WILLIAMS MAILS LETTER TO STOCKHOLDERS
RECOMMENDING A VOTE “FOR” THE MERGER AGREEMENT WITH ETE
Stockholders to Benefit from Enhanced
Long-Term Value Prospects through Ongoing Participation in Larger,
More Diverse Company
Transaction Secures Substantial Value
Certainty through Cash Consideration Amidst Currently Volatile
Energy Environment
The Williams Companies, Inc. (NYSE:WMB) (“Williams”) today
announced that Institutional Shareholder Services (“ISS”), a
leading independent proxy voting and corporate governance advisory
firm, recommends that Williams stockholders vote “FOR” the merger
agreement with Energy Transfer Equity, L.P. (NYSE:ETE) (“ETE”) at
Williams’ special meeting of stockholders scheduled for June 27,
2016.
In recommending that Williams stockholders vote “FOR” the merger
agreement, ISS stated in its June 15, 2016 report: “A vote FOR the
proposed transaction is warranted, despite the additional strains
brought on by a continued decline in commodity prices, given the
significant cash component of the consideration payable on closing,
the more diversified customer base of the combined company, the
upside exposure to significant growth opportunities such as Lake
Charles LNG, and the opportunity to own nearly half the equity in a
combined company anticipated to have much stronger free cash flow –
particularly as the oil and gas sector recovers – than Williams on
a standalone basis.”1
In addition, Williams has mailed a letter to its stockholders
recommending that they vote “FOR” the merger agreement with ETE. A
copy of the letter being mailed to stockholders is pasted
below:
June 15, 2016
Dear Williams Stockholder,
On June 27, 2016, The Williams Companies, Inc. (NYSE: WMB)
(“Williams” or “WMB”) will be holding a special meeting for
stockholders to vote on the transaction with Energy Transfer
Equity, L.P. (NYSE: ETE) (“ETE”). I am writing about your
opportunity to make a very important choice about the future of
your investment.
By way of background, on September 28, 2015, Williams executed a
definitive agreement to combine with ETE (the “Merger Agreement”).
Under the Merger Agreement, ETE will form a partnership that will
be treated as a corporation for tax purposes to be called Energy
Transfer Corp LP (“ETC”), and ETC will merge with Williams and
survive the merger.
LEADING PROXY ADVISORY FIRM ISS RECOMMENDS
WILLIAMS STOCKHOLDERS VOTE “FOR” THE MERGER AGREEMENT WITH
ETE
The Board is pleased that Institutional Shareholder Services
(“ISS”), a leading independent proxy voting and corporate
governance advisory firm, has recommended that Williams
stockholders vote “FOR” the Merger Agreement with ETE. The Board
urges stockholders to follow ISS’ recommendation by voting “FOR”
the Merger Agreement at the upcoming special meeting.
THE WILLIAMS BOARD CONTINUES TO RECOMMEND
THAT YOU VOTE "FOR" THE MERGER AGREEMENT
If all Williams’ stockholders elect to receive all cash or all
stock, then each share of Williams common stock would receive $8.00
in cash and 1.5274 ETC common shares. The cash and unit
consideration represents $27.38 of value per Williams share based
on the ETE closing price of $12.69 as of June 14, 2016.
Additionally, Williams plans to pay a one-time $0.10 special
dividend following closing. Given the significant and certain value
the transaction will provide, the Board urges you to vote "FOR" the
Merger Agreement.
STOCKHOLDERS TO BENEFIT FROM ENHANCED
LONG-TERM VALUE PROSPECTS THROUGH ONGOING PARTICIPATION IN A
LARGER, MORE DIVERSE COMPANY
TRANSACTION SECURES SUBSTANTIAL VALUE
CERTAINTY THROUGH CASH CONSIDERATION AMIDST THE CURRENTLY VOLATILE
ENERGY ENVIRONMENT
Key highlights of the transaction include:
- Enhanced scale, scope of operations
and M&A opportunities: The transaction will create the
largest midstream franchise in North America and the Board believes
that the combined company will be better positioned to compete in a
dynamic midstream sector and a challenging commodity price
environment.
- Significant synergies: In
addition to the significant available cost synergies, the combined
company will benefit from commercial synergies that are expected to
result in increased EBITDA by 2020 of more than $100 million (base
case) to more than $500 million (upside price case).
