Williams Partners Agrees to Sell Its Interests in the Geismar Olefins Facility to NOVA Chemicals for $2.1 Billion; Announces ...
April 17 2017 - 7:45AM
Business Wire
- Proceeds to be used to pay down debt
and pre-fund capital investments; transaction strengthens credit
profile
- Transaction reduces Williams Partners’
commodity and operational risks
- Long-term fee-for-service agreements to
supply and transport feedstock to the plant on Williams Partners’
Bayou Ethane pipeline system retain the partnership’s pipeline
revenue which aligns with Williams’ strategy to grow fee-based
revenues
Williams Partners L.P. (NYSE:WPZ) announced today that it has
agreed to sell 100 percent of its membership interest in Williams
Olefins LLC, which owns an 88.46 percent undivided ownership
interest in the Geismar, Louisiana, olefins plant and associated
complex, to NOVA Chemicals for $2.1 billion in cash subject to
customary closing conditions.
Additionally, upon closing of the transaction, Williams Partners
subsidiaries will enter into long-term supply and transportation
agreements with NOVA Chemicals to provide feedstock to the Geismar
olefins plant via Williams Partners’ Bayou Ethane pipeline system
in the U.S. Gulf Coast. These agreements secure a meaningful
long-term fee-based revenue stream for the partnership.
“The Williams Olefins transaction and these announced new supply
and transportation agreements fortify our focus on natural gas
market fundamentals, reduce our commodity margin exposure and
secure our fee-based Gulf Coast transportation business - all
consistent with Williams’ strategy to allocate capital to its core,
natural gas-focused business,” said Alan Armstrong, chief executive
officer of Williams Partners’ general partner. “When the Williams
Olefins transaction closes, we expect to be at 97 percent fee-based
revenues driven largely by natural gas volumes. Today’s
announcements further strengthen our financial position to support
Williams’ peer-leading, low-risk growth portfolio.”
Williams Partners plans to use the cash proceeds from the
Williams Olefins transaction to pay off its $850 million term loan
and to fund a portion of the capital and investment expenditures
that are a part of the partnership’s extensive growth portfolio.
Williams expects that for federal tax purposes, any taxable gain
generated from the transaction will be sheltered by its net
operating loss carry-forwards. As a result of today’s Williams
Olefins transaction announcement, Williams Partners plans to update
its financial guidance at its Analyst Day event on May 11.
Armstrong added, “Geismar has been a part of Williams since
1999, and I appreciate the hard work and dedication of the Geismar
team through the years. The Geismar team including our olefins
marketing team will be a great asset to NOVA as they expand their
presence in the Gulf Coast. We now look forward to helping NOVA
grow profitably here in the Gulf Coast by providing highly reliable
feedstock supply via our recently expanded Bayou Ethane Pipeline
network. This transaction allows both companies to pursue their
focused strategies in a mutually beneficial manner.”
The Williams Olefins transaction is expected to close in summer
2017. Closing is subject to customary closing conditions and
regulatory approvals. Morgan Stanley & Co. LLC acted as the
lead financial adviser to Williams Partners on the transaction.
Centerview Partners LLC acted as a co-adviser to Williams Partners
on the transaction. Gibson, Dunn & Crutcher LLP and Kean Miller
LLP served as legal advisers to Williams Partners on the
transaction.
About Williams Partners
Williams Partners is an industry-leading, large-cap natural gas
infrastructure master limited partnership with a strong growth
outlook and major positions in key U.S. supply basins. Williams
Partners has 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. Williams Partners 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.
Williams Partners’ operations touch approximately 30 percent of
U.S. natural gas. Tulsa, Okla.-based Williams (NYSE:WMB), a premier
provider of large-scale U.S. natural gas infrastructure, owns
approximately 74 percent of Williams Partners.
About NOVA Chemicals
NOVA Chemicals develops and manufactures chemicals and plastic
resins that make everyday life safer, healthier and easier. Our
employees work to ensure health, safety, security and environmental
stewardship through our commitment to sustainability and
Responsible Care®. NOVA Chemicals, headquartered in Calgary,
Alberta, Canada, is a wholly owned subsidiary of the International
Petroleum Investment Company (IPIC) of the Emirate of Abu Dhabi,
United Arab Emirates.
Portions of this document may constitute “forward-looking
statements” as defined by federal law. Although the partnership
believes any such statements are based on reasonable assumptions,
there is no assurance that actual outcomes will not be materially
different. Additional information about issues that could lead to
material changes in performance is contained in the partnership’s
annual and quarterly reports filed with the Securities and Exchange
Commission.
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Williams Partners L.P.Media Relations:Keith Isbell,
918-573-7308orInvestor Relations:John Porter, 918-573-0797orBrett
Krieg, 918-573-4614
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