The Idaho Public Utilities Commission (PUC) has decided to continue its five-year-old revenue sharing plan for U S WEST Communications, a local exchange telephone carrier, for one year. It...
Williams Moves into the Northeast
On December 12, the Williams Companies Inc. and Transco Energy Co. announced a cash tender offer by Williams to acquire up to 24.6 million shares, or 60 percent of Transco stock, for $17.50 per share. Combined with assumed debt and preferred shares, Williams' acquisition cost will total about $3 billion. Following completion of the tender offer, a newly formed subsidiary of Williams will be merged into Transco, with Transco continuing as a wholly-owned subsidiary of Williams. The boards of directors of both companies have unanimously approved the transaction. Williams also is in the process of selling its fiber-optic company, WilTel Network Services, for $2.5 billion. Some proceeds of this sale will be used to fund the Transco purchase.
The proposed merger caused Duff & Phelps (D&P) Credit Rating Co. (D&P) to place Williams on rating watch-"uncertain"-reflecting the added leverage and weakened quantitative credit-protection measures that would result from the acquisition of Transco. From a strategic standpoint, however, D&P says it views the acquisition positively. D&P modified the rating watch direction of Transco from "uncertain" to "positive," finding that acquisition by the financially stronger Williams will provide additional resources to service Transco debt and afford greater operating and financial flexibility.
Williams owns and operates Northwest Pipeline Corp., a 3,900-mile interstate natural gas pipeline system that serves the Pacific Northwest, as well as Williams Pipe Line Co., a 6,200-mile gas pipeline serving the middle United States. It also owns a 50-percent interest in Kern River Gas Transmission Co., a 930-mile pipeline system that links Wyoming and Southern California. Transco owns Transcontinental Gas Pipe Line Corp., which in turn owns 10,500 miles of interstate gas pipeline that extend from the Gulf of Mexico to New York City. Transco also owns Texas Gas Transmission Corp., which operates 6,100 miles of pipeline from the Louisiana Gulf Coast to Ohio.
Documents filed at the Securities and Exchange Commission say Williams plans to "maintain and expand" Transco's existing core natural gas businesses and to "promptly pursue" new business opportunities stemming from the merger-such as expanding development of market projects in Transco's northeast and southeast markets.
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