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Williams disclosed that its former telecommunications business, Williams Communications Group, intends to exercise a purchase right for certain assets for which Williams is guarantor. WCG expects Williams to pay for the fiber-optic network and associated facilities, pursuant to the guarantee, which was negotiated in September 1999, in return for unsecured debt or equity. Williams CEO Steve Malcolm said the action already was factored into earnings, balance sheet and liquidity numbers reported in filings and presented to investors during the past week. “In the event we need to perform on this obligation, we have developed more than sufficient financial capacity to do so,” he said. The issue involves credit support of $750 million for a lease agreement related to the communications assets. The expected closing date for the transaction is April 1. Williams Communications said the move will help preserve its flexibility to achieve a previously-announced comprehensive balance sheet restructuring. The proposed restructuring is intended to support uninterrupted business service and, at the same time, minimize any impact to customer and vendor relationships. Discussions with the company’s banks and others have been expanded to include multiple restructuring options, including the use of a negotiated Chapter 11 reorganization as a restructuring mechanism. The company may decide to pursue that alternative to allow for a more orderly process that maximizes enterprise value.
Avista Utilities filed a request with the Oregon Public Utility Commission (OPUC) to reduce natural gas rates because of lower wholesale prices. The filing requests an overall decrease of 15.3%, or $12.5 million in revenues. Avista’s filing proposes an effective date of April 2. The utility serves about 80,000 natural gas customers in Oregon. If approved, the rate reduction will save the average residential customer (60 therms per month) about $8.90, or 15.05%, each month. Larger-use commercial and industrial customers in Oregon will see a higher percentage decrease because of lower base rates for these customers. In a separate filing, Avista proposed a low-income rate assistance program intended to reduce the energy burden among those residential customers least able to pay natural gas bills. If approved by regulators, about $200,000 would be collected through a 0.5% tariff on residential natural gas sales and used to provide assistance to Avista’s low-income customers demonstrating need. The proposal is in response to the Oregon legislature’s authorization for rate assistance for low-income natural gas customers and is based on a program already in place for Avista customers in Washington.
Infinity Inc. more than doubled its acreage position with new leasehold interests on 106,000 net acres of coalbed methane properties located in the Sand Wash Basin in the states of Colorado and Wyoming. The name of seller and the terms of the proposed transaction were not disclosed. “These properties are located between our Antelope and Pipeline coalbed methane projects, and this should result in significant logistical advantages for Infinity and its oilfield services subsidiary when development activities get underway,” noted CEO Stanton E. Ross. “Infinity will retain the deep gas rights, as well as the coalbed methane rights, on these properties, which may open the door for Infinity to partner with another energy company to explore and develop both coalbed methane and the deeper gas horizons.”
Centrica plc and NewPower Holdings Inc. announced the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 regarding Centrica’s acquisition of NewPower. A subsidiary of Centrica, Windsor Acquisition Corp., is buying NewPower’s outstanding common stock for $1.05 per share, or about $130 million in cash. The deal will make Centrica by far the largest retail energy marketing company in North America with about 4.3 million retail customers.
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