Williams and Williams Partners L.P. announced Monday an agreement to permanently waive payment obligations under the incentive distribution rights held by Williams and convert Williams’ economic general partner interest into a non-economic interest for 289 million newly issued Williams Partners common units. The estimated transaction value is approximately $11.4 billion, according to a company press release.
Following the waiver, Williams will hold approximately 660 million Williams Partners common units, representing approximately 72% of the common units outstanding.
Williams also announced that it expects to purchase newly issued common units of Williams Partners at a price of $36.08586 per unit. Williams expects to fund the unit purchase with equity. With respect to units issued to Williams in the private placement, Williams Partners will not be required to pay distributions for the quarter ended December 31, 2016 and the prorated portion of the first quarter of 2017 up to closing of the private placement.
Williams expects to discontinue participation in Williams Partners’ DRIP program, upon successful completion of the Transactions and asset monetizations.
“Today we announced a comprehensive series of measures to strengthen Williams’ role as North America’s premier natural gas infrastructure company,” said Alan Armstrong, Williams’ president and chief executive officer. “These actions will deliver immediate and ongoing benefits and position Williams and Williams Partners for long-term, sustainable growth. The improvement of Williams Partners’ cost of capital and simplified organizational structure will better align GP and LP interests as well as solidify Williams Partners’ investment-grade credit ratings. This strong financial position combined with Williams Partners’ high quality, low risk growth portfolio makes Williams a leader amongst peers.”