Williams Partners To Buy Williams' Canadian Assets For $1.2 Bln. - Quick Facts

(RTTNews) - Energy infrastructure company Williams Partners L.P. (WPZ) Wednesday agreed to acquire Williams Cos. Inc.'s (WMB) currently in-service Alberta, Canada operations for $1.2 billion.

The acquisition is immediately accretive to Williams Partners and positions the partnership for future growth in Canada.

The deal is expected to close on Feb. 28.

The assets being acquired include an oil sands offgas processing plant near Fort McMurray, about 260 miles of NGL and olefins pipelines, as well as an 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 Canadian operations have competitive advantages and long-term contracts that are expected to produce strong cash flows for Williams Partners. The operating results are expected to contribute distributable cash flow to Williams Partners of about $135 million to $160 million for the remainder of 2014 and $200 million to $240 million in 2015.

Williams Partners plans to fund the deal with the issuance to Williams of 25.6 million Class D payment-in-kind (PIK) limited-partner units, $25 million in cash and an increase to the general partner's capital account to maintain Williams' 2 percent general-partner interest. Williams currently owns about 64 percent of Williams Partners, including the general-partner interest.

In lieu of cash distributions, the PIK units will receive quarterly distributions of additional PIK units. Williams Partners also has an option to issue up to $200 million of additional PIK units to Williams for funding expansions at the Redwater facility.

Upon conversion of the PIK units, Williams expects to gain increased distributions from Williams Partners.