The Williams Companies Inc. (NYSE: WMB) has begun litigation against Energy Transfer Equity LP (NYSE: ETE) and Kelcy Warren, CEO and chairman of the board of ETE, in response to the private offering of Series A convertible preferred units that ETE disclosed on March 9.
The litigation against ETE in the Delaware Court of Chancery seeks to unwind the private offering of Series A convertible preferred units. The litigation against Warren in the district court of Dallas County, Texas, is for tortious, or wrongful, interference with the merger agreement executed on Sept. 28, 2015, as a result of the private offering of Series A convertible preferred units.
The Williams board issued the following statement:
The Williams board is unanimously committed to enforcing its rights under the merger agreement entered into with ETE on Sept. 28, 2015, and to delivering the benefits of the merger agreement to Williams’ stockholders. ETE has no basis to avoid its obligations under the merger agreement.
Williams has reviewed ETE’s private offering of convertible preferred units and concluded it is a breach of the merger agreement. Among other things, the offering provides select ETE investors with preferential treatment on ETE distributions.
Williams has commenced litigation to protect the interests of its stockholders. The litigation is intended to ensure that Williams’ stockholders will receive the consideration to which they are entitled under the merger agreement.
Williams is committed to mailing the proxy statement, holding the stockholder vote and closing the transaction as soon as possible.
Williams remains committed to working with ETE to ensure the financial strength of the combined company, provided that all ETE and Williams investors are treated fairly and equitably. Williams looks forward to completing the transaction and delivering its benefits to the Company’s stockholders.
The Williams board has not changed its recommendation "FOR" the merger agreement executed on Sept. 28, 2015. In addition to the receipt of Williams’ stockholder approval, the transaction remains subject to other customary closing conditions. Integration planning is underway. The transaction is expected to close in the second quarter of 2016.