8-KMaterial AgreementsRegulation FDExhibits & Filings

WILLIAMS COMPANIES, INC. 8-K Report, Material Agreement (Mar 20, 2012)

Filed March 20, 2012For Securities:WMB

Summary

Williams Companies, Inc. (WMB) filed an 8-K on March 19, 2012, reporting a material definitive agreement. The primary event is that Williams Partners L.P. (an indirect subsidiary) is acquiring all of the limited liability company interests of Caiman Eastern Midstream, LLC, a gathering and processing business, for $2.5 billion. This acquisition significantly expands WMB's midstream footprint in key Appalachian Basin areas (northern West Virginia, southwestern Pennsylvania, and eastern Ohio). The transaction is structured with a combination of cash ($1.78 billion) and restricted common units of Williams Partners L.P. ($720 million). Additionally, Williams Companies, Inc. intends to purchase up to $1.0 billion of the Partnership's common units. The filing also announced an update to financial guidance for 2012-2014 and a planned increase in dividends for the upcoming fiscal years, signaling confidence in future performance and a commitment to returning capital to shareholders.

Key Highlights

  • 1Williams Partners L.P. to acquire Caiman Eastern Midstream, LLC for $2.5 billion.
  • 2Acquisition expands WMB's midstream presence in the Marcellus and Utica shale regions.
  • 3Transaction financed by $1.78 billion cash and $720 million in Williams Partners L.P. common units.
  • 4Williams Companies, Inc. plans to invest up to $1.0 billion in the Partnership's common units.
  • 5Updated financial guidance provided for 2012-2013, with initial guidance for 2014.
  • 6Planned dividend increases announced for fiscal years 2012, 2013, and 2014.

Frequently Asked Questions

The acquisition of Caiman Eastern Midstream, LLC allows Williams Partners L.P. to significantly expand its midstream gathering and processing infrastructure in the important northern West Virginia, southwestern Pennsylvania, and eastern Ohio regions, which are key areas for natural gas production. This strengthens WMB's position in the Appalachian Basin.

The $2.5 billion purchase price is being funded through $1.78 billion in cash and $720 million through the issuance of restricted common units of Williams Partners L.P. to Caiman Energy. Williams Companies, Inc. is also planning to invest up to $1.0 billion in the Partnership's common units.

The closing of the acquisition is scheduled to occur during the second quarter of 2012, subject to the satisfaction of customary closing conditions and regulatory approvals.

The updated financial guidance for 2012-2014 and the planned dividend increases suggest management's confidence in the company's future earnings potential and cash flow generation, particularly following the strategic acquisition. It also signals a commitment to shareholder returns.