FORM S-4
REGISTRATION STATEMENT
Delaware | 4922 | 73-0569878 | ||
(State or Other Jurisdiction of Incorporation or Organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Gibson, Dunn & Crutcher LLP 1801 California Street, Suite 4100 Denver, Colorado 80202-2641 (303) 298-5700 Attention: Richard M. Russo, Esq. |
Approximate date of commencement of proposed sale to the public: The exchange offer commenced, and the exchange offer prospectus and exchange offer materials were sent to security holders, beginning on September 17, 2004, and the registrant expects to commence the proposed sale pursuant to the exchange offer asAs soon as practicable after this registration statement becomes effective and all other conditions to the exchange offer described herein have been satisfied or waived.effective.
If the securities being registered on this form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o
registrantRegistrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrantRegistrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this |
EXCHANGEOffer (“Williams”) hereby offers to ExchangeOne (1.0000) Sharepay a cash premium to holders (“Holders”) of Common Stock Plus $1.47 in CashforEach Outstanding FELINE PACSSMin the Formany and all of an Income PACSSMUpits $299,987,000 principal amount outstanding 5.50% Junior Subordinated Convertible Debentures due 2033 (the “Debentures”) who elect to an Aggregateconvert their Debentures to shares of 43,900,000 Income PACSWe are offering to exchange one (1.0000) share of ourWilliams’ common stock, plus $1.47$1.00 par value per share (“Common Stock”), in cash for each validly tenderedaccordance with the terms of the Debentures and accepted FELINE PACS in the form of an Income PACS, up to an aggregate of 43,900,000 Income PACS, upon the terms and subject to the conditions set forth in this exchange offer prospectusConversion Offer Prospectus (this “Conversion Offer Prospectus”), and in the related letteraccompanying Letter of transmittal. On October 6, 2004, 44,000,000 Income PACS were outstanding,Transmittal (the “Letter of Transmittal” and no Growth PACS were outstanding. Wetogether with this Conversion Offer Prospectus, the “Offer”). The Debentures are conducting thisnot listed on any national securities exchange offer to reduce our overall indebtedness. Income PACS validly tendered and not withdrawn will be subject to proration as described in this exchange offer prospectus (1) if we determine there is any likelihood that the New York Stock Exchange continued-listing condition described below may not be satisfied based on consultation with the New York Stock Exchange or (2) if more than 43,900,000 Income PACSbut are validly tendered and not withdrawn prior to the expiration date of the exchange offer. The exchange offer will expire at 5:00 p.m., New York City time, on October 18, 2004, unless extended or earlier terminated by us. You may withdraw Income PACS that you tender at any time before the exchange offer expires. In addition, you may withdraw any tendered Income PACS after November 15, 2004, which is 40 business days from September 17, 2004, if we have not accepted themeligible for exchange.The exchange offer is subject to the conditions described in “The Exchange Offer — Conditions to the Exchange Offer,” including, among other things, the effectiveness of the registration statement of which this exchange offer prospectus forms a part and the continued listing of the Income PACStrading on the New YorkPORTAL Market. The Common Stock Exchange after the exchange offer. The New York Stock Exchange will consider de-listing the outstanding Income PACS if, following the exchange, the number of publicly-held outstanding Income PACS is less than 100,000, the number of holders of outstanding Income PACS is less than 100, the aggregate market value of the outstanding Income PACS is less than $1 million, or for any other reason based on the suitability for the continued listing of the outstanding Income PACS in light of all pertinent facts as determined by the New York Stock Exchange. We reserve the right to terminate or extend the exchange offer if any condition of the exchange offer is not satisfied and otherwise to amend the exchange offer in any respect.The Income PACS are listed on the New York Stock Exchange under the symbol “WMB PrI,” and our common stock is listedtraded on the New York Stock Exchange under the symbol “WMB.” On September 16, 2004, the day before commencementThe last reported sale price of the exchange offer,Common Stock on December 28, 2005 was $23.25 per share.Income PACSCommon Stock on the Expiration Date in lieu of issuing any such fractional shares. The “Settlement Date” in respect of any Debentures that are validly surrendered for conversion is expected to be promptly following the Expiration Date. Holders surrendering their Debentures for conversion after 5:00 p.m., New York Stock Exchange was $13.34 per Income PACS and the last reported sale price of our common stockCity time, on the New York Stock Exchange was $12.05 per share. On October 7, 2004,Expiration Date will not be eligible to receive the last reported sale priceConversion Consideration.Income PACS on the New YorkDebentures and an investment in Williams’ Common Stock Exchange was $14.20 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.83 per share. The shares of our common stock to be issued in the exchange offer have been approved for listing on the New York Stock Exchange.We urge you to carefully read theinvolves risks. See “Risk Factors” section beginning on page 15 before6 for a discussion of issues that you make any decision regardingshould consider with respect to the exchange offer.Offer.
You must make your own decision whether to tendersurrender any Income PACS inDebentures for conversion pursuant to the exchange offerOffer, and, if so,you surrender Debentures for conversion, the numberprincipal amount of Income PACSDebentures to tender. We do not makesurrender. Neither Williams nor its Board of Directors (the “Board”) makes any recommendation as to whether Holders should surrender their Debentures for conversion pursuant to the Offer.
Securities and Exchange Commission or any state securities commission. Neither the Securities and Exchange Commission nor any state securities commission has approvedpassed upon the fairness or disapprovedmerits of this transaction or upon the accuracy or adequacy of the securities being offeredinformation contained in this exchange offer, or determined if this exchange offer prospectus is truthful or complete.document. Any representation to the contrary is a criminal offense.
Lead
Dealer Managers
dateDate of this exchange offer prospectusConversion Offer Prospectus is September 17, 2004 (as amended on October 8, 2004).December 29, 2005
“FELINE PACS,” “Income PACS” and “Growth PACS” are service marks of Merrill Lynch & Co., Inc.
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QUESTIONS AND ANSWERS ABOUT THE EXCHANGE OFFER
These answersIn order to questions that you may have as a holder of FELINE PACS, as well asensure timely delivery, Holders must request the summary that follows, provide an overview of material information regardingfrom Williams no later than five business days before the exchange offer that is included elsewhere or incorporated by reference in this exchange offer prospectus. To fully understand the exchange offer and the other considerations that may be important to your decision about whether to participate in the exchange offer, youExpiration Date.
Conversion Offer Prospectus.
We are making the exchange offer.
Why are we making the exchange offer?
We are making the exchange offer as part of our ongoing strategy to reduce our overall indebtedness. The exchange offer allows us to retire the notes included in the Income PACS instead of having them remain outstanding if a remarketing of the notes is successful. A remarketing of the notes will be “successful” if a “failed remarketing” has not occurred as described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Remarketing.” If a remarketing of the notes included in the Income PACS is successful, the notes will have been sold to third parties, and the notes will remain outstanding as a stand alone security until February 16, 2007, bearing a new interest rate to be established in connection with such successful remarketing as described in the section of this exchange offer prospectus entitled “Description of the Notes — Market Rate Reset.”
What amount of Income PACS is being sought in the exchange offer?
We are offering to exchange up to an aggregate of 43,900,000 of our outstanding Income PACS.
What is an Income PACS and how does it differ from a Growth PACS?
