Williams to Sell 6,000-Mile Pipeline

Monday, September 16th 2002, 12:00 am

By: News On 6

TULSA, Okla. (AP) _ Williams Cos. has agreed to sell its 6,000-mile central natural gas pipeline to a private equity fund sponsored by insurer American International Group Inc. for $380 million in cash.

Under the deal announced Monday, the buyer, Southern Star Central Corp., will also assume $175 million in Williams debt to acquire the pipeline, which transports natural gas from Kansas, Oklahoma, Texas, Wyoming and Colorado to markets in the Midwest. Southern Star is wholly owned by AIG Highstar Capital LP.

Williams announced its intention to sell the pipeline in July as part of a plan to reduce debt and increase cash through asset sales and cost cuts.

``This is a significant transaction that demonstrates the steps we are taking to strengthen our balance sheet and build a more select base of energy companies for the future,'' said Williams chairman, president and chief executive officer Steve Malcolm.

The sale of Central Pipeline, which has a capacity of 2.3 billion cubic feet per day, to Southern Star is expected to close within 60 days, the companies said. The pipeline has about 450 employees and headquarters in Owensboro, Ky.

Williams said the sale should save the company $50 million in capital spending over the next 16 months. Williams also plans to take a pretax loss of approximately $90 million to $95 million in the third quarter.