Williams agrees to acquire interest in Access Midstream Partners


Williams agrees to acquire interest in Access Midstream Partners Williams (NYSE:WMB) today announced that it has agreed to acquire the 50 percent general partner interest and 55.1 million limited partner units in Oklahoma City-based Access Midstream Partners L.P. (NYSE:ACMP) held by Global Infrastructure Partners II ("GIP") for $5.995 billion in cash. At the close of trading on Friday, June 13, the 55.1 million LP units had a market value of $3.6 billion. Upon closing, Williams will own 100 percent of the general partner and 50 percent of the limited partner interests in Access Midstream Partners. This transaction follows Williams' acquisition of its 50 percent GP interest and 23 percent LP interest in Access Midstream Partners in December 2012. Williams expects the acquisition to close in the third quarter of 2014. Following the closing of the acquisition, Williams plans to increase its third-quarter 2014 dividend by 32 percent to $0.56 per share.

Williams also today announced a proposal to merge Williams Partners L.P. (NYSE:WPZ) with and into Access Midstream Partners.

"Today, we're announcing a series of steps designed to amplify the benefits of our existing relationship with Access Midstream Partners, an increase in our dividend and the acceleration of Williams' move to a pure-play GP holding company of two leading master limited partnerships," said Alan Armstrong, Williams' chief executive officer.

"The proposed merger of Williams Partners and Access Midstream Partners, if consummated, would create an industry-leading, large-scale MLP with substantial positions across the midstream business – spanning natural gas gathering and processing, natural gas transmission pipelines, and NGL and petchem services. Our positions in these businesses provide clearly identified growth for the foreseeable future," Armstrong said.

The Acquisition of Access Midstream Partners
The acquisition of the additional interests in Access Midstream Partners is expected to increase Williams' cash flow per share as a result of rapid growth in Access Midstream Partners' business, which drives attractive growth in its GP/IDR (incentive distribution rights) and LP cash-distributions. Williams expects the acquisition to increase fee-based revenues to more than 80 percent of its gross margin as a result of Access Midstream Partners' fee-based revenues.

Access Midstream Partners' business growth is driven by expected production increases in its portfolio of more than 8.3 million acres under dedication in major shale and unconventional producing areas, including the Marcellus, Utica, Eagle Ford, Haynesville, Barnett, Mid-continent and Niobrara.

Williams expects to close the acquisition of GIP's Access Midstream Partners interests in the third quarter this year. The closing of the acquisition is not conditioned upon the consummation of Williams' proposed merger of Williams Partners and Access Midstream Partners. Closing of the acquisition is subject only to the receipt of regulatory approvals under provisions of the Hart-Scott-Rodino Act.

"Our acquisition of the additional GP and LP interests in Access Midstream Partners represents a unique, strategic opportunity for investors, customers and the employees of both Access Midstream Partners and Williams," Armstrong continued. "We expect the acquisition to deliver immediate and future dividend growth for Williams' shareholders and to further enhance our presence in attractive growth basins. In addition, we expect the acquisition of Access Midstream Partners will fortify Williams' stable, fee-based business model and support our industry-leading dividend growth strategy."

Williams plans to fund approximately half of the $5.995 billion acquisition with equity and the remainder with a combination of long-term debt, revolver borrowings and cash on hand. The company expects to repay revolver borrowings with proceeds from the planned drop-down of its remaining NGL & Petchem Services assets and projects. In addition, Williams has entered into a backup financing commitment with respect to a $5.995 billion interim-liquidity facility with UBS Investment Bank, Barclays and Citigroup that would be available to fund the acquisition.

Williams expects to retain its investment-grade credit ratings at two of the three ratings agencies. The company expects the third agency to reduce Williams' credit rating one notch to sub-investment-grade as a result of the agency's recently announced proposed change in ratings methodology for general partners, along with Williams' plans to accelerate its move to a GP holding company and the acquisition announced today. The company expects Williams Partners to retain its current strong BBB investment-grade credit ratings.

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