Williams completes tender offer for more than $1 billion of notes

New York, June 9 - The Williams Cos. Inc. (B3/B+) said that along with its wholly owned subsidiary, Williams Production RMT Co., it had completed a previously announced tender offer for $1.34 billion principal amount of outstanding notes in seven series and a solicitation of consents to proposed indenture changes among the holders of one of the note series.

The tender offers expired as scheduled at 5 p.m. ET on June 8, without extension. As of that deadline, $1.171 billion of the notes had been tendered. All validly tendered notes have been accepted for purchase by Williams.

As of the offer's expiration, noteholders had tendered $87.9 million or 77% of Williams' 6 5/8% notes coming due on Nov. 15, $370.3 million or 93% of Williams' 6¾% putable asset term securities, which are putable/callable on Jan. 15, 2006, $181 million or 91% of Williams' 6¼% senior debentures due 2006, originally issued by Williams Holdings of Delaware Inc., $181.4 million or 88% of Williams' 6½% notes due 2006, $118.8 million or 79% of Williams Production RMT Co.'s 7.55% senior notes due 2007, originally issued by Barrett Resources Corp. (Holders also delivered a required amount of consents to proposed changes in the notes' indenture), $146.9 million or 84% of Williams' 6½% notes due 2008, originally issued by Williams Holdings of Delaware Inc., and $85 million or 85% of Williams' 7¼% notes due 2009, originally issued by Mapco Inc.

Williams said that along with the tendered notes and related consents, the companies paid premiums totaling about $62 million. As a result of the premiums, as well as related fees and expenses, Williams expects to record a pre-tax charge against earnings of about $75 million in its second-quarter results.

As previously announced, Williams Cos., a Tulsa, Okla.-based natural gas company, said on May 10 that along with Williams Production RMT that they were beginning cash tender offers for $1.1 billion principal amount of several specified series of outstanding notes.

Williams said the companies were offering to buy the outstanding notes to decrease their debt, reduce their annual interest expense and reduce administrative costs associated with the various debt issues. Certain of the outstanding notes the companies announced tender offers for were originally issued by Barrett Resources Corp., Williams Holdings of Delaware Inc. and Mapco Inc., all either subsidiaries of Williams Cos. or companies previously acquired and then absorbed by Williams, which assumed the various debt issues at the time of the acquisition.

Williams said that it would buy any and all of the $113.830 million outstanding of 6 5/8% notes due on Nov. 15. It offered to pay $989 per $1,000 principal amount of notes tendered plus a $30 per $1,000 principal amount early tender payment, for notes tendered by the early tender deadline, for total consideration of $1,019 per $1,000 principal amount.

The companies also offered to buy up to $1 billion of certain of their specified series of notes maturing in 2006 through 2009, an amount which was later increased to include all of the outstanding notes of those series, and originally announced a 1-though-6 priority ranking order under which it would accept the notes for purchase, which was subsequently eliminated when the companies said they would buy all of the tendered notes.

In addition to a $30 per $1,000 principal amount early tender payment for each series of notes, the companies said they would seek to buy up to $400 million of 6¾% putable asset term securities for $1,021.25 per $1,000 principal amount, up to $200 million of 6¼% senior debentures due 2006 for $1,013.75 per $1,000 principal amount, up to $205 million of 6½% notes due 2006 for $1,023.75 per $1,000 principal amount, up to $150 million of the 7.55% senior notes due 2007, which were originally issued by Barrett Resources Corp., for $1,050 per $1,000 principal amount.

Williams Production RMT meanwhile was also soliciting noteholder consents to proposed amendments to the indenture governing the 7.55% notes that would eliminate or amend substantially all of the restrictive covenants and certain events of default. The tender offers are not conditioned upon receiving the minimum required consents to amend the indenture.

Also, in addition to a $30 per $1,000 principal amount early tender payment, the companies offered to buy up to $175 million of 6½% notes due 2008 for $1,020 per $1,000 principal amount and up to $100 million of 7¼% notes due 2009 for $1,046 per $1,000 principal amount.

Williams also offered to pay cash accrued interest up to, but not including, the settlement date, on all validly tendered notes accepted in the various tender offers.

On May 20, Williams said that it had received tenders of $1.169 billion total of the various series of notes by the early tender deadline of 5 p.m. ET on May 19, which expired as scheduled without extension.

Williams said that as of the early tender deadline, it had received tenders of $87.8 million of the 6 5/8% notes, out of the $113.830 million outstanding principal amount, and had received a total of $1.079 billion from the other six series of the notes, exceeding the $1 billion total amount it had originally offered to buy.

It accordingly announced that it had amended the terms of the offers for the other six series of notes, so that the company will tender for any and all of the roughly $1.23 billion of total outstanding principal amount of the other notes, eliminating the $1 billion cap and a 1-though-6 priority ranking order under which it would accept the notes for purchase. All other original terms of the tender offers remained in force.

The companies said that as of the early tender date, holders had tendered $369.821 million of Williams' $400 million of outstanding 6¾% putable asset term securities.

They also had tendered $178.629 million of the $200 million outstanding 6¼% senior debentures due 2006, $180.527 million of the $205 million outstanding 6½% notes due 2006, $118.845 million of the $150 million outstanding 7.55% senior notes due 2007 originally issued by Barrett Resources Corp. and later assumed by Williams, and had submitted required consents to a previously outlined consent solicitation related to those notes, and had tendered $146.231 million of the $175 million outstanding 6½% notes due 2008, and $85 million of the $100 million outstanding 7¼% notes due 2009.

The company said that notes tendered by the early tender deadline and any related consents could no longer be withdrawn.

Lehman Brothers Inc. was the lead dealer manager (call 212 528-7581 or 800 438-3242). Banc of America Securities LLC, Barclays Capital Inc., Greenwich Capital Markets Inc., J.P. Morgan Securities Inc., Merrill Lynch & Co. and Scotia Capital (USA) Inc. served as co-dealer managers. D.F. King & Co. Inc. was the information agent for the tender offer (call 212 269-5550 or 800 848-2998).

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