Williams Companies concern

Wednesday, July 24th 2002, 12:00 am
By: News On 6

For Tulsans, it's a nasty case of deja vu. First Williams Communications, now Williams Companies could be facing bankruptcy.

News on Six business reporter Steve Berg explains if you're a Tulsan, or more importantly a stockholder, you might be wondering, what's the number one warning sign? Here's the answer. The bad news is, the warning sign has already happened. When the company's credit rating was cut to junk status.

Paine Webber's David Healey says that's far and away the biggest sign that a company's on the ropes. "Because what the downgrade of the debt does is it makes it so much more expensive for them to do business and continuing operations. It's just like when you and I get a bad credit rating, it costs us more money to go borrow money."

And Williams needs money. The company reportedly doesn't have enough cash to pay its debts that are coming due this month. Williams is now caught in a vicious cycle where they need to raise money to improve their credit so they can raise money. “With that hanging over them, they now have the problem how are we gonna raise money to get out of this mess and do what we need to do."

It's still just "if", but "if" the company goes bankrupt, it could be the best thing for them, and the absolute worst thing for the shareholders. Just ask the Williams Communications shareholders about that.

Speaking of them, a bankruptcy judge Wednesday has denied their effort to create a shareholders committee. That would have given them a say in the bankruptcy process.