Williams Companies plans to improve finances by more than $3 billion

<br>TULSA, Okla. (AP) _ Williams Cos. announced plans Tuesday to improve the company's finances by more than $3 billion during the next 12 months and more narrowly focus its business strategy within

Tuesday, May 28th 2002, 12:00 am

By: News On 6

TULSA, Okla. (AP) _ Williams Cos. announced plans Tuesday to improve the company's finances by more than $3 billion during the next 12 months and more narrowly focus its business strategy within its three major business units.

The company said it expects to issue common stock, sell additional assets, increase cash flow and make additional cuts in expenses. The company is evaluating the impact on its near-term earnings targets.

``We must take these steps so that our company can reach its long-term growth potential,'' said Steve Malcolm, chairman, president and CEO. ``We believe we have significant growth opportunities, and we are committed to doing what it takes to realize that potential.

``Clearly, that means adapting to a new world in the energy business that calls for significantly greater financial strength and flexibility.

``We've decided to lead the way with an effective, decisive response rather than deny the market reality, fight it or wait for others to define it,'' he said. ``We are determined to put the industry's issues of credit quality and financial strength behind us and get on with our business.''

Coupled with other financial-enhancement plans the company has announced, the package brings the total expected improvement to some $8 billion.

In Tuesday's announcement, Williams said it plans during the next 12 months to:

_ Issue $1 billion to $1.5 billion in common equity. That amount could be reduced in the event of transactions that boost cash flows.

_ Sell an additional $1.5 billion to $3 billion in assets.

_ Reduce annual costs by $100 million, double the previous goal.

_ Fund base-level capital expenditures, including all mandatory, efficiency and highest-priority growth needs, with cash flow from operations. Fund additional growth opportunities with an appropriate mix of follow-on equity and debt.

_ Use all net proceeds from sales of assets and initial equity to pay down debt or increase liquidity.

Also, Williams will continue to evaluate the level of its common-stock dividend. The company has formed an internal team within its energy marketing and trading business that is dedicated to evaluating potential ``joint venture'' or other alternative structural solutions to enhance that unit's risk-mitigation tools.

So far this year, Williams has sold $1.1 billion in publicly traded equity-linked securities; completed transactions covering approximately $1.7 billion in assets; issued $1.5 billion in bonds and reduced planned capital spending by nearly $2 billion.

The company said it has eliminated nearly all of the so-called ``triggers'' from its major on- and off-balance-sheet financial structures, including the successful resolution of more than $2 billion in liabilities related to its former telecommunications subsidiary. The remaining triggers have a maximum exposure of less than $190 million and will mature next year.

``We can and have taken quick, decisive action to improve our financial strength,'' Malcolm said. ``Now it is clear we need to take additional steps for Williams to grow and thrive. This is not a situation that we or others in our industry can effectively address by merely tweaking things.''