- Complementary geographic
footprint: ETE and Williams have complementary geographic
footprints, which the Board believes will allow the combined
company to be able to better serve customers through the entire
value chain across all major basins.
- Upside exposure: The Board
expects that, as market conditions improve, Williams stockholders
will be able to benefit from the upside in the combined company’s
significant and diverse set of growth opportunities. The Board also
expects upside to the combined company’s commercial synergy targets
as commodity prices improve and demand for natural gas, NGL and
crude supply increases.
- Financial strength: The Board
believes that the combined company will be well-positioned to
cost-effectively delever and strengthen the balance sheet over
time.
- Certainty of value: The cash
component of the merger consideration is equivalent to exchanging
18% of Williams shares for cash at a valuation of $43.50 per share.
This cash component represents ~29% of the current overall value of
the merger consideration (as of June 14, 2016) and provides a
substantial value cushion in the current commodity downturn.
In summary, Williams stockholders will
benefit from enhanced long-term value prospects, while securing
value certainty in today’s volatile energy market through the cash
component of the transaction consideration.
COMBINATION REDUCES RISKS INHERENT IN A
WILLIAMS STANDALONE CASE; KEY CONSIDERATIONS FOR WILLIAMS
STANDALONE CASE
One of the key benefits of the transaction is that it reduces
key risks Williams would face as a standalone company.
- The Board believes that the combination
spreads customer concentration risk across a much broader
base, and provides more opportunities and flexibility to negotiate
“win-win” solutions with Williams’ large and important customer,
Chesapeake.
- The Board believes that the merger also
reduces the risk that Williams’ access to capital may be
impaired as a result of customer credit issues. The combined
company will have more levers to finance its capital plan,
including four MLP financing vehicles.
In addition, set forth below are certain key considerations for
Williams stockholders.
- The Board believes that a standalone
scenario would likely involve the elimination or a significant
reduction of the WMB dividend to prioritize strengthening of
its credit profile and increasing financial flexibility.
- While Williams is focused on continuing
to improve its credit profile, current leverage metrics are
higher than the targeted level and there is risk for a credit
rating downgrade if the merger is not completed. Williams’
consolidated current debt / 2016E EBITDA is ~6X.
In a standalone scenario, levers available
to Williams to improve its balance sheet and delever over time
would be prioritized as follows: (1) dividend elimination or
significant reduction to fund growth and delever; (2) further capex
reductions; (3) asset sales; and (4) equity issuances to bolster
the balance sheet and liquidity.
TRANSACTION DESIGNED TO PROTECT THE VALUE OF
YOUR INVESTMENT
The transaction with ETE has been designed to protect the
interests of Williams’ stockholders and to ensure that the Board is
maximizing the value of your investment. For example, under the
Merger Agreement, a contingent consideration right (“CCR”) attached
to each ETC share Williams stockholders receive strongly incents
ETE to ensure trading parity between ETC shares and ETE units for
two years following closing. In addition, a dividend equalization
agreement through 2018 will ensure that ETC shareholders will
receive the same cash dividends as ETE unitholders, if any.
STRONG ALIGNMENT OF ETC AND ETE
INTERESTS
In addition to the CCR and dividend equalization agreement, the
initial ETC Board will include three independent directors and the
initial conflicts committee of the Board was approved by the
existing Williams Board. The conflicts committee will appoint its
successor members going forward.
The Board believes that ETE management’s significant ownership
in ETE provides a high degree of incentive for ETE value creation.
Notably, ETE management owns ~28% of outstanding ETE units, with
Kelcy Warren personally owning ~18%. ETE management also has a
strong track record of creating value for unitholders. Since
January 2010, ETE has generated total shareholder return of ~135%
(compared to ~60% for the Alerian MLP Index and ~65% for WMB).2
ACT NOW BY ELECTING YOUR MERGER
CONSIDERATION AND VOTING “FOR” THE MERGER AGREEMENT ON THE ENCLOSED
WHITE PROXY CARD
On May 25, 2016, Williams announced that the Securities and
Exchange Commission (“SEC”) declared effective the Registration
Statement on Form S-4 relating to the proposed transaction. The
proxy statement, which provides important information about the
proposed transaction, has been mailed to Williams stockholders.
The Board encourages you to act today, not only to vote “FOR” the Merger
Agreement, but to also elect the form of consideration you wish to
receive in the merger: ETC shares, cash, or a mix of the two,
subject to proration, as described in the proxy statement. Your
financial advisor (bank or broker) can assist you in making this
election. Regardless of your merger consideration election, the
total amount of cash to be paid will be approximately $6.05
billion.
