Item 1.01 Entry into a Material
Definitive Agreement.
On
June 21, 2021, Consumers Energy Company ("Consumers"), a wholly-owned subsidiary of CMS Energy Corporation ("CMS Energy"),
signed a Purchase and Sale Agreement, dated as of June 21, 2021 with New Covert Generating Company, LLC (the
"Covert Agreement"). Pursuant to the Covert Agreement, Consumers will acquire the New Covert Generating Facility, which is a
1,176-megawatt natural gas-fired combined cycle generating plant located in Van Buren County, Michigan. The purchase price, $810
million, will be adjusted by post-Closing working capital adjustments.
The Covert Agreement contains
a number of customary representations, warranties, covenants and closing conditions. The closing conditions include approvals by the Federal
Energy Regulatory Commission, the Michigan Public Service Commission and the expiration of the waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, and reconnection with the Midcontinent Independent System Operator, Inc. system (or a reasonably
acceptable alternative arrangement). The Covert Agreement also contains indemnification provisions, subject to specified limitations as
to time and amount. The closing of the transaction is targeted for the second quarter of 2023 and the Covert Agreement provides that a
party not in default may terminate the Covert Agreement if closing does not occur by September 30, 2023. However, Consumers and CMS
Energy cannot predict with certainty whether or when the closing conditions will be satisfied or whether or when this transaction will
be consummated.
The foregoing description of
the Covert Agreement does not purport to be complete and is qualified in its entirety by the provisions of the Covert Agreement, which
is attached hereto as Exhibit 10.1 and incorporated by reference herein.
Also,
on June 21, 2021, Consumers signed a Purchase and Sale Agreement, dated as of June 21, 2021 with Dearborn Industrial
Generation, LLC, CMS Generation Michigan Power, LLC, and CMS Energy Resource Management Company (the
"Enterprises Agreement"). Pursuant to the Enterprises Agreement, Consumers will acquire three additional Michigan natural gas-fired
power plants: Dearborn Industrial Generation, which is a 770-megawatt natural gas and waste gas co-generation power plant in Wayne
County; Kalamazoo River Generating Station, which is a 75-megawatt plant in Kalamazoo County; and the Livingston Generating Station, which
is a 156-megawatt plant in Otsego County. The purchase price, $515 million, will be adjusted
by post-Closing working capital adjustments, and certain other adjustments.
The Enterprises Agreement contains
a number of customary representations, warranties, covenants and closing conditions. The closing conditions include approvals by the
Federal Energy Regulatory Commission, and the Michigan Public Service Commission. The Enterprises Agreement also contains indemnification
provisions, subject to specified limitations as to time and amount. The closing of the transaction is targeted for April 2025 and
the Enterprises Agreement provides that a party not in default may terminate the Enterprises Agreement if closing does not occur by May 2027.
However, Consumers and CMS Energy cannot predict with certainty whether or when the closing conditions will be satisfied or whether or
when this transaction will be consummated.
Dearborn Industrial Generation, LLC, CMS Generation Michigan Power,
LLC, and CMS Energy Resource Management Company are subsidiaries of CMS Enterprises Company (“CMS
Enterprises”), a wholly-owned subsidiary of CMS Energy or HYDRA-CO Enterprises, Inc.,
a wholly-owned subsidiary of CMS Enterprises.
The foregoing description of
the Enterprises Agreement does not purport to be complete and is qualified in its entirety by the provisions of the Enterprises Agreement,
which is attached hereto as Exhibit 10.2 and incorporated by reference herein.