<PAGE> 1
As filed with the Securities and Exchange Commission on March 2, 1998.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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<S> <C> <C>
MCN ENERGY GROUP INC. Michigan 38-2820658
MCN Financing II Delaware 38-6668275
MCN Financing IV Delaware 38-3334052
(Exact Name of Registrant as (State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Specified in Its Charter) Incorporation or Organization)
</TABLE>
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500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
------------------------
DANIEL L. SCHIFFER, ESQ.
Senior Vice President, General Counsel and Secretary
MCN ENERGY GROUP INC.
500 Griswold Street, Detroit, Michigan 48226, (313) 256-5500
(Name, Address, Including Zip Code, and Telephone Number, Area Code, of Agent
for Service for Each Registrant)
Copies to:
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<S> <C>
JOHN W. OSBORN, ESQ. WILLIAM S. LAMB, ESQ.
Skadden, Arps, Slate, Meagher & Flom LLP LeBoeuf, Lamb, Greene & MacRae, L.L.P.
919 Third Avenue, New York, New York 10022 125 West 55th Street, New York, New York 10019-5389
(212) 735-2718 (212) 424-8000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement. If the only
securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [X]
CALCULATION OF REGISTRATION FEE
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AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF REGISTERED OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED (1)(6) PER UNIT(1)(2)(3) PRICE(1)(2)(3) FEE(2)(8)
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Preferred Securities of MCN Financing II..........
- ---------------------------------------------------------------------------------------------------------------------------------
Preferred Securities of MCN Financing IV..........
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Subordinated Debt Securities of MCN Energy Group
Inc. ............................................
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Guarantees of Preferred Securities of MCN
Financing II and MCN Financing IV by MCN Energy
Group Inc.(4)....................................
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Stock Purchase Contracts of MCN Energy Group
Inc.(5)..........................................
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Stock Purchase Units of MCN Energy Group(5).......
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value of MCN Energy Group
Inc.(6)..........................................
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock Warrants of MCN Energy Group
Inc.(7) .........................................
- ---------------------------------------------------------------------------------------------------------------------------------
Senior Debt Securities of MCN Energy Group Inc....
- ---------------------------------------------------------------------------------------------------------------------------------
Total........................................... $800,000,000 100% $800,000,000 $236,000
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</TABLE>
(1) Such indeterminate number of Preferred Securities of MCN Financing II and
MCN Financing IV, and such indeterminate principal amount of Subordinated
Debt Securities, Stock Purchase Contracts, Stock Purchase Units, Common
Stock, Common Stock Warrants and Senior Debt Securities of MCN Energy Group
Inc. (formerly MCN Corporation) as may from time to time be issued at
indeterminate prices. Subordinated Debt Securities may be issued and sold to
MCN Financing II and MCN Financing IV, in which event each Subordinated Debt
Securities may later be distributed to the holders of Preferred Securities
upon a dissolution of MCN Financing II or MCN Financing IV, and the
distribution of the assets thereof.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. The aggregate public offering price of the Preferred
Securities of MCN Financing II and MCN Financing IV, and the Subordinated
Debt Securities, Stock Purchase Contracts, Stock Purchase Units, Common
Stock, Common Stock Warrants and Senior Debt Securities of MCN Energy Group
Inc. registered hereby will not exceed $800,000,000.
(3) Exclusive of accrued interest and distributions, if any.
(4) Includes the rights of holders of the Preferred Securities under the
Guarantees of Preferred Securities and back-up undertakings, consisting of
obligations by MCN Energy Group Inc. as set forth in the Amended and
Restated Declaration of Trust, the Subordinated Debt Securities Indenture
and Supplemental Indentures thereto, in each case as further described in
the Registration Statement. No separate consideration will be received for
any Guarantees or any back-up undertakings.
(5) Includes an indeterminable number of shares of Common Stock issuable by MCN
Energy Group Inc. upon settlement of the Stock Purchase Contracts or Stock
Purchase Units issued by MCN Energy Group Inc.
(6) Includes Preferred Share Purchase Rights ("Rights"). The Rights are
associated with and trade with the Common Stock. The value, if any,
attributed to the Rights is reflected in the market price of the Common
Stock.
(7) Includes such indeterminable number of shares of Common Stock as may from
time to time be issued by MCN Energy Group Inc. upon the exercise of the
Common Stock Warrants.
(8) Does not include certain securities of MCN Energy Group Inc. covered by
Registration Statement No. 333-21175 which are being carried over to this
Registration Statement. Also does not include the Registration Fee of
$41,185 which was previously paid with respect to such securities.
Pursuant to the provisions of Rule 429 under the Securities Act of 1933, the
Prospectus contained in this Registration Statement also relates to $135,908,125
of unsold securities covered by the Registration Statement on Form S-3
(Registration No. 333-21175) of MCN Energy Group Inc., MCN Financing II and MCN
Financing IV which are being carried forward in connection with this
Registration Statement. Such Registration Statement is accordingly amended to
reflect the information contained herein. In the event that any of such
previously registered Securities are offered prior to the effective date of this
Registration Statement, the amount of such Securities will not be included in
any Prospectus hereunder. The amount of Securities being registered, together
with the remaining Securities registered under Registration statement No.
333-21175, represents the maximum amount of Securities which are expected to be
offered for sale.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS 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 STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 2, 1998
PROSPECTUS
$935,908,125
SENIOR DEBT SECURITIES
SUBORDINATED DEBT SECURITIES
COMMON STOCK
COMMON STOCK WARRANTS
STOCK PURCHASE CONTRACTS
STOCK PURCHASE UNITS
-------------------------
MCN FINANCING II
MCN FINANCING IV
PREFERRED SECURITIES
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
MCN ENERGY GROUP INC.
-------------------------
MCN Energy Group Inc., 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) and/or (ii) above being referred to herein as the
"Debt Securities"), (iii) common stock, $.01 par value ("MCN Common Stock"),
(iv) warrants to purchase shares of MCN Common Stock ("Common Stock Warrants"),
(v) stock purchase contracts ("Stock Purchase Contracts") to purchase MCN Common
Stock or (vi) stock purchase units ("Stock Purchase Units"), each representing
ownership of a Stock Purchase Contract and Debt Securities or Preferred
Securities (as defined below) or debt obligations of third parties, including
U.S. Treasury Securities, securing the holder's obligation to purchase the MCN
Common Stock under the Stock Purchase Contracts, 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 Financing II and MCN Financing IV (each, an "MCN Trust" and
collectively, the "MCN Trusts"), each a statutory business trust formed under
the laws of the State of Delaware, may offer, from time to time, preferred
securities, representing preferred undivided beneficial interests in the assets
of the respective MCN Trust ("Preferred Securities"). The payment of periodic
cash distributions ("distributions") with respect to Preferred Securities of
each of the MCN Trusts out of moneys held by each of the MCN Trusts, and payment
on liquidation, redemption or otherwise with respect to such Preferred
Securities, will be guaranteed by MCN to the extent described herein (each a
"Preferred Securities Guarantee"). See "Description of the Preferred Securities
Guarantees" below. MCN's obligations under the Preferred Securities Guarantees
are subordinate and junior in right of payment to all other liabilities of MCN
and rank pari passu with the most senior preferred stock, if any, issued from
time to time by MCN. Subordinated Debt Securities may be issued directly or
issued and sold from time to time in one or more series to an MCN Trust, or a
trustee of such MCN Trust, in connection with the investment of the proceeds
from the offering of Preferred Securities and Common Securities (as defined
herein) of such MCN Trust. The Subordinated Debt Securities purchased by an MCN
Trust may be subsequently distributed pro rata to holders of Preferred
Securities and Common Securities in connection with the dissolution of such MCN
Trust upon the occurrence of certain events as may be described in an
accompanying Prospectus Supplement.
Specific terms of the particular Subordinated Debt Securities, the
Preferred Securities and the related Preferred Securities Guarantees, together
with the Stock Purchase Contracts, the Stock Purchase Units, the MCN Common
Stock, the Common Stock Warrants and the Senior Debt 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
(continued on following page)
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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 , 1998.
<PAGE> 3
(continued from previous page)
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, denominations, maturity, premium, if any, any exchange,
conversion, redemption or sinking fund provisions, interest payment dates,
interest rate (which may be fixed or variable) or method of calculating
interest, 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, put
options, if any, initial offering or purchase price, ranking as senior or
subordinated debt, 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, (iii)
in the case of Common Stock Warrants, the offering price, the aggregate number
of shares of MCN Common Stock purchasable upon exercise of such Common Stock
Warrants, and the price at which such number of shares of MCN Common Stock may
be purchased upon such exercise, the date on which the right to exercise such
Common Stock Warrants shall commence and the expiration date of such right,
whether the Common Stock Warrants will be issued in registered or bearer form
and other specific terms of the offering, (iv) in the case of Preferred
Securities, the specific title, aggregate amount, number of securities, stated
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 used to purchase a
specific series of Subordinated Debt Securities of MCN, (v) in the case of Stock
Purchase Contracts, the number of shares of MCN Common Stock issuable
thereunder, the purchase price of the MCN Common Stock, the date or dates on
which the MCN Common Stock is required to be purchased by the holders of the
Stock Purchase Contracts, any periodic payments required to be made by the
Company to the holders of the Stock Purchase Contract or visa versa, and the
terms of the offering and sale thereof, and (vi) in the case of Stock Purchase
Units, the specific terms of the Stock Purchase Contracts and any Debt
Securities or Preferred Securities or debt obligations of third parties securing
the holder's obligation to purchase the MCN Common Stock under the Stock
Purchase Contracts, and the terms of the offering and sale thereof. The Offered
Securities may be offered in amounts, at prices and on terms to be determined at
the time of the offering, provided, however, that the aggregate offering price
to the public of the Offered Securities will be limited to $935,908,125. If so
specified in the applicable Prospectus Supplement, the Offered Securities
offered thereby may be issued in whole or in part in the form of one or more
temporary or permanent global securities.
MCN Common Stock is listed 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". The Prospectus Supplement will state
whether any Offered Securities offered thereby will be listed on any national
securities exchange. If such Offered Securities are not listed on any national
securities exchange, there can be no assurance that there will be a secondary
market for any such Offered Securities.
MCN and/or each of the MCN Trusts may sell the Offered Securities to or
through underwriters, directly to purchasers, through agents or dealers or
through a combination of such methods. See "Plan of Distribution." If any agents
of MCN and/or any MCN Trust 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 fees, 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.
<PAGE> 4
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, ANY ACCOMPANYING
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED OR DEEMED INCORPORATED BY
REFERENCE HEREIN, AND ANY INFORMATION OR REPRESENTATIONS NOT CONTAINED HEREIN OR
THEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MCN OR THE MCN
TRUSTS OR BY ANY AGENT, DEALER OR UNDERWRITER. THIS PROSPECTUS AND ANY
ACCOMPANYING PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AND/OR
ANY PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN
OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF SUCH INFORMATION.
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. The SEC also
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
The address of such site is http://www.sec.gov. 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 by MCN Energy Group Inc. and the MCN Trusts 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, the MCN Trusts, 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 any of the MCN Trusts have been
included herein. MCN does not consider that such financial statements would be
material to holders of the Preferred Securities because (i) all of the voting
securities of each of the MCN Trusts will be owned, directly or indirectly, by
MCN, a reporting company under the Exchange Act, (ii) each of the MCN Trusts has
no independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of such MCN Trust and
investing the proceeds thereof in Subordinated Debt Securities issued by MCN,
and (iii) MCN's obligations described herein and in any accompanying prospectus
supplement under the Declarations of each Trust, the Guarantee issued with
respect to Preferred Securities issued by that Trust, the Subordinated Debt
Securities purchased by that Trust and the related Indenture, taken together,
constitute a full and unconditional guarantee of payments due on the Trust
Securities. See "Particular Terms of the Subordinated Debt Securities" and
"Description of the Preferred Securities Guarantees."
The MCN Trusts are not currently subject to the information reporting
requirements of the 1934 Act. The MCN Trusts will become subject to such
requirements upon the effectiveness of the Registration Statement, although they
intend to seek and expect to receive exemptions therefrom.
2
<PAGE> 5
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, 1997.
2. The description of the MCN Common Stock as contained in its Form 8-B
dated September 29, 1988.
3. The description of MCN's Preferred Share Purchase Rights contained in
its Form 8-A dated December 28, 1989 and July 23, 1997.
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 or in any Prospectus Supplement and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference in this Prospectus or in any Prospectus Supplement
shall be deemed to be modified or superseded for purposes of this Prospectus or
any Prospectus Supplement to the extent that a statement contained in this
Prospectus or in any Prospectus Supplement or in any other subsequently filed
document which also is or is deemed to be incorporated by reference in this
Prospectus or in any Prospectus Supplement modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus or any
Prospectus Supplement.
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 Energy Group Inc., 500 Griswold
Street, Detroit, Michigan 48226; telephone 1-800-548-4655.