As you may be aware, there is litigation pending against ETE
with respect to the Merger Agreement. The trial is scheduled for
June 20 and June 21, 2016. The Williams Board
is unanimously committed to enforcing Williams’ rights under the
Merger Agreement. Details of the litigation are included in
the proxy statement.
VOTE “FOR” THE MERGER AGREEMENT ON THE
ENCLOSED WHITE PROXY CARD TODAY
The Board encourages you to use the enclosed WHITE proxy card to
vote “FOR” the Merger Agreement today – by telephone, by Internet,
or by signing, dating and returning the WHITE proxy card in the
postage-paid envelope provided. This letter should be read in
conjunction with the proxy statement mailed to you and other
documents filed by Williams with the SEC in connection with the
proposed transaction.
On behalf of your Board of Directors, I thank you for your
continued support. Over the last several months, the Board’s number
one priority has been to protect the interests of Williams
stockholders. The Board looks forward to completing the transaction
and to delivering its many benefits to our stockholders.
Sincerely,
Frank T. MacInnisChairman of the Board
YOUR VOTE IS IMPORTANT!
If you have questions or need assistance in
voting your shares,please contact our proxy solicitor:
Mackenzie Partners, Inc.105 Madison AvenueNew
York, NY 10016(212) 929-5500 (Call Collect)Call Toll-Free (800)
322-2885Email: proxy@mackenziepartners.com
Williams (NYSE: WMB) is a premier provider of large-scale
infrastructure connecting North American natural gas and natural
gas products to growing demand for cleaner fuel and feedstocks.
Headquartered in Tulsa, Okla., Williams owns approximately 60
percent of Williams Partners L.P. (NYSE: WPZ) (“WPZ”), including
all of the 2 percent general-partner interest. WPZ is an
industry-leading, large-cap master limited partnership with
operations across the natural gas value chain from gathering,
processing and interstate transportation of natural gas and natural
gas liquids to petchem production of ethylene, propylene and other
olefins. With major positions in top U.S. supply basins and also in
Canada, WPZ owns and operates more than 33,000 miles of pipelines
system wide – including the nation’s largest volume and fastest
growing pipeline – providing natural gas for clean-power
generation, heating and industrial use. WPZ’s operations touch
approximately 30 percent of U.S. natural gas.
Forward-looking Statements
This communication may contain forward-looking statements. These
forward-looking statements include, but are not limited to,
statements regarding the merger of ETE and Williams, the expected
future performance of the combined company (including expected
results of operations and financial guidance), and the combined
company's future financial condition, operating results, strategy
and plans. Forward-looking statements may be identified by the use
of the words "anticipates," "expects," "intends," "plans,"
"should," "could," "would," "may," "will," "believes," "estimates,"
"potential," "target," "opportunity," "designed," "create,"
"predict," "project," "seek," "ongoing," "increases" or "continue"
and variations or similar expressions. These statements are based
upon the current expectations and beliefs of management and are
subject to numerous assumptions, risks and uncertainties that
change over time and could cause actual results to differ
materially from those described in the forward-looking statements.
