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CMS' Consumers Energy expected to seek $300 million of new debt
By Sara Rosenberg
New York, Nov. 14 - CMS Energy Corp. plans to refinance debt at Consumers Energy by accessing the capital markets for $300 million of new debt later in the year, company officials said in an earnings call on Thursday. The parent company, though, intends to use asset sales and earnings to repay debt and avoid the need to access the capital markets, officials added.
If the refinancing of Consumers' debt is not successful, the company reassured that it has other alternatives.
"We're continuing to pay down bank debt faster than expected," company officials said during the call. "The Enterprises loan is fully paid. The CMS Energy revolver has been paid down from $296 million to $207 million. We expect to repay the balance of this loan in the next few months."
By the end of the third quarter, the Dearborn, Mich. energy company had reduced its debt by $860 million in 2002, including paying down $239 million in bank debt since July 2002. Operating cash flow at CMS is expected to be sufficient to support dividends. Furthermore, operating cash flow coupled with asset sales will allow the company to reduce debt by another $125 million, officials said.
At Consumers Energy, cash flow is expected to be sufficient to retire additional debt and to increase the cash balance by $55 million, officials added.
If an offer for Panhandle is accepted, debt would be reduced by $1.5 billion in 2003. However, the bank debt that is due next March should be repaid with asset sale proceeds even without the sale of Panhandle.
At the end of the third quarter, long-term debt was $2.9 billion and short-term debt was $364 million.
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