CMS Energy announces cash tender offers for up to $125 million of outstanding debt securities issued by Consumers Energy

Rhea-AI Summary

CMS Energy has announced a cash tender offer for up to $125 million of outstanding bonds issued by Consumers Energy Company. The tender offer targets five series of First Mortgage Bonds with maturities ranging from 2046 to 2060, with acceptance priority levels from 1 to 5. Bondholders who tender before the Early Tender Date of June 17, 2025, will receive the Total Consideration including a $30 Early Tender Payment per $1,000 principal amount. The tender offer expires on July 3, 2025. The settlement dates are expected to be June 23, 2025, for early tenders and July 9, 2025, for regular tenders. The 2.500% First Mortgage Bonds due 2060 have a Series Tender Cap of $125 million. The offer includes bonds with interest rates ranging from 2.500% to 3.500% and principal amounts outstanding between $300 million and $575 million.

Positive

• Opportunity for bondholders to receive early tender premium of $30 per $1,000 principal amount
• Strategic debt management initiative to potentially improve company's debt structure
• Clear acceptance priority levels and structured tender process providing transparency to bondholders

Negative

• Limited tender offer size of $125 million compared to total outstanding bonds
• Potential proration risk for bondholders if tender offer is oversubscribed
• Series Tender Cap on 2.500% bonds may limit participation for that series

Insights

Financial Analyst

CMS Energy's $125M tender offer aims to optimize debt structure by repurchasing longer-dated bonds at potentially favorable prices.

CMS Energy's tender offer for up to $125 million of Consumers Energy's outstanding mortgage bonds represents a strategic debt management initiative. The company is targeting five series of long-dated bonds with maturities ranging from 2046 to 2060, with priority given to the 2.500% bonds due 2060 (limited to $125 million of the $525 million outstanding).

This tender structure reveals careful financial engineering to optimize CMS's debt profile. By establishing an acceptance priority hierarchy and early tender incentives ($30 per $1,000 principal), management is encouraging prompt bondholder participation while maintaining control over which series they ultimately repurchase.

The timing is particularly noteworthy. With these bonds carrying relatively low coupon rates (2.5%-3.5%) compared to current market yields, CMS can likely repurchase them below par value, creating potential accounting gains. The fixed spread pricing mechanism (+35 to +50 basis points over Treasury benchmarks) suggests CMS is willing to pay fair market prices rather than seeking deep discounts.

The tender doesn't signal financial distress but rather reflects prudent capital management. By reducing long-term, lower-rate debt obligations now, CMS can potentially refinance at more optimal rates in the future or simply reduce its overall leverage. The transaction's modest size relative to Consumers Energy's $2.4 billion total debt in these series indicates this is a targeted optimization rather than a comprehensive debt restructuring.

JACKSON, Mich., June 4, 2025 /PRNewswire/ -- CMS Energy Corporation ("CMS Energy") (NYSE: CMS) announced today the commencement of a cash tender offer (the "Tender Offer") for up to $125 million aggregate principal amount (the "Aggregate Tender Cap") of the outstanding bonds listed in the table below (the "Bonds"), which were issued by Consumers Energy Company ("Consumers").

The table below summarizes certain information regarding the Bonds and the Tender Offer, including the acceptance priority levels (the "Acceptance Priority Levels"), subject to the applicable sublimit (set forth in the table below) (the "Series Tender Cap"), if applicable, and the Aggregate Tender Cap for the Bonds.

The Bonds
Title of Security	CUSIP Numbers	Applicable Par Call Date / Maturity Date (1)	Issuer	Principal Amount Outstanding	Acceptance Priority Level (2)	Series Tender Cap	U.S. Treasury Reference Security	Bloomberg Reference Page	Fixed Spread	Early Tender Payment (3)(4)
2.500% First Mortgage Bonds due 2060	210518 DJ2	05/01/2060	Consumers Energy Company	$525,000,000	1	$125,000,000	4.625% U.S.T. due 02/15/55	PX1	+35	$30
2.650% First Mortgage Bonds due 2052	210518 DN3	08/15/2052	Consumers Energy Company	$300,000,000	2	N/A	4.625% U.S.T. due 02/15/55	PX1	+35	$30
3.100% First Mortgage Bonds due 2050	210518 DF0	08/15/2050	Consumers Energy Company	$550,000,000	3	N/A	4.625% U.S.T. due 02/15/55	PX1	+50	$30
3.250% First Mortgage Bonds due 2046	210518 CZ7	08/15/2046	Consumers Energy Company	$450,000,000	4	N/A	5.000% U.S.T. due 05/15/45	PX1	+40	$30
3.500% First Mortgage Bonds due 2051	210518 DH6	08/01/2051	Consumers Energy Company	$575,000,000	5	N/A	4.625% U.S.T. due 02/15/55	PX1	+45	$30

