Williams And Williams Partners Announce Financial Repositioning

(RTTNews) - Williams (WMB) and Williams Partners L.P. (WPZ) announced an agreement to permanently waive payment obligations under the incentive distribution rights held by Williams and convert Williams' economic general partner interest into a non-economic interest for 289 million newly issued Williams Partners common units collectively, the "IDR Waiver". The estimated transaction value is about $11.4 billion.

Following the IDR Waiver, Williams will hold approximately 660 million Williams Partners common units, representing approximately 72% of the common units outstanding.

Williams also announced that it expects to purchase newly issued common units of Williams Partners at a price of $36.08586 per unit. Williams expects to fund the unit purchase with equity. With respect to units issued to Williams in the private placement, Williams Partners will not be required to pay distributions for the quarter ended December 31, 2016 and the prorated portion of the first quarter of 2017 up to closing of the private placement.

Williams said it expects to discontinue participation in Williams Partners' DRIP program, upon successful completion of the Transactions and asset monetizations.

Effective with the quarterly distribution for the quarter ending March 31, 2017, Williams Partners expects to pay a quarterly distribution of $0.60 ($2.40 per unit on an annualized basis), a reduction of approximately 29% from Williams Partners' expected fourth quarter 2016 distribution of $0.85 per common unit ($3.40 per unit on an annualized basis). Williams Partners expects distribution growth of 5-7% annually over the next several years. Future quarterly distributions are subject to quarterly approval by Williams Partners' board of directors.

Williams announced that effective with the quarterly dividend to be paid in March 2017, Williams expects to pay a quarterly dividend of $0.30 per share ($1.20 per share on an annualized basis), an increase of 50% above Williams' dividend paid in December 2016 of $0.20 per share ($0.80 per share on an annualized basis). Williams expects dividend per share growth of 10-15% annually over the next several years. Future quarterly dividend payments are subject to quarterly approval by Williams' board of directors.

As a result of the measures announced today, Williams expects that Williams Partners will not be required to access the public equity markets for the next several years. In addition, the Transactions result in debt reduction at Williams Partners and a meaningful increase in its cash coverage ratio to approximately 1.2x in 2017 and maintenance of strong coverage in excess of 1.1x thereafter.

Excess cash at Williams after dividend payments will be used to reduce leverage over time.

Strengthening Williams Partners' coverage and credit profile through the Transactions will benefit stakeholders in Williams Partners, including Williams. In addition, maintaining Williams Partners as a strong, separate entity provides on-going strategic and financial flexibility to Williams, enabling it to capitalize on future opportunities to grow both organically and inorganically.

As part of Williams' ongoing commitment to maximize returns on capital deployed, Williams today announced that, in addition to the previously announced Geismar monetization process, Williams has identified other select assets that do not support the company's clear strategy, ensuring focus on those assets and regions that are core to Williams' operations and growth. Williams expects to raise more than $2.0 billion in after-tax proceeds, inclusive of the ongoing Geismar monetization process.