Bernard, I guess that we will need to agree to disagree. I do not see Williams' selling of overpriced optical investments to raise capital as scraping the bottom of the barrel. I also see no evidence that they have had or will have any trouble raising cash. tp
Williams Comms. to sell $250 mln convertible shares
(UPDATE: Updates, adds comment, details, closing stock price)
By Jonathan Stempel
NEW YORK, Sept 8 (Reuters) - Williams Communications Group Inc. (NYSE:WCG - news), which is building a 33,000-mile nationwide fiber-optic cable network, plans next week to sell $250 million of 12-year convertible preferred shares, market sources said on Friday.
Merrill Lynch & Co. and Salomon Smith Barney are arranging the private sale for the Tulsa, Okla.-based company.
Williams Communications, which completed its initial public offering last September, said recently it plans to spend about $5.8 billion on expansion by the end of 2001.
``Our approach from the very beginning was to strike a balance between debt and equity,'' said Howard Kalika, Williams vice president and treasurer. ``Convertibles are one tool we use to maintain that balance. The idea behind a convertible preferred is that it's attractive from a cost-of-capital perspective.''
The shares, which are expected to mature in 2012 and not be callable for five years, likely will carry a 6.25 to 6.75 percent coupon and an 18 to 22 percent conversion premium, sources said.
Convertibles are hybrid securities that usually offer current income and can be converted into company stock. Their fortunes are closely tied to underlying stock prices.
Williams Communications last tapped capital markets on Aug. 3, when it sold $1 billion of junk bonds. It sold $2 billion of junk bonds concurrently with its IPO.
Moody's Investors Service rates Williams' bonds ``B2,'' its fifth highest junk grade, while Standard & Poor's rates them ``B-plus,'' roughly one notch higher.
Williams has said its fiber-optic network will eventually reach 125 U.S. cities.
Williams Communications' stock closed Friday on the New York Stock Exchange at $27, down $1-3/8. Its 52-week closing high is $58, set March 7. Its 52-week closing low is $23-7/16, set last Dec. 9. |