Each Income PACS consists of a unit comprising a purchase contract and either a note or, after a successful remarketing on November 10, 2004, the appropriate applicable ownership interest in a portfolio of zero-coupon U.S. Treasury securities, which we refer to as the Treasury portfolio, that is pledged to secure the settlement of that purchase contract. If a holder of an Income PACS elects to substitute zero-coupon U.S. Treasury securities maturing on February 15, 2005 as pledged securities in substitution Debentures surrendered for the notes or the applicable ownership interest in the Treasury portfolio, as the caseconversion may be the notes or the applicable ownership interest in the Treasury portfolio will be released from the pledge and delivered to the holder. This substitution would cause Income PACS to become Growth PACS. For more information on Income PACS, Growth PACS, how to create Growth PACS and how to recreate Income PACS see the sections of this exchange offer prospectus entitled “Description of FELINE PACS,” “— Creating Growth PACS” and “— Recreating Income PACS.”
What will participating Income PACS holders receive in the exchange offer?
For each Income PACS that you validly tender and that we accept for exchange, you will receive one (1.0000) share of our common stock plus $1.47 in cash upon the terms and subject to the conditions set forth in this exchange offer prospectus and the related letter of transmittal. The portion of the exchange consideration represented by the one (1.0000) share to be received in the exchange offer represents the number of shares of our common stock that you would be obligated to purchase from us on February 16, 2005 for each Income PACS you hold, assuming that the applicable market value of our common stock on that date is less than or equal to $41.25 per share.
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Our common stock and the Income PACS are listed on the New York Stock Exchange under the symbols “WMB” and “WMB PrI,” respectively. On September 16, 2004, the day before commencement of the exchange offer, the last reported sale price per Income PACS on the New York Stock Exchange was $13.34 and the last reported sale price of our common stock on the New York Stock Exchange was $12.05 per share. On October 7, 2004, the last reported sale price of the Income PACS on the New York Stock Exchange was $14.20 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.83 per share.
If I participate by tendering my Income PACS, will I receive the quarterly contract adjustment payments and interest payments that are payable on November 16, 2004 and February 16, 2005?
No. If your Income PACS are validly tendered and accepted for exchange, you will lose your right to receive payments with respect to your Income PACS to be made after completion of the exchange offer, includingwithdrawn at any accrued interest or the accrued portion of the contract adjustment payment.
How does the cash payment I will receive if I tender my Income PACS compare to the payments I would receive on the Income PACS if I do not tender?
The $1.47 cash payment for each Income PACS you validly tender and that we accept for exchange is more than the interest and quarterly contract adjustment payments you will receive for each of your Income PACS if you do not participate in the exchange offer. If you do not participate in the exchange offer, you will receive $0.5625 for each Income PACS on each of November 16, 2004 and February 16, 2005, for a total of $1.125. Except in the circumstances described in the following sentence, you will receive no further quarterly payments after February 16, 2005, because you will have sold your note to a third party in the remarketing or surrendered your note to us to satisfy your stock purchase obligation of $25 for each Income PACS. If you create a Growth PACS or if the first remarketing of the notes fails and you subsequently elect to pay $25 in cash to settle your stock purchase contract instead of using the proceeds of the remarketing or surrendering your note, you will be able to retain the note and receive quarterly interest payments at the reset ratetime up until February 16, 2007 (but not the quarterly contract adjustment payments, which terminate on February 16, 2005).
If a remarketing of the notes is successful, the proceeds of the remarketing will be used to satisfy your stock purchase obligation on February 16, 2005, and to pay the remarketing agent’s fee. The excess proceeds (up to $0.064 per Income PACS assuming a successful remarketing at 100.5% of the Treasury portfolio purchase price), if any, will be remitted to you.
Accordingly, if you do not participate in the exchange offer and hold your Income PACS through February 16, 2005, you will receive, over the period ending on that date, total cash payments of up to $1.189 per Income PACS. If on February 16, 2005, the applicable market value of our common stock is less than or equal to $41.25 per share, you will also receive one (1.000) share of our common stock on that date. If, however, you participate in the exchange offer and we accept your validly tendered Income PACS for exchange, you will receive, for each such Income PACS, $1.47 in cash and one (1.000) share of our common stock upon the closing of the exchange offer.
In addition, if you validly tender your Income PACS and we accept them for exchange, you will be entitled to receive cash dividends on our common stock if, as, and when declared by our board of directors on or after the closing date of the exchange offer. If you do not participate in the exchange offer, you will be entitled to receive cash dividends only after satisfying your stock purchase obligations on February 16, 2005.
How does the amount of common stock I will receive if I tender my Income PACS compare to the amount of common stock I will be obligated to purchase on February 16, 2005 if I do not tender?
The one (1.0000) share of our common stock that you will receive in the exchange offer for each Income PACS validly tendered and accepted for exchange is, based on the current price of the common
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How will fluctuations in the trading price of our common stock and the Income PACS affect the amount I will receive if I tender my Income PACS?
We are offering to exchange one (1.0000) share of our common stock and $1.47 cash for each Income PACS regardless of any fluctuation in the trading price of our common stock or of the Income PACS. If the market price of our common stock declines, the value of the one (1.0000) share you will receive will decline. The trading value of our common stock could fluctuate depending upon any number of factors, including those specific to us and those that influence the trading prices of equity securities generally.
Will we exchange all validly tendered Income PACS?
We may not exchange all of the Income PACS that you tender in the exchange offer. If holders validly tender more than an aggregate of 43,900,000 Income PACS for exchange, we will accept an aggregate of not more than 43,900,000 Income PACS from all holders, prorated among the tendering holders. If we determine that there is any likelihood that the New York Stock Exchange continued-listing condition may not be met, we may accept a pro rata amount of the Income PACS tendered in the exchange offer to ensure that the Income PACS continue to be listed on the New York Stock Exchange after the consummation of the exchange offer. Any Income PACS tendered but not accepted because of proration will be returned to you; see the section of this exchange offer prospectus entitled “The Exchange Offer — Priority of Exchanges and Proration.”
May I tender only a portion of the Income PACS that I hold?
Yes. You do not have to tender all of your Income PACS to participate in the exchange offer.
If the exchange offer is consummated and I do not participate in the exchange offer or I do not exchange all of my Income PACS in the exchange offer, how will my rights and obligations under my unexchanged Income PACS be affected?
The terms of your Income PACS, if any, that remain outstanding after the consummation of the exchange offer will not change as a result of the exchange offer. On February 16, 2005, you will be obligated to purchase from us, for the stated amount of $25, a fraction of a newly issued share of our common stock equal to the “settlement rate.” The settlement rate will be calculated based on the price of our common stock and cannot exceed one (1.0000) share, subject to adjustment as described in the section of this exchange offer prospectus entitled “Description of the Purchase Contracts — Anti-Dilution Adjustments.”
How will the exchange offer affect the trading market for the Income PACS that are not exchanged?
If a sufficiently large number of Income PACS do not remain outstanding after the exchange offer, the trading market for the remaining outstanding Income PACS may be less liquid and more sporadic, and market prices may fluctuate significantly depending on the volume of trading in Income PACS.
What do we intend to do with the Income PACS that are tendered in the exchange offer?
Income PACS accepted for exchange by us in the exchange offer will be retired and cancelled. We intend to treat the exchange of your Income PACS for shares of our common stock plus cash pursuant to the exchange offer as a cash settlement of the purchase contract and a redemption of the note for its adjusted issue price. See the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences — Federal Income Tax Treatment of Participation in the Exchange.”
