Securities
subsequently may be distributed pro rata to holders of Preferred Securities in
connection with the dissolution of MCN Michigan upon the occurrence of certain
events as may be described in an accompanying Prospectus Supplement (a
"Prospectus Supplement").
Specific terms of the particular Debt Securities, MCN Common Stock and
Preferred Securities in respect of which this Prospectus is being delivered (the
"Offered Securities") will be set forth in an accompanying Prospectus Supplement
or Supplements, together with the terms of the offering of the Offered
Securities, the initial price thereof and the net proceeds from the sale
thereof. The Prospectus Supplement will set forth with regard to the particular
Offered Securities, without limitation, the following: (i) in the case of Debt
Securities, the designation, aggregate principal amount, denomination, maturity,
any exchange, conversion, redemption or sinking fund provisions, interest rate
(which may be fixed or variable), the time and method of calculating interest
payments, the right of the Company, if any, to defer payment of interest on the
Subordinated Debt Securities and the maximum length of such deferral period, any
listing on a securities exchange and other specific terms of the offering, (ii)
in the case of MCN Common Stock, the designation, number of shares, public
offering price and other specific terms of the offering and (iii) in the case of
Preferred Securities, the designation, number of shares, liquidation preference
per security, initial public offering price, any listing on a securities
exchange, dividend rate (or method of calculation thereof), dates on which
dividends shall be payable and dates from which dividends shall accrue, any
voting rights, any redemption, exchange or sinking fund provisions, any other
rights, preferences, privileges, limitations or restrictions relating to the
Preferred Securities of a specific series and the terms upon which the proceeds
of the sale of the Preferred Securities will be loaned to MCN. The offering
price to the public of the Offered Securities will be limited to $300,000,000 in
the aggregate.
The Company's Common Stock is traded on the New York Stock Exchange ("NYSE")
under the symbol MCN. See "Description of MCN Capital Stock -- Price Range of
MCN Common Stock and Common Stock Dividends".
MCN and/or MCN Michigan may sell the Offered Securities directly, through
agents designated from time to time or through underwriters or dealers. See
"Plan of Distribution." If any agents of MCN and/or MCN Michigan or any
underwriters or dealers are involved in the sale of the Offered Securities, the
names of such agents, underwriters or dealers and any applicable commissions and
discounts will be set forth in the related Prospectus Supplement.
This Prospectus may not be used to consummate sales of Offered Securities
unless accompanied by a Prospectus Supplement.
------------------------
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 OCTOBER 18, 1994.
<PAGE> 10
AVAILABLE INFORMATION
MCN is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "1934 Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "SEC"). Reports, proxy statements and other information
concerning MCN can be inspected and copied at the SEC's Public Reference Room,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 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, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can be
obtained from the Public Reference Section of the SEC at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, at prescribed rates. Such reports,
proxy statements and other information may also be inspected at the offices of
the NYSE, on which MCN Common Stock is traded, at 20 Broad Street, New York, New
York 10005.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed with the SEC under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Offered 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 MCN and the Offered
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.
No separate financial statements of MCN Michigan have been included herein.
MCN and MCN Michigan do not consider that such financial statements would be
material to holders of Preferred Securities because MCN Michigan is a newly
organized special purpose entity, has no operating history and no independent
operations and is not engaged in, and does not propose to engage in, any
activity other than the issuance of its Preferred Securities and the lending of
the proceeds thereof to MCN. MCN Michigan is a limited partnership organized
under the laws of the State of Michigan. MCN is the sole general partner in MCN
Michigan and, as of the date hereof, directly or indirectly beneficially owns
all of MCN Michigan's partnership interests. See "MCN Michigan Limited
Partnership".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by MCN (File No. 1-10070) with the SEC
pursuant to the 1934 Act are incorporated by reference herein and made a part
hereof:
1. Annual Report on Form 10-K for the year ended December 31, 1993.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1994 and
June 30, 1994.
3. The description of MCN's Common Stock as contained in its Form 8-B dated
September 29, 1988.
4. The description of MCN's Preferred Share Purchase Rights contained in its
Form 8-A dated December 28, 1989.
All documents filed by MCN pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the 1934 Act subsequent to the date hereof and prior to the termination of the
offering of the Offered Securities pursuant hereto 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 shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in this Prospectus modifies
or supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
MCN undertakes to provide without charge to each person 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 foregoing documents incorporated herein by
reference, other than exhibits to such documents (unless such exhibits are
specifically incorporated by reference into such documents). Such requests
should be directed to: Investor Relations, MCN Corporation, 500 Griswold Street,
Detroit, Michigan 48226; telephone 1-800-548-4655.
2
<PAGE> 11
MCN CORPORATION
MCN, a Michigan corporation organized in 1988, is the holding company for
(i) Michigan Consolidated Gas Company ("MichCon"), a public utility engaged in
the distribution, transmission and storage of natural gas to more than 1.1
million customers throughout Michigan; (ii) Citizens Gas Fuel Company
("Citizens"), a natural gas utility servicing Adrian, Michigan; and (iii) MCN
Investment Corporation ("MCN Investment"), the holding company for its
nonutility businesses. MCN's principal executive office is located at 500
Griswold Street, Detroit, Michigan 48226, telephone number (313) 256-5500.
Utility Services. MichCon and Citizens provide gas sales service primarily
to residential and commercial customers and transportation service to
large-volume customers. MichCon also provides transportation service to other
gas utilities, gas marketers and producers.
Gas Services. MCN Investment, through its subsidiary companies and various
joint ventures, markets natural gas to large-volume customers, develops gas
cogeneration facilities, provides gas gathering and processing services, engages
in gas exploration and production and provides gas storage services.
