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Williams Companies, Inc. Message Board

  • overlayman overlayman Jun 20, 2002 8:25 AM Flag

    CSFB Opines

    WMB: To Sell Refineries - Asset Sale Part of Plan Goes to $3B High-End

    Credit Suisse First Boston - United States
    Curt Launer
    June 19, 2002
    STRONG BUY
    Target Price: 22.00 (US$)
    Williams Companies (WMB)
    To Sell Refineries: Asset Sale Part Of Plan Goes To $3B High-end

    Summary

    WMB announced late yesterday that it intends to sell its two refineries and
    related assets as part of its balance sheet "fix" plan. The expected sale price
    in excess of $1 billion was stated by WMB to be in conjunction with third party
    expressions of interest in the assets.

    We regard this move very favorably. It removes earnings volatility, focuses WMB on
    core businesses and places WMB's "plan" for asset sales at the high end of the
    $1.5-$3.0 billion range discussed in late May.

    Our estimates are $1.25 per share for '02 and $1.50 for '03 and are unchanged by the
    prospective refinery sale. Our cash flow estimates are $3.30 for '02 and $3.75 for '03.
    Our adjusted book value estimate of $18.00 per share places no value on WMB's
    Merchant unit.

    Our recovery thesis for WMB to "utility multiples" as its plan is executed is
    for a recovery to $15 per share. Our longer-term target of $22 returns WMB to historic
    pipeline multiples of 15x eps and 6x cash flow. We rate WMB Strong Buy.

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