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Are we making a recommendation regarding whether you should tender in the exchange offer?
We are not making any recommendation regarding whether you should tender or refrain from tendering your Income PACS in the exchange offer.
Accordingly, you must make your own determination as to whether to tender your Income PACS in the exchange offer and, if so, the number of Income PACS to tender. Before making your decision, we urge you to carefully read this exchange offer prospectus in its entirety, including the information set forth in the section of this exchange offer prospectus entitled “Risk Factors,” and the other documents incorporated by reference in this exchange offer prospectus.
Will the common stock to be issued in the exchange offer be listed for trading?
Yes. The shares of our common stock to be issued in the exchange offer have been approved for listing on the New York Stock Exchange. Generally, the common stock you receive in the exchange offer will be freely tradeable, unless you are considered an “affiliate” of ours, as that term is defined in the Securities Act of 1933. For more information regarding the market for our common stock, see the section of this exchange offer prospectus entitled “Market for Common Stock and Income PACS.”
What are the conditions to the exchange offer?
The exchange offer is conditioned upon:
We may waive certain condition of this exchange offer. If any of the conditions is not satisfied or waived, we will not accept and exchange any validly tendered Income PACS. For more information regarding the conditions to the exchange offer (including conditions we cannot waive), see the section of this exchange offer prospectus entitled “The Exchange Offer — Conditions to the Exchange Offer.”
When does the exchange offer expire?
The exchange offer will expire at 5:00 p.m., New York City time, on October 18, 2004, unless extended or earlier terminated by us.
Under what circumstances can the exchange offer be extended, amended or terminated?
We reserveExpiration Date. In the right to extend the exchange offer for any reason or no reason at all. We also expressly reserve the right, at any time or from time to time, to amend the termsevent of a termination of the exchange offer in any respect priorOffer, the Debentures surrendered for conversion pursuant to the expiration date of the exchange offer. Further, we may be required by law to extend the exchange offer if we make a material change in the terms of the exchange offer or in the information contained in this exchange offer prospectus or waive a material condition to the exchange offer. During any extension of the exchange offer, Income PACS that were previously tendered and not validly withdrawn will remain subject to the exchange offer. We reserve the right, in our sole and absolute discretion, to terminate the exchange offer, at any time prior to the expiration date of the exchange offer, if any condition to the exchange offer is not met. If the exchange offer is terminated, no Income PACS
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How will Irelated materials should be notified if the exchange offer is extended, amended or terminated?
If the exchange offer is extended, amended or terminated, we will promptly issue a press release or another form of public announcement, with the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration date of the exchange offer. For more information regarding notification of extensions, amendments or the termination of the exchange offer, see the section of this exchange offer prospectus entitled “The Exchange Offer — Extension, Delay in Acceptance, Amendment or Termination.”
What risks should I consider in deciding whether or not to tender my Income PACS?
In deciding whether to participate in the exchange offer, you should carefully consider the discussion of risks and uncertainties affecting our business, the Income PACS and our common stock described in the section of this exchange offer prospectus entitled “Risk Factors,” and the documents incorporated by reference in this exchange offer prospectus.
What are the federal income tax consequences of my participating in the exchange offer?
We intend to treat the exchange of your Income PACS for shares of our common stock plus cash pursuantdirected to the exchange offer as a cash settlement of the purchase contract and a redemption of the note for its adjusted issue price. Accordingly, the note component will be redeemed for an amount equal to the fair market value of one share of our common stock as of the date of the exchange plus an amount of cash, which when added to the fair market value of one share of our common stock, equals the adjusted issue price of the note component as of the date of the exchange. The purchase contract component will be cash settled for a payment to us by you equal to the adjusted issue price of the note component minus the sum of the fair market value of one share of our common stock as of the date of the exchange plus $1.47. The redemption of the note component generally will give rise to your recognition of ordinary income or loss equal to the difference between the adjusted issue price of the note component as of the date of the exchange and your adjusted basis in the note component. If you purchased an Income PACS in our original issuance or when the purchase contract component had positive value, you will recognize a capital loss on the settlement of the purchase contract component equal to the amount you are treated as paying to cancel the purchase contract component plus your adjusted basis in the purchase contract component, if any. If you purchased an Income PACS when the purchase contract component had a negative value, you may recognize capital gain or capital loss on the settlement of the purchase contract component. For a detailed discussion, see the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences.”
Are the financial condition and results of operations of Williams relevant to my decision to tender in the exchange offer?
Yes. The price of both our common stock and the Income PACS are closely linked to our financial condition and results of operations. The successful completion of the exchange offer will reduce our debt service obligations and other related commitments. For information about the accounting treatment of the exchange offer, see the section of this exchange offer prospectus entitled “The Exchange Offer — Accounting Treatment.”
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Will Williams receive any cash proceeds from the exchange offer?
No. We will not receive any cash proceeds from the exchange offer.
What amount of expenses will Williams incur to effect the exchange offer?
If the maximum of 43,900,000 Income PACS are validly tendered and accepted, we expect to incur an aggregate of approximately $74 million in cash expenses, including the cash payment portion of the exchange offer consideration, to effect the exchange offer. Approximately $49 million of this amount represents aggregate cash payment in lieu of quarterly interest and contract adjustment payments that would have been payable to holders on November 16, 2004 and February 16, 2005, but that will not be paid to tendering holders because their Income PACS would no longer be outstanding.
How do I tender my Income PACS?
If you beneficially own Income PACS that are held in the name of a broker or other nominee and wish to tender such Income PACS, you should promptly instruct your broker or other nominee to tender on your behalf. To tender Income PACS, JPMorgan Chase Bank, the exchange agent, must receive, prior to the expiration date of the exchange offer, a timely confirmation of book-entry transfer of such Income PACS and a properly completed letter of transmittal or an agent’s message through the automated tender offer program of The Depository Trust Company, which we refer to in this exchange offer prospectus as the “depositary” or “DTC,” according to the procedure for book-entry transfer described in this exchange offer prospectus. For more information regarding the procedures for tendering your Income PACS, see the section of this exchange offer prospectus entitled “The Exchange Offer — Procedures for Tendering Income PACS.”
What happens if some or all of my Income PACS are not accepted for exchange?
If we decide for any reason not to accept some or all of your Income PACS, the Income PACS not accepted by us will be returned to you, at our expense, promptly after the expiration or termination of the exchange offer. In the case of Income PACS tendered by book entry transfer into the exchange agent’s account at DTC, DTC will credit any validly withdrawn or unaccepted Income PACS to your account at DTC. For more information, see the section of this exchange offer prospectus entitled “The Exchange Offer — Return of Unaccepted Income PACS.”
Until when may I withdraw previously tendered Income PACS?
If not previously returned, you may withdraw previously tendered Income PACS at any time until the exchange offer has expired, that is, 5:00 p.m., New York City time, on October 18, 2004, unless extended or earlier terminated by us. In addition, you may withdraw any Income PACS that you tender that are not accepted for exchange by us after November 15, 2004, which is 40 business days from September 17, 2004. For more information, see the section of this exchange offer prospectus entitled “The Exchange Offer — Withdrawals of Tenders.”
How do I withdraw previously tendered Income PACS?
To withdraw previously tendered Income PACS, you are required to deliver a written notice of withdrawal to the exchange agent, which you may deliver by facsimile, or you must comply with the appropriate procedures of DTC’s automated tender offer program. For more information regarding the procedures for withdrawing tendered Income PACS, see the section of this exchange offer prospectus entitled “The Exchange Offer — Withdrawals of Tenders.”
