The transaction value is $1.045 billion, which includes $795 million in cash to be paid to Williams and $250 million in debt that will remain at Texas Gas. The closing of the transaction, which is expected to occur in early June 2003, is subject to normal and customary conditions, including the filing of notification under the Hart-Scott-Rodino antitrust law.
Texas Gas owns and operates a 5,800-mile pipeline system that transports natural gas from the Gulf Coast, east Texas and north Louisiana to markets in the southern United States through the Midwest. Texas Gas has a delivery capacity of 2.8 billion cubic feet (Bcf) per day and a working storage capacity of 55 Bcf. In 2002, the company reported net income of $56 million on revenues of $267 million.
James Tisch, CEO of Loews, commented on the acquisition, "Texas Gas is a highly attractive asset with an experienced and capable management team, and we are pleased that it will become a subsidiary of Loews. The transaction should be accretive to earnings per share and provide very attractive free cash flow to Loews."
Loews intends to issue additional debt at the subsidiary level immediately following the acquisition of Texas Gas. It is anticipated that this recapitalization would bring the debt-to-total capital ratio of Texas Gas to approximately 50 percent.
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