Telecommunications carrier Williams Communications Group announced Thursday that it raised $1.4 billion through a private debt sale.
The Tulsa, Okla.-based company said the proceeds from the
deal, originally announced March 15, will be spent on telecommunications
showing that carriers still plan to spend cash despite the narrowed
access to funds from the public markets.
"They are in a unique position because they are majority owned by
Williams," said Bill Klein, an analyst at Dresdner Kleinwort
Wasserstein. "It's like going to your Dad for a loan while in college."
Williams Communications Group is 86 percent owned by Williams Companies,
a concern that produces and transports energy. Under the terms of the
sale, the parent company will back the deal and issue its own equity
shares to debt holders in case Williams Communications cannot pay back
the bonds, which are due in 2004.
Klein also added that Williams needed the extra cash to fully fund its
expansion plans, so the additional funding was just a way to catch up with
carriers, such as Qwest Communications International or WorldCom, who probably
don't have to return to
the capital markets.
"They are now set," he said.
The funds also set the stage for the completion of a spinoff of Williams
from its parent company.
Williams plans to distribute the shares it owns of Williams
Communications, a move that its board will vote on during the first half
of this year.
As of the end of 2000, Williams Communications reported long-term debt
of $3.55 billion owed to holders other than Williams. That compares with
$1.99 billion in debt at the end of the previous year.