JACKSON, Mich., July 25 /PRNewswire-FirstCall/ -- Consumers Energy, the
principal subsidiary of CMS Energy, has reached an agreement to sell the
utility's interests in the 1,500-megawatt Midland Cogeneration Venture to
GSO Capital Partners and Rockland Capital Energy Investments for $60.5
million, the companies announced today.
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),
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 America and European
energy sectors.
For more information about Consumers Energy, visit our Website at
http://www.consumersenergy.com
SOURCE Consumers Energy
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CONTACT:
Media Contacts: Jeff Holyfield,
+1-517-788-2394, or Dan Bishop, +1-517-788-2395, both of
Consumers Energy, or Investment Analyst Contact: CMS Energy
Investor Relations, +1-517-788-2590
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