FORWARD-LOOKING STATEMENTS
Statements contained in or incorporated by reference into this Prospectus
which are not historical in nature are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve certain risks and uncertainties that may cause actual future
results to differ materially from those contemplated, projected, estimated or
budgeted in such forward-looking statements. Factors that may impact forward
looking statements include, but are not limited to, the following: (i) the
effects of weather and other natural phenomena; (ii) increased competition from
other energy suppliers as well as alternative forms of energy; (iii) the capital
intensive nature of the Company's business; (iv) economic climate and growth in
the geographic areas in which the Company does business; (v) the uncertainty of
gas and oil reserve estimates; (vi) the timing and extent of changes in
commodity prices for natural gas, electricity and crude oil; (vii) the nature,
availability and projected profitability of potential projects and other
investments available to the Company; (viii) conditions of capital markets and
equity markets; (ix) changes in the economic and political climate and
currencies of foreign countries where the Company has invested or may invest in
the future and (x) the effects of changes in governmental policies and
regulatory actions, including income taxes, environmental compliance and
authorized rates. See "Incorporation of Certain Documents by Reference" above.
3
<PAGE> 6
MCN ENERGY GROUP INC.
MCN is a diversified energy holding company with natural gas markets and
investments throughout North America. MCN operates through two major business
groups, Diversified Energy and Gas Distribution. MCN, organized in 1988, is
exempt from most provisions of the Public Utility Holding Company Act of 1935,
as amended.
DIVERSIFIED ENERGY, operating through MCN Investment Corporation ("MCNIC"),
is involved in the following businesses: Exploration & Production with proved
gas and oil reserves in the Midwest/Appalachia, Midcontinent/Gulf Coast and
Western regions of the United States; Pipelines & Processing with gathering,
processing and transmission facilities near areas of rapid reserve development
and growing consumer markets; Energy Marketing and Power Generation with gas and
electric markets and investments in electric generation and distribution
facilities; and Gas Storage with investments in storage facilities.
GAS DISTRIBUTION consists principally of Michigan Consolidated Gas Company
("MichCon"), a Michigan corporation organized in 1898 that, with its
predecessors has been in business for nearly 150 years. MichCon is a natural gas
distribution and transmission company serving 1.2 million customers in more than
500 communities throughout Michigan. MichCon is subject to the accounting
requirements and rate regulation of the Michigan Public Service Commission with
respect to the distribution and transportation of natural gas.
The mailing address of MCN's principal executive office is 500 Griswold
Street, Detroit, Michigan 48226 and its telephone number is (313) 256-5500.
THE MCN TRUSTS
Each of MCN Financing II and MCN Financing IV is a statutory business trust
formed under Delaware law pursuant to (i) a separate declaration of trust (each
a "Declaration") executed by the Company, as sponsor for such trust (the
"Sponsor") and the MCN Trustees (as defined herein) for such trust and (ii) the
filing of a certificate of trust with the Delaware Secretary of State on March
6, 1996, in the case of MCN Financing II and February 3, 1997, in the case of
MCN Financing IV. Each MCN Trust exists for the exclusive purposes of (i)
issuing the Preferred Securities and common securities representing undivided
beneficial interests in the assets of such Trust (the "Common Securities" and,
together with the Preferred Securities, the "Trust Securities"), (ii) investing
the gross proceeds of the Trust Securities in the Subordinated Debt Securities
and (iii) engaging in only those other activities necessary or incidental
thereto. All of the Common Securities will be directly or indirectly owned by
the Company. The Common Securities will rank pari passu, and payments will be
made thereon pro rata, with the Preferred Securities except that upon an event
of default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. The Company will, directly or indirectly, acquire
Common Securities in an aggregate liquidation amount equal to 3% of the total
capital of each MCN Trust. Each MCN Trust has a term of approximately 45 years,
other than MCN Financing II, which has a term of approximately 25 years, but may
earlier terminate as provided in the Declaration. Each MCN Trust's business and
affairs will be conducted by the trustees (the "MCN Trustees") appointed by the
Company, as the direct or indirect holder of all the Common Securities. The
holder of the Common Securities will be entitled to appoint, remove or replace
any of, or increase or reduce the number of, the MCN Trustees of an MCN Trust.
The duties and obligations of the MCN Trustees shall be governed by the
Declaration of such MCN Trust. A majority of the MCN Trustees (the "Regular
Trustees") of each MCN Trust will be persons who are employees or officers of or
affiliated with the Company. In certain limited circumstances set forth in a
Prospectus Supplement, the holders of a majority of the Preferred Securities
will be entitled to appoint one additional Regular Trustee, who need not be an
employee or officer of or otherwise affiliated with the Company. One MCN Trustee
of each MCN Trust will be a financial institution which will be unaffiliated
with the Company and which shall act as property trustee and as indenture
trustee for purposes of the Trust Indenture Act of 1939 (the "Trust Indenture
Act"), pursuant to the terms set forth in a Prospectus Supplement (the "Property
Trustee" or the "Institutional Trustee"). In addition, unless the Property
Trustee maintains a principal place of business in the State of Delaware, and
otherwise meets the requirements of applicable law, one MCN Trustee of each MCN
Trust will have its principal place of business or reside in the
4
<PAGE> 7
State of Delaware (the "Delaware Trustee"). The Company will pay all fees and
expenses related to the MCN Trusts and the offering of Trust Securities, the
payment of which will be guaranteed by the Company. The office of the Delaware
Trustee for each MCN Trust in the State of Delaware is Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of each MCN Trust shall be c/o MCN Energy Group
Inc., 500 Griswold Street, Detroit, Michigan 48226; telephone 1-313-256-5500.
USE OF PROCEEDS
Each MCN Trust will use the proceeds received from the sale of its
Preferred Securities to purchase Subordinated Debt Securities from MCN. Unless
otherwise indicated in a Prospectus Supplement with respect to the proceeds from
the sale of the particular Offered Securities to which such Prospectus
Supplement relates, MCN intends to add the net proceeds from the sale of Offered
Securities to its general funds, to be used for general corporate purposes,
which may include capital expenditures, investment in subsidiaries, working
capital, repayment of debt and other business opportunities.
RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to combined fixed charges and preferred stock dividends
for MCN on a historical basis for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)(2)(3)......................... 2.18 2.28 2.55 2.70 3.15
</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 Combined Earnings to Fixed Charges and Preferred Stock
Dividends is equal to the Ratio of Earnings to Fixed Charges and is not
disclosed separately.
(2) The Ratio of Earnings to Fixed Charges is based on earnings from operations.
"Earnings" consist of the pre-tax income of majority-owned and 50%-owned
companies adjusted to include any income actually received from less than
50%-owned companies, plus fixed charges, less interest capitalized during
the period for nonutility companies and less the preferred stock dividend
requirements of MichCon included in fixed charges but not deducted in the
determination of pre-tax income. "Fixed Charges" represent (a) interest
(whether expensed or capitalized), (b) amortization of debt discount,
premium and expense, (c) as estimate of interest implicit in rentals, and
(d) in the case of MCN, the preferred securities dividend requirements of
subsidiaries (MichCon, MCN Michigan Limited Partnership, MCN Financing I,
MCN Financing III, MCN Financing V and MCN Financing VI), increased to
reflect the pre-tax earnings requirement for MichCon.
(3) In June 1996, MCN completed the sale of its computer operations subsidiary,
Genix. For purposes of calculating the Ratio of Earnings to Fixed Charges,
Genix has been classified as a discontinued operation and is therefore
excluded from the ratio for all periods presented.
INTEREST COVERAGE RATIO
The following table sets forth the interest coverage ratio for MCN on a
historical basis for the periods indicated. This ratio differs from the SEC
prescribed "Ratio of Earnings to Fixed Charges" in its treatment of certain
hybrid securities of MCN.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1997 1996 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
MCN(1)............................... 2.94 2.70 3.02 3.40 3.25
</TABLE>
- -------------------------
(1) The interest coverage ratio is the quotient of MCN's Income From Continuing
Operations Before Income Taxes, as adjusted and defined below, divided by
Interest Rate Charges as defined below.
5
<PAGE> 8
Income From Continuing Operations Before Income Taxes as reported on MCN's
Consolidated Statement of Income has been adjusted to add the following: (1)
Interest Rate Charges as defined below, (2) dividends on the $100,000,000 of
9 3/8% redeemable preferred securities of MCN Michigan Limited Partnership, (3)
dividends on the $132,250,000 of 8% FELINE PRIDES of MCN Financing III, (4)
interest on the $130,000,000 of 6.82% Series Medium-Term Notes issued in
conjunction with the $135,000,000 of 8 3/4% Preferred Redeemable Increased
Dividend Equity Securities of MCN, (5) dividends on the $80,000,000 of 8 5/8%
Trust Originated Preferred Securities of MCN Financing I and (6) interest
related to nonrecourse debt of MCN. In addition, capitalized interest, pension
cost and postretirement benefit costs have been subtracted from the
determination of Income From Continuing Operations Before Income Taxes.
The computation of Interest Rate Charges includes total interest expense as
reported on MCN's Consolidated Statement of Income adjusted to add: (1)
capitalized interest expense, (2) dividends on the $100,000,000 of Single Point
Remarketed Reset Capital Securities of MCN Financing VI, (3) dividends on the
$100,000,000 of Private Institutional Trust Securities of MCN Financing V and
(4) interest expense implicit in rentals. In addition, interest expense reported
on MCN's Consolidated Statement of Income has been adjusted to exclude: (1)
interest on the $130,000,000 of 6.82% Series Medium-Term Notes issued in
conjunction with the $135,000,000 of 8 3/4% Preferred Redeemable Increased
Dividend Equity Securities of MCN and (2) interest expense related to
nonrecourse debt of MCN.
6
<PAGE> 9
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. The Senior Debt Securities will be issued under an Indenture dated
as of September 1, 1994, as supplemented by the First Supplemental Indenture,
dated June 4, 1997, the Second Supplemental Indenture dated June 6, 1997, and
the Third Supplemental Indenture dated June 6, 1997 (the "Senior Debt Securities
Indenture"), between the Company and NBD Bank Michigan ("NBD"), as trustee (the
"Senior Debt Securities Trustee"). NBD is a wholly-owned subsidiary of First
Chicago NBD Corporation. The Subordinated Debt Securities will be issued under
an Indenture, dated as of September 1, 1994, as supplemented by the First
Supplemental Indenture dated April 17, 1996, the Second Supplemental Indenture
dated July 24, 1996, and the Third Supplemental Indenture dated March 19, 1997
(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."
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 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; (9) the right of Holders, if any, to put the Subordinated Debt
Securities to the Company; and (10) 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
7
<PAGE> 10
exchangeable and transfers thereof will be registrable, at the Place of Payment,
provided that, at the option of the Company, payment of interest may be made by
check mailed or wire transferred to the address of the person entitled thereto
as it appears in the Security Register.
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Offered 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.
"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
Unless otherwise specified in the applicable Prospectus Supplement, 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
8
<PAGE> 11
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.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as the Depositary for a Global Security, or its nominee, is the registered owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or Holder of the 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.
9
<PAGE> 12
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.
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;
10
<PAGE> 13
(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.
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.
11
<PAGE> 14
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.
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
12
<PAGE> 15
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, 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 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.
"Project Finance Indebtedness" means Indebtedness of a Subsidiary
(other than a Utility and other than the Company) secured by a Lien on any
property, acquired, constructed or improved by such Subsidiary after the
date of execution of the Subordinated Debt Securities Indenture which Lien
is created or assumed contemporaneously with, or within 120 days after,
such acquisition or completion of such construction or improvement, or
within six months thereafter pursuant to a firm commitment for financing
arranged with a lender or investor within such 120-day period, to secure or
provide for the payment of all or any part of the purchase price of such
property or the cost of such construction or improvement or on any property
existing at the time of acquisition thereof; provided that such a Lien
shall not apply to any property theretofore owned by any such Subsidiary
other than, in the case of any such construction or improvement, any
theretofore unimproved real property on which the property so constructed
or the improvement is located; and provided further that such Indebtedness,
by its terms,
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<PAGE> 16
shall limit the recourse of any holder of such Indebtedness (or trustee on
such holder's behalf) in the event of any default in such Indebtedness to
the assets subject to such Liens and the capital stock of, or the dividends
received from, the Subsidiary issuing such Indebtedness. Notwithstanding
the foregoing, Project Finance Indebtedness shall include all Indebtedness
that would constitute Project Finance Indebtedness but for the fact that
such Indebtedness was issued prior to the execution of the Subordinated
Debt Securities Indenture and taking into account the fact that the
property subject to the Lien may have been acquired prior to the execution
of the Subordinated Debt Securities Indenture.
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 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
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<PAGE> 17
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, (but excluding Project Finance Indebtedness and
certain other gas and oil reserve-based financing with limited recourse to MCN
as described below), 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; as noted in
(4) above, it will not be an Event of Default under the Subordinated Debt
Securities Indenture if a default occurs in certain gas and oil reserve-based
financing of MCNIC Oil & Gas Company (formerly known as Supply Development Group
Inc., a Subsidiary of the Company) or its Subsidiaries if the obligations of MCN
and its Subsidiaries with respect to such Indebtedness (other than Supply
Development Group, Inc. and its Subsidiaries) are limited to (i) payments with
respect to Section 29 tax credits, (ii) payments with respect to certain
material contracts of the borrower (generally limited to gas and oil supply
contracts and gas and oil hedging contracts)
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<PAGE> 18
and (iii) certain environmental obligations of the borrowers. As of December 31,
1997, $100,000,000 of such gas and oil reserve-based Indebtedness was
outstanding. From time to time, MCN or its Subsidiaries may establish additional
similar reserve-based credit facilities with respect to which a default would
not result in an Event of Default under the Subordinated Debt Securities
Indenture.
