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Financings And Capitalization | 12 Months Ended
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Dec. 31, 2012
Financings And Capitalization | 5:FINANCINGS and Capitalization Presented in the following table is CMS Energy’s long-term debt at December 31:
In Millions
| Interest Rate (%) |  | Maturity | 2012 | 2011 |
CMS Energy |  |  |  |  |  |  |  |  |  |
Senior notes | variable | 1 | 2013 |  | $ | - |  | $ | 150 |
| 2.750 |  | 2014 |  |  | 250 |  |  | 250 |
| 6.875 |  | 2015 |  |  | 125 |  |  | 125 |
| 4.250 |  | 2015 |  |  | 250 |  |  | 250 |
| 6.550 |  | 2017 |  |  | 250 |  |  | 250 |
| 5.050 |  | 2018 |  |  | 250 |  |  | 250 |
| 8.750 |  | 2019 |  |  | 300 |  |  | 300 |
| 6.250 |  | 2020 |  |  | 300 |  |  | 300 |
| 5.050 |  | 2022 |  |  | 300 |  |  | - |
| 2.875 | 2 | 2024 |  |  | - |  |  | 226 |
| 5.500 | 2 | 2029 |  |  | 172 |  |  | 172 |
Total CMS Energy senior notes |  |  |  |  | $ | 2,197 |  | $ | 2,273 |
Term loan facility | variable | 3 | 2016 |  |  | 180 |  |  | - |
Total CMS Energy parent |  |  |  |  | $ | 2,377 |  | $ | 2,273 |
Consumers |  |  |  |  | $ | 4,341 |  | $ | 4,329 |
Other CMS Energy subsidiaries |  |  |  |  |  |  |  |  |  |
EnerBank certificates of deposits | 1.164 | 4 | 2013-2020 |  | $ | 527 |  | $ | 462 |
Trust preferred securities | 7.750 | 5 | 2027 |  |  | - |  |  | 29 |
Total other CMS Energy subsidiaries |  |  |  |  | $ | 527 |  | $ | 491 |
Total CMS Energy principal amount outstanding |  |  |  |  | $ | 7,245 |  | $ | 7,093 |
Current amounts |  |  |  |  |  | (519) |  |  | (1,033) |
Net unamortized discounts |  |  |  |  |  | (16) |  |  | (20) |
Total CMS Energy long-term debt |  |  |  |  | $ | 6,710 |  | $ | 6,040 |
1 | CMS Energy’s variable-rate senior notes bore interest at three-month LIBOR plus 95 basis points (1.35 percent at December 31, 2011). In July 2012, CMS Energy retired these notes.
2 | CMS Energy’s contingently convertible notes. CMS Energy’s 2.875 percent senior notes were converted in January and April 2012. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversion features.
3 | Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.
4 | The weighted-average interest rate for EnerBank’s certificates of deposit was 1.16 percent at December 31, 2012 and 1.33 percent at December 31, 2011. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.
5 | In February 2012, CMS Energy retired the 7.75 percent Trust Preferred Securities.
