The div.on this hybrid security is still intact and cannot be cut.I spoke with a company representative early this week.In case it has to be suspended it will accumulate until payback of priniciple($25 a sh),rollover or coversion in 2005.In case of bankruptcy,it will have seniority over common stock.A much better investment than common with huge potential return.
Take a look at the 7/22 news releases for WMB. They refer only to the cut in the common dividend to 1 cent. They say nothing about the preferred dividend. I doubt whether there would be any common dividend before the preferred dividends were paid.
Thanks. Dumb me. Talked to a very cautious WMB IR department rep (1 of 7) yesterday morning and neglected to ask.
Deferral clause, yield around 25-30%, better credit risk than common...
Still, the overall credit risk to WMB is still there. I remain very disappointed in WMB management. Why? I realize we had a bit of a perfect storm here (Enron, FERC, CA, etc.), but where was their margin of safety ? They knew how crucial credit ratings are to running the EM&T business. They simply did not conduct their business affairs to withstand a crisis.
During the conference call Malcom said: "...We will live within our means". Isn't that the way most intelligent people conduct their lives ? In fact, its much more important to be relatively conservative when you are responsible for the jobs and pensions of your employees, not to mention the trust of your shareholders.
Now What ?
Shut down/sell the EM&T business (maybe pick it up later with better hedging when credit rating improves), sell non-core businesses, pay down debt, stick to your circle of competence.
I apologize for the soap box. Not directed at you at all. Just amazed at the last few weeks of distracting and unnecessary turmoil.