Williams seeking over $1 billion in secured credit facilities

By Sara Rosenberg

New York, July 23 - Williams Cos. Inc. is looking to obtain a secured credit facility, which may face some market skepticism, according to market sources. The new loan is expected to be sized at "north of a billion" and should provide maximum financial liquidity in current market conditions, company officials said in a conference call Monday.

The new loan is anticipated to consist of two tranches, Williams' officials said. In addition, the company currently has a $700 million undrawn revolver with a three- year term.

Originally the company was looking at an unsecured line of credit, however due to earnings results, the company opted to switch to a secured facility. Williams expects a recurring loss from operations of $0.35 to $0.40 per share, compared to previous guidance of recurring earnings of $0.20 to $0.25 per share in the second quarter. For reported results, which include non-recurring items, the company estimates a second quarter loss of $0.63 to $0.73 per share. Furthermore, the company reduced its common stock dividend to $0.01 per share from $0.20 per share.

Since the company was close "to the finish line" on the unsecured loan, it is expected that the secured loan will not take long to obtain. "We're optimistic that we will have a secured facility in place here within a relatively short period of time," officials said in the conference call.

However, Williams' bonds were trading at around 40 on Tuesday, market sources said, leading some to believe that company may end up filing for Chapter 11.

"Anything is possible," a market professional said. "There is potential for a filing. Why would you invest in a secured deal when the company might file.

"At the end the day, will they be able to get a secured deal done? Yes. But it all depends on what they're able to do with the bonds. I don't now if they can syndicate a huge amount. Time will tell."

Williams is a Tulsa, Okla. mover, manager and marketer of energy products.

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