Williams Partners L.P. has agreed to sell 100 percent of its membership interest in Williams Olefins LLC, which owns an 88.46 percent undivided ownership interest in the Geismar, Louisiana, olefins plant and associated complex, to NOVA Chemicals for $2.1 billion in cash subject to customary closing conditions.
Additionally, upon closing of the transaction, Williams Partners subsidiaries will enter into long-term supply and transportation agreements with NOVA Chemicals to provide feedstock to the Geismar olefins plant via Williams Partners’ Bayou Ethane pipeline system in the U.S. Gulf Coast.
“The Williams Olefins transaction and these announced new supply and transportation agreements fortify our focus on natural gas market fundamentals, reduce our commodity margin exposure and secure our fee-based Gulf Coast transportation business – all consistent with Williams’ strategy to allocate capital to its core, natural gas-focused business,” said Alan Armstrong, chief executive officer of Williams Partners’ general partner. “When the Williams Olefins transaction closes, we expect to be at 97 percent fee-based revenues driven largely by natural gas volumes. Today’s announcements further strengthen our financial position to support Williams’ peer-leading, low-risk growth portfolio.”
Williams Partners plans to use the cash proceeds from the Williams Olefins transaction to pay off its $850 million term loan and to fund a portion of the capital and investment expenditures that are a part of the partnership’s extensive growth portfolio.
“Geismar has been a part of Williams since 1999, and I appreciate the hard work and dedication of the Geismar team through the years,” Armstrong added. “We now look forward to helping NOVA grow profitably here in the Gulf Coast by providing highly reliable feedstock supply via our recently expanded Bayou Ethane Pipeline network.”
The transaction is expected to close in summer 2017.