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Financings and Capitalization

9 Months Ended

Sep. 30, 2020

Financings: Presented in the following table is a summary of major long‑term debt issuances during the nine months ended September 30, 2020:



	Principal (In Millions)			Interest Rate		Issuance Date	Maturity Date
CMS Energy, parent only
Term loan facility¹		$	300	variable		February	February 2021
Junior subordinated notes²		500		4.750	%	May	June 2050
Total CMS Energy, parent only		$	800
Consumers
Term loan facility³		$	300	variable		January	January 2021
First mortgage bonds		575		3.500	%	March	August 2051
First mortgage bonds		525		2.500	%	May	May 2060
First mortgage bonds⁴		134		variable		May	May 2070
Total Consumers		$	1,534
Total CMS Energy		$	2,334


¹	At September 30, 2020, the interest rate on the balance of this term loan facility was 0.606 percent, based on an interest rate of one-week LIBOR plus 0.500 percent.


²	These unsecured obligations rank subordinate and junior in right of payment to all of CMS Energy’s existing and future senior indebtedness. On June 1, 2030, and every five years thereafter, the notes will reset to an interest rate equal to the five-year treasury rate plus 4.116 percent.


³	At September 30, 2020, the interest rate on the balance of this term loan facility was 0.556 percent, based on an interest rate of one‑week LIBOR plus 0.450 percent.


⁴	The variable-rate bonds bear interest quarterly at a rate of three-month LIBOR minus 0.300 percent, subject to a zero‑percent floor (zero percent at September 30, 2020).

In October 2020, Consumers issued $127 million in variable-rate first mortgage bonds that mature in October 2070 and bear interest at a rate of three-month LIBOR minus 0.300 percent, subject to a zero‑percent floor.

Presented in the following table is a summary of major long‑term debt retirements during the nine months ended September 30, 2020:



	Principal (In Millions)			Interest Rate		Retirement Date	Maturity Date
Consumers
First mortgage bonds		$	100	3.770	%	April	October 2020
First mortgage bonds		250		5.300	%	June	September 2022
First mortgage bonds		375		2.850	%	September	May 2022
Total Consumers		$	725
Total CMS Energy		$	725

In July 2020, Consumers purchased, in lieu of redemption, $35 million of variable-rate tax-exempt revenue bonds due April 2035. At September 30, 2020, Consumers held the variable-rate tax-exempt revenue bonds and may remarket the bonds or replace them with debt instruments of an equivalent value.

Credit Facilities: The following credit facilities with banks were available at September 30, 2020:



In Millions
Expiration Date	Amount of Facility			Amount Borrowed			Letters of Credit Outstanding			Amount Available
CMS Energy, parent only
June 5, 2023		$	550		$	—		$	5		$	545
CMS Enterprises, including subsidiaries
September 25, 2025¹		$	39		$	—		$	39		$	—
September 30, 2025²		18			—			8			10
Consumers³
June 5, 2023		$	850		$	—		$	7		$	843
November 19, 2021		250			—			1			249
April 18, 2022		30			—			30			—


¹	This letter of credit facility is available to Aviator Wind Equity Holdings. For information regarding the acquisition of Aviator Wind Equity Holdings, see Note 15, Purchase of Variable Interest Entity.


²	Under this facility, $8 million is available solely for the purpose of issuing letters of credit. Obligations under this facility are secured by the collateral accounts with the lending bank.


³	Obligations under these facilities are secured by first mortgage bonds of Consumers.

Short‑term Borrowings: Under Consumers’ commercial paper program, Consumers may issue, in one or more placements, investment-grade commercial paper notes with maturities of up to 365 days at market interest rates. These issuances are supported by Consumers’ revolving credit facilities and may have an aggregate principal amount outstanding of up to $500 million. While the amount of outstanding commercial paper does not reduce the available capacity of the revolving credit facilities, Consumers does not intend to issue commercial paper in an amount exceeding the available capacity of the facilities. At September 30, 2020, there were no commercial paper notes outstanding under this program.

Dividend Restrictions: At September 30, 2020, payment of dividends by CMS Energy on its common stock was limited to $5.3 billion under provisions of the Michigan Business Corporation Act of 1972.

Under the provisions of its articles of incorporation, at September 30, 2020, Consumers had $1.6 billion of unrestricted retained earnings available to pay dividends on its common stock 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, dividends from Consumers on its common stock would not be limited to amounts in Consumers’ retained earnings. Any decision by Consumers to pay dividends on its common stock in excess of retained earnings would be based on specific facts and circumstances and would be subject to a formal regulatory filing process.

For the nine months ended September 30, 2020, Consumers paid $449 million in dividends on its common stock to CMS Energy.

Issuance of Common Stock: In 2018 and 2020, CMS Energy entered into equity offering programs under which it may sell, from time to time, shares of CMS Energy common stock. Under both programs, CMS Energy may sell its common stock in privately negotiated transactions, in “at the market” offerings, through forward sales transactions or otherwise.

During 2018 and 2019, CMS Energy entered into forward sales contracts having an aggregate sales price of $250 million, the maximum allowed under the 2018 program. In March 2020, CMS Energy settled one of these contracts by issuing 2,017,783 shares of common stock for $47.95 per share, resulting in net proceeds of $97 million.

Under the 2020 program, CMS Energy may sell shares of its common stock having an aggregate sales price of up to $500 million. In September 2020, CMS Energy entered into a forward sales contract having an aggregate sale price of $52 million.

Presented in the following table are details of CMS Energy’s remaining forward sales contracts under these programs at September 30, 2020:



			Forward Price Per Share
Contract Date	Maturity Date	Number of Shares	Initial			September 30, 2020
November 20, 2018	March 31, 2021	777,899		$	50.91		$	48.83
February 21, 2019	March 31, 2021	2,083,340		52.27			50.39
September 15, 2020	December 31, 2021	846,759		$	61.06		$	61.04

These contracts allow CMS Energy to either physically settle the contracts by issuing shares of its common stock at the then‑applicable forward sale price specified by the agreement or net settle the contracts through the delivery or receipt of cash or shares. CMS Energy may settle the contracts at any time through their maturity dates, and presently intends to physically settle the contracts by delivering shares of its common stock.

The initial forward price in the forward equity sale contracts includes a deduction for commissions and will be adjusted on a daily basis over the term based on an interest rate factor and decreased on certain dates by certain predetermined amounts to reflect expected dividend payments. No amounts are recorded on CMS Energy’s consolidated balance sheets until settlements of the forward equity sale contracts occur. If CMS Energy had elected to net share settle the contracts as of September 30, 2020, CMS Energy would have been required to deliver 538,335 shares.

Consumers Energy Company

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Financings and Capitalization