Presented in the following table is Consumers’ long-term debt at December 31:
In Millions
| Interest Rate (%) |  | Maturity | 2012 | 2011 |
Consumers |  |  |  |  |  |  |  |  |  |
FMBs1 | 5.000 |  | 2012 |  | $ | - |  | $ | 300 |
| 5.375 | 2 | 2013 |  |  | - |  |  | 375 |
| 6.000 |  | 2014 |  |  | 200 |  |  | 200 |
| 5.000 |  | 2015 |  |  | 225 |  |  | 225 |
| 2.600 |  | 2015 |  |  | 50 |  |  | 50 |
| 5.500 |  | 2016 |  |  | 350 |  |  | 350 |
| 5.150 |  | 2017 |  |  | 250 |  |  | 250 |
| 3.210 |  | 2017 |  |  | 100 |  |  | 100 |
| 5.650 |  | 2018 |  |  | 250 |  |  | 250 |
| 6.125 |  | 2019 |  |  | 350 |  |  | 350 |
| 6.700 |  | 2019 |  |  | 500 |  |  | 500 |
| 5.650 |  | 2020 |  |  | 300 |  |  | 300 |
| 3.770 |  | 2020 |  |  | 100 |  |  | 100 |
| 5.300 |  | 2022 |  |  | 250 |  |  | 250 |
| 2.850 |  | 2022 |  |  | 375 |  |  | - |
| 3.190 |  | 2024 |  |  | 52 |  |  | - |
| 3.390 |  | 2027 |  |  | 35 |  |  | - |
| 5.800 |  | 2035 |  |  | 175 |  |  | 175 |
| 6.170 |  | 2040 |  |  | 50 |  |  | 50 |
| 4.970 |  | 2040 |  |  | 50 |  |  | 50 |
| 4.310 |  | 2042 |  |  | 263 |  |  | - |
|  |  |  |  | $ | 3,925 |  | $ | 3,875 |
Senior notes | 6.875 |  | 2018 |  |  | 180 |  |  | 180 |
Securitization bonds | 5.718 | 3 | 2013-2015 |  |  | 133 |  |  | 171 |
Tax-exempt pollution control revenue bonds | various |  | 2018-2035 |  |  | 103 |  |  | 103 |
Total Consumers principal amount outstanding |  |  |  |  | $ | 4,341 |  | $ | 4,329 |
Current amounts |  |  |  |  |  | (41) |  |  | (339) |
Net unamortized discounts |  |  |  |  |  | (3) |  |  | (3) |
Total Consumers long-term debt |  |  |  |  | $ | 4,297 |  | $ | 3,987 |
1 | The weighted-average interest rate for Consumers’ FMBs was 5.19 percent at December 31, 2012 and 5.52 percent at December 31, 2011.
2 | In May 2012, Consumers retired its 5.375 percent FMBs.
3 | The weighted-average interest rate for Consumers’ Securitization bonds was 5.72 percent at December 31, 2012 and 5.65 percent at December 31, 2011.
Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2012:
| Principal |  | Issue/Retirement |  |
| (In Millions) | Interest Rate |  | Date | Maturity Date |
Debt issuances |  |  |  |  |  |  |  |
CMS Energy |  |  |  |  |  |  |  |
Senior notes |  | $ | 300 | 5.050 | % | March 2012 | March 2022 |
Term loan facility1 |  |  | 180 | variable |  | February 2012 and July 2012 | December 2016 |
Total CMS Energy parent |  |  | 480 |  |  |  |  |
Consumers |  |  |  |  |  |  |  |
FMB |  |  | 375 | 2.850 | % | May 2012 | May 2022 |
Term loan facility2 |  |  | 350 | variable |  | July 2012 | March 2013 |
Tax-exempt bonds3 |  |  | 68 | variable |  | August 2012 | April 2018 |
Tax-exempt bonds3 |  |  | 35 | variable |  | August 2012 | April 2035 |
FMB |  |  | 52 | 3.190 | % | December 2012 | December 2024 |
FMB |  |  | 35 | 3.390 | % | December 2012 | December 2027 |
FMB |  |  | 263 | 4.310 | % | December 2012 | December 2042 |
Total Consumers |  |  | 1,178 |  |  |  |  |
Total debt issuances |  | $ | 1,658 |  |  |  |  |
Debt retirements |  |  |  |  |  |  |  |
CMS Energy |  |  |  |  |  |  |  |
Contingently convertible senior notes4 |  | $ | 226 | 2.875 | % | January 2012 and April 2012 | December 2024 |
Trust Preferred Securities |  |  | 29 | 7.750 | % | February 2012 | July 2027 |
Senior notes |  |  | 150 | variable |  | July 2012 | January 2013 |
Total CMS Energy parent |  |  | 405 |  |  |  |  |
Consumers |  |  |  |  |  |  |  |
FMB |  |  | 300 | 5.000 | % | February 2012 | February 2012 |
FMB |  |  | 375 | 5.375 | % | May 2012 | April 2013 |
Tax-exempt bonds3 |  |  | 68 | variable |  | August 2012 | April 2018 |
Tax-exempt bonds3 |  |  | 35 | variable |  | August 2012 | April 2035 |
Term loan facility2 |  |  | 350 | variable |  | December 2012 | March 2013 |
Total Consumers |  |  | 1,128 |  |  |  |  |
Total debt retirements |  | $ | 1,533 |  |  |  |  |
1 | Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). CMS Energy used these proceeds to retire the 7.75 percent Trust Preferred Securities and floating-rate senior notes due January 2013. In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.