Computer Operations Services. The Genix Group, a wholly-owned subsidiary of
MCN Investment, provides data processing, computer operations management, data
telecommunications design and management, large-scale electronic printing and
mailing, and business process solution services to more than 100 corporate
clients in financial services, insurance, retailing, food processing, education,
manufacturing and other industries. These services are provided through
facilities located in Michigan, Pennsylvania and North Carolina.
Gas Technology. MCN's gas technology programs are developing products to
expand demand for natural gas.
Capital investments will exceed $400 million in 1994, with over $250
million being invested in nonutility businesses, primarily to purchase gas
reserves and for exploration and development. Approximately $150 million will be
invested in MCN's utility services operations.
MCN MICHIGAN LIMITED PARTNERSHIP
MCN Michigan is a limited partnership formed under the laws of the State of
Michigan. MCN Michigan exists for the sole purpose of issuing securities
representing beneficial interests in limited partner interests and investing the
net proceeds thereof in Subordinated Debt Securities. All of its partnership
interests, as of the date hereof, are beneficially owned, directly or
indirectly, by MCN. MCN is the sole general partner in MCN Michigan (the
"General Partner"). MCN Finance Corporation, a Michigan corporation and
wholly-owned subsidiary of MCN ("MCN Finance"), is, as of the date hereof, the
sole limited partner in MCN Michigan. Upon the issuance of Preferred Securities,
which securities represent beneficial interests in limited partner interests in
MCN Michigan, MCN Finance will withdraw as a limited partner. MCN Michigan has a
term of approximately 99 years, unless earlier dissolved. MCN Michigan's
registered office in the State of Michigan is 500 Griswold Street, Detroit,
Michigan 48226, telephone number: (313) 256-5500. All of MCN Michigan's business
and affairs will be conducted by MCN, as the sole general partner. The principal
place of business of MCN Michigan is c/o MCN Corporation, 500 Griswold Street,
Detroit, Michigan 48226, telephone number: (313) 256-5500.
USE OF PROCEEDS
MCN intends to add the net proceeds from the sale of Offered Securities to
its general funds, to be used for general corporate purposes, including capital
expenditures, investment in subsidiaries, working capital, repayment of loans
under bank credit agreements and repayment of other short-term borrowings. MCN
Michigan will loan to MCN all proceeds received by MCN Michigan from the sale of
its Preferred Securities.
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<PAGE> 12
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to fixed charges and preferred stock dividends for the
periods indicated.
<TABLE>
<CAPTION>
TWELVE MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------
1994 1993 1992 1991 1990 1989
------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)......... 3.38 3.04 2.74 2.08 2.06 3.45
</TABLE>
- -------------------------
(1) MCN has authority to issue up to 25,000,000 shares of preferred stock, no
par value, however, there are currently no shares outstanding and MCN
currently does not have a preferred stock dividend obligation. Therefore,
the Ratio of Earnings to Fixed Charges and Preferred Stock Dividends is
equal to the Ratio of Earnings to Fixed Charges and is not disclosed
separately.
The Ratio of Earnings to Fixed Charges, and the Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends are based on continuing operations.
"Earnings" consist of the consolidated pre-tax income of MCN adjusted to exclude
any income not actually received from less than 50% owned companies, plus fixed
charges, less interest capitalized for nonutility operations. "Fixed Charges"
represent (a) interest (whether expensed or capitalized), (b) amortization of
debt discount or premium and expense, (c) an estimate of interest implicit in
rentals and (d) preferred stock dividend requirements of MichCon, increased to
reflect the pre-tax earnings requirement.
DESCRIPTION OF MCN DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms of the Debt Securities offered by any Prospectus Supplement and
the extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating to
such Debt Securities.
The Debt Securities may be issued, from time to time, in one or more series
and will constitute either Senior Debt Securities or Subordinated Debt
Securities. Senior Debt Securities will be issued under an Indenture (the
"Senior Debt Securities Indenture"), between the Company and NBD Bank, N.A.
("NBD"), as trustee (the "Senior Debt Securities Trustee"). The Subordinated
Debt Securities will be issued under an Indenture (the "Subordinated Debt
Securities Indenture") between the Company and NBD as trustee (the "Subordinated
Debt Securities Trustee").
The Senior Debt Securities Indenture and the Subordinated Debt Securities
Indenture are referred to herein individually as an "Indenture" and,
collectively, as the "Indentures," and the Senior Debt Securities Trustee and
the Subordinated Debt Securities Trustee are referred to herein as the
"Trustee." A copy of each Indenture is filed as an exhibit to the Registration
Statement.
The following summaries of certain provisions of the Debt Securities and
the Indentures do not purport to be complete and are subject to, and are
qualified in their entirety by express reference to, all the provisions of the
Indentures, including the definitions therein of certain terms. Certain
capitalized terms herein are defined in the Indentures.
GENERAL
The Debt Securities will be unsecured obligations of the Company.
The Indentures do not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provide that Debt Securities may
be issued thereunder, from time to time, in one or more series.
Reference is made to the Prospectus Supplement relating to the Debt
Securities being offered (the "Offered Debt Securities") for, among other
things, the following terms thereof: (1) the title of the Offered
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<PAGE> 13
Debt Securities; (2) any limit on the aggregate principal amount of the Offered
Debt Securities; (3) the date or dates on which the Offered Debt Securities will
mature; (4) the rate or rates (which may be fixed or variable) per annum at
which the Offered 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 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 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; (8) the right of the Company, if any, to defer payment of interest
on the Subordinated Debt Securities and the maximum length of any such deferral
period; and (9) any other terms of the Offered Debt Securities (which terms
shall not be inconsistent with the appropriate Indenture). For a description of
the terms of the Offered Debt Securities, reference must be made to both the
Prospectus Supplement relating thereto and to the description of 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 Debt Securities
will be payable, and the Offered Debt 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 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 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 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 both the Senior Debt Securities and the
Subordinated 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.
