8-KOther Events

WILLIAMS COMPANIES, INC. 8-K Report (Jan 23, 2002)

Filed January 23, 2002For Securities:WMB

Summary

This 8-K filing from The Williams Companies, Inc. (WMB) on January 23, 2002, reports the closing of a sale of publicly traded units on January 14, 2002. These units consist of a five-year senior debt security and an equity purchase contract. The equity purchase contract obligates the company to deliver common stock to holders after three years, with the delivery amount determined by a pre-agreed rate. This transaction represents a form of financing for Williams Companies, utilizing a combination of debt and an equity derivative. Investors holding these units are exposed to both the credit risk of the senior debt and the potential upside of the common stock, contingent on the company's performance and the terms of the purchase contract. The filing also lists several key exhibits related to this transaction, including the underwriting agreement, supplemental indenture, purchase contract agreement, and related pledge and remarketing agreements.

Key Highlights

  • 1Williams Companies closed the sale of a new financial product on January 14, 2002.
  • 2The product consists of a five-year senior debt security.
  • 3The product also includes an equity purchase contract requiring future common stock delivery.
  • 4The equity component mandates stock delivery to holders after three years.
  • 5The amount of stock to be delivered is based on an agreed-upon rate.
  • 6The filing details various agreements supporting this transaction, including underwriting, indenture, purchase contract, pledge, and remarketing agreements.
  • 7A tax opinion from Skadden, Arps, Slate, Meagher & Flom LLP is included as an exhibit.

Frequently Asked Questions

Williams Companies sold publicly traded units comprising a five-year senior debt security and an equity purchase contract. This contract requires the company to deliver shares of its common stock to the holders after three years, with the exact number of shares determined by a pre-agreed rate.

Investors hold both a debt instrument (senior debt security) with a five-year term and an equity derivative (equity purchase contract). They are exposed to the creditworthiness of Williams Companies for the debt portion and the potential future value of the company's common stock for the equity portion, which is subject to the terms of the purchase contract and the agreed-upon delivery rate.

The filing references several critical agreements, including the Underwriting Agreement (dated January 7, 2002), the Sixth Supplemental Indenture (dated January 14, 2002) with Bank One Trust Company as Trustee, the Purchase Contract Agreement (dated January 14, 2002) with JPMorgan Chase Bank as Purchase Contract Agent, and a Pledge Agreement also involving JPMorgan Chase Bank. A Remarketing Agreement with Merrill Lynch & Co. is also listed.

The equity purchase contract is a component of the overall unit offering. It obligates Williams Companies to deliver a specified quantity of its common stock to the contract holders approximately three years after the closing date, based on a predetermined rate. This allows investors to participate in the potential appreciation of the company's stock price.