Williams Partners acquire Williams’ Geismar olefins facility

Williams Partners to acquire Williams’ Geismar olefins facility

3:55 AM, 2nd November 2012
Williams Partners to acquire Williams’ Geismar olefins facility

TULSA, US: Williams Partners has agreed to acquire Williams’ approximately 83 per cent undivided interest in the Geismar olefins production facility, as well as Williams’ refinery-grade propylene splitter for $2.264 billion and pipelines in the Gulf region, for $100 million. Additionally, Williams Partners will be responsible for the completion of the ongoing expansion of the Geismar facility projected to cost $270 million and additional pipelines projected to cost approximately $160 million.

Williams also agreed to temporarily waive approximately $16 million per quarter of general partner incentive distribution rights (IDRs) until the later of 31 December 2013 or 30 days after the Geismar plant expansion is operational. Williams estimates the foregone IDRs will last approximately five quarters, which would total $80 million.

Williams currently owns approximately 66 per cent of Williams Partners, including the general-partner interest. Following the closing of this transaction Williams will own approximately 70 per cent of Williams Partners, including the general-partner interest. Williams Partners plans to fund the acquisition with the issuance to Williams of 42.8 million Williams Partners limited-partner units, $25 million in cash and an increase to the general partner’s capital account to maintain Williams’ 2 per cent general-partner interest. The transaction is expected to close in early November.

“The addition of the Geismar facility to Williams Partners’ portfolio immediately reduces the partnership’s exposure to the over-supplied ethane markets by nearly 70 per cent and eliminates it by 2014, while increasing our ability to produce globally marketed ethylene. Bringing this natural hedge to Williams Partners makes it unique among similarly situated MLPs. In addition, it provides strong support for our continuing distribution growth,” said Alan Armstrong, CEO, the general partner, Williams Partners.

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