2 | In June 2012, Consumers entered into a short-term credit agreement permitting Consumers to borrow up to $375 million. This agreement was terminated using proceeds from FMBs issued in December 2012.
3 | In August 2012, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund revenue bonds. The bonds, which are backed by letters of credit and collateralized by Consumers’ FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in August 2012.
4 | CMS Energy’s contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.
FMBs: Consumers secures its FMBs by a mortgage and lien on substantially all of its property. Consumers’ ability to issue FMBs is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a two-times interest coverage ratio and having sufficient unfunded net property additions. Regulatory Authorization for Financings: FERC has authorized Consumers to have outstanding at any one time, up to $500 million of secured and unsecured short-term securities for general corporate purpose s. The remaining availability wa s $500 million at December 31, 2012. FERC has also authorized Consumers to issue and sell up to $1.9 billion of secured and unsecured long-term securities for general corporate purposes. Th e remaining availability was $1.6 billion at December 31, 2012. The authorizations are for the period ending June 30, 2014. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements. Securitization Bonds: Certain regulatory assets owned by Consumers’ subsidiary Consumers Funding collateralize Consumers’ Securitization bonds. The bondholders have no recourse to Consumers’ other assets. Through its rate structure, Consumers bills customers for Securitization surcharges to fund the payment of principal, interest, and other related expenses. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than Consumers Funding. Debt Maturities: At December 31, 2012, the aggregate annual contractual maturities for long-term debt for the next five years were:
In Millions
| 2013 | 2014 | 2015 | 2016 | 2017 |
CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  | $ | 347 |  | $ | 583 |  | $ | 738 |  | $ | 563 |  | $ | 630 |
Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  | $ | 41 |  | $ | 243 |  | $ | 324 |  | $ | 350 |  | $ | 350 |
Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2012:
In Millions
|  |  | Letters of Credit |
Expiration Date | Amount of Facility | Amount Borrowed | Outstanding | Amount Available |
CMS Energy |  |  |  |  |  |  |  |  |  |  |  |  |
December 21, 20171 |  | $ | 550 |  | $ | - |  | $ | 2 |  | $ | 548 |
Consumers |  |  |  |  |  |  |  |  |  |  |  |  |
December 21, 20172 |  | $ | 500 |  | $ | - |  | $ | 2 |  | $ | 498 |
April 18, 20172 |  |  | 150 |  |  | - |  |  | - |  |  | 150 |
September 9, 20142 |  |  | 30 |  |  | - |  |  | 30 |  |  | - |
1 | Obligations under this facility are secured by Consumers common stock. CMS Energy’s average borrowings during the year ended December 31, 2012 were $12 million, with a weighted-average annual interest rate of 2.26 percent, representing LIBOR plus 2.00 percent.
2 | Obligations under this facility are secured by FMBs of Consumers.