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(1)	The application of the par call date, if any, will be in accordance with market practice. Specifically, if the interest rate on a particular series of Bonds is less than the applicable Offer Yield (as defined in the Offer to Purchase (as defined below)), then the calculation will assume that the payments of such Bonds are through the maturity date of the Bonds, and if the interest rate is greater than the applicable Offer Yield, then the calculation will assume that the payments of such Bonds are through the par call date. See Schedule A to the Offer to Purchase for an overview of the calculation of the Total Consideration (as defined below) with respect to the Bonds.
(2)	CMS Energy will purchase up to an aggregate principal amount of the Bonds equal to the Aggregate Tender Cap of $125,000,000, subject to the Acceptance Priority Level and the Series Tender Cap, each as set forth in the table above. The Aggregate Tender Cap and the Series Tender Cap are based on principal amounts. CMS Energy reserves the right, but is under no obligation, to increase, decrease or eliminate the Aggregate Tender Cap and/or the Series Tender Cap at any time, including on or after June 18, 2025, subject to applicable law, which could result in CMS Energy purchasing an aggregate principal amount of the Bonds greater than the Aggregate Tender Cap and/or purchasing an aggregate principal amount of Capped Bonds (as defined below) above the applicable sublimit set forth herein.
(3)	Per $1,000 principal amount.
(4)	The Total Consideration for Bonds validly tendered prior to or at the applicable Early Tender Date (as defined below) and accepted for purchase is calculated using the applicable Fixed Spread and is inclusive of the applicable Early Tender Payment (as defined below).

The Tender Offer is being made pursuant to an Offer to Purchase, dated June 4, 2025 (the "Offer to Purchase"), which sets forth the terms and conditions of the Tender Offer. The Tender Offer will expire at 5:00 p.m., New York City time, on July 3, 2025, or any other date and time to which Tender Offer is extended (such date and time, as it may be extended with respect to the Tender Offer, the "Expiration Date"), unless earlier terminated. Holders of Bonds must validly tender and not validly withdraw their Bonds prior to 5:00 p.m., New York City time, on June 17, 2025, (such date and time, as it may be extended with respect to the Tender Offer, the "Early Tender Date"), to be eligible to receive the Total Consideration, which is inclusive of the applicable cash amount set forth in the above tables under the heading "Early Tender Payment" (the "Early Tender Payment"). Holders of Bonds who validly tender their Bonds after the Early Tender Date but prior to the applicable Expiration Date will only be eligible to receive the applicable Tender Offer Consideration.

All holders of Bonds accepted for purchase will also receive accrued and unpaid interest on Bonds validly tendered and accepted for purchase from the applicable last interest payment date up to, but not including, the applicable settlement date.

The applicable consideration (the "Total Consideration") offered per $1,000 principal amount of Bonds of each series validly tendered and accepted for purchase pursuant to the Tender Offer will be determined in the manner described in the Offer to Purchase by reference to the applicable "Fixed Spread" for such Bonds specified in the tables above plus the applicable yield to maturity based on the bid-side price of the applicable "U.S. Treasury Reference Security" specified in the tables above as quoted on the applicable page on the Bloomberg Bond Trader at 10:00 a.m., New York City time, on the business day following the Early Tender Date, which is expected to be June 18, 2025. The "Tender Offer Consideration" is equal to the Total Consideration minus the Early Tender Payment.

Bonds tendered prior to or at the Early Tender Date and accepted for purchase will be accepted based on the Acceptance Priority Levels noted in the tables above, with 1 being the highest Acceptance Priority Level and 5 being the lowest Acceptance Priority Level, and will have priority over Bonds tendered after the Early Tender Date, regardless of the Acceptance Priority Levels of the Bonds tendered after the Early Tender Date. Bonds of a series may be subject to proration if the aggregate principal amount of the Bonds of such series validly tendered and not validly withdrawn would cause the Aggregate Tender Cap to be exceeded, or, in the case of the 2.500% First Mortgage Bonds due 2060 (the "Capped Bonds"), if the aggregate principal amount of such Capped Bonds validly tendered and not validly withdrawn is greater than the Series Tender Cap.

