Williams Inquiry:
Howdy Y'all,
I'm wondering if anyone here is keeping an eye on Williams (WMB)? Their subsidiary EnergyNewsLive.com is reporting as of last week that the bond rating firms are maintaining ratings, then today WMB reported they might be selling assets and watering the stock. Anyone got any 411 to share?
Garcias, Ramon
Here's something on the matter:
thestreet.com
Banks Say Williams Communications Could Be in Credit
Default
By Rebecca Byrne
Staff Reporter
02/04/2002 11:04 AM EST
Bank lenders told Williams Communications (WCG:NYSE - news - commentary
- research - analysis) it might be in default on its credit agreement following the
recent spate of bankruptcies and big losses in the telecommunications industry.
Williams, a Williams Cos. (WMB:NYSE - news - commentary - research -
analysis) spinoff that runs a high-speed telecommunications network, said it does
not intend to file for bankruptcy, but will submit to creditors a plan to reduce the
relative amount of debt on its balance sheet.
"Due to recent negative developments in the telecommunications industry, the
banks are questioning whether the company can confirm the representations and
warranties included in the credit agreement," the firm said in a statement.
The banks said the purchase by Williams of certain senior redeemable notes may
have violated the credit agreement.
The telecom industry has been hit hard by a slowdown in capital spending, pricing
pressures and stiff competition over the past year. Last week, Global Crossing
and McLeod USA both filed for bankruptcy protection, sending shares of rival
telecom companies into a tailspin.
Williams said it strongly disagrees with the banks, "and that it is not in default
under the credit agreement or any other material agreement." Still, the company
has agreed to submit a plan by Feb. 25 to "restructure and de-leverage" its balance
sheet. This plan "does not include seeking bankruptcy court protection or the
substantial dilution of equity security holders," the firm noted.
As of Dec. 31, Williams Communications had cash and short-term investments in
excess of $1 billion, which the firm believes is sufficient to fully fund its business
plan through 2003.
Just last week, shares of Williams Cos. plunged after the firm delayed the release
of its earnings statement, saying it was assessing financial obligations to Williams
Communications, 95% of which it spun off last year. A spokesman at Williams
said the issue was one of proper accounting rather than an imminent liability.
Williams Communications also announced Monday a fourth-quarter loss of $372
million, or 76 cents a share, down from a loss of $546.6 million, or $1.18 a share,
last year. Excluding one-time items, Williams' fourth-quarter loss was 52 cents a
share. Thompson Financial/First Call had expected a loss of 57 cents a share.
Revenue came in at $330.3 million from $287.0 million a year earlier.
Shares of Williams Communications fell 22% to $1.10 while Williams Cos. fell 11%
to $16.87. |
