Williams to Acquire All Public Equity of Williams Partners L.P.

Published: May 18, 2018 |

[Click image to enlarge]

Williams and Williams Partners L.P. entered into an agreement where Williams will acquire all of the outstanding public common units of Williams Partners in an all stock-for-unit transaction at a 1.494 ratio of Williams common shares per unit of Williams Partners. The transaction is valued at $10.5 billion; representing a premium to the public unitholders of 6.4 percent based on closing prices on May 16, 2018, or a premium of 13.6 percent to the unaffected closing prices on March 15, 2018.

Williams and Williams Partners indicated the potential for a corporate restructuring in response to the Federal Energy Regulatory Commission’s (FERC) March 15, 2018, issuance of a revised policy statement that reversed the FERC’s 2005 income tax policy that permitted master limited partnership (MLP) interstate oil and natural gas pipelines to maintain an income tax allowance in cost-of-service rates. Since that time, Williams and Williams Partners considered a number of alternatives relating to the FERC ruling and determined that the transaction described is in the best interests of Williams’ shareholders and Williams Partners’ public unitholders.

“This strategic transaction will provide immediate benefits to Williams and Williams Partners investors. Today’s announcement will maintain the income tax allowance that is included in our regulated pipeline’s cost-of-service rates. This transaction also simplifies our corporate structure, streamlines governance and maintains investment-grade credit ratings. The transaction will allow Williams to directly invest the excess coverage in our expanding portfolio of large-scale, fully-contracted infrastructure projects that will drive significant EBITDA growth without the need to issue equity for the broad base of projects currently included in our guidance,” said Alan Armstrong, Williams’ president and chief executive officer.

“We continue to see an expanding portfolio of projects to connect the best supplies of natural gas and natural gas products to the best markets. As a fast-growing, investment grade C-Corp with the best natural gas infrastructure assets in the sector, we are confident this combined entity will provide a compelling investment opportunity to a broader range of investors,” added Armstrong.

Compelling benefits of the transaction for WMB shareholders:

• Immediately accretive to cash available for dividends for Williams

• Retention of significant Distributable Cash Flow coverage (of approximately 1.7x in 2019) allowing excess cash to be re-invested in attractive capital projects

• Extends the period for which Williams is not expected to be a cash taxpayer through 2024 and provides modest G&A savings

• Achieves investment-grade credit ratings consistent with Williams Partners’ current ratings

• Simplifies organizational structure, expanding investment appeal to a broader range of corporate investors

Solid value proposition of the transaction for public WPZ unitholders:

• Meaningful upfront premium

• Receipt of five dividends/distributions during the calendar year 2018, equating to approximately a 15 percent increase to the previously-guided 2018 distributions (assuming closing occurs before the Williams’ regular third quarter dividend record date; otherwise, the exchange ratio will be increased to 1.513 and Williams Partners public unitholders will receive a total of four dividends/distributions during the calendar year).

• Retains income tax allowance for regulated cost-of-service revenue

• Increases excess cash coverage that can be re-invested in attractive capital projects

• Retains investment-grade credit ratings consistent with current ratings

• Increases trading liquidity, float and access to capital markets

About Williams & Williams Partners
Williams is a premier provider of large-scale infrastructure connecting U.S. natural gas and natural gas products to growing demand for cleaner fuel and feedstocks. Headquartered in Tulsa, Oklahoma, Williams owns approximately 74 percent of Williams Partners L.P. Williams Partners is an industry-leading, large-cap master limited partnership with operations across the natural gas value chain including gathering, processing and interstate transportation of natural gas and natural gas liquids. With major positions in top U.S. supply basins, Williams Partners owns and operates more than 33,000 miles of pipelines system wide — including the nation’s largest volume and fastest growing pipeline — providing natural gas for clean-power generation, heating and industrial use. Williams Partners’ operations touch approximately 30 percent of U.S. natural gas.

To stop by Williams & Williams Partners’ website, CLICK HERE

Be in-the-know when you’re on-the-go!

FREE eNews delivery service to your email twice-weekly. With a focus on lead-driven news, our news service will help you develop new business contacts on an on-going basis.
CLICK HERE to register your email address.

For licensing permission, .(JavaScript must be enabled to view this email address)