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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