Williams Cos. tenders for $1.1 billion of notes

New York, May 10 - The Williams Cos. Inc. (B3/B+) said that along with its wholly owned subsidiary, Williams Production RMT Co., it is beginning cash tender offers for some $1.1 billion principal amount of several specified series of outstanding notes.

The companies set early tender deadlines for each series of 5 p.m. ET on May 19 and said the tender offers would expire at 5 p.m. ET on June 8. Settlement for the various offers is expected to be June 10, with all deadlines subject to possible extension.

Williams, a Tulsa, Okla.-based natural gas company, said the companies are offering to purchase 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 seek to purchase 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 is offering to purchase any and all of the $113.83 million outstanding principal amount of its 6 5/8% notes scheduled to come due on Nov. 15. It is offering tender consideration of $989 per $1,000 principal amount of notes tendered and accepted for purchase by the company, 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 are also offering to purchase up to $1 billion of certain of their specified series of notes maturing in 2006 through 2009, ranking them on a priority basis from 1 to 6. Should more than $1 billion total principal amount of those notes be tendered, Williams will only purchase $1 billion of the tendered notes and will accept tendered notes of each series according to the specified acceptance priority level.

All tendered notes having a higher acceptance priority level will be accepted before any tendered notes having a lower acceptance priority level. For a particular series of notes that has some, but not all, tendered notes accepted, all tenders of notes of that series will be accepted on a pro rata basis, according to the principal amount tendered. Williams is offering a $30 per $1,000 principal amount early tender payment on each series as part of total consideration.

As top priority, the companies are seeking to purchase up to $400 million of 6¾% putable asset term securities which are putable or callable on Jan. 15, 2006. Williams is offering tender offer consideration of $1,021.25 per $1,000 principal amount and total consideration of $1,051.25 per $1,000 principal amount.

As second priority, the companies are seeking to purchase up to $200 million of 6¼% senior debentures due 2006. Williams is offering tender offer consideration of $1,013.75 per $1,000 principal amount, and total consideration of $1,043.75 per $1,000 principal amount.

As third priority, the companies are seeking to purchase up to $205 million of 6½% notes due 2006. Williams is offering tender offer consideration of $1,023.75 per $1,000 principal amount and total consideration of $1,053.75 per $1,000 principal amount.

As fourth priority, the companies are seeking to purchase up to $150 million of the 7.55% senior notes due 2007 that were originally issued by Barrett Resources Corp. Williams is offering tender offer consideration of $1,050 per $1,000 principal amount and total consideration of $1,080 per $1,000 principal amount. Williams Production RMT is also soliciting noteholder consents to proposed amendments to the indenture governing the 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.

As fifth priority, the companies are seeking to purchase up to $175 million of 6½% notes due 2008. Williams is offering tender offer consideration of $1,020 per $1,000 principal amount and total consideration of $1,050 per $1,000 principal amount.

And as sixth priority, the companies are seeking to purchase up to $100 million of 7¼% notes due 2009. Williams is offering tender offer consideration of $1,046 per $1,000 principal amount and total consideration of $1,076 per $1,000 principal amount.

In addition to the tender offer consideration or the total consideration, which includes the early tender payment, as applicable, Williams is offering to pay cash accrued interest up to, but not including, the settlement date, on all validly tendered notes accepted in the various tender offers.

Williams has retained Lehman Brothers Inc. to serve as the lead dealer manager (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. will serve as co-dealer managers. D.F. King & Co. Inc. is the information agent for the tender offer (212 269-5550 or at 800 848-2998).

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