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<PAGE> 14
"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.
The Debt Securities may be issued under the Indentures 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.
BOOK-ENTRY DEBT SECURITIES
The 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 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 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
Debt Securities, means a Debt 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 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
Debt 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 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, 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 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 Debt Securities or, if such 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.
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<PAGE> 15
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 Securities
represented by such Global Security for all purposes under the Indenture. Unless
otherwise specified in the applicable Prospectus Supplement, owners of
beneficial interests in such Global Security will not be entitled to have 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 Debt
Securities of such series in certificated form and will not be considered the
Holders thereof for any purposes under the 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 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
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.
THE TRUSTEE
NBD is the Trustee under the Senior Debt Securities Indenture and the
Subordinated Debt Securities Indenture. NBD has extended lines of credit to
various subsidiaries of MCN. MCN and various of its subsidiaries maintain bank
accounts and have other customary banking relationships with NBD in the ordinary
course of business. In addition, various MCN subsidiaries borrow money from NBD.
Mr. Thomas H. Jeffs II, President and Chief Operating Officer of NBD, serves as
a Director of MCN. Mr. Alfred R. Glancy III, Chairman, President and Chief
Executive Officer of MCN, serves as a Director of NBD.
PARTICULAR TERMS OF THE SENIOR DEBT SECURITIES
The following description of the Senior Debt Securities sets forth certain
general terms and provisions of the Senior Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Senior Debt
Securities offered by any Prospectus Supplement and the extent, if any, to which
such general provisions may apply to the Senior Debt Securities so offered will
be described in the Prospectus Supplement relating to such Senior Debt
Securities.
RESTRICTIONS
The Senior Debt Securities 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, 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 Debt Securities Indenture,
all the obligations of the Company under the Senior Debt Securities and the
Senior Debt Securities 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 Debt
Securities Indenture.
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<PAGE> 16
The Senior Debt Securities Indenture also provides that the Company will
not, nor will it permit any Significant Subsidiary to, create, incur, or suffer
to exist any Lien in, of or on the property of the Company or any of its
Subsidiaries, except: (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 and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books; (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 and for which
adequate reserves shall have been set aside on its books; (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, building restrictions and such
other encumbrances or charges against real 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) Liens arising in connection with first mortgage bonds issued by
any Significant Subsidiary pursuant to any first mortgage indenture in effect as
of the date of the Senior Debt Securities Indenture, as such indenture may be
supplemented from time to time; (vii) 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; (viii)
Liens existing on the date Senior Debt Securities are first issued; and (ix)
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.
The Senior Debt Securities Indenture provides that the Company will not,
nor will it permit any Subsidiary to, enter into any arrangement with any lender
or investor (other than the 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
Senior Debt Securities and other obligations of the Company ranking on a parity
with the Senior Debt Securities.
RANKING OF SENIOR DEBT SECURITIES
The Senior Debt Securities will rank pari passu in right of payment with
all other unsecured indebtedness of the Company, except that the Senior Debt
Securities will be senior in right of payment to any subordinated indebtedness
which, by its terms, is subordinate to the Senior Debt Securities.
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<PAGE> 17
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Senior Debt Securities
Indenture with respect to 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 Debt Securities Indenture (other than a covenant, agreement or warranty
included in the Senior Debt Securities Indenture solely for the benefit of
Senior Debt Securities other than that series), continued for a period of 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) certain
events of bankruptcy, insolvency or reorganization relating to the Company; and
(6) any other Event of Default with respect to 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 Debt Securities 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 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.
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 Debt Securities
Indenture.
The Senior Debt Securities 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.
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<PAGE> 18
MODIFICATION OF SENIOR DEBT SECURITIES INDENTURE; WAIVER
The Senior Debt Securities 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 Debt Securities 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 Debt Securities
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, 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 Debt Securities 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 Debt
Securities Indenture. 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 Debt Securities 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 Debt
Securities 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 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 Debt Securities Indenture.
PARTICULAR TERMS OF THE SUBORDINATED DEBT SECURITIES
The following description of the Subordinated Debt Securities sets forth
the general terms and provisions of the Subordinated Debt Securities to which
any Prospectus Supplement may relate. The particular terms of the Subordinated
Debt Securities offered by any Prospectus Supplement and the extent, if any, to
which such general provisions may apply will be described in the Prospectus
Supplement relating to such Subordinated Debt Securities.
For purposes of the description of the Subordinated Debt Securities,
certain defined terms have the following meanings:
"Senior Indebtedness" means the principal of and premium, if any, and
interest on the following, whether outstanding on the date of execution of
the Subordinated Debt Securities Indenture or thereafter incurred or
created: (i) indebtedness of the Company for money borrowed by the Company
(including
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<PAGE> 19
purchase money obligations with an original maturity in excess of one year)
or evidenced by debentures (other than the Subordinated Debt Securities),
notes, bankers' acceptances or other corporate debt securities or similar
instruments issued by the Company; (ii) obligations with respect to letters
of credit; (iii) indebtedness of the Company constituting a guarantee of
indebtedness of others of the type referred to in the preceding clauses (i)
and (ii); or (iv) renewals, extensions or refundings of any of the
indebtedness referred to in the preceding clauses (i), (ii) and (iii)
unless, in the case of any particular indebtedness, renewal, extension or
refunding, under the express provisions of the instrument creating or
evidencing the same, or pursuant to which the same is outstanding, such
indebtedness or such renewal, extension or refunding thereof is not
superior in right of payment to the Subordinated Debt Securities.
