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Filed by DTE Energy Company
Subject Company - MCN Energy Group Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Commission File No 001-10070
DTE ENERGY
&
MCN Energy Group
Merger Financial Review
March 7, 2001
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March 7, 2001
DTE ENERGY AND MCN ENERGY PROVIDE POST-MERGER EARNINGS GUIDANCE
DETROIT - DTE Energy Co. (NYSE: DTE) today provided 2001 and 2002
earnings guidance for the company reflecting the expected close of its merger
with MCN Energy Group (NYSE: MCN).
DTE announced combined expectations for 2001 earnings of $2.90 to $3.00
per diluted share. This includes one-time merger costs estimated at $0.60 per
share. This estimate assumes a merger date of July 1, 2001 and that the
Financial Accounting Standards Board no longer requires goodwill amortization.
With goodwill amortization, the earnings expectations would be lowered by 10
cents per share.
For 2002, DTE announced combined earnings guidance of $4.10 to $4.20
per share excluding goodwill amortization. If goodwill is recorded as an
expense, the expectations would be lowered by approximately 20 cents per share.
In a conference call for analysts and other interested parties, company
officials discussed projected non-regulated earnings, the pending merger with
MCN Energy and the process of securitization now under way as the result of a
Michigan Public Service Commission order earlier this year. The company's
projections encompass regulatory certainty obtained through the order and
virtual certainty related to the completion of the merger following a recent
re-negotiation of the original October 1999 merger agreement. The company is
currently awaiting Federal Trade Commission and Securities and Exchange
Commission approvals related to the merger. For planning purposes the company's
current projections are based on an assumed July 1, 2001 close of the merger.
"We have maintained a solid track record of achieving our projections
and are confident in forecasting expected earnings for the period 2002 in the
range of $4.10 to $4.20," said David E. Meador, senior vice president, Finance.
"This is in line with our anticipated annual rate of growth ramping up to 8
percent over the next several years."
Growth will be led by anticipated increased earnings in the company's
non-regulated businesses, which build, own and operate a wide range of energy
projects, offer energy related products and services, promote development of new
technologies, and transport and sell coal.
"We have set a goal of our aggregated non-regulated earnings reaching
$300 million by 2005, up dramatically from the $125 million expected for this
year," Meador said. "We are confident that this goal is achievable."
Meador also noted that the company would likely be in the market this
year to sell excess tax credits earned by the company's qualifying facilities.
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Company officials also provided an update on securitization of $1.75
billion in qualified assets as part of the state's restructuring of the electric
utility industry. The company has obtained regulatory rulings that provide full
recovery of stranded costs and will provide a rate reduction for customers of
Detroit Edison, the principal operating subsidiary of DTE Energy. The rate
reduction bonds were priced late last week, with the settlement date set for
Friday, March 9.
On the call, MCN announced stand-alone expectations for 2001 earnings
of $1.00 to $1.10 per diluted share excluding unusual items and merger costs.
This estimate assumes normal weather, break-even results for Michigan
Consolidated Gas Company's gas sales program, and the ongoing impact from
adoption of new accounting standards for the treatment of derivative instruments
(FAS 133). MCN expects to record a first-quarter charge of approximately $100
million, net of tax, from FAS 133 adoption, primarily related to marking to
market the value of long-term pipeline capacity contracts held by MCN's Energy
Marketing segment. "While this charge is being recognized in conjunction with
the adoption of FAS 133, it would have been recorded in the purchase accounting
valuation upon the merger's close," MCN Executive Vice President and Chief
Financial Officer Lee Dow said.
DTE Energy is a Detroit-based diversified energy company involved
in the development and management of energy-related businesses and services
nationwide. DTE Energy's principal operating subsidiary is Detroit Edison, an
electric utility serving 2.1 million customers in Southeastern Michigan. DTE
Energy announced in October 1999, plans to merge with MCN Energy Group, parent
company of Michigan Consolidated Gas Co., a natural gas utility serving 1.2
million customers in Michigan. The proposed company, DTE Energy, would be the
largest energy utility in the state. Information about DTE Energy is available
on the World Wide Web at http://www.dteenergy.com.
MCN Energy Group Inc. is an integrated energy company with
approximately $4 billion of assets and $2.5 billion of annual revenues. The
company primarily is involved in natural gas production, gathering, processing,
transmission, storage, distribution and marketing in the Midwest-to-Northeast
corridor. Its largest subsidiary is Michigan Consolidated Gas Company, a natural
gas utility serving 1.2 million customers in more than 500 communities
throughout Michigan. Information about MCN Energy Group is available on the
World Wide Web at www.mcnenergy.com.
DTE will be filing a post-effective amendment to its registration
statement filed on Form S-4, which was filed with the SEC on November 12, 1999
and contains a proxy statement/prospectus for DTE and MCN, and other documents
with the Securities and Exchange Commission. Investors and security 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 security 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 security holdings or otherwise, may be
obtained from the Secretary of MCN at the address listed above. This
presentation will be filed with the SEC on March 7, 2001.
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This release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements are based
upon the company's current estimates. Actual results may differ materially.
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MEMBERS OF THE MEDIA - FOR FURTHER INFORMATION:
At DTE Energy: At MCN Energy:
Lewis K. Layton Stewart Lawrence
(313) 235-8809 (313) 256-6289
Lorie N. Kessler
(313) 235-8807
ANALYSTS AND INVESTORS - FOR FURTHER INFORMATION:
At DTE Energy At MCN Energy
Lisa Muschong Stewart Lawrence
(313) 235-8030 (313) 256-6289