Williams to Sell Energy Partners Stake
Apr. 21, 2003
TULSA, Okla. (AP) _ Williams Cos. has agreed to sell its controlling stake in Williams Energy Partners for $1.1 billion, the second major asset sale in a week for the struggling energy giant. Its shares rose.
Williams said Monday it would sell its 54.6 percent ownership interest, plus its general partnership with lucrative cash distribution rights, to a new venture formed by three investment firms.
The group _ made up of Madison Dearborn Partners, Carlyle/Riverstone Global Energy and Power Fund II _ will pay Williams about $512 million in cash. Williams Energy also will retain $570 million in debt that Williams had been required to service.
The deal, expected to close in May pending regulatory approval, comes as Williams is shedding assets to raise cash for its debt obligations. The Tulsa-based company last week announced the sale of its Texas Gas pipeline for more than $1 billion.
Williams said it has now sold or agreed to sell assets for more than $2.6 billion in cash and nearly $900 million in debt relief this year. It sold about $5 billion in assets in 2002.
The Williams Energy sale would nearly remove Williams from the oil business after almost four decades, as the company refocuses on finding, producing, processing and transporting natural gas. Williams is trying to sell its Alaska oil refinery.
``Williams has come a long way in a short time,'' said Steve Malcolm, the company's chairman, president and chief executive officer. ``We are pleased with our continued success in narrowing our focus to key natural gas businesses while at the same time attending to the critical tasks of raising cash and reducing debt to strengthen our balance sheet.''
Shares of Williams rose 46 cents, or nearly 8 percent, to $6.36 in midday trading on the New York Stock Exchange. Williams Energy stock was down 2 cents $38.98.
Williams Energy's assets include a 6,700-mile refined products pipeline system and 39 related storage terminals, an ammonia pipeline system, five marine terminal facilities and 23 inland terminal facilities connected to third-party pipelines.
The partnership, which will be renamed after the sale closes, earned $99.1 million in 2002 on revenues of $434.5 million. Williams' stake was once considered a core asset, off limits in its asset sale plan.
``This transaction is quite attractive to the partnership,'' said Don Wellendorf, the partnership's chief executive officer. ``These companies that have purchased the general partnership have a great presence out there. We have a lot of opportunities for acquisitions, and they're going to be able to add to that nicely.''
Wellendorf said the new owners will retain the current management, and the partnership will continue to have headquarters in Tulsa. About 800 Williams employees will be offered employment by the new owners, Williams said.
Chicago-based Madison manages about $8 billion in assets in natural resources, communications, consumer, health care and financial services. Carlyle/Riverstone is a joint venture of New York-based Riverstone and The Carlyle Group, a private Washington, D.C., firm managing more than $15.8 billion in assets.
Williams expects to post a pretax gain of at least $285 million to $300 million with the sale, while Williams Energy expects transaction costs of about $27 million through 2004.
The agreement calls for Williams to receive about $510 million at closing and up to $2 million in August if closing occurs on or after May 15. Malcolm said Williams also could receive up to $20 million in cash incentives if the buyers sell partnership units for more than $37.50.