By Ronda Fears
Nashville, May 19 - The Williams Cos. Inc. sold $275 million of 30-year junior subordinated convertible notes at par of 50 to yield 5.5% with a 46% initial conversion premium in the Rule 144A market via sole lead manager Lehman Brothers.
The Rule 144A deal sold at the tight end of yield talk of 5.5% to 6% and aggressively outside revised premium guidance of 41% to 45%. Original premium talk put the initial conversion premium at 38% to 42%.
Williams said the financing will allow it to retire the investments in Williams by a subsidiary of MidAmerican Energy Holdings Co., a member of the Berkshire Hathaway Inc. family of companies. In March 2002, Williams sold 1.47 million convertible preferred shares to MidAmerican for $275 million. Williams will repurchase all of the outstanding 9.875% issue for about $289 million. The repurchase is subject to approvals from Williams' banks, but the company expects to close the transaction in June.
Also, Williams said it intends to make a $1.17 billion payment that will retire a loan with a group of investors led by Berkshire Hathaway. The 364-day loan, which matures in July, is secured by substantially all of Williams' exploration-and-production interests in the U.S. Rocky Mountains.
Williams plans to refinance a portion of the loan with new, subsidiary level borrowing at market rates. The company is seeking $400 million to $500 million in financing through a four-year, fully funded and prepayable term loan, using the same exploration and production interests to secure the new financing. Williams is scheduled to close the new exploration-and-production loan on or around May 30.
Remaining funds will come from available cash at Williams, principally generated from recently closed asset sales.
Terms of the deal are:
Issuer: The Williams Cos. Inc.
| Issue: | Junior convertible subordinated notes
|
| Lead manager: | | Lehman Brothers
|
| Amount | $275 million
|
| Greenshoe: | $25 million
|
| Maturity: | May 28, 2033
|
| Coupon: | 5.5%
|
| Price: | Par, $50
|
| Yield: | 5.5%
|
| Conversion premium: | 46%
|
| Conversion price: | $10.89
|
| Conversion ratio: | 4.5907
|
| Call: | Non-callable for seven years, then with 130% hurdle
|
| Settlement: | May 28
|
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