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 to 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 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.
In addition, in the case of a Junior Subordinated Debenture issued to an
MCN Trust, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Company to pay interest or principal, then
a holder of Preferred Securities of such MCN Trust may directly institute a
proceeding against the Company for payment.
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
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<PAGE> 19
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 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
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<PAGE> 20
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.
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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 December 31, 1997, there were no
shares of MCN Preferred Stock outstanding and 78,231,889 shares of MCN Common
Stock outstanding.
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"). 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
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.
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
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<PAGE> 22
prices of the MCN Common Stock, as reported on the NYSE Composite Tape, and the
dividends declared on the MCN Common Stock, have been as follows:
<TABLE>
<CAPTION>
CASH DIVIDENDS
HIGH LOW PAID PER SHARE
---- --- --------------
<S> <C> <C> <C> <C> <C>
1996
First Quarter............................................. 25 1/2 21 5/8 .2325
Second Quarter............................................ 25 5/8 22 3/4 .2325
Third Quarter............................................. 27 5/8 22 3/4 .2325
Fourth Quarter............................................ 30 1/2 26 5/8 .2425
1997
First Quarter............................................. 32 5/8 28 1/8 .2425
Second Quarter............................................ 30 13/16 27 3/8 .2425
Third Quarter............................................. 33 30 3/8 .2425
Fourth Quarter............................................ 40 1/2 32 .2550
1998
First Quarter (through February 25, 1998)................. 39 7/8 36 1/2 .2550
</TABLE>
The closing price of MCN Common Stock on December 31, 1997 was $40.375 per
share. The book value of the MCN Common Stock on December 31, 1997 was $14.74
per share.
The timing and amount of future cash dividends will depend on 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 direct stock purchase and dividend reinvestment plan under
which investors 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 for the trading day
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.
Management cannot currently foresee whether or when MCN might issue any
shares of MCN Preferred Stock.
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<PAGE> 23
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 TRUST PREFERRED SECURITIES
Each MCN Trust may issue, from time to time, only one series of Preferred
Securities having terms described in the Prospectus Supplement relating thereto.
The Declaration of each MCN Trust authorizes the Regular Trustees of such MCN
Trust to issue on behalf of such MCN Trust one series of Preferred Securities.
The Declaration will be qualified as an indenture under the Trust Indenture Act.
The Institutional Trustee, Wilmington Trust Company, an independent trustee,
will act as indenture trustee for the Preferred Securities, to be issued by each
MCN Trust, for the purposes of compliance with the provisions of the Trust
Indenture Act. The Preferred Securities will have such terms, including
distributions, redemption, voting, liquidation rights and such other preferred,
deferred or other special rights or such restrictions as shall be set forth in
the Declaration or made part of the Declaration by the Trust Indenture Act, and
which will mirror the terms of the Subordinated Debt Securities held by the MCN
Trust and as described in the Prospectus Supplement related thereto. Reference
is made to the Prospectus Supplement relating to the Preferred Securities of the
Company for specific terms, including (i) the distinctive designation of such
Preferred Securities; (ii) the number of Preferred Securities issued by such MCN
Trust; (iii) the annual distribution rate or rates (or method of determining
such rate or rates) for Preferred Securities issued by such MCN Trust and the
date or dates upon which such distributions shall be payable; provided, however,
that distributions on such Preferred Securities shall be payable on a periodic
basis to holders of such Preferred Securities as of a record date in each period
during which such Preferred Securities are outstanding; (iv) whether
distributions on Preferred Securities issued by such MCN Trust shall be
cumulative, and, in the case of Preferred Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities issued by such MCN Trust
shall be cumulative; (v) the amount or amounts which shall be paid out of the
assets of such MCN Trust to the holders of Preferred Securities of such MCN
Trust upon voluntary or involuntary dissolution, winding-up or termination of
such MCN Trust; (vi) the obligation or option, if any, of such MCN Trust to
purchase or redeem Preferred Securities issued by such MCN Trust and the price
or prices at which, the period or periods within which, and the terms and
conditions upon which, Preferred Securities issued by such MCN Trust shall be
purchased or redeemed, in whole or in part, pursuant to such obligation or
option (with such redemption price to be determined through negotiations among
the Company and the Underwriters based on, among other factors, redemption
prices of securities similar to the Preferred Securities and market conditions
generally); (vii) the voting rights, if any, of Preferred Securities issued by
such MCN Trust in addition to those required by law, including the number of
votes per Preferred Security and any requirement for the approval by the holders
of Preferred Securities, or of Preferred Securities issued by one or more MCN
Trusts, or of both, as a condition to specified action or amendments to the
Declaration of such MCN Trust; (viii) the terms and conditions, if any, upon
which the Subordinated Debt Securities may be distributed to holders of
Preferred Securities; (ix) if applicable, any securities exchange upon which the
Preferred Securities shall be listed; and (x) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such MCN Trust not inconsistent with the Declaration of such MCN Trust
or with applicable law. All Preferred Securities offered hereby will be
guaranteed by the Company to the extent set forth below under "Description of
the Preferred Securities Guarantees." The Preferred Securities Guarantee of MCN,
when taken together with MCN's
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<PAGE> 24
obligations under the Subordinated Debt Securities and the relevant Supplemental
Indenture, and its obligations under each Declaration, including obligations to
pay costs, expenses, debts and liabilities of the MCN Trust (other than with
respect to the Trust Securities), would provide a full and unconditional
guarantee of amounts due on Preferred Securities issued by each of MCN Financing
II and MCN Financing IV. Certain United States federal income tax considerations
applicable to any offering of Preferred Securities will be described in the
Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each MCN Trust
will issue one series of Common Securities. The Declaration of each MCN Trust
authorizes the Regular Trustees of such trust to issue on behalf of such MCN
Trust one series of Common Securities having such terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the Common Securities issued by an MCN Trust will be
substantially identical to the terms of the Preferred Securities issued by such
trust and the Common Securities will rank pari passu, and payments will be made
thereon pro rata, with the Preferred Securities except that, upon an event of
default under the Declaration, the rights of the holders of the Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Preferred Securities. Except in certain limited circumstances, the Common
Securities will also carry the right to vote to appoint, remove or replace any
of the MCN Trustees of an MCN Trust. All of the Common Securities of each MCN
Trust will be directly or indirectly owned by the Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If an Event of Default under the Declaration of an MCN Trust occurs and is
continuing, then the holders of Preferred Securities of such MCN Trust would
rely on the enforcement by the Institutional Trustee of its rights as a holder
of the applicable series of Subordinated Debt Securities against the Company. In
addition, the holders of a majority in liquidation amount of the Preferred
Securities of such an MCN Trust will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Institutional Trustee or to direct the exercise of any trust or power conferred
upon the Institutional Trustee under the applicable Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available to
it as a holder of the Subordinated Debt Securities. If the Institutional Trustee
fails to enforce its rights under the applicable series of Subordinated Debt
Securities, a holder of Preferred Securities of such MCN Trust may institute a
legal proceeding directly against the Company to enforce the Institutional
Trustee's rights under the applicable series of Subordinated Debt Securities
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if an Event of
Default under the applicable Declaration has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the applicable series of Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities of such MCN Trust may
directly institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the applicable series of Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder (a "Direct Action") on or after the
respective due date specified in the applicable series of Subordinated Debt
Securities. In connection with such Direct Action, the Company will be
subrogated to the rights of such holder of Preferred Securities under the
applicable Declaration to the extent of any payment made by the Company to such
holder of Preferred Securities in such Direct Action.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by MCN for the
benefit of the holders from time to time of Preferred Securities. Each Preferred
Securities Guarantee will be qualified as an indenture under the Trust Indenture
Act. Wilmington Trust Company, an independent trustee, will act as indenture
trustee under each Preferred Securities Guarantee (the "Preferred Guarantee
Trustee") for the purposes of compliance with the provisions of the Trust
Indenture Act. The terms of each Preferred Securities Guarantee will be those
set forth in such Preferred Securities Guarantee and those made part of such
Preferred Securities Guarantee by the Trust
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<PAGE> 25
Indenture Act. The following 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 form of Preferred Securities Guarantee, which is filed as
an exhibit to the Registration Statement of which this Prospectus forms a part,
and to the Trust Indenture Act. Each Preferred Securities Guarantee will be held
by the Preferred Guarantee Trustee for the benefit of the holders of the
Preferred Securities of the applicable MCN Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will
irrevocably and unconditionally agree, to the extent set forth therein, to pay
in full, to the holders of the Preferred Securities issued by an MCN Trust, the
Guarantee Payments (as defined herein)(except to the extent paid by such MCN
Trust), as and when due, regardless of any defense, right of set-off or
counterclaim which such MCN Trust may have or assert. The following payments or
distributions with respect to Preferred Securities issued by an MCN Trust to the
extent not paid by such MCN Trust (the "Guarantee Payments"), will be subject to
the Preferred Securities Guarantee thereon (without duplication): (i) any
accrued and unpaid distributions which are required to be paid on such Preferred
Securities, to the extent such MCN Trust shall have funds available therefor;
(ii) the redemption price (the "Redemption Price") and all accrued and unpaid
distributions to the date of redemption to the extent such MCN Trust has funds
available therefor with respect to any Preferred Securities called for
redemption by such MCN Trust and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such MCN Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of Preferred Securities or the redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to the
extent such MCN Trust has funds available therefor and (b) the amount of assets
of such MCN Trust remaining available for distribution to holders of such
Preferred Securities in liquidation of such MCN Trust. The Company's obligation
to make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Company to the holders of Preferred Securities or by causing the
applicable MCN Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will be a guarantee with respect to the
Preferred Securities issued by the applicable MCN Trust, but will not apply to
any payment of distributions except to the extent such MCN Trust shall have
funds available therefor. If the Company does not make interest payments on the
Subordinated Debt Securities purchased by an MCN Trust, such MCN Trust will not
pay distributions on the Preferred Securities issued by such MCN Trust and will
not have funds available therefor. See "Description of the MCN Debt Securities
- -- Particular Terms of the Subordinated Debt Securities." The Preferred
Securities Guarantee, when taken together with MCN's obligations under the
Subordinated Debt Securities, the Subordinated Debt Securities Indenture, and
the Declaration will provide a full and unconditional guarantee on a
subordinated basis by the Company of payments due on the Preferred Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the MCN Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantee, except that upon an event of default under the
Subordinated Debt Securities Indenture, holders of Preferred Securities shall
have priority over holders of Common Securities with respect to distributions
and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable MCN Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Declaration of
such MCN Trust, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of MCN Common Stock in connection with the
satisfaction by MCN of its obligations under any employee benefit plans or the
satisfaction by MCN of its obligations pursuant to any contract or security
requiring MCN to purchase shares of MCN Common Stock, (ii) as a result of a
reclassification of MCN capital stock or the exchange or conversion of one class
or series of
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<PAGE> 26
MCN's capital stock for another class or series of MCN capital stock or, (iii)
the purchase of fractional interests in shares of MCN's capital stock pursuant
to the conversion or exchange provisions of such MCN capital stock or the
security being converted or exchanged), (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities (including guarantees) issued by the Company which
rank pari passu with or junior to such Subordinated Debt Securities and (c) the
Company shall not make any guarantee payments with respect to the foregoing
(other than pursuant to a Preferred Securities Guarantee).
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; 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),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities issued by the applicable MCN Trust. The manner
of obtaining any such approval of holders of such Preferred Securities will be
as set forth in an accompanying Prospectus Supplement. All guarantees and
agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable MCN Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable MCN Trust (a) upon full payment of the
Redemption Price of all Preferred Securities of such MCN Trust, (b) upon
distribution of the Subordinated Debt Securities held by such MCN Trust to the
holders of the Preferred Securities of such MCN Trust or (c) upon full payment
of the amounts payable in accordance with the Declaration of such MCN Trust upon
liquidation of such MCN Trust. Each Preferred Securities Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any
holder of Preferred Securities issued by the applicable MCN Trust must restore
payment of any sums paid under such Preferred Securities or such Preferred
Securities Guarantee.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
to which such Preferred Securities Guarantee relates have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Preferred Guarantee Trustee in respect of the Preferred Securities
Guarantee or to direct the exercise of any trust or power conferred upon the
Preferred Guarantee Trustee under such Preferred Securities Guarantee. If the
Preferred Guarantee Trustee fails to enforce such Preferred Securities
Guarantee, any holder of Preferred Securities to which such Preferred Securities
Guarantee relates may institute a legal proceeding directly against the Company
to enforce such holder's rights under such Preferred Securities Guarantee,
without first instituting a legal proceeding against the relevant MCN Trust, the
Preferred Guarantee Trustee or any other person or entity. Notwithstanding the
foregoing, if the Company has failed to make a guarantee payment, a holder of
Preferred Securities may directly institute a proceeding against the Company for
enforcement of the Preferred Securities Guarantee for such payment. The Company
waives any right or remedy to require that any action be brought first against
such MCN Trust or any other person or entity before proceeding directly against
the Company.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
The Preferred Securities Guarantees will constitute unsecured obligations
of the Company and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Company, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company and with
any guarantee now or hereafter entered into by MCN in respect of any preferred
or preference stock of any affiliate of the
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<PAGE> 27
Company; and (iii) senior to the Company's common stock. The terms of the
Preferred Securities provide that each holder of Preferred Securities issued by
the applicable MCN Trust by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee relating
thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Preferred Guarantee Trustee,
upon the occurrence of an event of default under such Preferred Securities
Guarantee, from exercising the rights and powers vested in it by such Preferred
Securities Guarantee.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
EFFECT OF OBLIGATIONS UNDER THE
SUBORDINATED DEBT SECURITIES AND THE PREFERRED SECURITIES GUARANTEE
As set forth in the Declaration, the sole purpose of each of the MCN Trusts
is to issue the Trust Securities evidencing undivided beneficial interests in
the assets of each of the MCN Trusts, and to invest the proceeds from such
issuance and sale in the Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Subordinated Debt Securities will
be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) MCN
shall pay all, and the applicable MCN Trust shall not be obligated to pay,
directly or indirectly, all costs, expenses, debt, and obligations of the
applicable MCN Trust (other than with respect to the Trust Securities); and (iv)
the Declaration further provides that the MCN Trustees shall not take or cause
or permit the applicable MCN Trust to, among other things, engage in any
activity that is not consistent with the purposes of the applicable MCN Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by MCN as and to the extent set forth under
"Description of the Preferred Securities Guarantees." If MCN does not make
interest payments on the Subordinated Debt Securities purchased by the
applicable MCN Trust, it is expected that the applicable MCN Trust will not have
sufficient funds to pay distributions on the Preferred Securities. The Guarantee
does not apply to any payment of distributions unless and until the applicable
MCN Trust has sufficient funds for the payment of such distributions. The
Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that MCN has made a payment of
interest or principal on the Subordinated Debt Securities held by the applicable
MCN Trust as its sole asset. The Guarantee, when taken together with MCN's
obligations under the Subordinated Debt Securities and the Indenture and its
obligations under the Declaration, including its obligations to pay costs,
expenses, debts and
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<PAGE> 28
liabilities of the applicable MCN Trust (other than with respect to the Trust
Securities), provide a full and unconditional guarantee of amounts on the
Preferred Securities.
