Fitch could lift Energy Transfer

Fitch Ratings said it placed Energy Transfer Equity, LP's ratings on Rating Watch Positive following the announcement that it would merge with Williams Cos. (BBB-, negative watch) in a $37.7 billion transaction including the assumption of $4.2 billion of Williams debt.

The transaction is expected to be funded by a combination of $6.05 billion in cash, generated from a new debt offering, and equity in a newly created up-C corporation Energy Transfer Corp. LP (ETC). The transaction is expected to close in the first half of 2016, subject to Williams stockholder vote and receipt of regulatory approvals; no Energy Transfer unitholder vote is required.

Fitch said it believes the merger of Williams is positive for Energy Transfer. It should benefit from the acquisition of Williams and its controlling ownership interest in Williams Partners, LP (BBB, negative watch) and Williams Partners’ operating pipelines. The combined Energy Transfer/Williams group of companies will become the largest energy infrastructure group in the U.S.

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