Loews Completes Acquisition of Williams' Texas Gas Pipeline
Williams said Friday afternoon that it has completed the previously announced sale of its Texas Gas Transmission pipeline to a subsidiary of Loews Corp. for approximately $1.045 billion, which includes approximately $795 million in cash and $250 million in existing Texas Gas debt.
First announced in mid-April (see Daily GPI, April 15), the pipeline divestiture leaves Williams' subsidiaries with approximately 14,000 miles of interstate natural gas transmission pipeline, comprised of the Transco and Northwest Pipeline systems. In addition, Williams also owns a 50% interest in the 581-mile Gulfstream pipeline. Overall, Williams now transports approximately 12% of the natural gas consumed in the United States.
"A reshaped, revitalized Williams continues to emerge," said Steve Malcolm, Williams CEO. "Our ability to sign, seal and quickly deliver on asset sales is building more favorable liquidity for our company."
The sale included the 5,800-mile Texas Gas pipeline system, which has the capacity to transport 2.8 Bcf/d from the Gulf Coast, East Texas and North Louisiana to markets in the southern United States and upper Midwest. Texas Gas also has a working storage capacity of 55 Bcf.
Loews Pipeline Holding Corp., a subsidiary of the New York-based Loews hotel, insurance and tobacco corp., funded the approximately $795 million balance of the purchase price with $520 million of its available cash and with proceeds from $275 million of additional debt incurred at the subsidiary level.
"We are pleased to announce the closing of this significant acquisition," said James Tisch, CEO of Loews. "Texas Gas is a first-rate company that we think complements our other assets very well -- particularly our other energy-related investments."
Williams said that nearly all of the 650 employees that supported Texas Gas at the time the transaction closed will remain employed with Texas Gas. In addition, Texas Gas' existing management team, led by its President, H. Dean Jones II, will continue to operate Texas Gas Transmission. "We are thrilled to announce that this transaction has been completed, and look forward to our future as a subsidiary of Loews Corp," Jones said.
Immediately following the acquisition, Texas Gas Transmission LLC borrowed $275 million under a short-term credit facility and advanced the proceeds to its parent company pursuant to an interest-bearing promissory note.
In other news, Texas Gas Transmission announced that it has commenced a tender offer for any and all $150 million in aggregate principal amount of its outstanding 8.625% notes due 2004. The tender offer is scheduled to expire at midnight EDT on June 13, unless extended or earlier terminated.
Loews Corp.'s principal subsidiaries are CNA Financial Corp., Lorillard Inc., Diamond Offshore Drilling Inc., Loews Hotels, Bulova Corp., and Texas Gas Transmission Corp.
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