Short-term Borrowings: Under Consumers’ revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. These transactions are accounted for as short-term secured borrowings. At December 31, 20 12, $1 40 million of accounts receivable were eligible for transfer, and $110 million had been transferred under the program. During the year ended December 31, 2012, Consumers’ average short-term borrowings totaled $20 million, with a weighted-average annual interest rate of 0.94 percent. Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at December 31, 2012:
|  | Outstanding | Adjusted | Adjusted |
Security | Maturity | (In Millions) | Conversion Price | Trigger Price |
5.50% senior notes | 2029 |  | $ | 172 |  | $ | 13.94 |  | $ | 18.12 |
The securities become convertible for a calendar quarter if the price of CMS Energy’s common stock remains at or above the trigger price for 20 of 30 consecutive trading days ending on the last trading day of the previous quarter. The trigger price at which these securities become convertible is 130 percent of the conversion price. The conversion and trigger prices are subject to adjustments in certain circumstances, including payments or distributions to CMS Energy’s common stockholders. The conversion and trigger price adjustment is made when the cumulative change in conversion and trigger prices is one percent or more. During 20 of the last 30 trading days ended December 31, 2012, the adjusted trigger-price contingencies were met for the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the note holders for the three months ending March 31, 2013. CMS Energy’s contingently convertible securities, if converted, require CMS Energy to pay cash up to the principal amount of the securities. Any conversion value in excess of the principal amount can be paid in cash or in shares of CMS Energy’s common stock, at the election of CMS Energy. Presented in the following table are details about conversions of contingently convertible securities during the year ended December 31, 2012:
|  |  | Conversion | Shares |
|  | Principal | Value per | of Common | Cash Paid on |
| Conversion | Converted | $1,000 of | Stock Issued | Settlement |
| Date | (In Millions) | Principal | on Settlement | (In Millions) |
2.875% senior notes due 2024 | January 2012 |  | $ | 73 |  | $ | 1,738.99 | 2,464,138 |  | $ | 73 |
| April 2012 |  |  | 153 |  |  | 1,774.98 | 5,381,349 |  |  | 153 |
Dividend Restrictions: Under provisions of CMS Energy’s senior notes indenture, at December 31, 2012, payment of common stock dividends by CMS Energy was limited to $1.4 billion. Under the provisions of its articles of incorporation, at December 31, 2012, Consumers had $536 million of unrestricted retained earnings available to pay common stock dividends to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay common stock dividends in excess of retained earnings would be based on specific facts and circumstances and would result only after a formal regulatory filing process. For the year ended December 31, 2012, CMS Energy received $393 million of common stock dividends from Consumers. Capitalization: The authorized capital stock of CMS Energy consists of:
· | 350 million shares of CMS Energy Common Stock, par value $0.01 per share, and
· | 10 million shares of CMS Energy Preferred Stock, par value $0.01 per share.
Issuance of Common Stock: In June 2011, CMS Energy entered into a continuous equity offering program under which CMS Energy may sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million. In June 2012, under this program, CMS Energy issued 650,235 shares of common stock at an average price of $23.07 per share, resulting in net proceeds of $15 million. CMS Energy has issued a total of 1,413,160 shares of common stock under this p rogram, resulting in net proceeds of $30 million. Preferred Stock of Subsidiary: Presented in the following table are details about Consumers’ preferred stock outstanding:
|  |  |  | Optional | Number of | Balance |
|  |  |  | Redemption | Shares | Outstanding |
December 31, 2012 and 2011 | Series | Price | Outstanding | In Millions |
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption |  | $ | 4.16 |  | $ | 103.25 | 68,451 |  | $ | 7 |
|  |  | 4.50 |  |  | 110.00 | 373,148 |  |  | 37 |