RESTRICTIONS
The Subordinated Debt Securities 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, 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 indentures supplemental to the Subordinated Debt Securities
Indenture executed and delivered to the Trustee in form satisfactory to the
Trustee, all the obligations of the Company under the Subordinated Debt
Securities and the Subordinated Debt Securities Indenture; (2) immediately
before and after giving effect to such transaction or series of related
transactions or series of transactions, no Event of Default, and no Default,
with respect to the Subordinated 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 sale, assignment, transfer or lease and such supplemental indentures
comply with the Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture also provides that the Company
will not, nor will it permit any Significant Subsidiary to, create, incur, or
suffer to exist any Lien in, of or on the property of the Company or any of its
Subsidiaries, except: (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 and for which adequate reserves in accordance with
generally accepted principles of accounting shall have been set aside on its
books; (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 and for which
adequate reserves shall have been set aside on its books; (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, building restrictions and such
other encumbrances or charges against real 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) Liens arising in connection with first mortgage bonds issued by
any Significant Subsidiary pursuant to any first mortgage indenture in effect as
of the date of the Subordinated Debt Securities Indenture, as such indenture may
be supplemented from time to time; (vii) 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
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<PAGE> 20
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; (viii) Liens existing on the date
Subordinated Debt Securities are first issued; and (ix) 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.
The Subordinated Debt Securities Indenture provides that the Company will
not, nor will it permit any Subsidiary to, enter into any arrangement with any
lender or investor (other than the 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
Subordinated 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 Subordinated Debt Securities and other obligations of the Company
ranking senior to or on a parity with the Subordinated Debt Securities.
EVENTS OF DEFAULT AND NOTICE THEREOF
The following are Events of Default under the Subordinated Debt Securities
Indenture with respect to the Subordinated Debt Securities of any series: (1)
failure to pay interest on any Subordinated Debt Securities of that series when
due, continued for 30 days; however, if the Company is permitted by the terms of
the Subordinated Debt Securities of the applicable series to defer the payment
in question, the date on which such payment is due and payable shall be the date
on which the Company is required to make payment following such deferral, if
such deferral has been elected pursuant to the terms of the Subordinated Debt
Securities; (2) failure to pay the principal of (or premium, if any, on) any
Subordinated Debt Securities of that series when due and payable at Maturity,
upon redemption or otherwise; however, if the Company is permitted by the terms
of the Subordinated Debt Securities, of the applicable series to defer the
payment in question, the date on which such payment is due and payable shall be
the date on which the Company is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Subordinated Debt Securities; (3) failure to observe or perform any other
covenant, warranty or agreement contained in the Subordinated Debt Securities of
that series or in the Subordinated Debt Securities Indenture (other than a
covenant, agreement or warranty included in the Subordinated Debt Securities
Indenture solely for the benefit of Subordinated Debt Securities of a series
other than that series), continued for a period of 60 days after notice has been
given to the Company by the applicable Trustee or Holders of at least 25% in
aggregate principal amount of the Outstanding Subordinated 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 Subordinated Debt Securities of that series; (5) certain
events of bankruptcy, insolvency or reorganization relating to the Company; and
(6) any other Event of Default with respect to Subordinated Debt Securities of
that series specified in the Prospectus Supplement relating thereto.
The Subordinated Debt Securities Indenture provides that the Trustee shall,
within 30 days after the occurrence of any Default or Event of Default with
respect Subordinated Debt Securities of any series, give the Holders of
Subordinated 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
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<PAGE> 21
Event of Default); provided, however, that, except in the case of an Event of
Default or a Default in payment on any Subordinated 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 Subordinated Debt Securities of that
series.
If an Event of Default with respect to Subordinated 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 Subordinated 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 Subordinated
Debt Securities of that series), may declare the unpaid principal of and accrued
interest to the date of acceleration on all the Outstanding Subordinated Debt
Securities of that series to be due and payable immediately and, upon any such
declaration, the Subordinated 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
Subordinated 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 Subordinated Debt Security of that series.
Any such declaration with respect to Subordinated 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 Subordinated Debt Securities of that series) may be waived by
the Holders of a majority of the principal amount of the Outstanding
Subordinated Debt Securities of that series, upon the conditions provided in the
Subordinated Debt Securities Indenture.
The Subordinated Debt Securities Indenture provides that the Company shall
periodically file statements with the Trustees regarding compliance by the
Company with certain of the respective covenants thereof and shall specify any
Event of Default or Defaults with respect to Subordinated Debt Securities of any
series, in performing such covenants, of which the signers may have knowledge.
MODIFICATION OF SUBORDINATED DEBT SECURITIES INDENTURE; WAIVER
The Subordinated Debt Securities 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 Subordinated Debt Securities Indenture and (ii) to make any
change that does not materially adversely affect the interests of any Holder of
Subordinated Debt Securities of any series. In addition, under the Subordinated
Debt Securities Indenture, certain rights and obligations of the Company and the
rights of Holders of the Subordinated 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 Subordinated Debt
Securities of each series affected thereby; but no extension of the maturity of
any Subordinated 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
Subordinated Debt Securities of any series, other modification in the terms of
payment of the principal of, or interest on, any Subordinated Debt Securities of
any series, or reduction of the percentage required for modification, will be
effective against any Holder of any Outstanding Subordinated Debt Security of
any series affected thereby without the Holder's consent. The Subordinated Debt
Securities Indenture does not limit the aggregate amount of Subordinated Debt
Securities of the Company which may be issued thereunder.
