| Issuer: | CMS Energy Corporation | |
| Ticker / Exchange for Common Stock: | CMS / NYSE | |
| Security: | 5.50% Convertible Senior Notes due 2029 (“Notes”) | |
| Aggregate Principal Amount Offered: | $150,000,000 (excluding the underwriters’ option to purchase up to $22,500,000 of additional aggregate principal amount of Notes to cover over-allotments, if any) | |
| Maturity: | June 15, 2029 (subject to earlier redemption, repurchase or conversion) | |
| Annual Interest Rate: | 5.50% | |
| Interest Payment Dates: | June 15 and December 15 | |
| First Interest Payment Date: | December 15, 2009 | |
| Public Offering Price: | $1,000 per Note / $150,000,000 total | |
| Closing Sale Price on June 9, 2009: | $11.57 per share of the Issuer’s common stock | |
| Conversion Premium: | 25.00% above the Closing Sale Price on June 9, 2009 | |
| Initial Conversion Price: | Approximately $14.46 per share of the Issuer’s common stock | |
| Initial Conversion Rate: | 69.1443 shares of the Issuer’s common stock per $1,000 principal amount of Notes | |
| Conversion Trigger Price: | Approximately $18.80, which is 130% of the Initial Conversion Price | |
| Optional Redemption: | At any time on or after June 20, 2014, the Issuer may redeem all or a part of the Notes for cash at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus accrued but unpaid interest (including additional interest, if any) to, but not including, the redemption date | |
| Repurchase at Option of Holder: | Holders may require the Issuer to repurchase all or a part of their Notes on June 15, 2014, June 15, 2019 and June 15, 2024 at a cash repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but not including, the repurchase date | |
| Repurchase at Option of Holder Upon a Fundamental Change: | Upon a “fundamental change” as defined in the preliminary prospectus supplement related to the Notes dated June 8, 2009, the holders may require the Issuer to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal |
| amount of the Notes to be repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but not including, the repurchase date | ||
| Increase to Conversion Rate Upon Certain Types of Fundamental Changes: | The following table sets forth the number of additional shares to be added to the conversion rate per $1,000 principal amount of Notes in connection with a “non-stock change of control” as defined in the preliminary prospectus supplement related to the Notes dated June 8, 2009, for each stock price and effective date set forth below: |
| Stock Price | ||||||||||||||||||||||||||||||||||||||||||||||||
| Date | $11.57 | $12.00 | $13.00 | $14.00 | $15.00 | $17.50 | $20.00 | $22.50 | $25.00 | $27.50 | $30.00 | $32.50 | ||||||||||||||||||||||||||||||||||||
| June 15, 2009 | 17.2861 | 17.2861 | 14.6473 | 11.8430 | 9.6393 | 5.8739 | 3.6593 | 2.3078 | 1.4549 | 0.9030 | 0.5400 | 0.3004 | ||||||||||||||||||||||||||||||||||||
| June 15, 2010 | 17.2861 | 16.7046 | 13.1860 | 10.4638 | 8.3586 | 4.8542 | 2.8847 | 1.7329 | 1.0369 | 0.6045 | 0.3315 | 0.1589 | ||||||||||||||||||||||||||||||||||||
| June 15, 2011 | 17.2861 | 15.6072 | 12.0337 | 9.3069 | 7.2421 | 3.9309 | 2.1863 | 1.2310 | 0.6877 | 0.3681 | 0.1767 | 0.0616 | ||||||||||||||||||||||||||||||||||||
| June 15, 2012 | 17.2861 | 14.8399 | 11.0381 | 8.1941 | 6.1063 | 2.9595 | 1.4776 | 0.7551 | 0.3832 | 0.1811 | 0.0664 | 0.0000 | ||||||||||||||||||||||||||||||||||||
| June 15, 2013 | 17.2861 | 14.1890 | 9.7821 | 6.6457 | 4.4781 | 1.6540 | 0.6550 | 0.2877 | 0.1305 | 0.0490 | 0.0001 | 0.0000 | ||||||||||||||||||||||||||||||||||||
| June 20, 2014 | 17.2861 | 14.1890 | 7.7788 | 2.2843 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | 0.0000 | ||||||||||||||||||||||||||||||||||||
| The exact stock prices and effective dates may not be set forth in the table above, in which case, if the stock price is: | ||
| • between two stock price amounts on the table or the effective date is between two effective dates on the table, the number of additional shares will be determined by a straight-line interpolation between the number of additional shares set forth for the higher and lower stock price amounts and the two effective dates, as applicable, based on a 360-day year | ||
| • in excess of $32.50 per share (subject to adjustment), no additional shares will be issued upon conversion | ||
| • less than $11.57 per share (subject to adjustment), no additional shares will be issued upon conversion | ||
| Notwithstanding the foregoing, in no event will the total number of shares of common stock issuable upon conversion exceed 86.4304 per $1,000 principal amount of Notes, subject to adjustments in the same manner as the conversion rate |
| Use of Proceeds: | It is expected that the net proceeds from the offering will be used for the retirement of existing indebtedness (including approximately $115 million of the net proceeds from the offering to repurchase, at a discount, a substantial portion of the outstanding principal amount of the convertible subordinated debentures underlying the 73/4% Convertible Quarterly Income Preferred Securities of CMS Energy Trust I) through redemption, open market repurchases, tender offers or private agreements, and for general corporate purposes | |
| Capitalization: | The following table updates the capitalization table set forth on page S-18 of the preliminary prospectus supplement related to the Notes dated June 8, 2009 to reflect the use of $115,000,000 of the proceeds from the offering of the Notes as described above: |
| At March 31, 2009 | ||||||||||||
| As Further | ||||||||||||
| Actual | As Adjusted | Adjusted | ||||||||||
| (Unaudited, dollars in millions) | ||||||||||||
| Cash and cash equivalents | $ | 826 | $ | 861 | $ | 1,156 | ||||||
| Common stockholders’ equity | $ | 2,517 | $ | 2,517 | $ | 2,517 | ||||||
| Preferred stock | 243 | 243 | 243 | |||||||||
| Preferred stock of subsidiary | 44 | 44 | 44 | |||||||||
| Non-controlling interests | 52 | 52 | 52 | |||||||||
| Long-term debt: | ||||||||||||
| 5.50% Convertible Senior Notes due 2029 | — | 150 | 150 | |||||||||
| 8.75% Senior Notes due 2019 | — | — | 300 | |||||||||
| Long-term debt — related parties | 178 | 34 | 34 | |||||||||
| Other long-term debt (excluding current maturities) | 6,279 | 6,279 | 6,279 | |||||||||
| Non-current portion of capital and finance lease obligations | 200 | 200 | 200 | |||||||||
| Total capitalization | $ | 9,513 | $ | 9,519 | $ | 9,819 | ||||||
| Current portion of long-term debt, capital and finance lease obligations | 311 | 311 | 311 | |||||||||
| Total capitalization and current portion of long-term debt, capital and finance lease obligations | $ | 9,824 | $ | 9,830 | $ | 10,130 | ||||||
| Trade Date: | June 9, 2009 | |
| Settlement Date: | June 15, 2009 (T+4) | |
| Ratings: | Ba1 / BB+ / BB+ (Moody’s / S&P / Fitch) | |
| Note:A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time | ||
| Sole Book-Running Manager: | Barclays Capital Inc. | |
| Joint Lead Managers: | Deutsche Bank Securities Inc. | |
| Merrill Lynch, Pierce, Fenner & Smith Incorporated Wachovia Capital Markets, LLC | ||
| CUSIP/ISIN: | 125896BD1 / US125896BD14 |