If MCN fails to make interest or other payments on the Subordinated Debt
Securities when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby the holders of the Preferred Securities, using the
procedures described in "Description of the Preferred Securities -- Book-Entry
Only Issuance -- The Depository Trust Company" and "-- Voting Rights" in any
accompanying Prospectus Supplement, may direct the Institutional Trustee to
enforce its rights under the Subordinated Debt Securities. If the Institutional
Trustee fails to enforce its rights under the Subordinated Debt Securities, a
holder of Preferred Securities may institute a legal proceeding against MCN to
enforce the Institutional Trustee's rights under the subordinated Debt
Securities without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of MCN to pay interest or principal on
the Subordinated Debt Securities on the date such interest or principal is
otherwise payable (or in the case of redemption on the redemption date), then a
holder of Preferred Securities may institute a Direct Action for payment on or
after the respective due date specified in the Subordinated Debt Securities. In
connection with such Direct Action, MCN will be subrogated to the rights of such
holder of Preferred Securities under the Declaration to the extent of any
payment made by MCN to such holder of Preferred Securities in such Direct
Action. MCN, under the Guarantee, acknowledges that the Preferred Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Preferred
Securities. If MCN fails to make payments under the Guarantee, the Guarantee
provides a mechanism whereby the holders of the Preferred Securities may direct
the Preferred Guarantee Trustee to enforce its rights thereunder. Any holder of
Preferred Securities may institute a legal proceeding directly against MCN to
enforce the Guarantee Trustee's rights under the Guarantee without first
instituting a legal proceeding against the applicable MCN Trust, the Preferred
Guarantee Trustee, or any other person or entity.
MCN and each of the MCN Trusts believe that the above mechanisms and
obligations, taken together, provide a full and unconditional guarantee by MCN
of payments due on the Preferred Securities. See "Description of the Preferred
Securities Guarantees -- General."
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants for the purchase of MCN Common
Stock. Common Stock Warrants may be issued independently or together with other
Offered Securities offered by any Prospectus Supplement and may be attached to
or separate from such Offered Securities. Each series of Common Stock Warrants
will be issued under one or more warrant agreements (each a "Common Stock
Warrant Agreement") to be entered into between the Company and a bank or trust
company, as common stock warrant agent which will be designated in the
applicable Prospectus Supplement (the "Common Stock Warrant Agent"), all as set
forth in the Prospectus Supplement relating to the particular issue of Common
Stock Warrants. The Common Stock Warrant Agent will act solely as an agent of
the Company in connection with the Common Stock Warrants and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Common Stock Warrants. The following summaries of certain
provisions of the form of Common Stock Warrant Agreement and certificate
representing Common Stock Warrants (the "Common Stock Warrant Certificates") do
not purport to be complete and are subject to and are qualified in their
entirety by reference to, all the provisions of the Common Stock Warrant
Agreement and the Common Stock Warrant Certificate which Agreement and
Certificate will be filed as an exhibit to or incorporated by reference in the
Registration Statement of which this prospectus forms a part.
GENERAL
If Common Stock Warrants are offered, the related Prospectus Supplement
will describe the terms of such Common Stock Warrants, including the following,
where applicable: (1) the offering price; (2) the aggregate number of shares of
MCN Common Stock purchasable upon exercise of such Common Stock Warrants and the
minimum number of Common Stock Warrants that are exercisable; (3) the number of
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<PAGE> 29
shares of MCN Common Stock with which such Common Stock Warrants are being
offered and the number of such Common Stock Warrants being offered with each
such share of MCN Common Stock; (4) the date on and after which such Common
Stock Warrants and the related shares of MCN Common Stock will be transferable
separately; (5) the number of shares of MCN Common Stock purchasable upon
exercise of each such Common Stock Warrant and the price at which such number of
shares of MCN Common Stock may be purchased upon such exercise; (6) the date on
which the right to exercise such Common Stock Warrants shall commence and the
date on which such right shall expire (the "Common Stock Warrant Expiration
Date"); (7) whether the Common Stock Warrants represented by the Common Stock
Warrant Certificates will be issued in registered or bearer form; (8)
information with respect to book-entry procedures, if any; and (9) any other
terms of such Common Stock Warrants for the purchase of shares of MCN Common
Stock which shall not be inconsistent with the provisions of the Common Stock
Warrant Agreements.
Common Stock Warrant Certificates may be exchanged for new Common Stock
Warrant Certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Common Stock Warrant Agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Common Stock
Warrants to purchase MCN Common Stock, holders of such Common Stock Warrants
will not have any rights of holders of shares of MCN Common Stock purchasable
upon such exercise, including the right to receive payments of dividends, if
any, on the MCN Common Stock purchasable upon such exercise or to exercise any
applicable right to vote.
Prospective purchasers of Common Stock Warrants should be aware that
special U.S. Federal income tax, accounting and other considerations may be
applicable to instruments such as Common Stock Warrants. The Prospectus
Supplement relating to any issue of Common Stock Warrants will describe such
considerations.
EXERCISE OF COMMON STOCK WARRANTS
Each Common Stock Warrant will entitle the holder thereof to purchase such
number of shares of MCN Common Stock at such exercise price as shall be set
forth in, or calculable from, the Prospectus Supplement relating to the Common
Stock Warrants. After the close of business on the Common Stock Warrant
Expiration Date (or such earlier or later date to which such Common Stock
Warrant Expiration Date may be accelerated or extended by the Company),
unexercised Common Stock Warrants will become void.
Common Stock Warrants may be exercised by delivery to the Common Stock
Warrant Agent of payment as provided in the applicable Prospectus Supplement of
the amount required to purchase the shares of MCN Common Stock purchasable upon
such exercise together with certain information set forth on the reverse side of
the Common Stock Warrant Certificate. Common Stock Warrants will be deemed to
have been exercised upon receipt of the exercise price, subject to the receipt,
within five business days, of the Common Stock Warrant Certificate evidencing
such Common Stock Warrants. Upon receipt of such payment and the Common Stock
Warrant Certificate properly completed and duly executed at the corporate trust
office of the Common Stock Warrant Agent or any other office indicated in the
applicable Prospectus Supplement, the Company will, as soon as practicable,
issue and deliver the shares of MCN Common Stock purchasable upon such exercise.
If fewer than all of the Common Stock Warrants represented by such Common Stock
Warrant Certificate are exercised, a new Common Stock Warrant Certificate will
be issued for the remaining amount of Common Stock Warrants.
MODIFICATIONS
The Common Stock Warrant Agreement and the terms of the Common Stock
Warrants may be amended by the Company and the Common Stock Warrant Agent,
without the consent of the holders, for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective or inconsistent provision
contained therein, or in any other manner which the Company may deem necessary
or desirable and which will not materially and adversely affect the interests of
the owners.
The Company and the Common Stock Warrant Agent also may modify or amend the
Common Stock Warrant Agreement and the terms of the Common Stock Warrants, with
the consent of the holders of not less
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<PAGE> 30
than a majority in number of the then outstanding unexercised Common Stock
Warrants affected, provided that no such modification or amendment that shortens
the period of time during which the Common Stock Warrants may be exercised,
increases the exercise price of such Common Stock Warrants or otherwise
materially and adversely affects the exercise rights of the holders of the
Common Stock Warrants or reduces the number of outstanding Common Stock Warrants
the consent of whose holders is required for modification or amendment of the
Common Stock Warrant Agreement or the terms of the Common Stock Warrants, may be
made without the consent of the holders affected thereby.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement, the
exercise price of, and the number of shares of MCN Common Stock covered by a
Common Stock Warrant, will be subject to adjustment in certain events,
including: (i) dividends (and other distributions) payable in MCN Common Stock
on any class of capital stock of the Company; (ii) subdivision, combinations and
reclassifications of MCN Common Stock; (iii) the issuance to all holders of MCN
Common Stock of certain rights or warrants entitling them to subscribe for or
purchase MCN Common Stock, at less than the current market price (as defined in
the Common Stock Warrant Agreement for such series of Common Stock Warrants);
and (iv) the distribution to all holders of MCN Common Stock of evidences of
indebtedness or assets of the Company (including securities, but excluding those
dividends and distributions referred to above and dividends and distributions
paid in cash out of surplus or retained earnings of the Company) or rights or
warrants (excluding those referred to above) of the Company, subject to the
limitation that all adjustments by reason of any of the foregoing need not be
made until they result in a cumulative change in the exercise price of at least
1%.
In the event that the Company shall distribute or shall have distributed
any rights or warrants to acquire capital stock pursuant to clause (iv) of the
preceding paragraph ("Capital Stock Rights"), pursuant to which separate
certificates representing such Capital Stock Rights are distributed subsequent
to the initial distribution of such Capital Stock Rights (whether or not such
distribution shall have occurred prior to the date of the issuance of a series
of Common Stock Warrants), the subsequent distribution shall be deemed to be the
distribution of such Capital Stock Rights; provided, however, that the Company
may, in lieu of making any adjustment in the exercise price of, and the number
of shares of MCN Common Stock covered by, a Common Stock Warrant upon a
distribution of separate certificates representing such Capital Stock Rights,
make proper provision so that each holder of a Common Stock Warrant who
exercises such Common Stock Warrant (or any portion thereof) (a) on or before
the record date for such distribution of separate certificates shall be entitled
to receive upon such exercise shares of MCN Common Stock issued with Capital
Stock Rights and (b) after such record date and prior to the expiration,
redemption or termination of such Capital Stock Rights shall be entitled to
receive upon such exercise, in addition to the shares of MCN Common Stock
issuable upon such exercise, the same number of such Capital Stock Rights as
would a holder of the number of shares of MCN Common Stock that such Common
Stock Warrant so exercised would have entitled the holder thereof to acquire in
accordance with the terms and provisions applicable to the Capital Stock Rights
if such Common Stock Warrant were exercised immediately prior to the record date
for such distribution. MCN Common Stock owned by or held for the account of the
Company or any majority owned subsidiary shall not be deemed outstanding for the
purpose of any adjustment.
In the event the Company shall effect any capital reorganization or
reclassification of its shares or shall consolidate, merge or engage in a
statutory share exchange with or into any other corporation (other than a
consolidation, merger or share exchange into which the Company is the surviving
corporation) or shall sell or transfer substantially all its assets to any other
corporation for a consideration consisting in whole or in part of equity
securities of such other corporation, the holders of the Common Stock Warrants
then outstanding will be entitled thereafter to exercise such Common Stock
Warrants to acquire the kind and amount of stock and other securities, cash or
property which they would have received in connection with such transaction had
such Common Stock Warrants been exercised immediately prior to such transaction.
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MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS
If at any time there shall be a merger, consolidation, sale, transfer,
conveyance or other disposition of substantially all of the assets of the
Company, then the successor or assuming corporation shall succeed to and be
substituted for the Company in, and the Company will be relieved of any further
obligation under, the Common Stock Warrant Agreement or the Common Stock
Warrants.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
MCN may issue Stock Purchase Contracts, including contracts obligating
holders to purchase from the Company, and the Company to sell to the holders, a
specified number of shares of MCN Common Stock at a future date or dates. The
price per share of MCN Common Stock may be fixed at the time the Stock Purchase
Contracts are issued or may be determined by reference to a specific formula set
forth in the Stock Purchase Contracts. The Stock Purchase Contracts may be
issued separately or as a part of units ("Stock Purchase Units") consisting of a
Stock Purchase Contract and Debt Securities or Preferred Securities or debt
obligations of third parties, including U.S. Treasury securities, securing the
holders' obligations to purchase the MCN Common Stock under the Stock Purchase
Contracts. The Stock Purchase Contracts may require MCN to make periodic
payments to the holders of the Stock Purchase Units or visa versa, and such
payments may be unsecured or prefunded on some basis. The Stock Purchase
Contracts may require holders to secure their obligations thereunder in a
specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not necessarily be complete and will be qualified in its
entirety by reference to the Stock Purchase Contracts, and, if applicable,
collateral arrangements and depositary arrangements, relating to such Stock
Purchase Contracts or Stock Purchase Units.
