Williams to Invest Up to $2.4B in Access Midstream Partners GP
Williams (NYSE: WMB) today announced it has agreed to acquire a 50 percent interest in privately held Access GP and approximately 25 percent of the limited partner units of Access Midstream Partners, LP (NYSE: ACMP) for approximately $2.4 billion. ACMP announced plans today to acquire most of Chesapeake Energy Corp.'s (NYSE: CHK) remaining natural gas and crude-oil gathering assets for $2.16 billion.
After closing, Williams and GIP each will own a 50 percent interest in Access GP, which holds a 2 percent general partner interest and incentive distribution rights. Williams and GIP have committed to invest up to $1.16 billion in newly issued ACMP limited partner units and will own approximately 25 percent and 43 percent, respectively, of the outstanding ACMP LP units at the time of the transaction closing (depending on certain capital-raising activities of ACMP).
This investment – together with ACMP's planned acquisition of Chesapeake's remaining natural gas and crude-oil gathering assets – significantly expands Williams' economic opportunities in 10 major shale and unconventional producing areas, including the Marcellus, Utica, Eagle Ford, Haynesville, Barnett, Permian, Granite Wash, Colony Wash, Mississippi Lime and Niobrara.
ACMP is an Oklahoma City-based, growth-oriented midstream natural gas services provider that, following its acquisition of Chesapeake's remaining gathering business, will have an average throughput of approximately 3.9 billion cubic feet per day and more than 5,800 miles of gathering pipelines and 8.7 million acres under long-term dedication.
Williams has agreed to acquire GIP's Fund I holdings in ACMP. Those holdings include GIP Fund I's 50 percent interest in Access GP, which owns the 2 percent general partner interest and incentive distribution rights in ACMP, and approximately 34.5 million ACMP subordinated limited partner units for $1.823 billion.
Additionally, Williams and GIP's Fund II each committed to acquire between approximately $350 million and $580 million (depending on certain capital-raising activities of ACMP) of Class B payment-in-kind (PIK) units, Class C subordinated units and potentially common units directly from ACMP to support ACMP's acquisition of the Chesapeake assets. The Class B and C units are convertible at the option of the holder or ACMP into common units on the day after the record date for the distribution to common units for the fiscal quarters ending Dec. 31, 2014, and Dec. 31, 2013, respectively.
GIP is an independent private-equity fund with more than $15 billion under management. The New York-based fund invests globally in infrastructure assets. Its investment in ACMP began in 2009.
Upon closing of these transactions, ACMP will continue to be an independent, publicly traded master limited partnership. ACMP will continue as the operator of the assets and maintain its headquarters in Oklahoma City. ACMP will benefit from the continuity of ACMP's existing, experienced leadership team and employees, including those associated with the assets ACMP is acquiring from Chesapeake.
Following this transaction, Williams and GIP, each 50 percent owners of Access GP, will have equal governance rights; ACMP will be governed by its board of directors in accordance with its governance documents. Williams will have the right, upon closing of the transactions announced today, to appoint certain of its representatives as directors to Access GP's board of directors.
Post-closing, Williams and GIP will own 25 percent and 43 percent, respectively, of ACMP LP units (depending on certain capital-raising activities of ACMP). Williams and GIP Fund II will maintain a right-of-first-offer on the sale of each other's interests.
Separately, ACMP and Chesapeake are engaged through March 1, 2013, in exclusive negotiations toward a purchase and sale agreement for Chesapeake's remaining Mid-Continent gathering-and-processing business.
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