Williams, El Paso gain in heavy trade
By Lisa Sanders, CBS.MarketWatch.com
Last Update: 5:12 PM ET April 17, 2003
NEW YORK (CBS.MW) -- Williams Cos. trumped El Paso in terms of trading volume by session's end Thursday as both
companies benefited from upgrades by an analyst at Lehman Bros.
Nearly 14 million shares of Williams Cos. (WMB: news, chart, profile) traded hands,
dwarfing its daily average of 5.16 million. El Paso posted volume of more than 13 million shares, eclipsing its daily average
of 10.2 million.
Williams closed trading at $5.90, up 80 cents, or 15.7 percent -- the highest finish since July 18. Shares of El Paso (EP: news,
chart, profile) gained 42 cents, or 6.2 percent, to end at $7.17 -- the highest finish since Feb. 4.
On Thursday, Williams got a boost from Lehman analyst Richard Gross, who upgraded the stock to "overweight" from
"underweight." Gross said "asset sales have replenished liquidity," and expects strong cash flow generation from 2004 to
help improve earnings and debt ratings. See more.
On Monday, Williams said it would sell Texas Gas Transmission for more than $1 billion. See more.
Gross also noted that the settlement of issues involving California has significantly reduced the downside. See more. He
believes the stock can double in value over the next three years.
El Paso Corp. became the volume leader early in the session after announcing it had secured $3.8 billion of new financing
with more favorable terms. The company's late Wednesday announcement follows similar news from Reliant Resources
(RRI: news, chart, profile) and Dynegy (DYN: news, chart, profile), among others.
Houston-based El Paso entered into a $3 billion revolving credit facility that matures in June 2005, replacing one set to
mature in May 2003, with a term-out option to May 2004.
El Paso also restructured its $750 million Clydesale into a term loan that will amortize in equal quarterly amounts over the
next two years.
All of the facilities carry interest rates of LIBOR plus 350 points, and letter of credit fees of 350 points. Financial covenants
mandate that El Paso not exceed a debt-to-capitalization ratio of 75 percent. See full story.
Lehman's Gross also upgraded El Paso Thursday to "overweight" from "underweight," noting that "asset sales have
stabilized liquidity." El Paso said Wednesday it had sold its interests in East Coast Power to Goldman Sachs for $456
million in cash.
Gross also said the extended maturities ease the pressure on El Paso to dispose of assets.
In the pipelines segment, Kinder Morgan (KMI: news, chart, profile) gained $1.52 to close at $45.75 after posting strong
first-quarter results.
Late Wednesday, Kinder Morgan said it earned $111 million, or 90 cents a share, up from $88.4 million, or 71 cents a share,
in the year-earlier period. Analysts polled by Thomson First Call were expecting Kinder to earn 85 cents, on average.
Kinder Morgan raised its 2003 earnings estimate to a range of $3.23 to $3.28 a share, from a previous target of $3.18. See
more.
Also late Wednesday, Kinder Morgan Energy Partners (KMP: news, chart, profile) said it earned $170.5 million, or 52 cents
a unit, compared to $141.4 million, or 48 cents a unit, for first-quarter 2002.
Analysts were expecting the pipeline limited partnership to earn 51 cents a unit on average. Kinder Morgan Energy
Partners traded up 38 cents to close at $39.05.
In the power generator group, Dynegy continued to benefit from Standard & Poor's latest corporate credit rating revision.
The stock was up 25 cents, or 8.8 percent, to close at $3.09. Volume of more than 8 million shares beat the daily average of
7.1 million. For more energy news, read Energy Watch.
S&P Wednesday affirmed the company's corporate credit rating of "B" and took the ratings off its review list for another
possible downgrade. S&P cited Dynegy's successful debt refinancing last week. However, S&P retained its negative
outlook because of Dynegy's weak financial status. See more.
In the utility group, advancers led decliners with Aquila (ILA: news, chart, profile) up a penny to close at $1.83, breaking a
two-session skid since announcing a hefty fourth-quarter loss. See more.
The Philadelphia Utility Index (UTY: news, chart, profile) was up 0.5 percent to close at 253.86.
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