PLAN OF DISTRIBUTION
MCN and/or any MCN Trust may sell the Offered Securities (i) to or through
underwriters, (ii) directly to purchasers, (iii) through agents, or (iv) through
dealers. 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 an MCN Trust from such sale;
any underwriting discounts and commissions or agency fees and other items
constituting underwriters' or agents' 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 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 the
applicable MCN Trust will sell such Offered Securities to the dealers as
principals. The dealers may then resell such Offered Securities to the
29
<PAGE> 32
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 an MCN Trust or
through agents designated by MCN and/or such MCN Trust 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 the applicable MCN Trust 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.
Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company and/or applicable MCN Trust. Any
remarketing firm will be identified and the terms of its agreement, if any, with
its compensation will be described in the applicable Prospectus Supplement.
Remarketing firms may be deemed to be underwriters, as such term is defined in
the Securities Act, in connection with the Securities remarketed thereby.
The Offered Securities may be sold directly by MCN and/or an MCN Trust 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.
Agents, dealers, underwriters and remarketing firms may be entitled under
agreements with MCN and/or an MCN Trust to indemnification by MCN and/or the
applicable MCN Trust against certain civil liabilities, including liabilities
under the Securities Act, or to contribution with respect to payments which such
agents, dealers, underwriters or remarketing firms may be required to make in
respect thereof. Agents, dealers, underwriters and remarketing firms may be
customers of, engage in transactions with, or perform services for MCN and/or an
MCN Trust in the ordinary course of business. Remarketing firms may be entitled
under agreements which may be entered into with the Company and/or the
applicable MCN Trust to indemnification or contribution by the Company and/or
the applicable MCN Trust against certain civil liabilities under the Securities
Act, and may be customers of, engage in transactions with or perform services
for MCN and its subsidiaries in the ordinary course of business.
Each series of Offered Securities will be a new issue of securities and,
other than the MCN Common Stock, which is listed on the NYSE, will have no
established trading market. Any underwriters to whom Offered Securities are sold
for public offering and sale may make a market in such Offered Securities, but
such underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. The Offered Securities may or may not be
listed on a national securities exchange, and in the case of the MCN Common
Stock, on any additional 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
by Daniel L. Schiffer, Esq., Senior Vice President, General Counsel and
Secretary of MCN Energy Group Inc., and for the underwriters by LeBoeuf, Lamb,
Greene & MacRae, L.L.P., a limited liability partnership including professional
corporations, New York, New York. Mr. Schiffer is a full-time employee and
officer of MCN and owned 33,255 shares of MCN Common Stock as of December 31,
1997. Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon on behalf of the MCN Trusts by Skadden, Arps,
Slate, Meagher & Flom LLP, special Delaware counsel to the MCN Trusts. Certain
United States federal income taxation matters will be passed upon for MCN and
the MCN Trusts by Skadden, Arps, Slate, Meagher & Flom LLP, special tax counsel
to MCN and the MCN Trusts. LeBoeuf, Lamb, Greene & MacRae, L.L.P. from time to
time renders legal services to the Company.
30
<PAGE> 33
EXPERTS
The consolidated financial statements and related financial statement
schedule incorporated in this prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 have been audited by
DELOITTE & TOUCHE LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
MCN's Annual Report on Form 10-K for the year ended December 31, 1997,
includes various oil and gas reserve information summarized from reports
prepared by the independent petroleum consultants Ryder Scott Company; Miller
and Lents, Ltd.; Williamson Petroleum Consultants, Inc.; S.A. Holditch &
Associates, Inc.; Questa Engineering Corporation and Netherland, Sewell &
Associates, Inc. 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.
31
<PAGE> 34
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered, other than underwriting compensation, are:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 236,000
NYSE Listing Fee............................................ 100,000
Printing and Engraving...................................... 500,000
Rating Agency Fee........................................... 200,000
Accounting Fees............................................. 70,000
Legal Fees.................................................. 400,000
Blue Sky Fees............................................... 50,000
Transfer Agent's Fees, Trustees and Agents Fees............. 10,000
Miscellaneous............................................... 59,000
----------
Total.................................................. $1,625,000
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") contain detailed provisions concerning the indemnification of directors
and officers against judgments, penalties, fines and amounts paid in settlement
of litigation.
Article VI, Section 6.1 of the By-Laws of MCN provides that MCN shall
indemnify its officers, directors, employees, agents and other persons to the
fullest extent of the MBCA.
Article NINTH of MCN's Articles of Incorporation provides that a director
of MCN shall not be personally liable to MCN or its shareholders for monetary
damages for breach of fiduciary duty as a director, except for liability for (i)
any breach of the director's duty of loyalty to MCN or its shareholders, (ii)
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) a violation of Section 551(1) of the MBCA, or
(iv) any transaction from which the director derived an improper personal
benefit. If the MBCA is amended after the date of MCN's Articles of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of MCN shall
be eliminated or limited to the fullest extent permitted by the MBCA, as so
amended.
MCN has entered into indemnification contracts with each officer and
director of MCN, and certain officers of its subsidiaries, that contain
provisions essentially similar to the provisions of the MBCA and MCN's Articles
of Incorporation referred to above. In addition, MCN maintains directors' and
officers' liability insurance which covers certain liabilities arising from the
performance of their responsibilities as directors and officers.
The Declaration of each MCN Trust provides that no Institutional Trustee or
any of its Affiliates, Delaware Trustee or any of its Affiliates, or officer,
director, shareholder, member, partner, employee, representative or agent of the
Institutional Trustee or the Delaware Trustee (each a "Fiduciary Indemnified
Person"), and no Regular Trustee, Affiliate of any Regular Trustee, Affiliate of
any Regular Trustee, or any officer, director, shareholder, member, partner,
employee, representative or agent of any Regular Trustee, or any employee or
agent of the MCN Trust or its Affiliates (each a "Company Indemnified Person")
shall be liable, responsible or accountable in damages or otherwise to such
Trust or any officer, director, shareholder, partner, member, representative,
employee or agent of the MCN Trust or its Affiliates for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Fiduciary Indemnified Person or Company Indemnified Person in good faith on
behalf of such MCN Trust and in a manner such Fiduciary Indemnified Person or
Company Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Fiduciary Indemnified Person or Company Indemnified
Person by such
II-1
<PAGE> 35
Declaration or by law, except that a Fiduciary Indemnified Person or Company
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Fiduciary Indemnified Person's or Company Indemnified Person's
gross negligence (or, in the case of a Fiduciary Indemnified Person, negligence)
or willful misconduct with respect to such acts or omissions.
The Declaration of each MCN Trust also provides that to the full extent
permitted by law, MCN shall indemnify any Company Indemnified Person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil criminal, administrative or
investigative (other than an action by or in the right of the Trust), by reason
of the fact that he is a was a Company Indemnified Person, against expenses
(including attorneys' fees), judgments, fines and any amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The Declaration of each MCN Trust also provides that to
the full extent permitted by law, the Company shall indemnify any Company
Indemnified person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action or suit by or in the right of the
Trust to procure a judgment in its favor by reason of the fact that he is or was
a Company Indemnified Person against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Trust
and except that no such indemnification shall be made in respect of any claim,
issue or matters to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the Court
of Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonable entitled to indemnity for such expenses which such Court of Chancery
or such other court shall deem proper. The Declaration of each MCN Trust further
provides that expenses (including attorneys' fees) incurred by a Company
Indemnified Person in defending a civil, criminal, administrative or
investigative action, suit or proceeding referred to in the immediately
preceding two sentences shall be paid by the Company in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such Company Indemnified Person to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by MCN as
authorized in the Declaration. The directors and officers of MCN and the Regular
Trustees are covered by insurance policies indemnifying them against certain
liabilities, including certain liabilities arising under the Securities Act of
1933, which might be incurred by them in such capacities and against which they
cannot be indemnified by MCN or the MCN Trusts.
II-2
<PAGE> 36
ITEM 16. EXHIBITS.
Exhibits identified in parentheses below are on file with the SEC and are
incorporated by reference to such previous filings.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1-1 Form of Underwriting Agreement with respect to the MCN
Senior Debt Securities (to be filed under subsequent Form
8-K).
1-2 Form of Underwriting Agreement with respect to the MCN
Subordinated Debt Securities (to be filed under subsequent
Form 8-K).
1-3 Form of Underwriting Agreement with respect to MCN Common
Stock (to be filed under subsequent Form 8-K).
1-4 Form of Underwriting Agreement with respect to the MCN
Income PRIDES (to be filed under subsequent Form 8-K).
1-5 Form of Underwriting Agreement with respect to the Preferred
Securities (to be filed under subsequent Form 8-K).
1-6 Form of Underwriting Agreement with respect to MCN Common
Stock Warrants (to be filed under subsequent Form 8-K).
4-1 Articles of Incorporation of MCN Energy Group Inc. (Exhibit
3-1 to MCN's March 31, 1997 Form 10-Q).
4-2 By-Laws of MCN Energy Group Inc., as amended (Exhibit 3-2 to
MCN's March 31, 1993 Form 10-Q).
4-3 Description of MCN's Preferred Share Purchase Rights (Form
8-A dated December 28, 1989; Form 8-A dated July 23, 1997).
4-4 Senior Debt Securities Indenture between MCN Energy Group
Inc. and NBD Bank, N.A., as Trustee. (Exhibit 4-4 to MCN's
September 29, 1994 Form S-3 Registration Statement No.
33-55665).
4-5 First Supplemental Indenture to Senior Debt Securities
Indenture between MCN Energy Group Inc. and NBD Bank, N.A.,
as Trustee, dated June 4, 1997. (Exhibit 4-2 to MCN's 1997
Form 10-K).
4-6 Subordinated Debt Securities Indenture between MCN Energy
Group Inc. and NBD Bank, N.A., as Trustee. (Exhibit 4-5 to
MCN's September 29, 1994 Form S-3 Registration Statement No.
33-55665).
4-7 First Supplemental Indenture to Subordinated Debt Securities
Indenture between MCN Energy Group Inc. and NBD Bank, as
Trustee, dated April 17, 1996 (Exhibit 4-18 to MCN's April
19, 1996 Amendment No. 2 to Form S-3 Registration Statement
No. 333-01521).
4-8 Second Supplemental Indenture to Subordinated Debt
Securities Indenture between MCN Energy Group Inc. and NBD
Bank, as Trustee, dated July 24, 1996 (Exhibit 5-2 to MCN's
July 24, 1996 Form 8-K).
4-9 Third Supplemental Indenture to Subordinated Debt Securities
Indenture between MCN Energy Group Inc. and NBD Bank, as
Trustee, dated March 19, 1997 (Exhibit 5-3 to MCN's March
19, 1997 Form 8-K).
4-10 Form of Preferred Security (included in Exhibits 4-23 and
4-24).
4-11 Form of Junior Subordinated Debenture (included in Exhibit
4-25).
4-12 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing II (Exhibit 4-8(b) to MCN's
April 10, 1996 Amendment No. 1 to Form S-3 Registration
Statement No. 333-01521).
</TABLE>
II-3
<PAGE> 37
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
4-13 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing IV (Exhibit 4-12 to MCN's March
7, 1997 Amendment No. 1 to Form S-3 Registration Statement
No. 333-21175).
4-14 Form of Purchase Contract Agreement (to be filed under
subsequent Form 8-K).
4-15 Form of Pledge Agreement (to be filed under subsequent Form
8-K).
4-16 Form of Common Stock Warrant Agreement (to be filed under
subsequent Form 8-K).
4-17 Certificate of Trust of MCN Financing II (Exhibit 4-12 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-18 Certificate of Trust of MCN Financing IV (Exhibit 4-17 to
MCN's February 5, 1997 Form S-3 Registration Statement No.
333-21175).
4-19 Declaration of Trust of MCN Financing II (Exhibit 4-14 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-20 Declaration of Trust of MCN Financing IV (Exhibit 4-20 to
MCN's March 7, 1997 Amendment No. 1 to Form S-3 Registration
Statement No. 333-21175).
4-21 Form of Amended and Restated Declaration of Trust of MCN
Financing II (Exhibit 4-16 to MCN's March 7, 1996 Form S-3
Registration Statement No. 333-01521).
4-22 Form of Amended and Restated Declaration of Trust of MCN
Financing IV (Exhibit 4-23 to MCN's March 7, 1997 Amendment
No. 1 to Form S-3 Registration Statement No. 333-21175).
4-23 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with the
issuance of Junior Subordinated Debentures (to be filed
under subsequent Form 8-K).
