CMS Energy Prices $450M Equity/Note Offerings

CMS Energy (NYSE: CMS - News) announced today the pricing of $150 million principal amount of 5.50 percent Convertible Senior Notes due 2029 and $300 million principal amount of 8.75 percent Senior Notes due 2019. In addition, CMS Energy may issue up to an additional $22.5 million principal amount of convertible senior notes upon exercise of an option granted to the underwriters to cover over-allotments, if any.
The convertible senior notes will pay interest semi-annually at a rate of 5.50 percent per annum and will mature on June 15, 2029. The convertible senior notes will be convertible under certain circumstances and during certain periods at an initial conversion rate of 69.1443 shares of CMS Energy's common stock per $1,000 principal amount of convertible senior notes (representing an initial conversion price of approximately $14.46 per share of common stock), subject to adjustment in certain circumstances. The initial conversion price represents a conversion premium of 25 percent over the last reported sale price of the common stock on June 9, 2009 of $11.57 per share. The convertible senior notes will be convertible prior to June 30, 2027 only upon specified events and, thereafter, at any time. Upon conversion, holders will receive cash up to the principal amount of each convertible senior note, and any excess conversion value will be delivered, at CMS Energy's option, in cash or a combination of cash and shares of CMS Energy's common stock. CMS Energy may redeem some or all of the convertible senior notes for cash on or after June 20, 2014.
The senior notes will pay interest semi-annually at a rate of 8.75 percent per annum and will mature on June 15, 2019. CMS Energy may redeem, at a make-whole premium, some or all of the senior notes for cash at any time.
It is expected that the net proceeds from the offerings will be used for the retirement of existing indebtedness (including approximately $115 million of the net proceeds from the offering of convertible senior notes to repurchase, at a discount, a substantial portion of the outstanding principal amount of the convertible subordinated debentures underlying the 7.75 percent Convertible Quarterly Income Preferred Securities of CMS Energy Trust I) and for general corporate purposes.
The closings of both offerings are expected to occur on June 15, 2009, subject to satisfaction of customary market and other closing conditions.
Barclays Capital Inc. is acting as sole book-running manager for the convertible senior notes offering. Barclays Capital Inc., Deutsche Bank Securities Inc., Banc of America Securities LLC, Citigroup Global Markets Inc. and UBS Securities LLC are acting as joint book-running managers for the senior notes offering.