The Holders of a majority in aggregate principal amount of the Outstanding
Subordinated Debt Securities of any series may on behalf of the Holders of all
Subordinated Debt Securities of that series waive, insofar as that series is
concerned, compliance by the Company with certain restrictive covenants of the
Subordinated Debt Securities Indenture. The Holders of not less than a majority
in aggregate principal amount of the Outstanding Subordinated Debt Securities of
any series may on behalf of the Holders of all Subordinated Debt Securities of
that series waive any past Event of Default or Default under the Subordinated
Debt Securities Indenture with respect to that series, except an Event of
Default or a Default in
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<PAGE> 22
the payment of the principal of, or premium, if any, or any interest on any
Subordinated Debt Security of that series or in respect of a provision which
under the Subordinated Debt Securities Indenture cannot be modified or amended
without the consent of the Holder of each Outstanding Subordinated Debt Security
of that series affected.
DEFEASANCE
The Company may terminate its substantive obligations in respect of
Subordinated Debt Securities of any series (except for its obligations to pay
the principal of (and premium, if any, on) and the interest on the Subordinated
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 Subordinated 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 Subordinated 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 Subordinated Debt Securities Indenture.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will be subordinated in right of payment to the
prior payment in full of all Senior Indebtedness of the Company and pari passu
with MCN trade creditors. No payment on account of principal of, premium, if
any, or interest on the Subordinated Debt Securities and no acquisition of, or
payment on account of any sinking fund for, the Subordinated Debt Securities may
be made unless full payment of amounts then due for principal, premium, if any,
and interest then due on all Senior Indebtedness by reason of the maturity
thereof (by lapse of time, acceleration or otherwise) has been made or duly
provided for in cash or in a manner satisfactory to the Holders of such Senior
Indebtedness. In addition, the Subordinated Debt Securities Indenture provides
that if a default has occurred giving the holders of such Senior Indebtedness
the right to accelerate the maturity thereof, or an event has occurred which,
with the giving of notice, or lapse of time, or both, would constitute such an
event of default, then unless and until such event shall have been cured or
waived or shall have ceased to exist, no payment on account of principal,
premium, if any, or interest on the Subordinated Debt Securities and no
acquisition of, or payment on account of a sinking fund for, the Subordinated
Debt Securities may be made. The Company shall give prompt written notice to the
Trustee of any default under any Senior Indebtedness or under any agreement
pursuant to which Senior Indebtedness may have been issued. The Subordinated
Debt Securities Indenture provisions described in this paragraph, however, do
not prevent the Company from making a sinking fund payment with Subordinated
Debt Securities acquired prior to the maturity of Senior Indebtedness or, in the
case of default, prior to such default and notice thereof. Upon any distribution
of its assets in connection with any dissolution, liquidation or reorganization
of the Company, all Senior Indebtedness must be paid in full before the Holders
of the Subordinated Debt Securities are entitled to any payments whatsoever. As
a result of these subordinated provisions, in the event of the Company's
insolvency, holders of the Subordinated Debt Securities may recover ratably less
than senior creditors of the Company.
DESCRIPTION OF MCN CAPITAL STOCK
The following is a brief description of certain provisions relating to MCN
capital stock:
MCN has authority to issue up to 125,000,000 shares of capital stock, which
are divided into two classes as follows: 25,000,000 shares of MCN Preferred
Stock, no par value ("MCN Preferred Stock") and 100,000,000 shares of MCN Common
Stock, par value $.01 per share. On August 31, 1994, there were no shares of MCN
Preferred Stock outstanding and 29,754,426 shares of MCN Common Stock
outstanding.
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<PAGE> 23
MCN COMMON STOCK
Voting Rights: The holders of MCN Common Stock are entitled to one vote for
each share on all matters voted upon by MCN's shareholders and, subject to any
voting rights of outstanding MCN Preferred Stock, the holders of such shares
possess all voting power.
Any action required or permitted to be taken by any shareholder of MCN must
be effected at a duly called annual or special meeting of such shareholders and
may not be effected by any consent in writing by such shareholders. Except as
otherwise permitted by law, special shareholder meetings of MCN may be called
only pursuant to a resolution approved by the Board.
The holders of MCN Common Stock have noncumulative voting rights, which
means that the holders of more than 50% of the shares of MCN Common Stock voting
for the election of directors can elect 100% of the directors standing for
election at any meeting if they choose to do so and, in such event, the holders
of the remaining shares voting for the election of directors would not be able
to elect any person or persons to the Board at that meeting.
Dividend Rights: The holders of MCN Common Stock are entitled to such
dividends as may be declared from time to time by the Board from funds legally
available therefor subject to: (1) preferential dividend rights, if any, of any
series of MCN Preferred Stock then outstanding; and (2) applicable requirements,
if any, with respect to the setting aside of sums for purchase, retirement or
sinking funds for MCN Preferred Stock.
Liquidation Rights: In the event of liquidation, the holders of MCN Common
Stock will be entitled to receive pro rata any assets distributable to
shareholders in respect of shares held by them, subject to the rights of any
holders of MCN Preferred Stock.
No Preemptive Rights: No holder of MCN Common Stock has any right to
subscribe to any additional securities which may be issued by MCN.
Redemption and Conversion Provisions: MCN Common Stock does not have any
redemption provisions or conversion rights.
Preferred Share Purchase Rights: MCN Common Stock currently trades with
Preferred Share Purchase Rights. The Rights, which cannot be traded separately
from MCN Common Stock, are intended to protect shareholders in the event of an
unsolicited attempt to acquire MCN and become exercisable upon the occurrence of
certain triggering events. Triggering events include acquisition by a person or
group of beneficial ownership of 20% or more of MCN's Common Stock. The Rights
could also have the effect of delaying, deferring or preventing a takeover or
change in control of MCN that has not been approved by the Board of Directors.