5-1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of certain of the Offered
Securities.*
5-2 Opinion of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Energy Group Inc.
regarding the validity of certain of the Offered
Securities.*
12-1 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.*
12-2 Computation of Interest Coverage Ratio.*
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.*
23-2 Consent of S.A. Holditch & Associates, Inc.*
23-3 Consent of Williamson Petroleum Consultants, Inc.*
23-4 Consent of Ryder Scott Company.*
23-5 Consent of Miller and Lents, Ltd.*
23-6 Consent of Questa Engineering Corporation.*
23-7 Consent of Netherland, Sewell & Associates, Inc.*
23-8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5-1).*
23-9 Consent of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Energy Group Inc.
(included in Exhibit 5-2).*
24-1 Powers of Attorney for MCN Energy Group Inc.*
24-2 Board Resolution authorizing issuance of the Offered
Securities.*
25-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, NBD Bank, N.A., as Trustee under the
Senior Debt Indenture (Exhibit 25-1 to MCN's March 7, 1997
Amendment No. 1 to Form S-3 Registration Statement No.
333-21175).
</TABLE>
II-4
<PAGE> 38
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
25-2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of NBD Bank, N.A., as Trustee under the
Subordinated Debt Securities Indenture (Exhibit 25-2 to
MCN's March 7, 1997 Amendment No. 1 to Form S-3 Registration
Statement No. 333-21175).
25-3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of the Preferred Securities of MCN Financing II
(Exhibit 25-3 to MCN's February 5, 1997 Form S-3
Registration Statement No. 333-21175).
25-4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of Preferred Securities of MCN Financing IV
(Exhibit 25-5 to MCN's February 5, 1997 Form S-3
Registration Statement No. 21175).
25-5 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing II (Exhibit 25-6 to MCN's February 5, 1997 Form
S-3 Registration Statement No. 333-21175).
25-6 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing IV (Exhibit 25-8 to MCN's February 5, 1997 Form
S-3 Registration Statement No. 333-21175).
</TABLE>
- -------------------------
* Indicates document filed herewith.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
ITEM 17. UNDERTAKINGS.
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required in Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by MCN pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of MCN's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
II-5
<PAGE> 39
incorporated by reference in this Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrants pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 40
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, MCN Financing
II and MCN Financing IV certify that they have reasonable grounds to believe
that they meet all of the requirements for filing on Form S-3 and that they have
duly caused this Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of Detroit and State of
Michigan on February 27, 1998.
MCN FINANCING II
By /s/ DANIEL L. SCHIFFER
------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
------------------------------------
Sebastian Coppola, Trustee
MCN FINANCING IV
By /s/ DANIEL L. SCHIFFER
------------------------------------
Daniel L. Schiffer, Trustee
By /s/ SEBASTIAN COPPOLA
------------------------------------
Sebastian Coppola, Trustee
II-7
<PAGE> 41
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Detroit, State of Michigan, on February 27, 1998.
MCN ENERGY GROUP INC.
(Registrant)
By: /s/ HAROLD GARDNER
------------------------------------
HAROLD GARDNER
Vice President, Controller and
Chief Accounting Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in their
capacities with MCN Energy Group Inc. and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chairman, President, Chief February 27, 1998
- --------------------------------------------- Executive Officer and Director
Alfred R. Glancy III
* Vice Chairman, Chief Financial February 27, 1998
- --------------------------------------------- Officer and Director
William K. McCrackin
/s/ HAROLD GARDNER Vice President, Controller and February 27, 1998
- --------------------------------------------- Chief Accounting Officer
Harold Gardner
* Director February 27, 1998
- ---------------------------------------------
Stephen E. Ewing
* Director February 27, 1998
- ---------------------------------------------
Roger Fridholm
* Director February 27, 1998
- ---------------------------------------------
Frank M. Hennessey
* Director February 27, 1998
- ---------------------------------------------
Thomas H. Jeffs II
* Director February 27, 1998
- ---------------------------------------------
Dale A. Johnson
Director
- ---------------------------------------------
Helen O. Petrauskas
* Director February 27, 1998
- ---------------------------------------------
Howard F. Sims
* Director February 27, 1998
- ---------------------------------------------
Bill M. Thompson
*By:
/s/ HAROLD GARDNER
----------------------------------------
Harold Gardner
Attorney-in-fact
</TABLE>
II-8
<PAGE> 42
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
1-1 Form of Underwriting Agreement with respect to the MCN
Senior Debt Securities (to be filed under subsequent Form
8-K).
1-2 Form of Underwriting Agreement with respect to the MCN
Subordinated Debt Securities (to be filed under subsequent
Form 8-K).
1-3 Form of Underwriting Agreement with respect to MCN Common
Stock (to be filed under subsequent Form 8-K).
1-4 Form of Underwriting Agreement with respect to the MCN
Income PRIDES (to be filed under subsequent Form 8-K).
1-5 Form of Underwriting Agreement with respect to the Preferred
Securities (to be filed under subsequent Form 8-K).
1-6 Form of Underwriting Agreement with respect to MCN Common
Stock Warrants (to be filed under subsequent Form 8-K).
4-1 Articles of Incorporation of MCN Energy Group Inc. (Exhibit
3-1 to MCN's March 31, 1997 Form 10-Q).
4-2 By-Laws of MCN Energy Group Inc., as amended (Exhibit 3-2 to
MCN's March 31, 1993 Form 10-Q).
4-3 Description of MCN's Preferred Share Purchase Rights (Form
8-A dated December 28, 1989; Form 8-A dated July 23, 1997).
4-4 Senior Debt Securities Indenture between MCN Energy Group
Inc. and NBD Bank, N.A., as Trustee. (Exhibit 4-4 to MCN's
September 29, 1994 Form S-3 Registration Statement No.
33-55665).
4-5 First Supplemental Indenture to Senior Debt Securities
Indenture between MCN Energy Group Inc. and NBD Bank, N.A.,
as Trustee, dated June 4, 1997. (Exhibit 4-2 to MCN's 1997
Form 10-K).
4-6 Subordinated Debt Securities Indenture between MCN Energy
Group Inc. and NBD Bank, N.A., as Trustee. (Exhibit 4-5 to
MCN's September 29, 1994 Form S-3 Registration Statement No.
33-55665).
4-7 First Supplemental Indenture to Subordinated Debt Securities
Indenture between MCN Energy Group Inc. and NBD Bank, as
Trustee, dated April 17, 1996 (Exhibit 4-18 to MCN's April
19, 1996 Amendment No. 2 to Form S-3 Registration Statement
No. 333-01521).
4-8 Second Supplemental Indenture to Subordinated Debt
Securities Indenture between MCN Energy Group Inc. and NBD
Bank, as Trustee, dated July 24, 1996 (Exhibit 5-2 to MCN's
July 24, 1996 Form 8-K).
4-9 Third Supplemental Indenture to Subordinated Debt Securities
Indenture between MCN Energy Group Inc. and NBD Bank, as
Trustee, dated March 19, 1997 (Exhibit 5-3 to MCN's March
19, 1997 Form 8-K).
4-10 Form of Preferred Security (included in Exhibits 4-23 and
4-24).
4-11 Form of Junior Subordinated Debenture (included in Exhibit
4-25).
4-12 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing II (Exhibit 4-8(b) to MCN's
April 10, 1996 Amendment No. 1 to Form S-3 Registration
Statement No. 333-01521).
4-13 Form of Guarantee Agreement with respect to Preferred
Securities of MCN Financing IV (Exhibit 4-12 to MCN's March
7, 1997 Amendment No. 1 to Form S-3 Registration Statement
No. 333-21175).
4-14 Form of Purchase Contract Agreement (to be filed under
subsequent Form 8-K).
</TABLE>
II-9
<PAGE> 43
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
4-15 Form of Pledge Agreement (to be filed under subsequent Form
8-K).
4-16 Form of Common Stock Warrant Agreement (to be filed under
subsequent Form 8-K).
4-17 Certificate of Trust of MCN Financing II (Exhibit 4-12 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-18 Certificate of Trust of MCN Financing IV (Exhibit 4-17 to
MCN's February 5, 1997 Form S-3 Registration Statement No.
333-21175).
4-19 Declaration of Trust of MCN Financing II (Exhibit 4-14 to
MCN's March 7, 1996 Form S-3 Registration Statement No.
333-01521).
4-20 Declaration of Trust of MCN Financing IV (Exhibit 4-20 to
MCN's March 7, 1997 Amendment No. 1 to Form S-3 Registration
Statement No. 333-21175).
4-21 Form of Amended and Restated Declaration of Trust of MCN
Financing II (Exhibit 4-16 to MCN's March 7, 1996 Form S-3
Registration Statement No. 333-01521).
4-22 Form of Amended and Restated Declaration of Trust of MCN
Financing IV (Exhibit 4-23 to MCN's March 7, 1997 Amendment
No. 1 to Form S-3 Registration Statement No. 333-21175).
4-23 Form of Supplemental Indenture to Subordinated Debt
Securities Indenture to be used in connection with the
issuance of Junior Subordinated Debentures (to be filed
under subsequent Form 8-K).
5-1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP
regarding the validity of certain of the Offered
Securities.*
5-2 Opinion of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Energy Group Inc.
regarding the validity of certain of the Offered
Securities.*
12-1 Computation of Ratio of Earnings to Fixed Charges and Ratio
of Earnings to Combined Fixed Charges and Preferred Stock
Dividends.*
12-2 Computation of Interest Coverage Ratio.*
23-1 Independent Auditors' Consent -- Deloitte & Touche LLP.*
23-2 Consent of S.A. Holditch & Associates, Inc.*
23-3 Consent of Williamson Petroleum Consultants, Inc.*
23-4 Consent of Ryder Scott Company.*
23-5 Consent of Miller and Lents, Ltd.*
23-6 Consent of Questa Engineering Corporation.*
23-7 Consent of Netherland, Sewell & Associates, Inc.*
23-8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP
(included in Exhibit 5-1).*
23-9 Consent of Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary for MCN Energy Group Inc.
(included in Exhibit 5-2).*
24-1 Powers of Attorney for MCN Energy Group Inc.*
24-2 Board Resolution authorizing issuance of the Offered
Securities.*
25-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, NBD Bank, N.A., as Trustee under the
Senior Debt Indenture (Exhibit 25-1 to MCN's March 7, 1997
Amendment No. 1 to Form S-3 Registration Statement No.
333-21175).
25-2 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of NBD Bank, N.A., as Trustee under the
Subordinated Debt Securities Indenture (Exhibit 25-2 to
MCN's March 7, 1997 Amendment No. 1 to Form S-3 Registration
Statement No. 333-21175).
</TABLE>
II-10
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- ------- -----------------------
<S> <C>
25-3 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of the Preferred Securities of MCN Financing II
(Exhibit 25-3 to MCN's February 5, 1997 Form S-3
Registration Statement No. 333-21175).
25-4 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee of
the Preferred Securities Guarantee of MCN for the benefit of
the holders of Preferred Securities of MCN Financing IV
(Exhibit 25-5 to MCN's February 5, 1997 Form S-3
Registration Statement No. 21175).
25-5 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing II (Exhibit 25-6 to MCN's February 5, 1997 Form
S-3 Registration Statement No. 333-21175).
25-6 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of Wilmington Trust Company as Trustee
under the Amended and Restated Declaration of Trust of MCN
Financing IV (Exhibit 25-8 to MCN's February 5, 1997 Form
S-3 Registration Statement No. 333-21175).
</TABLE>
- -------------------------
* Indicates document filed herewith.
References are to MCN (File No. 1-10070) for documents incorporated by
reference.
II-11
<PAGE> 1
EXHIBIT 5-1
[SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP LETTERHEAD]
February 27, 1998
MCN Energy Group Inc.
MCN Financing II
MCN Financing IV
c/o MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Re: MCN Energy Group Inc.;
MCN Financing II;
MCN Financing IV;
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as special counsel to (1) MCN Energy Group Inc.
(the "Company"), a corporation organized under the laws of the State of
Michigan and (2) MCN Financing II and MCN Financing IV (each an "MCN Trust"
and, together, the "MCN Trusts"), statutory business trusts formed under the
Business Trust Act of the State of Delaware, in connection with the preparation
of a Registration Statement on Form S- 3, filed by the Company and the MCN
Trusts with the Securities and Exchange Commission (the "Commission") on
February 27, 1998 under the Securities Act of 1933, as amended (the "Act")
(such Registration Statement being hereinafter referred to as the "Registration
Statement") relating to the registration under the Act of the preferred
securities (the "Preferred Securities") of each of the MCN Trusts and certain
other securities.
The Preferred Securities of each MCN Trust are to be issued
pursuant to the Amended and Restated Declaration of Trust of such MCN Trust
(each a "Declaration" and, collectively, the "Declarations"), each such
Declaration being among the Company, as sponsor, Wilmington
<PAGE> 2
MCN Energy Group Inc.
February 27, 1998
Page 2
Trust Company, as the institutional trustee and as Delaware trustee (the
"Institutional Trustee") and Daniel L. Schiffer and Sebastian Coppola, as
regular trustees (together, the "Regular Trustees").
This opinion is being delivered in accordance with the
requirements of Item 601(b)(5) of Regulation S-K under the Act.
