Summary
Williams Companies, Inc. (WMB) filed an 8-K on January 26, 2005, to report on significant changes to its credit facilities. The company entered into amended and restated credit agreements that relaxed certain restrictive covenants and events of default. Immediately thereafter, these amended agreements were terminated and replaced by new credit agreements totaling $500 million ($400 million and $100 million facilities). These new credit agreements are primarily intended for issuing letters of credit, though they also permit borrowings. Investors should note the facility fees (3.18% and 3.25%) and the interest rate structure, which can be either a floating base rate or LIBOR-based. A key aspect is the potential for Citicorp USA, Inc. to syndicate the credit risk to institutional investors, which would then alter the interest rate terms for any borrowings.
Key Highlights
- 1Williams Companies entered into new $400 million and $100 million Five Year Credit Agreements on January 20, 2005.
- 2The new credit agreements replaced amended and restated agreements that had relaxed restrictive covenants.
- 3The primary intended use of the new credit facilities is for issuing letters of credit.
- 4Facility fees are set at 3.18% for the $400 million agreement and 3.25% for the $100 million agreement.
- 5Interest on borrowings can be based on a floating base rate or a floating LIBOR rate.
- 6Citicorp USA, Inc. has the option to syndicate the credit risk to institutional investors, potentially changing borrowing interest rates.
- 7The new agreements include covenants restricting the incurrence of liens and significant asset dispositions.