Transfer Agent: The transfer agent and registrar for MCN Common Stock is
First Chicago Trust Company of New York, 525 Washington Boulevard, Jersey City,
New Jersey 07310.
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<PAGE> 24
PRICE RANGE OF MCN COMMON STOCK AND COMMON STOCK DIVIDENDS
MCN Common Stock began trading on the NYSE on January 4, 1989, following
the effective date of the restructuring of MichCon and subsequent formation of
MCN as its holding company. The high and low sales prices of the Common Stock of
MCN, reported as composite transactions, have been as follows:
<TABLE>
<CAPTION>
CASH
DIVIDENDS
PAID PER
HIGH LOW SHARE
----- ----- ---------
<S> <C> <C> <C>
1992
First Quarter....................................... $24 1/2 $21 3/4 $ .41
Second Quarter...................................... 24 7/8 21 5/8 .41
Third Quarter....................................... 28 1/8 24 5/8 .41
Fourth Quarter...................................... 31 25 1/4 .42
1993
First Quarter....................................... 33 5/8 29 .42
Second Quarter...................................... 34 7/8 30 7/8 .42
Third Quarter....................................... 36 1/2 33 .42
Fourth Quarter...................................... 36 5/8 33 7/8 .43
1994
First Quarter....................................... 40 33 3/4 .43
Second Quarter...................................... 40 1/4 35 1/4 .43
Third Quarter (through August 31, 1994)............. 40 1/2 37 7/8 .43
</TABLE>
The closing price of MCN Common Stock on September 28, 1994 was $36.125 per
share. The book value of the Company's Common Stock on June 30, 1994 was $17.68
per share.
The timing and amount of future cash dividends will depend on the financial
condition of MCN, the income from its subsidiaries, primarily MichCon, internal
cash requirements and other factors deemed relevant by MCN's Board of Directors.
MCN sponsors a dividend reinvestment and stock purchase plan under which
holders of record of MCN Common Stock and MichCon's $2.05 Series Preferred Stock
may purchase a limited amount of MCN Common Stock without paying brokerage fees
and other expenses. Under this plan, the MCN Common Stock may be purchased in
the open market at prevailing prices or purchased from MCN at the average of the
high and low sales prices on the NYSE during the five trading days immediately
preceding the purchase.
MCN PREFERRED STOCK
The Board of Directors of MCN is authorized, without further action by the
shareholders of MCN, to issue up to 25,000,000 shares of MCN Preferred Stock,
without par value, in one or more series, from time to time, with such voting
powers, full or limited, or without voting powers, and with such designations,
preferences and relative, participating, optional or other special rights and
qualifications, limitations or restrictions thereof, as may be provided in a
resolution or resolutions adopted by the Board of Directors. The authority of
the Board of Directors includes, but is not limited to, the determination or
fixing of the following with respect to shares of such class or any series
thereof: (i) the number of shares and designation; (ii) the dividend rate and
whether the dividends are to be cumulative; (iii) whether shares are to be
redeemable and, if so, the terms and provisions applying; (iv) whether the
shares are subject to a purchase, retirement or sinking fund and, if so, the
terms and provisions applying; (v) whether shares shall be convertible and, if
so, the terms and provisions applying; (vi) what voting rights are to apply, if
any, not to exceed one vote per share; (vii) the rights to which the holders of
shares are entitled upon voluntary or involuntary liquidation or dissolution;
and (viii) what restrictions are to apply, if any, on the issue or reissue of
any additional MCN Preferred Stock. If MCN Preferred Stock of a class were to be
issued, it would be preferred to the MCN Common Stock with respect to dividends
and other matters and might have the effect of making more difficult any change
in control of MCN.
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<PAGE> 25
Management cannot currently foresee whether or when MCN might issue any
shares of MCN Preferred Stock.
OTHER PROVISIONS
The Articles of Incorporation of MCN provide for a classified Board of
Directors; the removal of directors by a two-thirds vote of shareholders (but
only for cause) or by vote of two-thirds of the other directors (with or without
cause); procedures for nomination by shareholders of candidates for election as
a director; director consideration of other constituencies when evaluating a
business combination; the prohibition of shareholder action by written consent;
supermajority (two-thirds) shareholder vote to amend or repeal the foregoing
provisions; and limitations on the personal liability of directors. These
provisions are generally intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors and ensure the careful
consideration of proposed business combinations and any appropriate alternatives
for MCN's stockholders. Such provisions may have the effect of making more
difficult or discouraging a proxy contest, or delaying, deferring or preventing
a future takeover or change in control of MCN.