Total preferred stock of Consumers |  |  |  |  |  |  |  |  | $ | 44 |
Consumers Energy Company [Member] |
Financings And Capitalization | 5:FINANCINGS and Capitalization Presented in the following table is CMS Energy’s long-term debt at December 31:
In Millions
| Interest Rate (%) |  | Maturity | 2012 | 2011 |
CMS Energy |  |  |  |  |  |  |  |  |  |
Senior notes | variable | 1 | 2013 |  | $ | - |  | $ | 150 |
| 2.750 |  | 2014 |  |  | 250 |  |  | 250 |
| 6.875 |  | 2015 |  |  | 125 |  |  | 125 |
| 4.250 |  | 2015 |  |  | 250 |  |  | 250 |
| 6.550 |  | 2017 |  |  | 250 |  |  | 250 |
| 5.050 |  | 2018 |  |  | 250 |  |  | 250 |
| 8.750 |  | 2019 |  |  | 300 |  |  | 300 |
| 6.250 |  | 2020 |  |  | 300 |  |  | 300 |
| 5.050 |  | 2022 |  |  | 300 |  |  | - |
| 2.875 | 2 | 2024 |  |  | - |  |  | 226 |
| 5.500 | 2 | 2029 |  |  | 172 |  |  | 172 |
Total CMS Energy senior notes |  |  |  |  | $ | 2,197 |  | $ | 2,273 |
Term loan facility | variable | 3 | 2016 |  |  | 180 |  |  | - |
Total CMS Energy parent |  |  |  |  | $ | 2,377 |  | $ | 2,273 |
Consumers |  |  |  |  | $ | 4,341 |  | $ | 4,329 |
Other CMS Energy subsidiaries |  |  |  |  |  |  |  |  |  |
EnerBank certificates of deposits | 1.164 | 4 | 2013-2020 |  | $ | 527 |  | $ | 462 |
Trust preferred securities | 7.750 | 5 | 2027 |  |  | - |  |  | 29 |
Total other CMS Energy subsidiaries |  |  |  |  | $ | 527 |  | $ | 491 |
Total CMS Energy principal amount outstanding |  |  |  |  | $ | 7,245 |  | $ | 7,093 |
Current amounts |  |  |  |  |  | (519) |  |  | (1,033) |
Net unamortized discounts |  |  |  |  |  | (16) |  |  | (20) |
Total CMS Energy long-term debt |  |  |  |  | $ | 6,710 |  | $ | 6,040 |
1 | CMS Energy’s variable-rate senior notes bore interest at three-month LIBOR plus 95 basis points (1.35 percent at December 31, 2011). In July 2012, CMS Energy retired these notes.
2 | CMS Energy’s contingently convertible notes. CMS Energy’s 2.875 percent senior notes were converted in January and April 2012. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversion features.
3 | Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.
4 | The weighted-average interest rate for EnerBank’s certificates of deposit was 1.16 percent at December 31, 2012 and 1.33 percent at December 31, 2011. EnerBank’s primary deposit product consists of brokered certificates of deposit with varying maturities and having a face value of $1,000.
5 | In February 2012, CMS Energy retired the 7.75 percent Trust Preferred Securities.
Presented in the following table is Consumers’ long-term debt at December 31:
In Millions
| Interest Rate (%) |  | Maturity | 2012 | 2011 |
Consumers |  |  |  |  |  |  |  |  |  |
FMBs1 | 5.000 |  | 2012 |  | $ | - |  | $ | 300 |
| 5.375 | 2 | 2013 |  |  | - |  |  | 375 |
| 6.000 |  | 2014 |  |  | 200 |  |  | 200 |
| 5.000 |  | 2015 |  |  | 225 |  |  | 225 |
| 2.600 |  | 2015 |  |  | 50 |  |  | 50 |
| 5.500 |  | 2016 |  |  | 350 |  |  | 350 |
| 5.150 |  | 2017 |  |  | 250 |  |  | 250 |
| 3.210 |  | 2017 |  |  | 100 |  |  | 100 |
| 5.650 |  | 2018 |  |  | 250 |  |  | 250 |
| 6.125 |  | 2019 |  |  | 350 |  |  | 350 |
| 6.700 |  | 2019 |  |  | 500 |  |  | 500 |
| 5.650 |  | 2020 |  |  | 300 |  |  | 300 |
| 3.770 |  | 2020 |  |  | 100 |  |  | 100 |
| 5.300 |  | 2022 |  |  | 250 |  |  | 250 |
| 2.850 |  | 2022 |  |  | 375 |  |  | - |
| 3.190 |  | 2024 |  |  | 52 |  |  | - |
| 3.390 |  | 2027 |  |  | 35 |  |  | - |
| 5.800 |  | 2035 |  |  | 175 |  |  | 175 |
| 6.170 |  | 2040 |  |  | 50 |  |  | 50 |
| 4.970 |  | 2040 |  |  | 50 |  |  | 50 |
| 4.310 |  | 2042 |  |  | 263 |  |  | - |
|  |  |  |  | $ | 3,925 |  | $ | 3,875 |
Senior notes | 6.875 |  | 2018 |  |  | 180 |  |  | 180 |
Securitization bonds | 5.718 | 3 | 2013-2015 |  |  | 133 |  |  | 171 |
Tax-exempt pollution control revenue bonds | various |  | 2018-2035 |  |  | 103 |  |  | 103 |
Total Consumers principal amount outstanding |  |  |  |  | $ | 4,341 |  | $ | 4,329 |
Current amounts |  |  |  |  |  | (41) |  |  | (339) |
Net unamortized discounts |  |  |  |  |  | (3) |  |  | (3) |
Total Consumers long-term debt |  |  |  |  | $ | 4,297 |  | $ | 3,987 |
1 | The weighted-average interest rate for Consumers’ FMBs was 5.19 percent at December 31, 2012 and 5.52 percent at December 31, 2011.
