Williams to sell its stake in Williams Energy Partners

By OGJ editors

HOUSTON, April 21 -- Williams Cos. Inc. agreed to sell its 54.6% interest in Williams Energy Partners LP to a new entity owned equally by two private equity firms as part of Williams' continuing efforts to improve its balance sheet.

Madison Dearborn Partners LLC and Carlyle/Riverstone Global Energy and Power Fund II LP agreed to pay $512 million in cash. The transaction also will remove $570 million of debt from Williams' consolidated balance sheet. The equity firms agreed to offer employment to more than 800 Williams employees affected by the partnership sale.

The deal will provide Williams with a pre-tax gain of at least $285-300 million. Including this transaction, Williams has agreed to sell assets for more than $2.6 billion in cash this year (OGJ, Aug. Apr. 21, 2003, p. 33). Last year, the company announced plans to resolve some liquidity problems (OGJ, Aug. 26, 2002, p. 37).

Williams Chairman, Pres., and CEO Steve Malcolm said the company is "narrowing our focus to key natural gas businesses while at the same time attending to the critical tasks of raising cash and reducing debt to strengthen our balance sheet . . .. This agreement moves us closer to wrapping up major asset sales and rounding out what Williams will look like in the near future."

The sale of its stake in Williams Energy Partners ends Williams' nearly 4 decades participation in the oil sector, Malcolm said.

Williams Energy Partners' assets include a 6,700-mile refined products pipeline system and 39 storage terminals, an ammonia pipeline system, five marine terminal facilities, and 25 inland terminal facilities.

Subsequent to an anticipated May 15 closing, the partnership buyer's future resale of equity at net prices exceeding $37.50/unit could provide Williams with up to $20 million.