Ann de Rouffignac
OGJ Online
HOUSTON, Feb. 4 -- After a sharp sell off, Williams Cos. Inc. Monday tried to shore up investor confidence with a plan to sell more assets, including a petroleum products pipeline and on-system terminals.
But the announcement, in addition to ratings agency affirmations of Williams's credit ratings, appeared to do little to calm investor fears. The stock continued to tumble in heavy midmorning trading to $17.05 from a close of $19 Friday.
Williams Communications Group Inc. (WCG), a separately traded affiliate of Williams, also experienced significant pressure on its stock and bonds. "Williams Communications bonds are tanking," said Jon Cartwright, bond analyst with Raymond James & Associates.
Williams owns WCG debt that if not paid off in full can trigger new stock issues. Williams is exposed to Williams Communications by a total of $2.4 billion, the company said.
Even if Williams has to pay all the notes, Moody's Investor Services said Friday the Tulsa energy company has the financial resources and liquidity to perform on its obligations to WCG. Moody's said Williams should be able to pay the communications company's notes and still have sufficient credit lines and liquidity to support the energy marketing and trading organization. Williams added that, if required, it will issue equity beyond the planned asset sales.
It said Williams Energy Partners LP would be a potential buyer for the terminal and pipelines. The sale would be in addition to, and more than double the cash proceeds from, the previously disclosed intention to sell noncore assets, the company said.
Cartwright also said there is "fear out there" among investors that they might own the next Enron. "The Enron problem has spread beyond the energy group and become a corporate bond issue. Bidding is drying up.
"Companies that have financial statements that are even the most remotely confusing are traded down. Companies with off balance sheet entities are traded down too," said Cartwright. "Investors fear they are missing something or accountants may have missed something."