Wednesday, January 20, 2010

Williams announces $12 billion revamp plan for pipeline affiliates

NEW YORK - Shares of natural-gas producer and pipeline firm Williams Cos. rallied on Jan. 19 after it said before the stock market opened that it would restructure its affiliates in a series of transactions that it valued at a combined $12 billion.
At day’s end, Williams Cos. Inc. (NYSE: WMB) closed up $1.73 per share at $23.10 per share (up 8.10 percent). Williams Partners LP (NYSE: WPZ) closed up $5.60 per share at $36.39 (up 18.19 percent), and Williams Pipeline Partners LP (NYSE: WMZ) closed up $3.84 at $27.19 (up 16.45 percent).
Williams said it plans to contribute its gas pipeline business and domestic distribution system and its limited and general partner interests in Williams Pipeline Partners into Williams Partners LP.
After the transactions, Williams Pipeline Partners will no longer be publicly traded.
"The restructuring is intended to drive additional growth and value for Williams' shareholders and Williams Partners' unitholders," Williams said.
"The moves will result in two well-capitalized entities that are better positioned to pursue value-adding growth strategies; both expect to have investment-grade credit ratings."
As part of the deal, Williams will purchase $3 billion of its corporate debt from the $3.5 billion in cash it will receive from Williams Partners. That cash, plus the value of 203 million Williams Partners units and $2 billion in assumed debt comprise the bulk of the $12 billion value for the deal.
Williams Partners will boost its regular quarterly distribution by 3.5 percent per LP unit to 65.8 cents from 63.5 cents starting with the first quarter.
Williams Partners will offer a fixed exchange ratio of 0.7584 of its common units for each Williams Pipeline Partners common unit. The exchange values Williams Pipeline Partners at $23.35 a unit, flat with its closing price on Jan. 15.

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