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Consumers Energy owns 49 percent of the MCV
Partnership, which leases and operates the facility
near Midland, Michigan. Consumers Energy also
indirectly owns 35 percent of the facility and
along with the other owners leases the facility
to the MCV Partnership.
The sales agreement calls for GSO and Rockland
to purchase all of the Michigan utility's interests.
GSO and Rockland also will provide Consumers
Energy a financial guarantee to back certain
contingent obligations.
Consumers Energy is the main customer for the
MCV's electricity output. The utility's contract
to purchase power from the plant, and the associated
customer rates, are not affected by the sale.
The sale is the result of a competitive process.
Proceeds from the sale will be used to reduce
debt at the utility, following a review by the
Michigan Public Service Commission.
CMS Energy said if the sale closes this fall,
as expected, it would boost 2006 cash flow by
about $56 million and reduce 2006 reported and
adjusted earnings by about 4 cents per share.
The Company said it is maintaining its guidance
for 2006 adjusted earnings, excluding mark-to-market
impacts, of about $1 per share. CMS Energy does
not provide specific reported earnings guidance
because of the uncertainties associated with
the expected reversal of mark-to-market gains
and losses from potential asset sales.
The natural gas-fired MCV facility can produce
up to 1,500 megawatts of electricity and up
to 1.35 million pounds per hour of industrial
steam. It began commercial operation in 1990.
Sustained high natural gas prices led the MCV
Partnership to reevaluate the economics of the
facility last year. Those high gas prices also
led Consumers Energy to examine several long-term
alternatives for its MCV interests, including
a competitive sale.
David Joos, the president and chief executive
officer of CMS Energy, said the sale of the
MCV interests reduces CMS Energy's financial
risk. "This sale will reduce our exposure
to sustained high natural gas prices and allow
us to pay down debt at the utility at a time
when interest rates are rising," he said.
J.P. Morgan Securities Inc. served as financial
advisor for Consumers Energy and managed the
competitive sale process.
Consumers Energy, the principal subsidiary
of CMS Energy (NYSE: CMS - News), provides natural
gas and electricity to nearly 6.5 million of
Michigan's 10 million residents in all 68 Lower
Peninsula counties.
GSO Capital Partners LP is an investment advisor
specializing in the leveraged finance marketplace.
Funds managed by GSO invest in a broad array
of assets including private equity securities,
mezzanine securities and leveraged loans. The
firm has approximately $5 billion in assets
under management and has over 90 professionals
in New York, London and Houston.
Rockland Capital Energy Investments is a private
energy investment company founded in 2003 to
focus on the acquisition, development and optimization
of companies and projects in the North American
and European energy sectors.
For more information about Consumers Energy,
visit our Website at http://www.consumersenergy.com
Source: Consumers Energy |
