Summary
Williams Companies, Inc. (WMB) announced on May 1, 2006, the execution of a new Credit Agreement, replacing an existing one. This new agreement establishes a $1.5 billion senior unsecured revolving line of credit with a three-year term. The credit facility is designed to provide financial flexibility, with interest rates tied to variable market benchmarks plus an applicable margin based on the company's credit rating. The agreement includes guarantees from Williams Gas Pipeline Company, LLC, and Williams itself for the obligations of Williams Partners L.P., underscoring the interconnectedness of these entities within the company's structure. Investors should note that while this credit facility provides significant borrowing capacity, it is subject to various covenants and restrictions. These include limitations on asset disposals, mergers, debt incurrence, and distributions, as well as a financial maintenance covenant for a minimum consolidated EBITDA to interest expense ratio for Williams. The agreement also features standard events of default, including cross-acceleration clauses and change of control provisions, which could lead to debt acceleration if triggered. As of the filing date, there were no outstanding borrowings under this new agreement, indicating it is a proactive measure for liquidity and financial management.
Key Highlights
- 1Williams Companies, Inc. entered into a new $1.5 billion senior unsecured revolving credit agreement.
- 2The new credit facility has a term of three years.
- 3Borrowings will bear variable interest rates based on LIBOR or a base rate, plus an applicable margin determined by debt ratings.
- 4The agreement includes guarantees from Williams Gas Pipeline Company, LLC and Williams for Williams Partners L.P.
- 5The credit agreement imposes various business restrictions on borrowers, including limitations on liens, mergers, asset sales, debt, and equity distributions.
- 6A financial maintenance covenant requires Williams to maintain a minimum consolidated EBITDA to interest expense ratio.
- 7The credit agreement contains cross-acceleration and change of control provisions as events of default.