The Tender Offer will expire on the applicable Expiration Date. The settlement date for the Bonds that are validly tendered on or prior to the Early Tender Date is expected to be June 23, 2025, the third business day following the Early Tender Date, assuming the conditions to the satisfaction of the Tender Offer are satisfied. The settlement date for Bonds that are validly tendered following the Early Tender Date but on or prior to the applicable Expiration Date is expected to be July 9, 2025, the third business day following the Expiration Date.

Bonds that are validly tendered may be validly withdrawn at any time prior to 5:00 p.m., New York City time, on June 17, 2025 (unless extended, the "Withdrawal Date"). After such time Bonds may not be withdrawn unless CMS Energy extends the Withdrawal Date.

CMS Energy or its affiliates (including Consumers) may from time to time, after completion of the Tender Offer, purchase additional Bonds in the open market, in privately negotiated transactions, through tender or exchange offers or otherwise, or CMS Energy or Consumers may redeem Bonds that are redeemable pursuant to their terms. In addition, from time to time, including during the Tender Offers, CMS Energy or its affiliates (including Consumers) may purchase certain of Consumers' first mortgage bonds that are not subject to the Tender Offers in the open market, in privately negotiated transactions, through tender or exchange offers, or otherwise, or Consumers may redeem such first mortgage bonds that they are permitted to redeem pursuant to their terms. Any future purchases by CMS Energy or its affiliates (including Consumers) will depend on various factors existing at that time.

CMS Energy's obligation to accept for payment and to pay for the Bonds validly tendered in the Tender Offer is not subject to any minimum tender condition but is subject to the satisfaction or waiver of the conditions described in the Offer to Purchase. CMS Energy reserves the right, subject to applicable law, to: (i) waive any and all conditions to the Tender Offer; (ii) extend or terminate the Tender Offer; (iii) increase or decrease the Aggregate Tender and/or Series Tender Cap; or (iv) otherwise amend the Tender Offer in any respect.

Information Relating to the Tender Offer

U.S. Bancorp Investments, Inc. is acting as the dealer manager (the "Dealer Manager") for the Tender Offer. The information agent and tender agent is D.F. King & Co. Inc. ("D.F. King"). Copies of the Offer to Purchase and related offering materials are available by contacting D.F. King via email at cms@dfking.com, (800) 283-9185 (U.S. toll-free) or (212) 269-5550 (banks and brokers). Questions regarding the Tender Offer should be directed to U.S. Bancorp Investments, Inc., Liability Management Group at (917) 558-2756 (collect) or (800) 479-3441 (toll free).

None of CMS Energy, its affiliates, the Dealer Manager, D.F. King or the trustee with respect to any series of Bonds is making any recommendation as to whether holders of Bonds should tender any Bonds in response to the Tender Offer, and neither CMS Energy nor any such other person has authorized any person to make any such recommendation. Holders of Bonds must make their own decision as to whether to tender any of their Bonds, and, if so, the principal amount of Bonds to tender.

This press release shall not constitute an offer to sell, a solicitation to buy or an offer to purchase or sell any securities. The Tender Offers are being made only pursuant to the Offer to Purchase and only in such jurisdictions as is permitted under applicable law.

The full details of the Tender Offer, including complete instruction on how to tender Bonds, are included in the Offer to Purchase. The Offer to Purchase contains important information that should be read by holders of Bonds before making a decision to tender any Bonds. The Offer to Purchase may be obtained from D.F. King, free of charge, by calling toll-free at (800) 283-9185 (bankers and brokers can call collect at (212) 269-5550) or emailing at cms@dfking.com.

CMS Energy (NYSE: CMS) is a Michigan-based energy provider featuring Consumers Energy Company, an electric and gas utility, as its primary business. It also owns and operates independent power generation businesses.

