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Moody's: Williams negative
Moody's Investors Service said it changed Williams Cos., Inc.'s outlook to negative and affirmed its Baa3 senior unsecured ratings. The Baa3 senior unsecured ratings of Williams Partners LP and the Baa2 senior unsecured ratings of Transcontinental Gas Pipe Line Co., LLC and Northwest Pipeline GP remain under review for possible upgrade.
These actions follow Williams' announced offer to purchase Southern Union Co. for $39.00 per share in cash, for a total enterprise value of $8.7 billion, the agency said.
The negative outlook for Williams reflects the leveraging effect of the potential Southern Union acquisition on the company's consolidated leverage, uncertainty regarding debt levels at the parent company and related structural subordination issues, the agency added.
The acquisition will increase Williams' consolidated leverage metrics given Southern Union's considerably higher debt levels relative to its earnings, Moody's said. There is also uncertainty regarding the amount of debt to be incurred by Williams and the implications on its Baa3 rating from structural subordination considerations.
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