Will I have to pay any fees or commissions if I tender my Income PACS?
If your Income PACS are held through a broker or other nominee who tenders the Income PACS on your behalf (other than those tendered through one of the dealer managers), your broker may charge
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Will my broker receive any fee from Williams if I tender my Income PACS?
If you own 10,000 or fewer Income PACS and they are validly tendered and accepted, we will pay your broker a soliciting dealer fee of an amount equal to $0.0625 per Income PACS. For more information, see the section of this exchange offer prospectus entitled “The Exchange Offer — Fees and Expenses.”
May I participate in the exchange offer by tendering Growth PACS for exchange?
No. We are not offering to exchange any Growth PACS. There are currently no Growth PACS outstanding. If you create Growth PACS and desire to participate in the exchange offer, you may recreate Income PACS from your Growth PACS and then tender the recreated Income PACS in the exchange offer. See the section of this exchange offer prospectus entitled “Description of FELINE PACS — Recreating Income PACS” for a discussion on how to recreate Income PACS from your Growth PACS.
With whom may I talk if I have questions about the exchange offer?
If you haveInformation Agent (as defined below). Any additional questions regarding the exchange offer, please contactOffer should be directed to either of the lead dealer manager, Merrill Lynch & Co. You may call Merrill Lynch & Co. toll free at 1-888-ML4-TNDR (1-888-654-8637) or (212) 449-4914 (collect)Dealer Managers (as defined below). If you have questions regardingContact information for the procedures for tendering inInformation Agent, the exchange offer, require additional exchange offer materials or require assistance in tendering your Income PACS, please contact D.F. King & Co., Inc.,Conversion Agent and the information agent. You may call the information agent toll-free at 1-800-848-2998. You may also write to the information agent or the lead dealer manager at one of their respective addressesDealer Managers is set forth on the back cover of this Conversion Offer Prospectus. Neither the Company nor any of the Dealer Managers, the Trustee (as defined below), the Information Agent or the Conversion Agent makes any recommendation as to whether or not Holders should surrender their Debentures for conversion pursuant to the Offer.
• | to waive any and all conditions to the Offer; | |
• | to extend the Offer; | |
• | to terminate the Offer, but only if any condition to the Offer is not satisfied (see “Terms of the Offer — Conditions to the Offer”); or | |
• | otherwise to amend the Offer in any respect. |
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• | amounts and nature of future capital expenditures; | |
• | expansion and growth of Williams’ business and operations; | |
• | business strategy; | |
• | estimates of proved gas and oil reserves; | |
• | reserve potential; | |
• | development drilling potential; | |
• | cash flow from operations; and | |
• | power and gas prices and demand. |
• | general economic and market conditions; | |
• | changes in laws or regulations; | |
• | continued availability of capital and financing; and | |
• | other factors, most of which are beyond Williams’ control. |
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ThisThe following summary highlights material information contained or incorporated by reference in this exchange offer prospectus.is provided solely for the convenience of the Holders of the Debentures. This summary is not intended to be complete and does not contain allis qualified in its entirety by reference to the full text and more specific details contained elsewhere in this Conversion Offer Prospectus, the Letter of Transmittal and any amendments or supplements hereto or thereto. Holders of the information that you should consider when making a decision regarding the exchange offer. You should carefullyDebentures are urged to read this entire exchange offer prospectus, including “Risk Factors,”Offer in its entirety. Each of the capitalized terms used in this summary and not defined herein has the information we have incorporated by reference intomeaning set forth elsewhere in this exchange offer prospectus before making a decision to participate in the exchange offer.Offer.
OUR COMPANY
We are
The energy industry has substantially changed over the last two years. Those changes have significantly impacted our operations and will continue to impact future operations.Seaboard.
Ourcost efficiencies.
Our
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Nine Months Ended | ||||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | ||||||||||||||||||
(Millions) | ||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||
Power(1) | $ | 6,307.2 | $ | 7,233.8 | $ | 9,272.4 | $ | 13,195.5 | $ | 56.2 | ||||||||||||
Gas Pipeline | 1,038.1 | 1,011.0 | 1,362.3 | 1,368.3 | 1,301.2 | |||||||||||||||||
Exploration & Production | 848.9 | 563.5 | 777.6 | 779.7 | 860.4 | |||||||||||||||||
Midstream Gas & Liquids(1) | 2,341.8 | 2,015.5 | 2,882.6 | 2,784.8 | 1,183.7 | |||||||||||||||||
Other | 19.4 | 26.3 | 32.8 | 72.0 | 124.1 | |||||||||||||||||
Intercompany eliminations | (1,647.9 | ) | (1,353.0 | ) | (1,866.4 | ) | (1,549.3 | ) | (91.1 | ) | ||||||||||||
Total revenues | 8,907.5 | 9,497.1 | 12,461.3 | 16,651.0 | 3,434.5 | |||||||||||||||||
Segment costs and expenses: | ||||||||||||||||||||||
Costs and operating expenses(1) | 7,708.1 | 8,208.2 | 10,751.7 | 15,004.3 | 1,987.7 | |||||||||||||||||
Selling, general and administrative expenses | 226.8 | 257.7 | 355.5 | 421.3 | 575.6 | |||||||||||||||||
Other (income) expense — net | (1.3 | ) | 25.8 | (51.6 | ) | (21.3 | ) | 240.4 | ||||||||||||||
Total segment costs and expenses | 7,933.6 | 8,491.7 | 11,055.6 | 15,404.3 | 2,803.7 | |||||||||||||||||
General corporate expenses | 106.3 | 84.5 | 119.8 | 87.0 | 142.8 | |||||||||||||||||
Operating income (loss): | ||||||||||||||||||||||
Power | (190.3 | ) | 137.3 | 86.5 | 145.3 | (471.7 | ) | |||||||||||||||
Gas Pipeline | 456.7 | 409.6 | 557.6 | 539.6 | 461.3 | |||||||||||||||||
Exploration & Production | 367.9 | 156.2 | 223.9 | 392.5 | 504.9 | |||||||||||||||||
Midstream Gas & Liquids | 343.7 | 305.2 | 552.2 | 178.0 | 153.2 | |||||||||||||||||
Other | (4.1 | ) | (2.9 | ) | (14.5 | ) | (8.7 | ) | (16.9 | ) | ||||||||||||
General corporate expenses | (106.3 | ) | (84.5 | ) | (119.8 | ) | (87.0 | ) | (142.8 | ) | ||||||||||||
Total operating income | 867.6 | 920.9 | 1,285.9 | 1,159.7 | 488.0 | |||||||||||||||||
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Nine Months Ended | |||||||||||||||||||||
September 30, | Year Ended December 31, | ||||||||||||||||||||
2005 | 2004 | 2004 | 2003 | 2002 | |||||||||||||||||
(Millions) | |||||||||||||||||||||
Interest accrued | $ | (495.3 | ) | $ | (662.9 | ) | $ | (834.4 | ) | $ | (1,293.5 | ) | $ | (1,169.2 | ) | ||||||
Interest capitalized | 4.3 | 5.7 | 6.7 | 45.5 | 27.3 | ||||||||||||||||
Interest rate swap loss | — | (5.3 | ) | (5.0 | ) | (2.2 | ) | (124.2 | ) | ||||||||||||
Investing income (loss) | 44.9 | 31.2 | 48.0 | 73.2 | (113.1 | ) | |||||||||||||||
Early debt retirement costs | — | (252.4 | ) | (282.1 | ) | (66.8 | ) | — | |||||||||||||
Minority interest in income and preferred returns of consolidated subsidiaries | (16.8 | ) | (16.0 | ) | (21.4 | ) | (19.4 | ) | (41.8 | ) | |||||||||||
Other income — net | 12.5 | 19.6 | 26.8 | 40.7 | 24.3 | ||||||||||||||||
Income (loss) from continuing operations before income taxes and cumulative effect of change in accounting principles | 417.2 | 40.8 | 224.5 | (62.8 | ) | (908.7 | ) | ||||||||||||||
Provision (benefit) for income taxes | 168.6 | 43.1 | 131.3 | (5.3 | ) | (290.3 | ) | ||||||||||||||
Income (loss) from continuing operations | 248.6 | (2.3 | ) | 93.2 | (57.5 | ) | (618.4 | ) | |||||||||||||
(1) | As discussed in Note 1 of Notes to Consolidated Financial Statements of the Annual Report, the January 1, 2003, adoption of Emerging Issues Task Force Issue No. 02-3 (“EITF 02-3”) required that revenues and costs of sale from non-derivative contracts and certain physically settled derivative contracts be reported on a gross basis. Prior to the adoption, these revenues were presented net of costs. As permitted byEITF 02-3, 2002 amounts have not been restated. |