Forward-Looking Information

This news release includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on management's beliefs and assumptions and can often be identified by terms and phrases that include "anticipates," "assumes," "believes," "could," "estimates," "expects," "forecasts," "goals," "guidance," "intends," "may," "might," "objectives," "plans," "possible," "potential," "predicts," "projects," "seeks," "should," "targets," "will," and other similar words. Various factors may cause actual results to be materially different than the suggested outcomes within forward‑looking statements; accordingly, there is no assurance that such results will be realized. These factors include, but are not limited to: the fact that there can be no assurance that the contemplated Tender Offer will be completed in accordance with its terms, or at all; there can be no assurance that a significant principal amount of the debt being tendered will be validly tendered and accepted for purchase in the Tender Offer; the impact and effect of recent events, such as worsening trade relations, geopolitical tensions, war, acts of terrorism, and the responses to these events, and related economic disruptions including, but not limited to, inflation, energy price volatility, tariffs, and supply chain disruptions; the impact of new regulation by the Michigan Public Service Commission ("MPSC"), the Federal Energy Regulatory Commission ("FERC"), and other applicable governmental proceedings and regulations, including any associated impact on electric or gas rates or rate structures; potentially adverse regulatory treatment, effects of a failure to receive timely regulatory orders that are or could come before the MPSC, FERC, or other governmental authorities, or effects of a government shutdown; changes in the performance of or regulations applicable to Midcontinent Independent System Operator, Inc., Michigan Electric Transmission Company, LLC (a non‑affiliated company), pipelines, railroads, vessels, or other service providers that CMS Energy, Consumers, or any of their affiliates rely on to serve their customers; federal actions, the adoption of or challenges to federal or state laws or regulations or changes in applicable laws, rules, regulations, principles, or practices, or in their interpretation, such as those related to energy policy, Retail Open Access, which allows electric generation customers to choose alternative electric suppliers pursuant to Michigan's Public Acts 141 and 142 of 2000, as amended, the Public Utility Regulatory Policies Act of 1978, infrastructure integrity or security, cybersecurity, gas pipeline safety, gas pipeline capacity, energy waste reduction, the financial compensation mechanism, the environment, regulation or deregulation, reliability, health care reforms, taxes, accounting matters, tariffs, climate change, air emissions, renewable energy, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and other business issues that could have an impact on CMS Energy's, Consumers', or any of their affiliates' businesses or financial results; factors affecting, disrupting, interrupting, or otherwise impacting CMS Energy's or Consumers' facilities, utility infrastructure, operations, or backup systems, such as costs and availability of personnel, equipment, and materials; weather and climate, including catastrophic weather-related damage and extreme temperatures; natural disasters; fires; smoke; scheduled or unscheduled equipment outages; maintenance or repairs; contractor performance; environmental incidents; failures of equipment or materials; electric transmission and distribution or gas pipeline system constraints; interconnection requirements; political and social unrest; general strikes; the government and/or paramilitary response to political or social events; changes in trade policies, regulations or tariffs; accidents; explosions; physical disasters; global pandemics; cyber incidents; physical or cyber attacks; vandalism; war or terrorism; and the ability to obtain or maintain insurance coverage for these events; the ability of CMS Energy and Consumers to execute cost-reduction strategies and/or convert economic development opportunities; potentially adverse regulatory or legal interpretations or decisions regarding environmental matters, or delayed regulatory treatment or permitting decisions that are or could come before agencies such as the Michigan Department of Environment, Great Lakes, and Energy, the U.S. Environmental Protection Agency, FERC, and/or the U.S. Army Corps of Engineers, and potential environmental remediation costs associated with these interpretations or decisions, including those that may affect Consumers' coal ash management or routine maintenance, repair, and replacement classification under New Source Review, a construction-permitting program under the Federal Clean Air Act of 1963, as amended; changes in energy markets, including availability, price, and seasonality of electric capacity and energy and the timing and extent of changes in commodity prices and availability and deliverability of coal, natural gas, natural gas liquids, electricity, oil, gasoline, diesel fuel, and certain related products; the price of CMS Energy's common stock, the credit ratings of CMS Energy and Consumers, capital and financial market conditions, and the effect of these market conditions on CMS Energy's and Consumers' interest costs and access to the capital markets, including availability of financing to CMS Energy, Consumers, or any of their affiliates; the ability of CMS Energy and Consumers to execute their financing strategies; the investment performance of the assets of CMS Energy's and Consumers' pension and benefit plans, the discount rates, mortality assumptions, and future medical costs used in calculating the plans' obligations, and the resulting impact on future funding requirements; the impact of the economy, particularly in Michigan, and potential future volatility in the financial and credit markets on CMS Energy's, Consumers', or any of their affiliates' revenues, ability to collect accounts receivable from customers, or cost and availability of capital; changes in the economic and financial viability of CMS Energy's and Consumers' suppliers, customers, and other counterparties and the continued ability of these third parties, including those in bankruptcy, to meet their obligations to CMS Energy and Consumers; population changes in the geographic areas where CMS Energy and Consumers conduct business; national, regional, and local economic, competitive, and regulatory policies, conditions, and developments; loss of customer demand for electric generation supply to alternative electric suppliers, the creation of municipal utilities, increased use of self-generation including distributed generation, energy waste reduction, or energy storage; loss of customer demand for natural gas due to alternative technologies or fuels or electrification; the ability of Consumers to meet increased renewable energy demand due to customers seeking to meet their own sustainability goals in a timely and cost-efficient manner; the reputational or other impact on CMS Energy and Consumers of the failure to meet the renewable or clean energy standards required by Michigan's Public Acts 229, 230, 231, 233, 234, and 235 of 2023 or to achieve or make timely progress on their greenhouse gas reduction goals related to reducing their impact on climate change; adverse consequences of employee, director, or third-party fraud or non‑compliance with codes of conduct or with laws or regulations; federal regulation of electric sales, including periodic re‑examination by federal regulators of CMS Energy's and Consumers' market-based sales authorizations; any event, change, development, occurrence, or circumstance that could impact the implementation of Consumers' Clean Energy Plan, including any action by a regulatory authority or other third party to prohibit, delay, or impair the implementation of Consumers' Clean Energy Plan; the ability to meet increases in electric demand associated with data centers; the availability, cost, coverage, and terms of insurance, the stability of insurance providers, and the ability of Consumers to recover the costs of any insurance from customers; the effectiveness of CMS Energy's and Consumers' risk management policies, procedures, and strategies, including strategies to hedge risk related to interest rates and future prices of electricity, natural gas, and other energy-related commodities; factors affecting development of electric generation projects, gas transmission, and gas and electric distribution infrastructure replacement, conversion, and expansion projects, including factors related to project site identification, construction material availability, quality, and pricing, tariffs, embargoes on equipment, supply chain disruptions, schedule delays, interconnection delays, availability of qualified construction personnel, permitting, acquisition of property rights, community opposition, environmental regulations, and government actions; changes or disruption in fuel supply, including but not limited to supplier bankruptcy and delivery disruptions; potential costs, lost revenues, reputational harm, or other consequences resulting from misappropriation of assets or sensitive information, corruption of data, or operational disruption in connection with a cyberattack or other cyber incident; potential disruption to, interruption or failure of, or other impacts on information technology backup or disaster recovery systems; technological developments in energy production, storage, delivery, usage, and metering; the ability to implement and integrate technology successfully, including artificial intelligence; the impact of CMS Energy's and Consumers' integrated business software system and its effects on their operations, including utility customer billing and collections; adverse consequences resulting from any past, present, or future assertion of indemnity or warranty claims associated with assets and businesses previously owned by CMS Energy or Consumers, including claims resulting from attempts by foreign or domestic governments to assess taxes on or to impose environmental liability associated with past operations or transactions; the outcome, cost, and other effects of any legal or administrative claims, proceedings, investigations, or settlements; the reputational impact on CMS Energy and Consumers of operational incidents, violations of corporate policies, regulatory violations, inappropriate use of social media, and other events; restrictions imposed by various financing arrangements and regulatory requirements on the ability of Consumers and other subsidiaries of CMS Energy to transfer funds to CMS Energy in the form of cash dividends, loans, or advances; earnings volatility resulting from the application of fair value accounting to certain energy commodity contracts or interest rate contracts; changes in financial or regulatory accounting principles or policies or interpretation of principles or policies; and other matters that may be disclosed from time to time in CMS Energy's and Consumers' SEC filings, or in other public documents.

