Summary
On July 13, 2018, The Williams Companies, Inc. (WMB) entered into a new Credit Agreement, which will become effective upon the consummation of its previously announced merger. This agreement provides for aggregate borrowings of up to $4.5 billion, with the potential to increase to $5.0 billion, and is intended for general corporate purposes, including working capital, acquisitions, and capital expenditures. The facility has a five-year term, extendable by two additional years, and includes financial covenants related to debt-to-EBITDA and debt-to-capitalization ratios. Additionally, WMB announced the contribution of 35,000 shares of Series B Non-Voting Perpetual Preferred Stock to The Williams Companies Foundation. This preferred stock carries a 7.25% annual dividend rate, payable quarterly if declared by the Board, and has specific provisions regarding conversion into common stock and redemption, both of which become exercisable on or after July 13, 2028, with restrictions tied to the Foundation's holding of the shares. The issuance of this preferred stock and the associated Certificate of Designations modifies the rights of common stockholders, as detailed in the filing.
Key Highlights
- 1Williams Companies, Inc. entered into a new Credit Agreement for up to $4.5 billion, potentially increasing to $5.0 billion, to support general corporate purposes.
- 2The Credit Agreement is contingent on the consummation of a previously announced merger and has a five-year maturity, with options for two one-year extensions.
- 3Key financial covenants in the Credit Agreement include a debt-to-EBITDA ratio not exceeding 5.75:1.00 (tightening over time) and a debt-to-capitalization ratio of 65% for specific subsidiaries.
- 4The company contributed 35,000 shares of Series B Non-Voting Perpetual Preferred Stock to The Williams Companies Foundation.
- 5The Series B Preferred Stock accrues a 7.25% annual dividend, payable quarterly if declared, and ranks on parity with other 'Parity Securities' and senior to common stock.
- 6Holders of Series B Preferred Stock can convert into WMB common stock or the company can redeem the shares on or after July 13, 2028, subject to certain conditions and restrictions, particularly if the Foundation holds the shares.
- 7The creation and issuance of the Series B Preferred Stock modify the rights of existing common stockholders and have been filed with amendments to the Company's Certificate of Incorporation.