Year Ended December 31, | ||||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||||
September 30, 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||||||
Ratio of earnings to fixed charges(a) | 1.86 | 1.29 | — | (b) | — | (b) | 2.36 | 2.48 | ||||||||||||||||
(a) | The ratio has been computed by dividing earnings by fixed charges. For purposes of computing these ratios, earnings means the following: income (loss) from continuing operations before income taxes, minority interest in income (loss) and preferred returns of consolidated subsidiaries, less equity earnings; plus fixed charges (discussed below) and an adjustment to reflect actual distributions from equity investments; less capitalized interest and preferred distributions. Fixed charges means the sum of the following: interest accrued, including a proportionate share from equity-method investees; that portion of rental expense that we believe to represent an interest factor; and the pretax effect of preferred distributions. |
Earnings were inadequate to cover fixed charges by $135.5 million and $944.0 million for the years ended December 31, 2003 and 2002, respectively. |
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The Company | The Williams Companies, Inc. | |
The Offer | ||
Expiration Date | ||
Conversion Consideration | ||
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The | ||
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Withdrawal and Revocation Rights | Debentures may be validly withdrawn at any time up until 5:00 p.m., New York City time, on the Expiration Date. In the event of a termination of the Offer, which can only occur if a condition to the Offer is not satisfied, the Debentures surrendered pursuant to the Offer will be promptly returned to the surrendering Holders. | |
Purpose of the Offer | The purpose of the Offer is to induce the conversion of any and all of the outstanding Debentures to Common Stock. Williams believes that the issuance of Common Stock upon conversion of the Debentures will strengthen Williams’ capitalization by reducing long-term debt. | |
Certain Conditions Precedent to the Offer | Williams’ obligation to pay the Conversion Consideration in respect of Debentures validly surrendered for conversion pursuant to the Offer is conditioned upon the satisfaction of the General Conditions. See “Terms of the Offer — Conditions to the Offer.” |
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Material | For a summary of the material U.S. federal income tax | |
Use of Proceeds | Williams will not receive any proceeds from the Offer. | |
Brokerage Commissions | ||
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Dealer Managers | ||
Information Agent | D.F. King & Co., Inc. is the Information Agent for the Offer. Its address and telephone number are set forth on the back cover of this Conversion Offer Prospectus. | |
JPMorgan Chase Bank, National Association is the Conversion Agent for the Offer. Its address and telephone number are set forth on the back cover of this Conversion Offer Prospectus. | ||
Regulatory Approvals | Williams is not aware of any other material regulatory approvals necessary to complete the Offer, other than the obligation to file a Schedule TO with the Securities and Exchange Commission and otherwise comply with applicable securities laws. | |
No Appraisal Rights | ||
Offer. | ||
Further Information |
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All references in this exchange offer prospectus to “Williams,” the “Company,” “we,” “our,” “ours” and “us” are to The Williams Companies, Inc., not including its subsidiaries, unless the context requires otherwise and except that such references in the sections of this exchange offer prospectus entitled “Summary — Our Company,” “Risk Factors — Risks Related to Our Business,” “— Risks Related to Legal Proceedings and Governmental Investigations,” “— Risks Affecting Our Strategy and Financing
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RISK FACTORS
In considering whether to participate in the exchange offer, you should carefully consider the risksuncertainties described below are not the only ones Williams faces. Additional risks and the other information we have includeduncertainties not presently known or incorporated by reference in this exchange offer prospectus.
that Williams currently believes to be less significant may also adversely affect Williams.
If you do not convert your Debentures, Debentures you retain may become less liquid as a result of the Offer. |
Upon consummation of the Offer, Holders who surrender Debentures for conversion pursuant to the Offer will lose their rights under the Debentures, including their rights to future interest and principal payments with respect to their Debentures and their rights as a creditor of Williams. |
Although Williams has regularly paid dividends on the Common Stock, there is no assurance that dividends will be paid in the future, or that, if paid, dividends would be paid in the same amount or with the same frequency as in the past. |
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The value of the |
We are Williams is offering to exchangepay a fixed number ofcash premium to Holders that convert their outstanding Debentures into shares of our common stock and a fixed dollar amount of cash for each Income PACS.Common Stock. The market price of our common stock has declined approximately 49% since the initial issuance of the Income PACS based on the last reported sale price of our common stock on the New YorkCommon Stock Exchange of $12.83 per share on October 7, 2004, and the market price of our common stock may decline furtherfluctuate widely in the future. If the market price of our common stockthe Common Stock declines, further, the value of the fixed numbershares of sharesthe Common Stock you will receive in exchange forupon conversion of your Income PACSDebentures will decline. The trading value of our common stockthe Common Stock could fluctuate depending upon any number of factors, including those specific to usWilliams and those that influence the trading prices of equity securities generally. The market price of our common stock will likely continue to fluctuate in response to factors including the following,generally, many of which are beyond our control:
In addition, the stock markets in general, including the New York Stock Exchange, experience significant price and trading fluctuations. These fluctuations have resulted in volatility in the market prices of securities that often has been unrelated or disproportionateWilliams’ control. See “— Risks Related to changes in operating performance. These broad market fluctuations may affect adversely the market prices of our notes and our common stock.
In any liquidation, dissolution or winding up of Williams, our common stock would rank below all debt claims against us, including the notes that are part of the Income PACS. As a result, holders of our common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation or dissolution until after our obligations to our debt holders have been satisfied. In addition, holders of shares of our preferred stock, if any, that may be issued will have priority over the holders of our common stock with respect to the distribution of our assets in the event of our liquidation or dissolution.
As a holder of our common stock rather than Income PACS, in addition to surrendering the right to receive quarterly interest and contract adjustment payments, you will forgo the possibility of being
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Holders of Income PACS are entitled to quarterly contract adjustment payments, quarterly interest payments, or both. If your Income PACS are validly tendered and accepted for exchange you will lose the right to receive any contract adjustment or quarterly interest payments to be made after completion of the exchange offer, including any accrued interest or the accrued portion of the contract adjustment payment.