Additional risks and uncertainties are identified and discussed in CMS Energy's and Consumers' reports filed with the SEC and are available at the SEC's website. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements included or incorporated by reference in this news release might not occur or might occur to a different extent or at a different time than described. Forward-looking statements speak only as of the date they are made and CMS Energy expressly disclaims an obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

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SOURCE CMS Energy Corporation

FAQ

What is the size of CMS Energy's tender offer for Consumers Energy bonds?

CMS Energy's tender offer is for up to $125 million aggregate principal amount of outstanding bonds issued by Consumers Energy Company.

When does CMS Energy's 2025 tender offer expire?

The tender offer expires at 5:00 p.m., New York City time, on July 3, 2025, unless extended or earlier terminated.

What is the Early Tender Payment for CMS Energy's 2025 bond tender?

The Early Tender Payment is $30 per $1,000 principal amount for bonds tendered before the Early Tender Date of June 17, 2025.

Which bonds are included in CMS Energy's 2025 tender offer?

The tender offer includes five series of First Mortgage Bonds with maturities from 2046 to 2060, with interest rates ranging from 2.500% to 3.500%.

What are the settlement dates for CMS Energy's 2025 tender offer?

The settlement dates are June 23, 2025, for early tenders (before June 17) and July 9, 2025, for regular tenders.