DESCRIPTION OF THE MCN MICHIGAN PREFERRED SECURITIES
MCN Michigan may issue, from time to time, Preferred Securities, in one or
more series, having terms described in the Prospectus Supplement relating
thereto. The limited partnership agreement of MCN Michigan will be amended and
restated (as so amended and restated, the "Limited Partnership Agreement") to
authorize the establishment of one or more series of Preferred Securities,
having such terms, including dividends, redemption, voting, liquidation rights
and such other preferred, deferred or other special rights or such restrictions
as shall be set forth therein or otherwise established by the General Partner
pursuant thereto. Reference is made to the Prospectus Supplement relating to the
Preferred Securities of a particular series for specific terms, including (i)
the distinctive designation of such series which shall distinguish it from other
series; (ii) the number of Preferred Securities included in such series, which
number may be increased or decreased from time to time unless otherwise provided
by the General Partner in creating the series; (iii) the annual dividend rate
(or method of determining such rate) for Preferred Securities of such series and
the date or dates upon which such dividends shall be payable, provided, however,
dividends on any series of Preferred Securities shall be payable on a monthly
basis to holders of such series of Preferred Securities as of a record date in
each month during which such series of Preferred Securities are outstanding;
(iv) whether dividends on Preferred Securities of such series shall be
cumulative, and, in the case of Preferred Securities of any series having
cumulative dividend rights, the date or dates or method of determining the date
or dates from which dividends on Preferred Securities of such series shall be
cumulative; (v) the amount or amounts which shall be paid out of the assets of
MCN Michigan to the holders of Preferred Securities of such series upon
voluntary or involuntary dissolution, winding-up or termination of MCN Michigan;
(vi) the price or prices at which, the period or periods within which and the
terms and conditions upon which Preferred Securities of such series may be
redeemed or purchased, in whole or in part, at the option of MCN Michigan or the
General Partner; (vii) the obligation, if any, of MCN Michigan to purchase or
redeem Preferred Securities of such series pursuant to a sinking fund or
otherwise and the price or prices at which, the period or periods within which
and the terms and conditions upon which Preferred Securities of such series
shall be purchased or redeemed, in whole or in part, pursuant to such
obligation; (viii) the period or periods within which and the terms and
conditions, if any, including the price or prices or the rate or rates of
conversion or exchange and the terms and conditions of any adjustments thereof,
upon which the Preferred Securities of such series shall be convertible or
exchangeable at the option of the holder of the Preferred Security, or MCN
Michigan, into any other Interests (as such term is defined in the Limited
Partnership Agreement) or securities or other property or cash or into any other
series of Preferred Securities; (ix) the voting rights, if any, of Preferred
Securities of such series in addition to those required by law or set forth in
the Limited Partnership Agreement, and any requirement for the approval by the
holders of Preferred Securities, or of Preferred Securities of one or more
series, or of both, as a condition to specified action or amendments to the
Limited Partnership Agreement; (x) the additional amounts, if any, which MCN
Michigan will pay as a distribution as necessary in order that the net amounts
received by holders of Preferred Securities of such series after withholding or
deduction of
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<PAGE> 26
certain taxes, duties, assessments or governmental charges will equal the amount
which would have been receivable in respect of such Preferred Securities in the
absence of such withholding or deduction; and (xi) any other relative rights,
powers, preferences, privileges, limitations or restrictions of Preferred
Securities of the series consistent with the Limited Partnership Agreement or
with applicable law. All Preferred Securities offered hereby will be guaranteed
by MCN to the limited extent set forth below under "Description of the
Guarantee." Any applicable federal income tax considerations applicable to any
offering of Preferred Securities will be described in the Prospectus Supplement
relating thereto. The aggregate number of Preferred Securities which MCN
Michigan shall have authority to issue is unlimited.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by MCN for the benefit of the holders, from time
to time, of Preferred Securities. The summary does not purport to be complete
and is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the Guarantee, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
MCN will irrevocably and unconditionally agree, to the extent set forth
herein, to pay in full, to the holders of the Preferred Securities of each
series, the Guarantee Payments (as defined below) (except to the extent paid by
MCN Michigan), as and when due, regardless of any defense, right of set-off or
counterclaim which MCN may have or assert against MCN Michigan. The following
payments with respect to any series of Preferred Securities to the extent not
paid by MCN Michigan (the "Guarantee Payments") will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid dividends which are required
to be paid on the Preferred Securities of such series, to the extent MCN
Michigan shall have funds legally available therefor, (ii) the redemption price,
including all accrued and unpaid dividends (the "Redemption Price"), payable out
of funds legally available therefor with respect to any Preferred Securities
called for redemption by MCN Michigan and (iii) upon a liquidation of MCN
Michigan, the lesser of (a) the aggregate of the liquidation preference and all
accrued and unpaid dividends on the Preferred Securities of such series to the
date of payment and (b) the amount of assets of MCN Michigan remaining available
for distribution to holders of Preferred Securities of such series in
liquidation of MCN Michigan. MCN's obligation to make a Guarantee Payment may be
satisfied by direct payment of the required amounts by MCN to the holders of
Preferred Securities or by causing MCN Michigan to pay such amounts to such
holders.
CERTAIN COVENANTS OF MCN
In the Guarantee, MCN will covenant that, so long as any Preferred
Securities remain outstanding, MCN will not declare or pay any dividend on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock if at such time MCN shall be in default with respect to its
payment or other obligations under the Guarantee or there shall have occurred
any event that, with the giving of notice or lapse of time or both, would
constitute an Event of Default under the Subordinated Debt Securities Indenture.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be changed only with the prior approval of the holders of not less
than 66 2/3% in liquidation preference of the outstanding Preferred Securities.
All guarantees and agreements contained in the Guarantee shall bind the
successors, assignees, receivers, trustees and representatives of MCN and shall
inure to the benefit of the holders of the Preferred Securities then
outstanding.
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TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect as to
the Preferred Securities of any series upon full payment of the Redemption Price
of all Preferred Securities of such series and will terminate completely upon
full payment of the amounts payable upon liquidation of MCN Michigan. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities of any series must restore
payment of any sums paid under such series of Preferred Securities or the
Guarantee.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of MCN and will rank
(i) subordinate and junior in right of payment to all other liabilities of MCN,
(ii) pari passu with the most senior preferred or preference stock now or
hereafter issued by MCN and with any guarantee now or hereafter entered into by
MCN in respect of any preferred or preference stock of any affiliate of MCN and
(iii) senior to MCN's common stock. The Limited Partnership Agreement provides
that each holder of Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection.
