Williams Partners signs agreement to acquire Canadian assets

Williams Partners LP has announced that it has signed an agreement to acquire Williams' currently in-service Alberta, Canada operations for US$ 1.2 billion. The parties plan to close the transactions on 28^th February.

The assets include an oil sands offgas processing plant near Fort McMurray, approximately 260 miles of NGL and olefins pipelines, as well as NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. Williams Partners also acquired an in-progress expansion project at the Redwater facility. The expansion will provide additional fractionation business to Williams Partners related to development of offgas processing at the CNRL Horizon upgrader facility retained by Williams.

These Canadian operations have unique competitive advantages and long-term contracts that are expected to produce strong cash flows for Williams partners. The operating results are subjected to commodity price fluctuations are are expected to contribute distributable cash flow to Williams Partners of approximately US$ 135 million to US$ 160 million during the remaining 10 months of 2014 and US$ 200 million to US $240 million in 2015. The acquisition is immediately accretive to Williams Partners and positions the partnership for future growth in Canada.

Williams Partners plans to fund the acquisition with the issuance to Williams of 25.6 million Class D payment-in-kind (PIK) limited-partner units, US$ 25 million in cash and an increase to the general partner's capital account to maintain Williams' 2% general-partner interest. In lieu of cash distributions, the PIK units will receive quarterly distributions of additional PIK units. All PIK units will be convertible to common units at a future date no earlier than February 2016. Williams Partners also has an option to issue up to US$ 200 million of additional PIK units to Williams for funding expansions at the Redwater facility.

Williams Partners' Conflicts Committee, consisting wholly of independent directors and their independent legal and financial advisors, represented Williams Partners' interests in the negotiations of this transaction. Robert W. Baird & Co. advised Williams Partners' Conflicts Committee with respect to the transaction.

Upon conversion of the PIK units, Williams expects to gain increased distributions from Williams Partners. The increased distributions from Williams Partners support Williams' dividend growth strategy. Williams currently owns approximately 64% of Williams Partners, including the general-partner interest. Barclays advised Williams with respect to the transaction.

Adapted from press release by Hannah Priestley-Eaton

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