Summary
The Williams Companies, Inc. (WMB) filed an 8-K report on September 26, 2005, detailing the execution of two significant credit agreements on September 20, 2005. The company entered into a $500 million and a $200 million five-year credit facility, totaling $700 million. These agreements are primarily intended for the issuance of letters of credit, although they also permit borrowings. The new credit facilities will bear fixed facility fees and variable interest rates based on either a base rate or LIBOR, with provisions for syndication to institutional investors. The agreements include standard covenants restricting asset sales, mergers, and the incurrence of liens, as well as defined events of default, including payment failures, covenant breaches, and bankruptcy-related events. This filing provides insight into WMB's financing strategy and liquidity management at the time.
Key Highlights
- 1Williams Companies entered into two new five-year credit agreements on September 20, 2005.
- 2The aggregate committed amount under these credit agreements is $700 million ($500 million and $200 million).
- 3The primary intended use of these credit facilities is for the issuance of letters of credit, not direct borrowings.
- 4The agreements allow for borrowings at a base rate or LIBOR, with associated facility fees (2.025% and 2.00%).
- 5Provisions exist for the credit agreements to be syndicated to institutional investors, with different interest rate structures upon syndication.
- 6The agreements contain covenants that restrict Williams' ability to incur liens, merge, or sell substantially all of its assets.
- 7Key events of default are defined, including failure to pay principal or interest, breaches of covenants, and certain bankruptcy events.