A leading master limited partnership, Williams Partners L.P. (WPZ) recently announced a public offering of 11,250,000 common units to increase its liquidity. The partnership also offered a 30-day option to the underwriters to purchase 1,687,500 additional units. The units were priced at $ 49.14 a piece.
Additionally, Williams Partners decided to sell 3,000,000 of its common units in a private placement to Williams Companies Inc. (WMB) – its general partner. The unit price will be same as above, less the underwriting discount and commissions.
The offering is expected to close on Mar 8, 2013. Upon closure, Williams Companies will own 68% of Williams Partners, together with the general-partner interest.
The partnership intends to use the entire proceeds to pay off the outstanding balance under the partnership's credit facility. The borrowings were used for capital expenditures, working capital, partnership distributions and other partnership purposes.
Williams Partners currently retains a Zacks Rank #5 (Strong Sell), implying that it is expected to underperform the broader U.S. equity market over the next 1 to 3 months.
Williams Partners is an energy master limited partnership engaged in gathering, transportation, treating and processing of natural gas as well as fractionation and storage of natural gas liquids.
Last month, the partnership registered fourth-quarter 2012 earnings of 42 cents per limited-partner unit, missing the Zacks Consensus Estimate of 52 cents. Lower NGL margins in the partnership’s business during the quarter led to the deterioration.
However, there are other stocks in the oil and gas sector – Calumet Specialty Products Partners L.P. (CLMT) and Compressco Partners L.P. (GSJK) – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.
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