2 | In May 2012, Consumers retired its 5.375 percent FMBs.
3 | The weighted-average interest rate for Consumers’ Securitization bonds was 5.72 percent at December 31, 2012 and 5.65 percent at December 31, 2011.
Financings: Presented in the following table is a summary of major long-term debt transactions during the year ended December 31, 2012:
| Principal |  | Issue/Retirement |  |
| (In Millions) | Interest Rate |  | Date | Maturity Date |
Debt issuances |  |  |  |  |  |  |  |
CMS Energy |  |  |  |  |  |  |  |
Senior notes |  | $ | 300 | 5.050 | % | March 2012 | March 2022 |
Term loan facility1 |  |  | 180 | variable |  | February 2012 and July 2012 | December 2016 |
Total CMS Energy parent |  |  | 480 |  |  |  |  |
Consumers |  |  |  |  |  |  |  |
FMB |  |  | 375 | 2.850 | % | May 2012 | May 2022 |
Term loan facility2 |  |  | 350 | variable |  | July 2012 | March 2013 |
Tax-exempt bonds3 |  |  | 68 | variable |  | August 2012 | April 2018 |
Tax-exempt bonds3 |  |  | 35 | variable |  | August 2012 | April 2035 |
FMB |  |  | 52 | 3.190 | % | December 2012 | December 2024 |
FMB |  |  | 35 | 3.390 | % | December 2012 | December 2027 |
FMB |  |  | 263 | 4.310 | % | December 2012 | December 2042 |
Total Consumers |  |  | 1,178 |  |  |  |  |
Total debt issuances |  | $ | 1,658 |  |  |  |  |
Debt retirements |  |  |  |  |  |  |  |
CMS Energy |  |  |  |  |  |  |  |
Contingently convertible senior notes4 |  | $ | 226 | 2.875 | % | January 2012 and April 2012 | December 2024 |
Trust Preferred Securities |  |  | 29 | 7.750 | % | February 2012 | July 2027 |
Senior notes |  |  | 150 | variable |  | July 2012 | January 2013 |
Total CMS Energy parent |  |  | 405 |  |  |  |  |
Consumers |  |  |  |  |  |  |  |
FMB |  |  | 300 | 5.000 | % | February 2012 | February 2012 |
FMB |  |  | 375 | 5.375 | % | May 2012 | April 2013 |
Tax-exempt bonds3 |  |  | 68 | variable |  | August 2012 | April 2018 |
Tax-exempt bonds3 |  |  | 35 | variable |  | August 2012 | April 2035 |
Term loan facility2 |  |  | 350 | variable |  | December 2012 | March 2013 |
Total Consumers |  |  | 1,128 |  |  |  |  |
Total debt retirements |  | $ | 1,533 |  |  |  |  |
1 | Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.50 percent (2.71 percent at December 31, 2012). CMS Energy used these proceeds to retire the 7.75 percent Trust Preferred Securities and floating-rate senior notes due January 2013. In February 2013, the term loan facility was amended, reducing the annual interest rate to LIBOR plus 2.00 percent.