In connection with this opinion, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of (i) the
certificate of trust of each of the MCN trusts (the "Certificates of Trust")
filed with the Secretary of State of the State of Delaware on March 6, 1996
with respect to MCN Financing II and February 3, 1997 in the case of MCN
Financing IV; (ii) the form of the Declaration of each of the MCN Trusts
(including the designation of the terms of the Preferred Securities annexed
thereto); and (iii) the form of the Preferred Securities of each of the MCN
Trusts. We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such other documents, certificates and
records as we have deemed necessary or appropriate as a basis for the opinions
set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us a certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents executed by parties other than the MCN Trusts, we have assumed that
such parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such
parties of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Declaration
of each MCN Trust, and the Preferred Securities of each MCN Trust, when
executed, will be in sub-
<PAGE> 3
MCN Energy Group Inc.
February 27, 1998
Page 3
stantially the form reviewed by us. As to any facts material to the opinions
expressed herein which were not independently established or verified, we have
relied upon oral or written statements and representations of officers, trustee
and other representatives of the Company, the MCN Trusts and others.
Members of our firm are admitted to the bar in the State of
New York, and we express no opinion as to the laws of any jurisdiction other
than the Business Trust Act of the State of Delaware.
Based on and subject to the foregoing and to the other
qualifications and limitations set forth herein, we are of the opinion that the
Preferred Securities of each MCN Trust, when the Declaration of such MCN Trust
is duly executed and delivered and the terms of the Preferred Securities are
established in accordance with the terms of the Declaration of such MCN Trust,
will be duly authorized for issuance and, when issued and executed in
accordance with the Declaration of such MCN Trust and delivered and paid for as
set forth in the form of prospectus supplement for the Preferred Securities
included in the Registration Statement, will be validly issued, fully paid and
nonassessable, representing undivided beneficial interests in the assets of
such MCN Trust. We bring to your attention, however, that the Preferred
Securities holders may be obligated, pursuant to the Declaration of such MCN
Trust, to (i) provide indemnity and/or security in connection with and pay
taxes or governmental charges arising from transfers of Preferred Securities
and (ii) provide security and indemnity in connection with the requests of or
directions to the Institutional Trustee of such MCN Trust to exercise its
rights and powers under the Declaration of such MCN Trust.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
use of our name under the heading "Validity of Securities" in the base
prospectus included in the Registration Statement. In giving this consent, we
do not thereby admit that we are within
<PAGE> 4
MCN Energy Group Inc.
February 27, 1998
Page 4
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder. This
opinion is expressed as of the date hereof unless otherwise expressly stated
and we disclaim any undertaking to advise you of any subsequent changes of the
facts stated or assumed herein or of any subsequent changes in applicable law.
Very truly yours,
Skadden, Arps, Slate,
Meagher & Flom LLP
<PAGE> 1
EXHIBIT 5-2
[MCN ENERGY GROUP INC. LETTERHEAD]
February 27, 1998
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Ladies and Gentlemen:
I am acting as counsel for MCN Energy Group Inc. ("MCN"), a Michigan
corporation, MCN Financing II, and MCN Financing IV, each a Delaware business
trust (collectively, the "MCN Trusts"), in connection with its filing with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-3 (the "Registration Statement") with respect to the
Company's (i) unsecured senior debt securities (the "Senior Debt Securities"),
(ii) unsecured subordinated debt securities (the "Subordinated Debt
Securities") (item (i) or (ii) above being referred to herein as the "Debt
Securities"), (iii) shares of common stock, $.01 par value per share, including
the preferred stock purchase rights associated therewith (collectively, "Common
Stock"),(iv) warrants to purchase Common Stock ("Warrants"),(v) stock purchase
contracts to purchase Common Stock ("Stock Purchase Contracts") and (vi) stock
purchase units, each representing ownership of a Stock Purchase Contract and
Debt Securities, Preferred Securities (as defined below) or debt obligations of
third parties, including U.S. Treasury Securities, securing the holder's
obligation to purchase the Common Stock under the Stock Purchase Contract
("Stock Purchase Units"). The Registration Statement also relates to the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of preferred securities of the MCN Trusts (the "Preferred Securities")
and guarantees of the Preferred Securities by MCN (the "Preferred Securities
Guarantees" and, together with the Debt Securities, the Common Stock, the
Warrants, the Stock Purchase Contracts, the Stock Purchase Units and the
Preferred Securities, the "Offered Securities"). The Offered Securities will
be issued from time to time pursuant to the provisions of Rule 415 under the
<PAGE> 2
MCN Energy Group Inc.
February 27, 1998
Page 2
Securities Act. Capitalized terms used but not defined herein are used as
defined in the Registration Statement.
In preparation for rendering my opinion hereafter expressed, I have
examined the originals or copies certified to my satisfaction of corporate
records and other documents and certificates as I have deemed necessary.
Based on the above, I am of the opinion that:
1. MCN is a corporation duly organized and validly existing
pursuant to the laws of the State of Michigan;
2. The Debt Securities, the Common Stock, the Warrants, the
Stock Purchase Contracts and the Stock Purchase Units, which are
covered by the Registration Statement, when sold will be legally
issued by MCN, duly authorized, fully paid and non-assessable and,
in the case of the Debt Securities, will constitute valid and
binding obligations of MCN, enforceable against MCN in accordance
with their terms, except as such enforcement is subject to any
applicable bankruptcy insolvency, reorganization or other law
relating to or affecting creditors' rights generally and general
principles of equity; and
3. Upon issuance, the Preferred Securities Guarantees will
constitute the legal, valid and binding obligation of MCN,
enforceable against MCN in accordance with their terms, except as
such enforcement is subject to any applicable bankruptcy,
insolvency, reorganization or other law relating to or affecting
creditors' rights generally and general principles of equity.
<PAGE> 3
MCN Energy Group Inc.
February 27, 1998
Page 3
I hereby consent to the use of this opinion as Exhibit 5-2 to the
Registration Statement and to the use of my name under the caption "Validity of
Securities" in the Prospectus and "Legal Matters" in the Prospectus Supplements
included therein.
Very truly yours,
Daniel L. Schiffer
<PAGE> 1
MCN ENERGY GROUP INC. AND SUBSIDIARIES EXHIBIT 12-1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in Thousands)
<TABLE>
<CAPTION>
TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS TWELVE MONTHS
ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1993
----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
EARNINGS AS DEFINED(1)(5)
Pre-tax income(2) $ 181,299 $ 146,607 $ 128,997 $ 100,143 $ 102,402
Fixed charges(3) 125,338 99,944 72,895 55,197 44,262
----------------- ---------------- ---------------- ----------------- ----------------
Earnings as defined $ 306,637 $ 246,551 $ 201,892 $ 155,340 $ 146,664
================= ================ ================ ================= ================
FIXED CHARGES AS DEFINED(1)(4)(5)
Interest, expensed $ 86,453 $ 77,781 $ 57,675 $ 49,104 $ 38,771
Interest, capitalized 18,190 13,235 7,926 2,928 3,966
Amortization of debt discounts,
premium and expense 2,426 2,217 1,641 1,332 1,153
Interest implicit in rentals 2,181 2,339 2,325 1,904 1,614
Preferred securities dividend
requirements of subsidiaries 31,090 12,390 9,699 2,194 1,079
----------------- ---------------- ---------------- ----------------- ----------------
Fixed charges as defined $ 140,340 $ 107,962 $ 79,266 $ 57,462 $ 46,583
================= ================ ================ ================= ================
Ratio of Earnings to Fixed Charges 2.18 2.28 2.55 2.70 3.15
================= ================ ================ ================= ================
</TABLE>
(1) Earnings and fixed charges are defined and computed in accordance with Item
503 of Regulation S-K.
(2) This amount represents the aggregate of (a) the pre-tax income from
continuing operations of MCN and its majority-owned subsidiaries, (b)
MCN's share of pre-tax income of its 50% owned companies, and (c) any
income actually received from less than 50% owned companies.
(3) Fixed charges added to earnings are adjusted to exclude interest
capitalized during the period for nonutility companies and the preferred
securities dividend requirements of MichCon included in fixed charges but
not deducted in the determination of pre-tax income.
(4) Fixed charges represent (a) interest, whether expensed or capitalized, (b)
amortization of debt discount, premium and expense, (c) an estimate of
interest implicit in rentals, and (d) preferred securities dividend
requirements of subsidiaries, increased to reflect the pre-tax earnings
requirement for MichCon.
(5) In June 1996, MCN completed the sale of The Genix Group, its computer
operations subsidiary. For purposes of calculating the Ratio of Earnings
to Fixed Charges, it has been classified as a discontinued operation and
therefore excluded from the ratio for all periods presented.
<PAGE> 1
EXHIBIT 12.2
MCN ENERGY GROUP INC. AND SUBSIDIARIES
COMPUTATION OF INTEREST COVERAGE RATIO
(Dollars in Thousands)
The following table sets forth the interest coverage ratio for MCN on a
historical basis for the periods indicated. This ratio differs from the SEC
prescribed "Ratio of Earnings to Fixed Charges" in its treatment of certain
hybrid securities of MCN.
<TABLE>
<CAPTION>
Twelve Months Twelve Months Twelve Months Twelve Months Twelve Months
Ended Ended Ended Ended Ended
December 31, 1997 December 31, 1996 December 31, 1995 December 31, 1994 December 31, 1993
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EARNINGS AS ADJUSTED:
Pre-tax income (1) $ 194,430 $ 148,944 $ 128,499 $ 102,088 $ 104,146
Nonrecourse debt 1,609 -- -- -- --
Interest capitalized (18,190) (14,631) (7,893) (2,828) (3,966)
Preferred dividend adjustment (2) 32,465 17,989 9,610 (1,982) (1,164)
Pension costs (20,539) (14,029) (14,099) 2,018 727
Postretirement costs 11,411 13,586 19,460 28,855 --
Interest rate charges 103,840 89,136 67,120 53,442 44,351
----------- ----------- ------------ ----------- -----------
$ 305,026 $ 240,995 $ 202,697 $ 181,593 $ 144,094
=========== =========== ============ =========== ===========
INTEREST RATE CHARGES:
Interest expensed $ 86,453 $ 77,781 $ 56,902 $ 48,710 $ 38,771
Interest capitalized 18,190 14,631 7,893 2,828 3,966
Interest implicit in rentals 2,181 2,339 2,325 1,904 1,614
Nonrecourse interest (1,609) -- -- -- --
Preferred dividends adjustment (3) (1,375) (5,615) -- -- --
----------- ----------- ------------ ----------- -----------
$ 103,840 $ 89,136 $ 67,120 $ 53,442 $ 44,351
=========== =========== ============ =========== ===========
Interest Coverage Ratio 2.94 2.70 3.02 3.40 3.25
=========== =========== ============ =========== ===========
</TABLE>
(1) Income from continuing operations before income taxes
(2) Preferred dividends expensed, adjusted to: exclude (a) dividends on the
$100,000,000 of Single Point Remarketed Reset Capital Securities (SPRRCS)
of MCN Financing VI, (b) dividends on the $100,000,000 of Private
Institutional Trust Securities (PRINTS) of MCN Financing V and to include
(c) interest on the $130,000,000 of 6.82% Series Medium-Term Notes, issued
in conjunction with the $135,000,000 of 8% Preferred Redeemable Increased
Dividend Equity Securities of MCN.
(3) Includes interest on $130,000,000 of 6.82% Series Medium-Term Notes less
dividends on the SPRRCS and PRINTS.
================================================================================
<PAGE> 1
EXHIBIT 23-1
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-3 of MCN Energy Group Inc. (the "Corporation"), of our reports dated
February 12, 1998 (which express an unqualified opinion and include an
explanatory paragraph relating to the Corporation's adoption of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"), appearing in and incorporated by reference in the Annual Report
on Form 10-K of the Corporation for the year ended December 31, 1997, and to
the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
Deloitte & Touche LLP
February 27, 1998
<PAGE> 1
EXHIBIT 23.2
[S.A. HOLDITCH & ASSOCIATES, INC. LETTERHEAD]
February 27, 1998
MCN Corporation
500 Griswold
Detroit, Michigan 48226
RE: MCN Corporation
MCN Investment Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of S.A. Holditch & Associates, Inc. consents to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
January 12, 1998, appearing in the Annual Report on Form 10-K of MCN Energy
Group Inc. for the year ended December 31, 1997, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Corporation relating to the securities included in this Registration
Statement on Form S-3 filed after the date hereof pursuant to Rule 462(b) under
the Securities Act of 1933, as amended.
Very truly yours,
S.A. HOLDITCH & ASSOCIATES, INC.
/s/ W. Denton Copeland
W. Denton Copeland
Vice President
<PAGE> 1
[WILLIAMSON PETROLEUM CONSULTANTS, INC. LETTERHEAD]
EXHIBIT 23.3
CONSENT OF WILLIAMSON PETROLEUM CONSULTANTS, INC.
Williamson Petroleum Consultants, Inc. hereby consents to incorporation by
reference in this Registration Statement on Form S-3 of our report, "Evaluation
of Proved Oil and Gas Reserves to the Interests of MCNIC Oil & Gas Company in
Various Enhanced Oil Recovery Projects Effective December 31, 1997 for
Disclosure to the Securities and Exchange Commission, Williamson Project
7.8527" dated January 14, 1998, appearing in the Annual Report on Form 10-K of
MCN Energy Group Inc. for the year ended December 31, 1997, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Energy Group Inc. relating to the securities included in the
Registration Statement on Form S-3 filed after the date hereof pursuant to
Rule 462(b) under the Securities Act of 1933, as amended.
Williamson Petroleum Consultants, Inc.
WILLIAMSON PETROLEUM CONSULTANTS, INC.
