CMS Energy Corp.’s immediate financial future was resting on the decisions of six banks late Friday as the Dearborn, MI-based company negotiated to have its $450 million credit line approved. Without approval by midnight Friday, CMS could be forced to default on a previous loan agreement and have to immediately repay a $300 million loan from the revolver. CMS also uses the credit line to operate and pay day-to-day expenses.

The revolving line of credit was originally set to expire June 17, but was extended after management negotiated with the lenders. CMS has scheduled a conference call for 10 a.m. EST on Monday (July 15) to discuss the outcome of the negotiations, as well as update investors and analysts on the company’s progress with its new strategic focus, announced last Tuesday. It also may provide information on whether the company’s dividend will be cut. The conference call may be accessed on the CMS web site at www.cmsenergy.com.

Spokesman Kelly Farr said the company was “fairly confident” an agreement would be reached, but did not anticipate an agreement until after the close of Friday business. He said, “it will probably take until the 11th hour on Friday before we know everything.”

Among other things to be discussed in the conference call Monday is an alleged investigation into its energy trading activities by the U.S. Attorney General offices in Houston and New York City. On Friday, Duke Energy and El Paso Corp. announced they had been U.S. attorney general in Houston, as well as the Commodity Futures Trading Commission (see related story).

Analysts also are waiting to hear whether CMS will announce it is cutting its investor dividend to generate more cash and pay down debt. Its annual dividend pay-out currently is $1.46 a share. CEO Ken Whipple said that paying the dividend was “important for this company, but with that said, we’ll have to cut the best deal that we can with bankers.”

Whipple also has affirmed that CMS’s former international expansion had not come at the best time, and tested the company’s “ability to read some of the political situations abroad.” Whipple said CMS was pulling out of some international markets to focus more attention on North America.

Last Tuesday, CMS took new steps last week to further sharpen its business focus and reduce operating costs by almost $50 million a year by announcing it will move its corporate headquarters, sell corporate jets, change its employee savings and health-care plans and cut about 50 jobs. Whipple also will see his compensation “largely deferred and based on the performance of CMS Energy stock, thereby tying his pay to the company’s success.”

Last month, COO David Joos assured analysts that even with the credit downgrades it had received, the company would have enough liquidity at least through mid-July, and longer if other assets such as the Panhandle Eastern Pipe Line Co. subsidiary had to be tapped for loans (see NGI, June 17).

“We are committed to restoring our company’s financial health and continuing the back-to-basics focus on our primary North American assets, which we announced last year,” said Whipple in a statement last week. “The ongoing savings measures we are announcing…in addition to cost reduction efforts already under way, are significant steps in our plan to improve over time, our cash flow and balance sheet.”

Whipple, a retired Ford Motor Co. executive and also a member of the CMS board of directors, took over the top job in June after long-time Chairman and CEO William McCormick Jr. resigned in May amid the round-trip trading scandal. He earns an estimated $50,000 to $60,000 a year as a member of the board, but the latest change to compensation would reduce his CEO salary to almost nothing.

The new job cuts will come with the office relocation, which for years has been headquartered in Dearborn, MI. New headquarters currently under construction in nearby Jackson, MI will open in March 2003, and will house an estimated 1,450 CMS employees. Consumers Energy Co., a utility subsidiary of CMS, is already located in Jackson. The relocation will “reduce corporate employee staffing requirements…and reduce office lease, travel, salary and information technology costs.” Three corporate jets are also being sold.

Also planned are changes to the company’s 401(k) savings program to provide more savings for CMS and “enhanced investment options for employee participants,” and changes to the company’s health plan to keep benefits and costs competitive.

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