2 | In June 2012, Consumers entered into a short-term credit agreement permitting Consumers to borrow up to $375 million. This agreement was terminated using proceeds from FMBs issued in December 2012.
3 | In August 2012, Consumers utilized the Michigan Strategic Fund for the issuance of $68 million and $35 million of tax-exempt Michigan Strategic Fund revenue bonds. The bonds, which are backed by letters of credit and collateralized by Consumers’ FMBs, are subject to optional tender by the holders that would result in remarketing. Consumers used the proceeds to redeem $103 million of tax-exempt bonds in August 2012.
4 | CMS Energy’s contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.
FMBs: Consumers secures its FMBs by a mortgage and lien on substantially all of its property. Consumers’ ability to issue FMBs is restricted by certain provisions in the First Mortgage Bond Indenture and the need for regulatory approvals under federal law. Restrictive issuance provisions in the First Mortgage Bond Indenture include achieving a two-times interest coverage ratio and having sufficient unfunded net property additions. Regulatory Authorization for Financings: FERC has authorized Consumers to have outstanding at any one time, up to $500 million of secured and unsecured short-term securities for general corporate purpose s. The remaining availability wa s $500 million at December 31, 2012. FERC has also authorized Consumers to issue and sell up to $1.9 billion of secured and unsecured long-term securities for general corporate purposes. Th e remaining availability was $1.6 billion at December 31, 2012. The authorizations are for the period ending June 30, 2014. Any long-term issuances during the authorization period are exempt from FERC’s competitive bidding and negotiated placement requirements. Securitization Bonds: Certain regulatory assets owned by Consumers’ subsidiary Consumers Funding collateralize Consumers’ Securitization bonds. The bondholders have no recourse to Consumers’ other assets. Through its rate structure, Consumers bills customers for Securitization surcharges to fund the payment of principal, interest, and other related expenses. The surcharges collected are remitted to a trustee and are not available to creditors of Consumers or creditors of Consumers’ affiliates other than Consumers Funding. Debt Maturities: At December 31, 2012, the aggregate annual contractual maturities for long-term debt for the next five years were:
In Millions
| 2013 | 2014 | 2015 | 2016 | 2017 |
CMS Energy, including Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  | $ | 347 |  | $ | 583 |  | $ | 738 |  | $ | 563 |  | $ | 630 |
Consumers |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt |  | $ | 41 |  | $ | 243 |  | $ | 324 |  | $ | 350 |  | $ | 350 |
Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at December 31, 2012:
In Millions
|  |  | Letters of Credit |
Expiration Date | Amount of Facility | Amount Borrowed | Outstanding | Amount Available |
CMS Energy |  |  |  |  |  |  |  |  |  |  |  |  |
December 21, 20171 |  | $ | 550 |  | $ | - |  | $ | 2 |  | $ | 548 |
Consumers |  |  |  |  |  |  |  |  |  |  |  |  |
December 21, 20172 |  | $ | 500 |  | $ | - |  | $ | 2 |  | $ | 498 |
April 18, 20172 |  |  | 150 |  |  | - |  |  | - |  |  | 150 |
September 9, 20142 |  |  | 30 |  |  | - |  |  | 30 |  |  | - |
1 | Obligations under this facility are secured by Consumers common stock. CMS Energy’s average borrowings during the year ended December 31, 2012 were $12 million, with a weighted-average annual interest rate of 2.26 percent, representing LIBOR plus 2.00 percent.
2 | Obligations under this facility are secured by FMBs of Consumers.