These assumptions, risks and uncertainties include, but are not
limited to, assumptions, risks and uncertainties discussed in the
Registration Statement on Form S-4 which was declared effective by
the U.S. Securities and Exchange Commission (the “SEC”) on May 25,
2016 (the “Form S-4”) and in the most recent Annual Report on Form
10-K for each of ETE, Energy Transfer Partners, L.P. (NYSE: ETP)
(“ETP”), Sunoco Logistics Partners L.P. (NYSE: SXL) (“SXL”), Sunoco
LP (NYSE: SUN) (“SUN”), Williams and WPZ filed with the SEC and
assumptions, risks and uncertainties relating to the proposed
transaction, as detailed from time to time in the Form S-4 and in
ETE’s, ETP’s, SXL’s, SUN’s, Williams’ and WPZ’s filings with the
SEC, which factors are incorporated herein by reference. Important
factors that could cause actual results to differ materially from
the forward-looking statements we make in this communication are
set forth in the Form S-4 and in other reports or documents that
ETE, ETP, SXL, SUN, Williams and WPZ file from time to time with
the SEC include, but are not limited to: (1) the ultimate outcome
of any business combination transaction between ETE, Energy
Transfer Corp LP (“ETC”) and Williams; (2) the ultimate outcome and
results of integrating the operations of ETE and Williams, the
ultimate outcome of ETE’s operating strategy applied to Williams
and the ultimate ability to realize cost savings and synergies; (3)
the effects of the business combination transaction of ETE, ETC and
Williams, including the combined company's future financial
condition, operating results, strategy and plans; (4) the ability
to meet the closing conditions to the transaction, including
Williams stockholder approval, on a timely basis or at all; (5) the
reaction of the companies’ stockholders, customers, employees and
counterparties to the proposed transaction; (6) diversion of
management time on transaction-related issues; (7) unpredictable
economic conditions in the United States and other markets,
including fluctuations in the market price of ETE common units and
ETC common shares; (8) the ability to obtain the intended tax
treatment in connection with the issuance of ETC common shares to
Williams stockholders; and (9) the ability to maintain Williams’,
WPZ’s, ETP’s, SXL’s and SUN’s current credit ratings. All
forward-looking statements attributable to us or any person acting
on our behalf are expressly qualified in their entirety by this
cautionary statement. Readers are cautioned not to place undue
reliance on any of these forward-looking statements. These
forward-looking statements speak only as of the date hereof.
Neither ETE nor Williams undertakes any obligation to update any of
these forward-looking statements to reflect events or circumstances
after the date of this communication or to reflect actual
outcomes.
Additional Information
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended. This communication relates to a
proposed business combination between ETE and Williams. In
furtherance of this proposed business combination and subject to
future developments, ETE, ETC and Williams have filed a
registration statement on Form S-4 with the SEC and a proxy
statement/prospectus of Williams and other documents related to the
proposed business combination. This communication is not a
substitute for any proxy statement, registration statement,
prospectus or other document ETE, ETC or Williams may file with the
SEC in connection with the proposed business combination. The
registration statement was declared effective by the SEC on May 25,
2016. INVESTORS AND SECURITY HOLDERS OF ETE AND WILLIAMS ARE URGED
TO READ THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND
OTHER DOCUMENTS THAT HAVE BEEN OR MAY BE FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY AS THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED BUSINESS COMBINATION.
Definitive proxy statement(s) were mailed to stockholders of
Williams beginning on May 25, 2016 and amended by Amendment No. 1
on June 3, 2016. Investors and security holders may obtain free
copies of these documents and other documents filed with the SEC by
ETE, ETC and Williams through the website maintained by the SEC at
http://www.sec.gov. Copies of the documents filed by ETE and ETC
with the SEC will be available free of charge on ETE’s website at
www.energytransfer.com or by contacting Investor Relations at
214-981-0700 and copies of the documents filed by Williams with the
SEC will be available on Williams’ website at
investor.williams.com.
ETE and its directors, executive officers and other members of
management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding the directors and officers of ETE’s general
partner is contained in ETE’s Annual Report on Form 10-K filed with
the SEC on February 29, 2016 (as it may be amended from time to
time). Additional information regarding the interests of such
potential participants is included in the proxy
statement/prospectus and other relevant documents filed with the
SEC. Investors should read the proxy statement/prospectus carefully
before making any voting or investment decisions. You may obtain
free copies of these documents from ETE using the sources indicated
above.
Williams and its directors, executive officers and other members
of management and employees may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction.
Information regarding the directors and officers of Williams is
contained in Williams’ Annual Report on Form 10-K filed with the
SEC on February 26, 2016 (as it may be amended from time to time).
Additional information regarding the interests of such potential
participants is included in the proxy statement/prospectus and
other relevant documents filed with the SEC. Investors should read
the proxy statement/prospectus carefully before making any voting
or investment decisions. You may obtain free copies of these
documents from Williams using the sources indicated above.
1 Permission to use quotation from the ISS report was neither
sought nor obtained.
2 Prices as of June 14, 2016
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version on businesswire.com: http://www.businesswire.com/news/home/20160615005840/en/
The Williams Companies, Inc.Investor Relations:John Porter,
918-573-0797orBrett Krieg, 918-573-4614orMedia Relations:Lance
Latham, 918-573-9675orJoele Frank, Wilkinson Brimmer KatcherDan
Katcher, Andrew Siegel or Dan Moore, 212-355-4449
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