Based upon Williams may redeem all or a portion of the opinionDebentures, at its option, on or after June 1, 2010 at 100% of White & Case LLP, we intendthe principal amount of Debentures being redeemed, plus accrued and unpaid interest, if any, if for at least 20 trading days within the preceding period of 30 consecutive trading days, including the last day in the30-day period, the closing price of Williams’ common stock exceeds 130% of the conversion price. Williams must provide the Holders with at least 30, but no more than 60, days’ notice of its intention to treat the exchange as a transaction in which the note component will be redeemed by us for the adjusted issueredeem any Debentures. The market price of the note component as ofCommon Stock into which the date ofDebentures are convertible may decline significantly between the exchangeExpiration Date and the purchase contract component will be cash settledtime fixed for any redemption by a payment from you to us equal to: (A) the adjusted issue priceWilliams of the note component of the Income PACS as of the date of the exchange; minus (B) the sum of: (x) the fair market value of one share of our common stock as of the date of the exchange; plus (y) $1.47. Redemption of the note component of the Income PACS generally will give rise to your recognition of ordinary income or loss equal to the difference between the adjusted issue price of the note as of the date of the exchange and your adjusted basis in the note. If you purchased an Income PACS in our original issuance of Income PACS or when the purchase contract component had positive value, you will recognize a capital loss equal to the amount you paid to us to cancel the purchase contract plus your adjusted basis in the purchase contract component, if any. If you purchased an Income PACS when the purchase contract component had a negative value, you may recognize a capital gain or a capital loss on the settlement of the purchase contract component, and White & Case LLP has not given its opinion regarding this matter. Your basis in a share of our common stock received on the exchange of an Income PACS pursuant to this treatment will equal the fair market value of the share as of the date of the exchange and your holding period for the share will begin on the day following the date of the exchange.
This treatment is not definitively supported by statutory, judicial or administrative authority and alternative characterizations of the exchange are possible. It is possible that the exchange may be treated as a tax-free recapitalization in which the note component of each Income PACS is exchanged for one share of our common stock, $1.47 in cash, and the cancellation of the purchase contract component of the Income PACS. In such case, you would not recognize a loss, your basis in the common stock received generally would be determined by reference to your adjusted basis in the note component, and your holding period of such stock would include the period that you held the note component. Alternatively, the exchange could possibly be treated as the cash settlement of the purchase contract component and a recapitalization in which the note component is redeemed for one share of our common stock and an amount of cash such that the total consideration for the note component equals the adjusted issue price of the note component. In such case, you would recognize gain or loss with respect to the cash settlement of the purchase contract component, you would not recognize any loss with respect to the redemption of the note component, your basis in the share of our common stock received in the exchange generally would be determined by reference to your adjusted basis in the note component, and your holding period of such share would include the period that you held the note component. We urge you to carefully review the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences.”
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Risks Related to Holding Income PACS After the Exchange Offer
Ifsufficiently large numberrecommendation with regard to whether you should surrender your Debentures for conversion pursuant to the Offer, and Williams has not obtained a third-party determination that the Offer is fair to Holders of Income PACS dothe Debentures. Williams has not remain outstanding afterretained and does not intend to retain any unaffiliated representative to act solely on behalf of the exchange offer,Holders for purposes of negotiating the trading market forterms of this Offer or preparing a report concerning the remaining outstanding Income PACS may be less liquid and market prices may fluctuate significantly depending on the volumefairness of trading in Income PACS. Furthermore, a security with a smaller “float” may command a lower price and trade with greater volatility or much less frequently than would a comparable security with a greater float. This decreased liquidity may also make it more difficult for holders of Income PACS that do not tender to sell their Income PACS.this Offer.If you do not participate inWilliams will withhold 30% of the exchange offer, you will have no rights as a common stockholder.Conversion Consideration payable to non-U.S. Holders.
Until you acquire sharesour common stock upon settlement of your purchase contract associatedthe Conversion Consideration payable to eachnon-U.S. Holder, as defined below, and submit the withheld amount to the Internal Revenue Service unless such Holder provides Williams with the applicable forms to demonstrate exemption from or entitlement to a reduced withholding tax rate. See “Material United States Federal Income PACS, you will not be entitledTax Consequences —Non-U.S. Holders —Conversion Pursuant to any rights with respectthe Offer.”our common stock, including voting rights and rights to receive any dividends or other distributions on our common stock, but you will be subject to all changes affecting the common stock. If you do not tender your Income PACS for exchange, you will only be entitled to rights with respect to our common stock if and when we deliver shares of common stock upon settlement of the Income PACS on February 16, 2005, or as a result of early settlement upon the occurrence of a corporate transaction, as the case may be, and if the applicable record date, if any, for the exercise of rights or the receipt of dividends or other distributions occurs after that date. For example, in the event that an amendment is proposed to our certificate of incorporation or bylaws in connection with a recapitalization of Williams and the record date for determining the stockholders of record entitled to vote on the amendment occurs prior to delivery of our common stock, you will not be entitled to vote on the amendment, although you will nevertheless be subject to any changes in the powers, preferences or special rights of our common stock.Williams’ BusinessIf you do not participate in the exchange offer, your pledged securities will remain encumbered.
Although you are the beneficial owner of the note or Treasury securities or Treasury portfolio, as applicable, underlying your Income PACS, those securities will remain pledged after the exchange offer to secure your obligations under the related purchase contract pursuant to a pledge agreement. Thus, your rights to the pledged securities will remain subject to our security interest. Additionally, even if the purchase contracts are terminated in the event that we become the subject of a case under the U.S. Bankruptcy Code, the delivery of the pledged securities to you may be delayed, as provided in the pledge agreement, because of the commencement of a bankruptcy case and the protections given to debtors in such circumstances.
The purchase contract agreement between the purchase contract agent and us is not qualified as an indenture under the Trust Indenture Act of 1939, and the purchase contract agent is not required to qualify as a trustee under the Trust Indenture Act. The note constituting a part of each Income PACS was issued pursuant to an indenture that has been qualified under the Trust Indenture Act. Accordingly, if you hold Income PACS after the exchange offer, you will not have the benefit of the protections of the Trust Indenture Act other than to the extent applicable to a note included in an Income PACS. The protections generally afforded the holder of a security issued under an indenture that has been qualified under the Trust Indenture Act include:
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We have the option to redeem the notes, on not less than 30 days nor more than 60 days prior written notice, in whole but not in part, at any time before February 16, 2007 if a tax event occurs and continues under the circumstances described in this exchange offer prospectus. A tax event means the receipt by us of an opinion of nationally recognized independent tax counsel experienced in such matters stating that, as a result of: (i) an amendment to, change in, or announced proposed change in, the laws, or any regulations thereunder, of the United States or any political subdivision or taxing authority thereof or therein affecting taxation; (ii) an amendment to or change in an interpretation or application of any such laws or regulations by any legislative body, court, governmental agency or regulatory authority; or (iii) any interpretation or pronouncement that provides for a position with respect to any such laws or regulations that differs from the generally accepted position on January 7, 2002, which is effective or which is announced on or after January 7, 2002, there is more than insubstantial risk that interest or original issue discount on the notes would not be deductible, in whole or in part, by us for U.S. federal income tax purposes. If we exercise this option, we will redeem the notes at the redemption price plus accrued and unpaid interest, if any. If we redeem the notes, we will pay the redemption price in cash to the holders of the notes. If the tax event redemption occurs before November 16, 2004, or before February 16, 2005 if the notes are not successfully remarketed on November 10, 2004 (the third business day immediately preceding November 16, 2004), the redemption price payable to you as a holder of the Income PACS will be distributed to the collateral agent, who in turn will apply an amount equal to the redemption price to purchase the Treasury portfolio on your behalf, and will remit the remainder of the redemption price to you, and the Treasury portfolio will be substituted for the notes as collateral to secure your obligations under the purchase contracts related to the Income PACS. If your notes are not components of Income PACS, you will receive redemption payments directly. The market price for the Income PACS may decline if we substitute the Treasury portfolio of treasury securities as collateral in place of any notes so redeemed. A tax event redemption will be a taxable event to the holders of Income PACS and of the notes held separately.
