North American energy firm
Williams Companies Inc.
) recently announced a 3.70% senior note offering of $850
million, due in 2023. The offer price would be 99.722% of the par
ACCESS MIDSTRM (ACMP): Free Stock Analysis
WILLIAMS COS (WMB): Free Stock Analysis
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Earlier this month, Williams Companies agreed to acquire a 25%
stake in natural gas partnership
Access Midstream Partners L.P.
) and a 50% interest in its general partner - Access Midstream
Partners GP LLC - from private equity firm Global Infrastructure
Partners. Williams Companies will be using the net proceeds from
the offering to finance this deal. The proceedings are expected
to be completed on December 18, 2012.
During the third quarter of 2012, Williams' capital expenditure
was $730 million. As of September 30, 2012, it had cash and cash
equivalents of about $996 million and long-term debt of more than
$9.5 billion, representing a debt-to-capitalization ratio of
75.5%. We expect interest expenses to increase with the sale of
the new notes.
Williams has also commenced a public offering of 46,500,000
shares of its common stock this month. Moreover, the company
intends to provide the underwriters with a 30-day option to
purchase up to 6,975,000 additional shares.
Tulsa, Oklahoma-based Williams is a premier energy infrastructure
provider in North America. The company's core operations include
finding, producing, gathering, processing, and transportation of
Williams, after the volatile and capital-intensive WPX Energy
spin-off, has transformed itself into a pure play midstream
conglomerate with operations spanning from the Canadian oil sands
to deepwater fields in the Gulf of Mexico.
We believe that the transfer of upstream assets (post-split) has
left Williams with a less diversified business. As a result, the
business risk profile of the reorganized Williams is weaker than
that of the pre-spin-off company.
We maintain our long-term Neutral recommendation, supported by a
Zacks #3 Rank (short-term Hold rating).