Williams Partners previously acquired a 25.1 percent interest in Four Corners from Williams for $360 million in June 2006. Four Corners owns certain natural gas gathering, processing and treating assets in the San Juan Basin in Colorado and New Mexico.
The transaction is expected to be immediately accretive to distributable cash flow for Williams Partners and its 40 percent interest in Discovery, on a per-unit basis for Williams Partners' unitholders.
The adjusted EBITDA attributable to a 100.0 percent interest in Four Corners was $136.7 million for the nine-month period ending Sept. 30, 2006. Distributable cash flow attributable to a 100.0 percent interest in Four Corners was $120.4 million for the same period.
Williams Partners plans to finance its payment of the purchase price through a combination of approximately 50 percent debt and 50 percent equity. The transaction, subject to standard closing conditions, is expected to be completed later in the fourth quarter.
"Our 25.1 percent interest in Four Corners has been a key contributor in the partnership's performance this year," said Alan Armstrong, chief operating officer of the general partner of Williams Partners. "This planned acquisition of the remaining interest enables incremental growth in the partnership with proven assets and enhances our ability to generate stable cash flows for our unitholders."
Assets comprising the Four Corners system include:
"The Four Corners system is one of the largest integrated natural gas gathering and processing systems in the country and its stable cash flows are anchored with a relatively high percentage of fee-based revenues," Armstrong said.
Steve Malcolm, chairman, president and chief executive officer of Williams, said the Four Corners transaction is consistent with Williams' strategy to drive value creation.
"It is designed to provide low-cost capital that can be reinvested in other attractive growth areas, helping to deliver on our commitment to pursue growth with discipline," Malcolm said.
The board of directors of the general partner of Williams Partners approved the transaction based upon a recommendation from its conflicts committee. The conflicts committee, which is comprised entirely of independent directors, retained independent legal and financial advisors to assist it in evaluating and negotiating the transaction.
For Four Corners, adjusted EBITDA is defined as net income plus depreciation and amortization and includes adjustments for certain non-cash, non-recurring items. Distributable cash flow is defined as net income plus depreciation and amortization and includes adjustments for certain non-cash, non-recurring items and less maintenance capital expenditures.
Citigroup and Lehman Brothers acted as financial advisors to Williams in connection with this planned transaction.
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