Williams and Williams Partners have completed the sale of their Canadian businesses to Inter Pipeline Ltd. The combined cash proceeds amounted to $1.38 billion CAD between the partnership and company.
In connection with the sale, Williams agreed to waive $150 million USD of incentive distribution rights in the quarter following closing to facilitate the partnership’s consent to the sale in recognition of the value of inter-company contracts. After taking into account this waiver, the division of the combined sales price between the entities is ~$839 million USD for Williams Partners and ~$220 million USD for Williams. The partnership and the company plan to use the cash proceeds from the transactions to reduce borrowings on credit facilities.
Certain amounts are required to be withheld and deposited into escrow accounts in accordance with the sale agreements. At closing, $105 million CAD of Williams’ proceeds were placed in escrow pending the receipt of certain credits being pursued by the Canadian businesses. In compliance with certain tax rules pertaining to a sale of Canadian assets by a foreign parent, 25 percent of the total proceeds, after the withholding described above, were deposited with an escrow agent pending receipt of Canadian Revenue Agency tax clearance which is expected in late 2016 or early 2017. The company and the partnership do not expect a taxable gain on the transactions.
TD Securities Inc. acted as lead financial advisor and Barclays acted as a co-advisor to Williams on the transactions.