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Williams Revises MLP Combo Deal With Richer Terms

Williams on Sunday (WMB) increased the incentives to investors in Williams Partners LP (WPZ) and Access Midstream Partners LP (ACMP) for the merger of the two master limited partnerships (MLP), both of which are controlled by Williams (WMB).

"This is another big step toward our goal of becoming the leading natural gas infrastructure provider in North America," said Williams CEO Alan Armstrong. "The combination of Access Midstream Partners' intense focus on natural gas gathering with Williams Partners' broader service offerings along the value chain is yielding even more robust growth opportunities.

"Additionally, the people at both partnerships bring valuable skills, experiences and best practices that will strengthen the combined partnership's ability to execute and grow. This transaction advances our strategy to connect the best supplies to the best markets by allowing us to provide even more service and market options for our customers."

In June WMB said it would acquire the half of the ACMP general partner interest it didn't already own and announced its plan to merge the two partnerships (see Daily GPIJune 16). WPZ would become wholly owned by ACMP, and the merged MLP would be named Williams Partners LP with headquarters in Tulsa and major offices in Oklahoma City, Houston, Pittsburgh, Salt Lake City and Calgary.

WPZ would merge with a subsidiary of ACMP in a unit-for-unit exchange at a ratio of 0.86672 ACMP common units per WPZ common unit held by the WPZ public unitholders.

Under the original terms, Williams had proposed that ACMP would acquire WPZ at an exchange ratio of 0.85 ACMP common units for each WPZ common unit plus additional consideration of 81 cents per WPZ common unit to be paid by ACMP in cash or additional ACMP common units.

ACMP and WPZ units each closed up more than 3% Monday. WMB shares closed up less than 1%.

Completion of the tie-up is expected by early next year. The merged MLP is expected by WMB to be one of the largest and fastest-growing MLPs with expected 2015 adjusted earnings before interest, taxes, depreciation and amortization of $5 billion; a 10-12% annual limited partner unit distribution growth rate through 2017 guidance period and with expected strong growth beyond.

Distribution coverage is expected to be at or above 1.1 times, or an aggregate of $1.1 billion through the 2017 guidance period, WMB said. Cash distributions for 2015 are expected to total $3.65 per unit, up 50% and 30% over ACMP's 2014 and 2015 distribution guidance, respectively. The merged MLP expects to pay a regular cash distribution in the first quarter of 2015 in the amount of 85 cents per unit, up 53% over the ACMP distribution paid in the first quarter of the prior year.

"Both Access and Williams Partners are experiencing robust growth, and this growth will benefit both our customers and our employees," said ACMP CEO Mike Stice. "We expect customers to benefit from the expanded organizational capability and enhanced national scale that the combined business provides. We're already seeing employees benefit from opportunities for advancement and from the additional benefits of being a member of the larger Williams family."

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