Williams sues ETE for alleged breach
Williams filed a separate lawsuit against Energy Transfer Partners chief executive Kelcy Warren for "tortious, or wrongful, interference with the merger agreement."
The deal, announced in September 2015, would combine ETE's 71,000 miles of natural gas, NGL, refined products and crude pipelines with Williams' 33,000 miles of pipelines. ETE would become one of the largest transporters of natural gas in the US and the largest processor of NGLs. The combined company would also be the third largest master limited partnership transporter of crude in the US.
Both lawsuits involve objections to a private offering by ETE of Series A convertible preferred units. The units were offered to certain common unitholders who are accredited investors who elected to forgo a portion of their future potential cash distributions for a period of up to nine quarters and reinvest those distributions in the convertible units, according to a 9 March filing to the US Securities and Exchange Commission (SEC).
Williams said it reviewed ETE's private offering of the convertible preferred units and "concluded it is a breach of the merger agreement."
Among other things, the offering provides select ETE investors with preferential treatment on ETE distribution, Williams said.
ETE said in an SEC filing today that it has complied with its obligations under the merger agreement and "intends to vigorously defend against the claims made by Williams."
Williams said today that it remains committed to working with ETE to ensure the financial strength of the combined company, provided that all ETE and Williams investors are treated fairly and equitably.
"Williams is committed to mailing the proxy statement, holding the stockholder vote and closing the transaction as soon as possible," the company said.
The two companies in September announced the deal worth \\$37.7bn including debt and other liabilities.
The agreement, approved by the board of directors of both companies, was well below the \\$53bn unsolicited bid ETE made for Williams in June 2015, back when crude prices were closer to \\$60/bl. Under the September agreement, Energy Transfer would pay \\$43.50 for each share of Williams, for a deal worth about \\$32.6bn not including debt.
Shares of both companies have plummeted in the last year amid the drop in oil prices. Williams' shares closed yesterday at \\$14.81, down from near \\$50 per share a year earlier. ETE closed yesterday at \\$6.45 per share, down from about \\$35 per share a year earlier.