Energy Transfer eyes $6.1 billion new debt, shares to fund $37.7 billion Williams acquisition

By Lisa Kerner

Charlotte, N.C., Sept. 28 – Energy Transfer Equity, LP affiliate Energy Transfer Corp. LP (ETC) will acquire the Williams Cos., Inc. in a transaction valued about $37.7 billion, including the assumption of debt and other liabilities.

Sources of funding for the transaction include new transaction debt of about $6.1 billion, a $634 million draw on Energy Transfer Equity’s revolver and about $27 billion of Energy Transfer Corp. shares, according to group chief financial officer Jamie Welch in a conference call.

Pro forma total debt is expected to be about $16.6 billion, comprised of 18% floating rate and 82% fixed rate, according to presentation materials.

Transaction details

ETC will acquire Willliams for $43.50 per share in cash/stock. Cash and stock elections will be prorated under a full cash pool of $6.05 billion.

If all Williams’ stockholders elect to receive all cash or all stock, then each share of Williams common stock would receive $8.00 in cash and 1.5274 ETC common shares, according to a news release.

Williams stockholders will be also entitled to a special one-time dividend of $0.10 per Williams share to be paid immediately prior to closing, which is expected to occur in the first half of 2016.

A previously announced merger agreement between Williams and Williams Partners LP has been terminated. Williams Partners will receive a $428 million break-up fee as a result.

Williams, which provides large-scale natural gas infrastructure in North America, will retain its current name and Tulsa headquarters location.

Energy Transfer Equity will become co-obligor of Williams’ existing debt, and Williams’ credit facility will be terminated at closing, the news release stated.

Dallas-based Energy Transfer Equity is a master limited partnership which 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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