8-KMaterial Agreements

WILLIAMS COMPANIES, INC. 8-K Report, Material Agreement (Dec 12, 2012)

Filed December 12, 2012For Securities:WMB

Summary

Williams Companies, Inc. (WMB) announced a significant strategic investment on December 11, 2012, marking a substantial move into the midstream energy sector through its partnership with Global Infrastructure Partners (GIP). The company entered into agreements to acquire a substantial stake in Access Midstream Partners, L.P. (ACMP), a publicly traded master limited partnership specializing in natural gas gathering systems and midstream assets. This transaction is structured as a two-part investment: the GIP I Purchase and the ACMP Subscription, involving the acquisition of limited partnership units, equity interests in ACMP's general partner, and convertible units. This acquisition is set to significantly expand WMB's midstream footprint and diversify its operations. The total investment is substantial, with the GIP I Purchase valued at approximately $1.823 billion and WMB's portion of the ACMP Subscription ranging from $350 million to $580 million. The transaction is also contingent upon ACMP's acquisition of Chesapeake Midstream Operating, L.L.C. (CMO), indicating a coordinated effort to build scale in the midstream space. Investors should note the complexities of the unit structures, including subordinated and convertible units with specific distribution and conversion rights, and the potential for further capital raises by ACMP that could impact WMB's ultimate ownership percentages and investment cost.

Key Highlights

  • 1Williams Companies (WMB) entered into material definitive agreements to acquire a significant interest in Access Midstream Partners, L.P. (ACMP).
  • 2The investment is structured as a GIP I Purchase of ACMP units and equity in its general partner, and an ACMP Subscription for convertible and subordinated units.
  • 3The total consideration for the GIP I Purchase is approximately $1.823 billion, with WMB's portion of the ACMP Subscription estimated between $350 million and $580 million.
  • 4The transactions are contingent on ACMP successfully acquiring Chesapeake Midstream Operating, L.L.C. (CMO) for approximately $2.2 billion.
  • 5Upon closing, WMB will hold an indirect 50% interest in ACMP's general partner (including incentive distribution rights) and an approximate 25% limited partner interest in ACMP.
  • 6The agreements include customary representations, warranties, covenants, indemnities, and termination rights, with a target closing date of January 31, 2013.
  • 7The investment represents a strategic expansion into the midstream energy sector for Williams Companies.

Frequently Asked Questions

This 8-K filing announces that The Williams Companies, Inc. has entered into material definitive agreements to acquire a significant stake in Access Midstream Partners, L.P. (ACMP), marking a strategic expansion into the midstream energy sector.

ACMP is a publicly traded master limited partnership that owns, operates, develops, and acquires natural gas gathering systems and other midstream energy assets.

The consideration for the GIP I Purchase is approximately $1.823 billion. Williams Companies' portion of the ACMP Subscription is estimated to be between $350 million and $580 million, depending on ACMP's capital raising activities related to its acquisition of Chesapeake Midstream Operating, L.L.C. (CMO).

Yes, the agreements are subject to customary closing conditions and require ACMP to close its acquisition of CMO. The parties have certain termination rights if the transactions do not close by January 31, 2013, with potential for extension. The closing of both the Investment and the CMO Acquisition was anticipated to occur in December 2012.