The trading prices of the Income PACS in the secondary market are directly affected by the trading prices of our common stock, the general level of interest rates and our credit quality. It is impossible to predict whether the price of our common stock or interest rates will rise or fall. Trading prices of our common stock will be influenced by the factors described in the section of this exchange offer prospectus entitled “Risk Factors — Risks Related to the Exchange Offer — The value of the common stock that you receive will decline if the market price of our common stock declines.” Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative value of the common stock underlying the purchase contracts and of the other components of the Income PACS. Any such arbitrage could, in turn, affect the trading prices of the Income PACS that remain outstanding after the exchange offer, the notes and our common stock.
Risks Related to Our Business
The
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To
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• | production is less than expected; | |
• | a change in the difference between published price indexes established by pipelines in which | |
• | the counterparties to |
Electricity, natural gas liquids and natural gas prices are volatile and this volatility could adversely affect |
Our
• | worldwide and domestic supplies of electricity, natural gas, petroleum and related commodities; | |
• | turmoil in the Middle East and other producing regions; | |
• | terrorist attacks; | |
• | weather conditions; | |
• | the level of consumer demand; |
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• | ||
the price and availability of | ||
• | the availability of pipeline capacity; | |
• | the price and level of foreign imports; | |
• | domestic and foreign governmental regulations and taxes; | |
• | ||
• | the overall economic environment; and | |
• | the credit of participants in the markets where products are bought and sold. |
WeWilliams might not be able to successfully manage the risks associated with selling and marketing products in the wholesale energy markets.
Our
ourWilliams’ businesses, including gas transmission and the sale of electric power, can have seasonal characteristics. In many parts of the country, demand for power peaks during the hot summer months, with market prices also peaking at that time. In other areas, demand for power peaks during the winter. In addition, demand for gas and other fuels peaks during the winter. As a result, ourWilliams’ overall operating results in the future might fluctuate substantially on a seasonal basis. The pattern of this fluctuation might changeDemand for gas and other fuels could vary significantly from Williams’ expectations depending on the nature and location of ourWilliams’ facilities and pipeline systems and the terms of ourits power sale agreements and gas transmission arrangements.arrangements relative to demand created by unusual weather patterns.OurWilliams’ investments and projects located outside of the United States expose usit to risks related to laws of other countries, taxes, economic conditions, fluctuations in currency rates, political conditions and policies of foreign governments. These risks might delay or reduce ourWilliams’ realization of value from ourits international projects.
We
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we developWilliams develops or acquireacquires projects, or makemakes investments, economic and monetary conditions and other factors could affect ourits ability to convert ourits earnings denominated in foreign currencies. In addition, risk from fluctuations in currency exchange rates can arise when ourWilliams’ foreign subsidiaries expend or borrow funds in one type of currency, but receive revenue in another. In such cases, an adverse change in exchange rates can reduce ourWilliams’ ability to meet expenses, including debt service obligations. Foreign currency risk can also arise when the revenues received by ourWilliams’ foreign subsidiaries are not in U.S. dollars. In such cases, a strengthening of the U.S. dollar could reduce the amount of cash and income we receiveWilliams receives from these foreign subsidiaries. The hedges and contracts that we have in place to manage foreign currency exchange risks might not be sufficient or we might have some exposures that are not hedged which could result in losses or volatility in our revenues.OurWilliams’ debt agreements and other related transaction documents impose restrictions on usit that may adversely affect ourits ability to operate ourits business.
As of JuneSeptember 30, 2004, we2005, Williams had approximately $9,759.6 million$7.72 billion of indebtednesslong-term debt outstanding, including the current portion, on a consolidated basis. OurCertain of Williams’ debt agreements and other related transaction documents contain covenants that restrict, among other things, ourits ability to:to create liens, sell assets, make certain distributions, repurchase equity and incur additional debt.
In addition, oursome of Williams’ debt agreements and other related transaction documents contain, and other debt agreements and other related transaction documents that we enterit enters into in the future willmay contain, financial covenants and other limitations with which weWilliams will need to comply. OurWilliams’ ability to comply with these covenants may be affected by many events beyond ourits control, and we cannot assure youthere can be no assurance that ourits future operating results will be sufficient to comply with the covenants or, in the event of a default under any of ourits debt agreements and other related transaction documents, to remedy that default.
Although we are currently in compliance Williams’ failure to comply with our financial and otherthe covenants in ourits debt agreements and other related transaction documents our failure to comply with such financial or other covenants could result in events of default. Upon the occurrence of an event of default under ourWilliams’ debt agreements, the lenders could elect to declare all amounts outstanding under a particular facility to be immediately due and payable and terminate all commitments, if any, to extend further credit. By reason of cross-default or cross-acceleration provisions in substantially allcertain of ourits debt agreements, such a default or acceleration could have a wider impact on Williams’ liquidity than might otherwise arise from a default or acceleration of a single debt instrument. If an event of default occurs, and the lenders under the affected debt agreements and other related transaction documents, substantially all of our indebtedness could also become immediately due and payable at that time as well. If the lenders under any of our debt agreements and other related transaction
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In 2002, several class action lawsuits were filed in the U.S. District Court for the Northern District of Oklahoma, alleging violations of various provisions of the Securities Act of 1933 and/or the Securities Exchange Act of 1934 against us and certain of our present and former officers and directors. The majority of the suits allege that we and co-defendants, WilTel Communications, a previously owned subsidiary known as Williams Communications Group, and certain corporate officers, acted jointly and separately to inflate the stock price of both companies. Other suits allege similar causes of action related to the public offering of the FELINE PACS in January 2002. These suits were filed against us, certain corporate officers, members of our board of directors and all of the underwriters, including the dealer managers for this exchange offer. The court ordered consolidation of these cases, and a Consolidated Amended Complaint was filed on behalf of various purchasers of our securities during the period July 24, 2000 through July 22, 2002. That pleading makes several claims against us relating to our former subsidiary Williams Communications Group, our power subsidiary, and various other alleged misrepresentations and omissions. Discovery in the now-consolidated actions is ongoing. See “Legal Proceedings” in our annual report for the year ended December 31, 2003 and our quarterly reports on Form 10-Q for the quarters ended March 31, 2004 and June 30, 2004, in each case as amended, if applicable. Our management has had to expend time addressing the demand of these cases, and we expect that management attention and resources may continue to be diverted in the future, all of which could harm our business.
Risks Affecting Our Strategy and Financing Needs
As a result
future.
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Because |
Our
• | ||
• | capital market conditions generally; | |
• | market prices for electricity and natural gas; | |
• | terrorist attacks or threatened attacks on | |
• | the overall health of the energy industry, including the bankruptcy or insolvency of other energy companies. |
Despite |
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ratios.
