Financings And Capitalization

9 Months Ended

Sep. 30, 2012

5:FINANCINGS and Capitalization

Presented in the following table is a summary of major long-term debt transactions during the nine months ended September 30, 2012:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt Issuances
CMS Energy
Senior notes		$	300	5.05	%	March 2012	March 2022
Term loan facility^1,2			180	variable		February 2012 and July 2012	December 2016
CMS Energy Total			480
Consumers
FMB			375	2.85	%	May 2012	May 2022
Term loan facility³			350	variable		June 2012	March 2013
Tax-exempt bonds⁴			68	variable		August 2012	April 2018
Tax-exempt bonds⁴			35	variable		August 2012	April 2035
Consumers Total			828
Total		$	1,308
Debt Retirements
CMS Energy
Contingently convertible senior notes⁵		$	226	2.88	%	January 2012 and April 2012	December 2024
Trust Preferred Securities			29	7.75	%	February 2012	July 2027
Senior notes			150	variable		July 2012	January 2013
CMS Energy Total			405
Consumers
FMB			300	5.00	%	February 2012	February 2012
FMB			375	5.38	%	May 2012	April 2013
Tax-exempt bonds⁴			68	variable		August 2012	April 2018
Tax-exempt bonds⁴			35	variable		August 2012	April 2035
Consumers Total			778
Total		$	1,183

¹	Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.5 percent.

²	CMS Energy used these proceeds to retire the 7.75 percent Trust Preferred Securities and floating-rate senior notes due January 2013.

³	In June 2012, Consumers entered into a short-term credit agreement permitting Consumers to borrow up to $375 million. Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 0.8 percent.

⁴

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.

⁵	CMS Energy’s contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.

In July 2012, Consumers executed a bond purchase agreement under which it will issue, in a December 2012 private placement, $52 million of 3.19 percent FMBs due 2024, $35 million of 3.39 percent FMBs due 2027, and $263 million of 4.31 percent FMBs due 2042.

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at September 30, 2012:



In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
March 31, 2016¹		$	550		$	-		$	2		$	548
Consumers
March 31, 2016²		$	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 nine months ended September 30, 2012 were $16 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 September 30, 2012, $250 million of accounts receivable were eligible for transfer, and no accounts receivable had been transferred under the program. During the nine months ended September 30, 2012, Consumers’ average short-term borrowings totaled $11 million, with a weighted average annual interest rate of 0.9 percent.

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at September 30, 2012:



		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.94		$	18.12

During 20 of the last 30 trading days ended September 30, 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 December 31, 2012.

Presented in the following table are details about conversions of contingently convertible securities during the nine months ended September 30, 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 September 30, 2012, payment of common stock dividends by CMS Energy was limited to $1.4 billion.

Under the provisions of its articles of incorporation, at September 30, 2012, Consumers had $550 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 nine months ended September 30, 2012, CMS Energy received $302 million of common stock dividends from Consumers.

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 program, resulting in net proceeds of $30 million.

Consumers Energy Company [Member]

Financings And Capitalization

5:FINANCINGS and Capitalization

Presented in the following table is a summary of major long-term debt transactions during the nine months ended September 30, 2012:



	Principal					Issue/Retirement
	(In Millions)			Interest Rate		Date	Maturity Date
Debt Issuances
CMS Energy
Senior notes		$	300	5.05	%	March 2012	March 2022
Term loan facility^1,2			180	variable		February 2012 and July 2012	December 2016
CMS Energy Total			480
Consumers
FMB			375	2.85	%	May 2012	May 2022
Term loan facility³			350	variable		June 2012	March 2013
Tax-exempt bonds⁴			68	variable		August 2012	April 2018
Tax-exempt bonds⁴			35	variable		August 2012	April 2035
Consumers Total			828
Total		$	1,308
Debt Retirements
CMS Energy
Contingently convertible senior notes⁵		$	226	2.88	%	January 2012 and April 2012	December 2024
Trust Preferred Securities			29	7.75	%	February 2012	July 2027
Senior notes			150	variable		July 2012	January 2013
CMS Energy Total			405
Consumers
FMB			300	5.00	%	February 2012	February 2012
FMB			375	5.38	%	May 2012	April 2013
Tax-exempt bonds⁴			68	variable		August 2012	April 2018
Tax-exempt bonds⁴			35	variable		August 2012	April 2035
Consumers Total			778
Total		$	1,183

¹	Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 2.5 percent.

²	CMS Energy used these proceeds to retire the 7.75 percent Trust Preferred Securities and floating-rate senior notes due January 2013.

³	In June 2012, Consumers entered into a short-term credit agreement permitting Consumers to borrow up to $375 million. Outstanding borrowings bear interest at an annual interest rate of LIBOR plus 0.8 percent.

⁴

⁵	CMS Energy’s contingently convertible notes. See the “Contingently Convertible Securities” section in this Note for further discussion of the conversions.

Revolving Credit Facilities: The following secured revolving credit facilities with banks were available at September 30, 2012:



In Millions
							Letters of Credit
Expiration Date	Amount of Facility			Amount Borrowed			Outstanding			Amount Available
CMS Energy
March 31, 2016¹		$	550		$	-		$	2		$	548
Consumers
March 31, 2016²		$	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 nine months ended September 30, 2012 were $16 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.

Contingently Convertible Securities: Presented in the following table are the significant terms of CMS Energy’s contingently convertible securities at September 30, 2012:



		Outstanding			Adjusted			Adjusted
Security	Maturity	(In Millions)			Conversion Price			Trigger Price
5.50% senior notes	2029		$	172		$	13.94		$	18.12

Presented in the following table are details about conversions of contingently convertible securities during the nine months ended September 30, 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 September 30, 2012, payment of common stock dividends by CMS Energy was limited to $1.4 billion.

For the nine months ended September 30, 2012, CMS Energy received $302 million of common stock dividends from Consumers.

- 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.

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