Williams reaps $1.4 billion from debt sale

The Tulsa, Okla.-based company said the proceeds from the deal, originally announced March 15, will be spent on telecommunications assets, 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 other 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 Communications 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.