NEW YORK (Reuters) - Energy Transfer Equity (ETE.N), which is in the process of buying rival pipeline company Williams Companies Inc (WMB.N), said it carried out a private offering of convertible shares to some of its investors in order to help pay for the deal.
ETE said shareholders - including CEO Kelcy Warren - holding more than 329 million of the company’s units elected to receive convertible units in exchange for agreeing to forego some of their distributions for up to nine quarters.
ETE said in its filing disclosed on Wednesday that it had originally intended to allow all of its unitholders to participate in the offering, but Williams would not allow its accounting firm to consent to a public offering.
The total value of the cash-and-stock deal has fallen to around half of the $33 billion transaction announced in September, after a plunge in energy prices since the two sides reached a deal.
CNBC reported late last month that ETE may take the proposed buyout to a shareholder vote.
Williams’ shareholders, disappointed by the deal’s lack of a hefty premium and worried about the combined company’s debt
levels, gave the Energy Transfer offer a poor reception the day
it was announced.
The slide in energy prices has weakened the investment case for pipeline companies such as Williams and Energy Transfer, which need to increase cash flows to fund payouts to investors.
The 329 million convertible units issued represents 31.5 percent of the company’s total outstanding common shares, the company said - with Warren’s participation taking up more than half of the offering.
Reporting by Michael Erman and Michael Flaherty; Editing by Sandra Maler and Andrew Hay