Williams and Williams Partners agreed to sell the companies’ Canadian businesses to Inter Pipeline Ltd. for combined cash proceeds of $1.03 billion. Williams will waive $150 million of incentive distribution rights in the quarter following closing to simplify the of inter-company contracts. After taking into account this waiver, Williams Partners will receive net consideration of about $817 million and Williams will receive net consideration of about $209 million.
At closing, in compliance with certain tax rules pertaining to a sale of Canadian assets by a foreign parent, 25% of the proceeds will be deposited with the Canadian Revenue Authority (CRA) or an escrow agent pending receipt of CRA tax clearance, which is expected in late 2016 or early 2017. The companies do not expect a taxable gain in light of the substantial tax basis in the assets. Williams and Williams Partners plan to use the cash proceeds from the transaction to reduce borrowings on credit facilities.
The transactions are expected to close this year.