Short-term Borrowings: Under Consumers’ revolving accounts receivable sales program, Consumers may transfer up to $250 million of accounts receivable, subject to certain eligibility requirements. These transactions are accounted for as short-term secured borrowings. At December 31, 20 12, $1 40 million of accounts receivable were eligible for transfer, and $110 million had been transferred under the program. During the year ended December 31, 2012, Consumers’ average short-term borrowings totaled $20 million, with a weighted-average annual interest rate of 0.94 percent. Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at December 31, 2012:
|  | Outstanding | Adjusted | Adjusted |
Security | Maturity | (In Millions) | Conversion Price | Trigger Price |
5.50% senior notes | 2029 |  | $ | 172 |  | $ | 13.94 |  | $ | 18.12 |
The securities become convertible for a calendar quarter if the price of CMS Energy’s common stock remains at or above the trigger price for 20 of 30 consecutive trading days ending on the last trading day of the previous quarter. The trigger price at which these securities become convertible is 130 percent of the conversion price. The conversion and trigger prices are subject to adjustments in certain circumstances, including payments or distributions to CMS Energy’s common stockholders. The conversion and trigger price adjustment is made when the cumulative change in conversion and trigger prices is one percent or more. During 20 of the last 30 trading days ended December 31, 2012, the adjusted trigger-price contingencies were met for the contingently convertible senior notes, and as a result, the senior notes are convertible at the option of the note holders for the three months ending March 31, 2013. CMS Energy’s contingently convertible securities, if converted, require CMS Energy to pay cash up to the principal amount of the securities. Any conversion value in excess of the principal amount can be paid in cash or in shares of CMS Energy’s common stock, at the election of CMS Energy. Presented in the following table are details about conversions of contingently convertible securities during the year ended December 31, 2012:
|  |  | Conversion | Shares |
|  | Principal | Value per | of Common | Cash Paid on |
| Conversion | Converted | $1,000 of | Stock Issued | Settlement |
| Date | (In Millions) | Principal | on Settlement | (In Millions) |
2.875% senior notes due 2024 | January 2012 |  | $ | 73 |  | $ | 1,738.99 | 2,464,138 |  | $ | 73 |
| April 2012 |  |  | 153 |  |  | 1,774.98 | 5,381,349 |  |  | 153 |
Dividend Restrictions: Under provisions of CMS Energy’s senior notes indenture, at December 31, 2012, payment of common stock dividends by CMS Energy was limited to $1.4 billion. Under the provisions of its articles of incorporation, at December 31, 2012, Consumers had $536 million of unrestricted retained earnings available to pay common stock dividends to CMS Energy. Provisions of the Federal Power Act and the Natural Gas Act appear to restrict dividends payable by Consumers to the amount of Consumers’ retained earnings. Several decisions from FERC suggest that under a variety of circumstances common stock dividends from Consumers would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay common stock dividends in excess of retained earnings would be based on specific facts and circumstances and would result only after a formal regulatory filing process. For the year ended December 31, 2012, CMS Energy received $393 million of common stock dividends from Consumers. Capitalization: The authorized capital stock of CMS Energy consists of:
· | 350 million shares of CMS Energy Common Stock, par value $0.01 per share, and
· | 10 million shares of CMS Energy Preferred Stock, par value $0.01 per share.
Issuance of Common Stock: In June 2011, CMS Energy entered into a continuous equity offering program under which CMS Energy may sell, from time to time in “at the market” offerings, common stock having an aggregate sales price of up to $50 million. In June 2012, under this program, CMS Energy issued 650,235 shares of common stock at an average price of $23.07 per share, resulting in net proceeds of $15 million. CMS Energy has issued a total of 1,413,160 shares of common stock under this p rogram, resulting in net proceeds of $30 million. Preferred Stock of Subsidiary: Presented in the following table are details about Consumers’ preferred stock outstanding:
|  |  |  | Optional | Number of | Balance |
|  |  |  | Redemption | Shares | Outstanding |
December 31, 2012 and 2011 | Series | Price | Outstanding | In Millions |
Cumulative, $100 par value, authorized 7,500,000 shares, with no mandatory redemption |  | $ | 4.16 |  | $ | 103.25 | 68,451 |  | $ | 7 |
|  |  | 4.50 |  |  | 110.00 | 373,148 |  |  | 37 |
Total preferred stock of Consumers |  |  |  |  |  |  |  |  | $ | 44 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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