Williams Partners L.P. (NYSE:WPZ) entered into a contribution agreement to acquire from The Williams Companies, Inc. (NYSE:WMB) 100% of the membership interests in Williams Energy Canada ULC (“WECU”) for approximately $1.2 billion. The transaction closed on March 3, 2014.
The primary assets of WECU include an oil sands offgas processing plant near Fort McMurray, approximately 260 miles of NGL and olefins pipelines and an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater. WPZ also acquired an in-progress expansion project at the Redwater facility. The expansion will provide additional fractionation business to WPZ related to development of offgas processing at the CNRL Horizon upgrader facility retained by WMB.
The consideration will consist of cash proceeds of $25 million and the issuance of 25,577,521 Class D payment-in-kind units of WPZ (the “PIK Units”) and 521,990 general partner units. In lieu of cash distributions, the PIK Units will receive quarterly distributions of additional PIK Units. All PIK Units will be convertible to common units at a future date no earlier than February 2016. WPZ also has an option to issue up to $200 million of additional PIK Units to WMB for funding expansions at the Redwater facility.
Baker Botts represented the Conflicts Committee of the Board of Directors of Williams Partners GP LLC in connection with the transaction.
