Williams - a Tulsa Based Company

National University of Singapore

NUS Business School

BMA5312 Advance Corporate Finance

Case Analysis: Williams

Submitted By:

Bansal, Ankur HT065019M

Kaushik, Anshuman HT065025R

Lucman, Christian Ade HT065048B

Plange, Victor NT070696J

Vardrup, Kasper NT070681E

INTRODUCTION:

William is a Tulsa based company that is into the energy related businesses including the exploration and production, pipelines, energy trading and telecommunications. It is suffering from a decline in the energy markets owing to the crash of Enron, pressure on margins in the telecommunications business owing to oversupply and inquiries by the regulators into alleged financial improprieties.

Oversupply in the telecommunications business has led to a decline in profits and margins in the industry forcing many players to back out of this sector. This goaded the Williams enterprise to guarantee an indirect credit support for $1.4 billion of WCG’s debt. At the same time, the deterioration of the energy industry resulted in more stringent requirements for the credit rating of investment grade companies. In response to those requirements, Williams initiated, at the end of 2001, a number of initiatives to “bolster its balance sheet” in order to maintain the company’s investment grade credit rating. These initiatives included large asset-sales (to be used to reduce outstanding debt), reduction of capital expenditures