The Guarantee will be deposited with the General Partner to be held for the
benefit of the holders of each series of Preferred Securities. In the event of
the appointment of a Special Representative to, among other things, enforce the
Guarantee, the Special Representative may take possession of the Guarantee for
such purpose. If no Special Representative has been appointed to enforce the
Guarantee, the General Partner has the right to enforce the Guarantee on behalf
of the holders of each series of Preferred Securities. The holders of not less
than 10% in aggregate liquidation preference of the Preferred Securities have
the right to direct the time, method and place of conducting any proceeding for
any remedy available in respect of the Guarantee, including the giving of
directions to the General Partner or the Special Representative, as the case may
be. If the General Partner or the Special Representative fails to enforce the
Guarantee as provided above, any holder of Preferred Securities may institute a
legal proceeding directly against the Guarantor to enforce its rights under the
Guarantee, without first instituting a legal proceeding against MCN Michigan or
any other person or entity. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by MCN Michigan
and by complete performance of all obligations under the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
PLAN OF DISTRIBUTION
MCN and/or MCN Michigan may sell the Offered Securities (i) to or through
underwriters or dealers; (ii) directly to purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Offered Securities will set forth
the terms of the offering of the Offered Securities, including the name or names
of any underwriters, dealers or agents; the purchase price of the Offered
Securities and the proceeds to MCN and/or MCN Michigan from such sale; any
underwriting discounts and commissions and other items constituting
underwriters' compensation; any initial public offering price and any discounts
or concessions allowed or reallowed or paid to dealers and any securities
exchange on which such Offered Securities may be listed. Any initial public
offering price, discounts or concessions allowed or reallowed or paid to dealers
may be changed from time to time.
If underwriters are used in the sale, the Offered 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 Offered Securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more firms acting as underwriters. The underwriter or underwriters with
respect to a particular underwritten offering of Offered Securities will be
named in the
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Prospectus Supplement 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 relating thereto, the obligations of the underwriters to
purchase the Offered Securities will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all the Offered Securities if
any are purchased.
If dealers are utilized in the sale of Offered Securities, MCN and/or MCN
Michigan will sell such Offered Securities to the dealers as principals. The
dealers may then resell such Offered Securities to the public at varying prices
to be determined by such dealers at the time of resale. The names of the dealers
and the terms of the transaction will be set forth in the Prospectus Supplement
relating thereto.
The Offered Securities may be sold directly by MCN and/or MCN Michigan or
through agents designated by MCN and/or MCN Michigan from time to time. Any
agent involved in the offer or sale of the Offered Securities in respect to
which this Prospectus is delivered will be named, and any commissions payable by
MCN and/or MCN Michigan to such agent will be set forth, in the Prospectus
Supplement relating thereto. 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 Offered Securities may be sold directly by MCN and/or MCN Michigan to
institutional investors or others, who may be deemed to be underwriters within
the meaning of the Securities 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, MCN and/or MCN Michigan will
authorize agents, underwriters or dealers to solicit offers from certain types
of institutions to purchase Offered Securities from MCN and/or MCN Michigan 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.
Agents, dealers and underwriters may be entitled under agreements with MCN
and/or MCN Michigan to indemnification by MCN and/or MCN Michigan against
certain civil liabilities, including liabilities under the Securities Act, or to
contribution with respect to payments which such agents, dealers or underwriters
may be required to make in respect thereof. Agents, dealers and underwriters may
be customers of, engage in transactions with, or perform services for MCN and/or
MCN Michigan in the ordinary course of business.
The Offered 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 Offered
Securities.
VALIDITY OF SECURITIES
The validity of the Offered Securities of MCN will be passed upon for MCN
and/or MCN Michigan by Daniel L. Schiffer, Esq., Vice President, General Counsel
and Secretary of MCN Corporation, and for the underwriters by LeBoeuf, Lamb,
Greene & MacRae, a partnership including professional corporations, New York,
New York. Mr. Schiffer is a full-time employee and officer of MCN and owns 9,984
shares of MCN Common Stock as of August 31, 1994.
EXPERTS
The consolidated financial statements and related financial statement
schedules incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1993 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference (which reports express an unqualified
opinion and include an explanatory paragraph relating to MCN's adoption of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting For
Postretirement Benefit Plans Other Than Pensions"), and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
SPEAKS AS OF ITS DATE AND NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN
ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Summary Information........................ S-3
Selected Financial and Operating
Information.............................. S-4
MCN Corporation............................ S-5
Capitalization of MCN at December 31,
1994..................................... S-6
Use of Proceeds............................ S-6
Description of MCN Capital Stock........... S-6
Price Range of MCN Common Stock and
Common Stock Dividends................. S-7
Experts.................................... S-7
Underwriting............................... S-7
PROSPECTUS
Available Information...................... 2
Incorporation of Certain Documents by
Reference................................ 2
MCN Corporation............................ 3
MCN Michigan Limited Partnership .......... 3
Use of Proceeds............................ 3
Ratio of Earnings to Fixed Charges and
Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends................ 4
Description of MCN Debt Securities......... 4
General.................................. 4
Particular Terms of the Senior Debt
Securities............................. 7
Particular Terms of the Subordinated Debt
Securities............................. 10
Description of MCN Capital Stock........... 14
MCN Common Stock......................... 15
Price Range of MCN Common Stock and
Common Stock Dividends................. 16
MCN Preferred Stock...................... 16
Other Provisions......................... 17
Description of the MCN Michigan Preferred
Securities............................... 17
Description of the Guarantee............... 18
Plan of Distribution....................... 19
Validity of Securities..................... 20
Experts.................................... 20
</TABLE>
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5,000,000 SHARES
[MCN LOGO]
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------------------
PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
SMITH BARNEY INC.
DEAN WITTER REYNOLDS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
A.G. EDWARDS & SONS, INC.
MARCH , 1995
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