Feb 26 Pipeline company Williams Partners LP
said it would buy certain Canadian gas assets from
Williams Cos Inc for about $1.2 billion to boost its
natural gas liquid treating and processing business.
The deal will include the purchase of about 260 miles of
pipelines, an oil sand offgas processing plant near Fort
McMurray, Alberta and two facilities at Redwater, Alberta.
Williams Cos owns about 64 percent of Williams Partners,
while Williams Partners owns most of Williams Cos' interstate
gas pipeline and domestic midstream assets.
Williams Partners said the deal will immediately add to its
earnings and is expected to contribute to its distributable cash
The company said it will fund the acquisition with $25
million in cash and will issue 25.6 million pay-in-kind (PIK)
limited partner-units to Williams Cos, all of which can be
converted to common units after February 2016.
To fund the expansion of the Redwater facility, Williams
Partners said it had the option to issue up to $200 million of
additional PIK units - a financial instrument that pays interest
to bondholders or preferred stockholders with additional debt or
equity, instead of cash.
The expansion will provide additional fractionation business
to Williams Partners related to the development of offgas
processing at the CNRL Horizon upgrader facility retained by
Williams Cos in December was the target of two hedge funds
which said the U.S. energy company had made recent operational
and financial missteps.
At that time, the two investors had said the areas they
might discuss with Williams Cos included the potential for deals
in the energy infrastructure sector.
Williams Partners said on Wednesday it plans to close the
deal by the end of this month.
Robert W. Baird & Co. advised Williams Partners on the deal
and Barclays advised Williams Cos.
Williams Partners shares closed up 1.3 percent at $49.79,
while Williams Cos shares closed up 0.8 percent at $41.22
Wednesday on the New York Stock Exchange.