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MCN ENERGY GROUP INC.
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[THIS FILING CONSISTS OF A LETTER TO SHAREHOLDERS FIRST MAILED ON
MARCH 12, 2001]
[MCN LETTER HEAD] 4TH QUARTER
ALFRED R. GLANCY III
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
500 GRISWOLD STREET
DETROIT, MICHIGAN 48226
WWW.MCNENERGY.COM
1 800 548-4655
March 5, 2001
Dear MCN Shareholder:
In addition to reporting its earnings for 2000, MCN Energy Group on February 28
announced revised terms to our merger agreement with DTE Energy. Under the
revised terms, DTE will acquire the outstanding shares of MCN for $24.00 per
share in cash, or 0.715 shares of DTE common stock per share of MCN common
stock, subject to pro-ration and tax considerations such that, in the aggregate,
55% of MCN common stock will be converted into cash and 45% will be converted
into DTE common stock. The value of the revised transaction is approximately
$25.62 per share, based on DTE's closing stock price today of $38.59.
The revised agreement also extends the original April 15, 2001 opt-out date to
December 31, 2001 to allow sufficient time to obtain the necessary regulatory
approvals as well as MCN shareholder approval of the revised terms. The boards
of both companies have approved the revised agreement.
The terms of our agreement have been revised to provide certainty that this
transaction will be completed. DTE made it clear that if April 15 passed and all
of the regulatory approvals were not in hand, it would not close the transaction
on the original terms. Our regulatory approval process has taken far longer than
anyone anticipated. The MCN Board of Directors and management made the judgment
that the uncertainties of closing by April 15 could result in a significant
reduction of shareholder value, well below the level represented by this
renegotiated price. We determined that the very high degree of certainty of
consummation represented by the amended agreement warranted accepting the
revised price. We believe this was the most prudent course of action under the
circumstances.
Proxy materials seeking shareholder approval of the revised merger agreement
will be mailed shortly, along with MCN's annual report on Form 10-K. The date of
the special shareholder meeting to approve the agreement will be provided in the
proxy mailing. Closing of the merger now is expected within four to five months,
assuming clearance is received from MCN shareholders, the Federal Trade
Commission and the Securities and Exchange Commission.
For the year 2000, MCN reported net income of $108.9 million. Excluding unusual
items and costs related to the planned merger with DTE, 2000 earnings were $66.4
million. MCN reported a restated net loss for 1999 of $18.9 million, which
included $121.0 million of unusual losses and merger costs. Comparisons of
results are affected by adoption of revised accounting treatment of
non-regulated storage activities beginning in the second quarter of 2000.
Our operations met expectations in the second half of 2000. The Gas Distribution
segment continued to perform well, while we achieved notable improvements at the
non-regulated Energy Marketing unit. The Pipelines & Processing, Electric Power
and Exploration & Production segments were in line with our expectations, while
the comparability of results for these units continued to be affected by asset
sales and other factors. Moving forward, we think this is a strong base upon
which to build.
In closing, let me assure you that we continue to do everything possible to
expedite the merger process, and to help ensure the new company's successful
integration.
Sincerely,
/s/Alfred R. Glancy III
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DTE will be filing a post-effective amendment to its registration
statement filed on Form S-4 - which was filed with the Securities and Exchange
Commission (SEC) on November 12, 1999 and contains a proxy statement/prospectus
for DTE and MCN - and other documents with the SEC. Investors and securities
holders are urged to read the post-effective amendment containing the proxy
statement/prospectus and any other relevant documents filed with the SEC when
they become available because they will contain important information. Investors
and securities holders will be able to receive the post-effective amendment
containing the proxy statement/prospectus and other documents free of charge at
the SEC's web site, www.sec.gov, from DTE Investor Relations at 2000 2nd Avenue,
Detroit, Michigan 48226-1279 or from MCN Investor Relations at 500 Griswold
Street, Detroit, Michigan 48226. Information concerning the identity of the
participants in the solicitation of proxies by the MCN board of directors and
their direct or indirect interests, by securities holdings or otherwise, may be
obtained from the Secretary of MCN at the address listed above.
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