Energy Transfer, Williams breach of merger lawsuit has been expedited

Williams balks at placement of 329,299,267 convertible preferred units

By Devika Patel

Knoxville, Tenn., April 14 – The litigation against Energy Transfer Equity LP by Williams Cos., Inc. has been expedited, according to a press release. The Delaware Court of Chancery has granted Williams’ motion to expedite the litigation that challenges Energy Transfer’s private offering of preferred units as a breach of the companies’ merger agreement.

As previously reported, Williams objects to the company’s March 8 private sale of series A convertible preferred units, since the offering provides select investors with preferential treatment on distributions. The two companies negotiated a merger on Sept. 28, 2015.

The financing in question sold 329,299,267 units to holders of common units who agreed that they will not receive distributions on the common units for up to nine quarters starting with the quarter ending March 31.

The units convert to common units at $6.56, which is a 78.99% discount to the March 7 closing share price of $31.22 and is also 95% of the five-day volume-weighted average closing price of the common units, the company noted in the filing. The units will pay a quarterly distribution of $0.11 per unit.

Williams also began litigation against Energy Transfer chairman Kelcy Warren, who participated in the placement, for tortious, or wrongful, interference with the merger agreement.

Williams said that the litigation is intended to ensure that Williams’ stockholders will receive the consideration to which they are entitled under the merger agreement.

Williams is committed to closing the merger as soon as possible and the transaction is expected to close in the second quarter of 2016.

Dallas-based Energy Transfer Equity is a master limited partnership that owns the general partner and 100% of the incentive distribution rights of Energy Transfer Partners, LP and energy gathering and transportation company Sunoco, LP.

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