Williams Signs Deal to Sell Texas Gas Pipe to Loews Insurance, Hotel Concern
Williams reported Monday it signed a definitive deal to sell its Gulf Coast pipeline system, Texas Gas Transmission Corp., to a unit of Loews Corp. for $795 million in cash and the assumption of $250 million in debt.
The Texas Gas asset will be sold to Loews Pipeline Holding Corp., a subsidiary of the New York-based Loews hotel, insurance and tobacco corporation. The transaction is expected to be completed within 60 days, subject to anti-trust review, according to Tulsa, OK-based Williams.
As a result of the pipeline sale totaling $1.045 billion, Williams said it expects to record a pre-tax impairment charge to earnings of approximately $110 million to $120 million in the first quarter.
Immediately following the announcement of the sale, Moody's Investors Service placed under review for possible upgrade the B3 senior unsecured debt and (P)B3 shelf ratings of Texas Gas Transmission. The review reflects the potential ownership of the pipeline by the financially stronger Loews, whose senior unsecured debt has been rated A3.
"Today, we have a solid buyer and a signed agreement that captures a good price for this good pipeline run by good people," said Williams Chairman Steve Malcolm. Including the pending sale of the Texas Gas Transmission system, the energy company estimated it has sold or agreed to sell assets for $2.1 billion in cash so far this year.
The 5,800-mile Texas Gas pipeline transports 2.8 Bcf/d of natural gas from the Gulf Coast, East Texas and North Louisiana to markets in the southern United States and in the Midwest. Under the terms of the agreement, the pipeline's employees -- an estimated 650 in Owensboro, KY -- will remain with Texas Gas, Williams said. In addition, an unspecified number of other Williams' employees who provide services to Texas Gas will be offered the chance to seek employment with the pipeline.
Following the closing of the Texas Gas sale, Williams said it will own and operate about 14,000 miles of interstate gas transmission pipelines through its Transcontinental Gas Pipe Line and Northwest Pipeline systems, as well as its 50% ownership in the 581-mile Gulfstream Pipeline that serves the Florida gas market.
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