By Tess Stynes
Williams Partners L.P. (WPZ) and Williams Cos. (WMB) signed a
deal in which Williams Partners will acquire Williams's 83.3%
interest in the Geismar, La., olefins-production facility and its
refinery-grade propylene splitter for $2.26 billion.
The deal was unveiled as Williams reported that its
third-quarter earnings fell 43%, while midstream and interstate
gas-pipeline asset-holder Williams Partners' profit decreased 31%
as natural-gas-liquids margins remained weak.
Williams Partners is expanding its presence in the olefins
sector in an effort to reduce its exposure to volatility in the
ethane market.
Under the deal, Williams Partners also will acquire pipelines in
the Gulf regions for $100 million. Williams Partners also agreed to
complete a continuing expansion at the Geismar facility, at an
estimated cost of $270 million, along with additional pipelines, at
an estimated cost of $160 million.
Williams agreed to waive general partner distribution rights of
about $16 million a quarter until the later of 30 days after the
Geismar plant is operational, or Dec. 31, 2013.
Williams Partners plans to fund the deal, expected to close
early this month, with 42.8 million Williams Partners
limited-partner units, $25 million in cash and an increase to the
general partner's capital account.
When the deal is closed, Williams's stake in Williams Partners
is expected to increase to 70% from 66% currently, both including
the general-partner interest.
"In the third quarter, fee-based revenue in our midstream
business grew 12%, but that growth was offset by unfavorable
commodity prices and downtime in the Gulf related to Hurricane
Isaac," said Alan Armstrong, chief executive of Williams Partners'
general partner.
Williams reported a profit of $155 million, or 25 cents a share,
down from $272 million, or 46 cents a share, a year earlier.
The latest period was hurt by lower natural-gas liquids margins
as well as higher costs associated with developing businesses
Williams Partners acquired earlier in the year. The year-earlier
period included a $66 million income tax benefit.
Analysts polled by Thomson Reuters most recently forecast
earnings of 26 cents.
Williams Partners reported a profit of $237 million, or 38 cents
a common unit, down from $342 million, or 91 cents a common unit, a
year earlier.
Analysts polled by Thomson Reuters most recently forecast
earnings of 55 cents.
Williams shares were flat at $34.99 in recent after-hours
trading. Williams Partners common units closed Wednesday at $52.98
and were inactive in recent after-hours trading.
Write to Tess Stynes at Tess.Stynes@dowjones.com
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