If the New York Times is right, serious problems have developed in the merger between Tulsa-based Williams Companies and Texas-based Energy Transfer Equity. The paper says that just five months after the two firms agreed to the deal, it has become a nightmare, shares have plunged in value and “buyers remorse” has developed among executives at Energy Transfer. Especially after Thursday’s earnings report by Energy Transfer showed disappointing earnings, the company stock is down to its lowest level in 7 years and the value of the deal lost $1 billion.
Adding to the problem is the involvement of Oklahoma City-based Chesapeake Energy, a firm in its own right that is dealing with massive debt and questions whether it will go into bankruptcy.
Under the deal that was announced last fall, Energy Transfer has to pay $6 billion in cash to Williams as part of the cash-and-stock acquisition. It means Energy Transfer will either have to sell assets, or divest of them as corporate leaders like to say, or raise additional debt. Adding to the risk is whether Chesapeake Energy, one of the biggest customers for Williams Cos. will file for bankruptcy. Chesapeake stated this week one of its 2016 goals was divesting up to $1 billion in assets.
As OK Energy Today reported earlier this week, Williams Cos. took note of the potentially perilous situation that exists for Chesapeake and it was considered in the financial earnings report issued by Williams.
Read full article in New York Times.
New York Times