Midland, Texas
February 27, 1998
<PAGE> 1
EXHIBIT 23-4
[RYDER SCOTT COMPANY PETROLEUM ENGINEERS LETTERHEAD]
February 27, 1998
MCN Energy Group Inc.
500 Griswold
Detroit, Michigan 48226
Re: MCN Energy Group Inc.
MCN Investment Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Ryder Scott Company Petroleum Engineers consents to the
incorporation by reference in this Registration Statement on Form S-3 of our
report dated January 22, 1998, appearing in the Annual Report on Form 10-K of
MCN Corporation (now known as MCN Energy Group Inc.) for the year ended
December 31, 1997, and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Energy Group Inc. relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Very truly yours,
Ryder Scott Company
/s/ Petroleum Engineers
-----------------------
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
CPM/sw
<PAGE> 1
EXHIBIT 23-5
[MILLER AND LENTS, LTD. LETTERHEAD]
February 24, 1998
MCN Energy Group Inc.
500 Griswold
Detroit, MI 48226
Re: MCN Energy Group Inc.
MCN Investment Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Miller and Lents, Ltd. consents to the incorporation by
reference in this Registration Statement on Form S-3 of our report dated
January 14, 1998, appearing in the Annual Report on Form 10-K of MCN Energy
Group Inc. for the year ended December 31, 1997, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Energy Group Inc. relating to the securities included in
this Registration Statement on Form S-3 filed after the date hereof pursuant to
Rule 462(b) under the Securities Act of 1933, as amended.
Miller and Lents, Ltd. has no interest in MCN Energy Group Inc. or in
any affiliated companies or subsidiaries and is not to receive such interest as
payment for such reports and has no director, officer, or employee otherwise
connected with MCN Energy Group Inc. We are not employed by MCN Energy Group
Inc. on a contingent basis.
Yours very truly,
MILLER AND LENTS, LTD.
By /s/ P.G. Von Tungeln
---------------------
P.G. Von Tungeln
Chairman
PGVT/mk
<PAGE> 1
EXHIBIT 23-6
[QUESTA ENGINEERING CORPORATION LETTERHEAD]
February 25, 1998
MCN Energy Group Inc.
500 Griswold
Detroit, Michigan 48226
RE: MCN Energy Group Inc.
MCN Investment Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Questa Engineering Corporation consents to the incorporation by
reference in this Registration Statement on Form S-3 of our reports dated
January 6, 1998, appearing in the Annual Report on Form 10-K of MCN Energy
Group Inc. for the year ended December 31, 1997, and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
This consent may be incorporated by reference into any registration statement
of MCN Energy Group Inc. relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
Very truly yours,
QUESTA ENGINEERING CORPORATION
John D. Wright
John D. Wright, President
<PAGE> 1
EXHIBIT 23-7
[NSA NETHERLAND, SEWELL & ASSOCIATES, INC. LETTERHEAD]
February 27, 1998
MCN Energy Group Inc.
500 Griswold
Detroit, Michigan 48226
RE: MCN Energy Group Inc.
MCN Investment Corporation
Form S-3 Registration Statement
Ladies and Gentlemen:
The firm of Netherland, Sewell & Associates, Inc. consents to the
incorporation by reference in this Registration Statement on Form S-3 of our
report dated January 15, 1998, appearing in the Annual Report on Form 10-K of
MCN Energy Group Inc. for the year ended December 31, 1997, and to the
reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
This consent may be incorporated by reference into any registration
statement of MCN Energy Group relating to the securities included in this
Registration Statement on Form S-3 filed after the date hereof pursuant to Rule
462(b) under the Securities Act of 1933, as amended.
NETHERLAND, SEWELL & ASSOCIATES, INC.
Clarence M. Netherland
------------------------------------------
Clarence M. Netherland
Chairman
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EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Alfred R. Glancy III and Daniel L. Schiffer, and each of them, his true
and lawful attorneys and agents, each with full power and authority (acting
alone and without the other) to execute in the name and on behalf of the
undersigned as such director or officer, a Registration Statement on Form S-3,
including any post-effective amendments and any subsequent Registration
Statement filed by MCN Energy Group Inc. pursuant to Rule 462(b) of the
Securities Act of 1933, as amended (the "1933 Act") or other filings in
connection therewith, under the 1933 Act, with respect to the issuance of up to
$800,000,000 maximum aggregate offering price of securities of MCN Energy Group
Inc., including MCN Debt Securities, MCN Stock Purchase Contracts, MCN Stock
Purchase Units, MCN Common Stock or the securities of any special purpose
financing entity; granting to such attorneys and agents, and each of them, full
power of substitution and revocation in the premises; and ratifying and
confirming all that such attorneys and agents, or either of them, may do or
cause to be done by virtue of these presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Harold Gardner
-----------------------
Harold Gardner
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EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Alfred R. Glancy III
-------------------------------
Alfred R. Glancy III
<PAGE> 3
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ William K. McCrackin
-----------------------------
William K. McCrackin
<PAGE> 4
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Stephen E. Ewing
------------------------
Stephen E. Ewing
<PAGE> 5
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Roger Fridholm
-------------------------
Roger Fridholm
<PAGE> 6
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Frank M. Hennessey
--------------------------
Frank M. Hennessey
<PAGE> 7
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Thomas H. Jeffs II
---------------------------
Thomas H. Jeffs II
<PAGE> 8
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Dale A. Johnson
----------------------
Dale A. Johnson
<PAGE> 9
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Howard F. Sims
----------------------
Howard F. Sims
<PAGE> 10
EXHIBIT 24-1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned director or officer of MCN Energy Group Inc., a
corporation formed under the laws of the State of Michigan, does constitute and
appoint Daniel L. Schiffer and Harold Gardner, and each of them, his true and
lawful attorneys and agents, each with full power and authority (acting alone
and without the other) to execute in the name and on behalf of the undersigned
as such director or officer, a Registration Statement on Form S-3, including any
post-effective amendments and any subsequent Registration Statement filed by MCN
Energy Group Inc. pursuant to Rule 462(b) of the Securities Act of 1933, as
amended (the "1933 Act") or other filings in connection therewith, under the
1933 Act, with respect to the issuance of up to $800,000,000 maximum aggregate
offering price of securities of MCN Energy Group Inc., including MCN Debt
Securities, MCN Stock Purchase Contracts, MCN Stock Purchase Units, MCN Common
Stock or the securities of any special purpose financing entity; granting to
such attorneys and agents, and each of them, full power of substitution and
revocation in the premises; and ratifying and confirming all that such attorneys
and agents, or either of them, may do or cause to be done by virtue of these
presents.
In Witness Whereof, I have executed this Power of Attorney this 17th
day of December, 1997.
/s/ Bill M. Thompson
------------------------
Bill M. Thompson
<PAGE> 1
EXHIBIT 24.2
MCN ENERGY GROUP INC.
SECRETARY'S CERTIFICATE
The undersigned, Senior Vice President, General Counsel and
Secretary of MCN Energy Group Inc., a Michigan corporation, hereby
certifies that the following is a true and correct copy of a resolution duly
adopted by the Board of Directors at a Regular Meeting of the Board of
Directors on December 17, 1997, and such resolution has not been modified,
amended or rescinded and remains in full force and effect on the date hereof:
RESOLVED, it is in the best interest of the Corporation to issue,
from time to time, debentures, notes and/or other debt obligations (the
"Debt Securities"), Common Stock and/or Preferred Securities (the
"Stock"), guarantees, Forward Purchase Contracts, Stock Purchase Units,
Warrants or such other forms of investment contracts as may be deemed
necessary or desirable by the Authorized Officers (as defined below)
(the "Other Securities"; collectively the Debt Securities, the Stock and
the Other Securities are hereinafter referred to as the "Securities").
The Securities may be issued either separately or in combination with
other Securities, may be denominated or payable in or issued for an
equivalent amount of foreign currencies or foreign currency units, may be
convertible into or obligate the Corporation or any Subsidiary Entity
(as defined below) to issue or deliver securities of the Corporation or
any other entity or may be issued at original issue discount, the
aggregate amount of Securities hereby authorized being that amount as
may result in the initial offering prices to the public for all
Securities aggregating up to $800,000,000 (determined in the case of
foreign currencies or foreign currency units based upon the equivalent
in U.S. Dollars, or in the case of other Securities or property, based
on the fair market value thereof, determined by the Authorized Officers
in good faith and consistent with any applicable rules and regulations
of the Securities and Exchange Commission (the "SEC"));
FURTHER RESOLVED, that the Corporation is authorized to form such
business trusts, partnerships or other
<PAGE> 2
subsidiary entities (collectively, the "Subsidiary Entities"), as may be
necessary or desirable to effectuate the issuance of the Securities and to cause
any such Subsidiary Entity to issue Securities, trust certificates or
partnership interests. The Chairman of the Board, Vice-Chairman, President, or
any Vice President (each an "Authorized Officer") are hereby authorized, by and
in the name of the Corporation, to execute and deliver such agreements,
declarations, certificates and other documents as may be necessary or desirable
in connection with the formation of a Subsidiary Entity or the creation,
issuance, sale or delivery of Securities, trust certificates or partnership
interests by such Subsidiary Entity.
FURTHER RESOLVED, that the Corporation is authorized, subject to the
limitations set forth below, to create, issue and sell the Securities on such
terms and conditions as shall be determined by the pricing committee of
directors and officers of the Corporation (the "Pricing Committee") appointed
by the Board of Directors' resolutions.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, and empowered to execute and deliver on behalf of the
Corporation an indenture or indentures, including one or more supplements to any
Indenture, in the form approved or authorized by the Pricing Committee under
the corporate seal to be thereto affixed and attested by the Secretary, with
the Trustee or Trustees appointed, such indenture or indentures, or supplement
or supplements, to be in such form and content and bear such date as may be
approved by the Authorized Officer executing the same, such approval to
be conclusively evidenced by the execution of said indenture or indentures, or
supplement or supplements.
FURTHER RESOLVED, that subject to the authority of the Pricing
Committee to determine any discount received by, or commission paid to, any
underwriters or agents, any one Authorized Officer is hereby authorized and
empowered to execute from time to time, on behalf of the Corporation, a purchase
agreement or agreements, an underwriting agreement or agreements or any other
type of agreement between the Corporation and the underwriter or
representatives of the underwriters (or any agents) or any other purchaser
appointed and named in such underwriting agreement or agreements or (other type
of agreement) providing for the sale by the
2
<PAGE> 3
Corporation and the purchase of Securities by said underwriters, agents or other
purchasers.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation, to execute
and deliver such other agreements, documents, certificates, and instruments as
may be required by any Fiduciary in connection with an indenture, purchase
contract agreement, warrant agreement, pledge agreement, trust agreement,
partnership agreement or other similar certificate, declaration or other
document as may be necessary or appropriate in connection with the issuance and
sale of the Securities.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
is hereby authorized and empowered to appoint a Property Trustee, Warrant
Agent, Purchase Contract Agent, Collateral Agent and any other agent or trustee
necessary or appropriate in connection with the issuance or sale of the
Securities.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized and empowered to execute the Securities in temporary and
definitive form, under his or her manual or facsimile signature and under the
facsimile seal of the Corporation, attested by the manual or facsimile
signature of the Secretary.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation and any
Subsidiary Entity, to prepare, execute and file, or cause to be prepared and
filed, with the SEC one or more Registration Statements with respect to the
Securities under the Securities Act of 1933, as amended, together with all
documents required as exhibits to said Registration Statement or Statements, or
any amendments or supplements thereto, and all certificates, letters,
instruments, applications and other documents which may be required to be filed
with the SEC with respect to the registration and offering of Securities, and
to take any and all actions that any such Authorized Officer shall deem
necessary or advisable.
FURTHER RESOLVED, that it is desirable and in the best interest of the
Corporation that the Securities be qualified or
3
<PAGE> 4
registered for sale in various states; that any one Authorized Officer is
hereby authorized to perform on behalf of the Corporation and any Subsidiary
Entity any and all such acts as they may deem necessary or advisable in order
to comply with the applicable laws of any states, and in connection therewith
to execute and file all requisite papers and documents.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, in the name and on behalf of the Corporation and any
Subsidiary Entity, to make application to such securities exchange as the
officer acting shall deem necessary or appropriate for the listing thereon of
any issues of Securities by the Corporation or any Subsidiary Entity.
FURTHER RESOLVED, that any one Authorized Officer be, and each of them
hereby is, authorized, and directed to do and perform, or cause to be done and
performed, all such acts, deeds and things and to make, execute and deliver, or
cause to be made, executed and delivered, all such agreements, undertakings,
documents, instruments or certificates in the name and on behalf of the
Corporation or otherwise as each such officer may deem necessary or appropriate
to effectuate or carry out fully the purpose and intent of the foregoing
resolutions, including the performance of the obligations of the Corporation
under Purchase Agreements, Underwriting Agreements or Sales Agreements,
Indentures, Purchase Contract Agreements, Pledge Agreements, Warrant Agreements,
Trust Agreements, Partnership Agreements or other similar agreements,
certificates or declarations, the Securities, any Registration Statement or any
other agreements related to the Securities.
IN WITNESS WHEREOF, I have hereunto set my hand this 23rd day of February,
1998.
/s/ Daniel L. Schiffer
---------------------------------------------
Daniel L. Schiffer, Senior Vice President,
General Counsel and Secretary
4