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We depend
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The different regional power markets in which |
OurourWilliams’ ability to sell power produced by ourits generating capacity to certain markets if there is insufficient transmission capacity otherwise available. The rules governing the various regional power markets might also change from time to time which could affect ourWilliams’ costs or revenues. Because it remains unclear which companies will be participating in the various regional power markets, or how RTOs will develop and evolve or what regions they will cover, we areWilliams is unable to assess fully the impact that these power markets might have on ourits business.OurWilliams’ gas sales, transmission and storage operations are subject to government regulations and rate proceedings that could have an adverse impact on ourits ability to recover the costs of operating ourits pipeline facilities.
Our
• | transportation and sale for resale of natural gas in interstate commerce; | |
• | rates and charges; | |
• | construction; | |
• | acquisition, extension or abandonment of services or facilities; | |
• | accounts and records; |
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• | depreciation and amortization policies; and | |
• | operating terms and conditions of service. |
Failure of the outsourcing relationship might negatively impact Williams’ ability to conduct its business. |
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Williams’ ability to receive services from outsourcing provider locations outside of the United States might be impacted by cultural differences, political instability or unanticipated regulatory requirements in jurisdictions outside the United States. |
Williams could incur material losses |
We are
We make
Our
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Potential changes in accounting standards might cause |
Recently
The long-term financial condition of |
ourWilliams’ pipeline systems. Low prices for natural gas, regulatory limitations or the lack of available capital for these projects could adversely affect the development of additional reserves and production, gathering, storage and pipeline transmission and import and export of natural gas supplies. Additional natural gas reserves might not be developed in commercial quantities and in sufficient amounts to fill the capacities of ourWilliams’ gathering and processing pipeline facilities.OurWilliams’ drilling, production, gathering, processing and transporting activities involve numerous risks that might result in accidents and other operating risks and costs.
Our
• | blowouts, cratering, and explosions; | |
• | uncontrollable flows of oil, natural gas, or well fluids; |
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• | fires; | |
• | formations with abnormal pressures; |
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• | pollution and other environmental risks; and | |
• | natural disasters. |
Williams implemented an Integrity Management Plan, or IMP, for its gas transmission pipelines in December 2004, as required by the Pipeline Safety Improvement Act. As part of the IMP, Williams identified High Consequence Areas, or HCAs, through which its pipelines run. An HCA is an area where the potential consequence of a gas pipeline accident may be significant or do considerable harm to people or property. Certain segments of Williams’ pipelines run through HCAs. An event such as those described above in an HCA not only could cause considerable harm to people or property, but could have a material adverse effect on Williams’ financial position and results of operations, particularly if the event is not fully covered by insurance.
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Implementation of new Pipeline Safety Improvement Act, or PSIA, regulations requires us to implement an Integrity Management Plan, or IMP, for our gas transmission pipelines by December 2004. As part of the IMP, we must identify High Consequence Areas, or HCA, through which our pipelines run. Although our investigations are ongoing, we believe that certain segments of our pipelines will be determined to run through HCAs. An HCA is defined by the rule as an area where the potential consequence of a gas pipeline accident may be significant or do considerable harm to people or property. Designing and implementing the IMP and identifying HCA’s could result in significant additional costs. There is always the possibility that the assessments related to the IMP would reveal an unexpected condition for which remedial action would be required.
Estimating reserves and future net revenues involves uncertainties and negative revisions to reserve estimates, and oil and gas price declines may lead to impairment of oil and gas assets. |
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The threat of terrorist activities and the potential for continued military and other actions could adversely affect |
ourWilliams’ gas operations. In addition, future acts of terrorism could be directed against companies operating in the United States, and it has been reported that terrorists might be targeting domestic energy facilities. While we areWilliams is taking steps that we believeit believes are appropriate to increase the security at locations where ourits energy assets are located, there is no assurance that weWilliams can completely secure ourits locations or to completely protect them against a terrorist attack. These developments have subjected ourWilliams’ operations to increased risks and, depending on their ultimate magnitude, could have a material adverse effect on ourits business. In particular, weWilliams might experience increased capital or operating costs to implement increased security for ourits energy assets.Historic performance of ourWilliams’ exploration and production business is no guarantee of future performance.
• | regulations and regulatory approvals; | |
• | availability of capital for drilling projects, which may be affected by other risk factors discussed, or incorporated by reference, in this | |
• | cost-effective availability of drilling rigs and necessary equipment; |
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• | availability of cost-effective transportation for products; or | |
• | market risks already discussed, or incorporated by reference, in this |
Our20032004 should not be considered a predictor of future performance. Reserves that are “proven“proved reserves” are those estimated quantities of crude oil, natural gas and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty are recoverable in future years formfrom known reservoirs under existing economic and operating conditions, but should not be considered as a guarantee of results for future drilling projects.OurWilliams’ assets and operations can be affected by weather and other natural phenomena.
Our
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What securities are the subject of the |
What is the purpose of |
What is the market value of the Debentures? |
What is the recent market price of the Common Stock into which the Debentures are convertible? |
20 21 22 23 25 conditions as set forth in “Terms of the Offer — Conditions to the Expiration Date: 27 28 29 30 32 33 34 35 36 37 38 41 “Restricted Payment”: 42 43 Debentures, unless: 44 Debentures, including to: Registration sole Holder of the global debentures. Except as provided below, owners of beneficial interests in the global debentures:A numberprovisionsthe Common Stock on December 28, 2005 was $23.25 per share. Each $50 principal amount of the Debentures is convertible into 4.5907 shares of Common Stock, which is equivalent to a conversion price of $10.8916 per share. See “Price Range of Common Stock and Dividend Policy.”What will I receive in the Offer if I surrender Debentures for conversion and they are accepted? our restated certificateprincipal amount of incorporation, as supplemented, bylawsDebentures converted pursuant to the Offer, you will receive (1) 4.5907 shares of Common Stock issuable upon conversion of the Debentures in accordance with their terms and rights agreement(2) the Conversion Consideration. Williams is not required to issue fractional shares of Common Stock upon conversion of the Debentures. Instead, Williams will pay a cash adjustment based upon the last reported sale price of the Common Stock on the Expiration Date.How does the cash payment I will receive if I surrender Debentures for conversion compare to the payments I would receive on Debentures if I do not surrender them for conversion? Delaware law could make it difficult“Description of the Debentures”) and will continue to have the right to convert your Debentures in accordance with their terms, subject to Williams’ right, on or after June 1, 2010, to redeem all or any portion of the Debentures at 100% of the principal amount of Debentures being redeemed, plus accrued and unpaid interest, if any, if for another company to acquire us and forat least 20 trading days within the preceding period of 30 consecutive trading days, including on the last day in the30-day period, the closing price of Williams’ common stock exceeds 130% of the conversion price; however, you will not be entitled to receive any related takeover premium for our common stock. These provisions include, but are not limitedthe Conversion Consideration to provisions providing for a classified board of directors, providing that directors cannot be removed except for cause and by the affirmative actionpaid upon conversion of the holders of at least three-fourths ofDebentures pursuant to the outstanding shares of our common stock and providing that only our chairman of the board or president or a majority of our board of directors may call a special meeting of the stockholders. See the section of this exchange offer prospectus entitled “Description of Capital Stock.”2919USE OF PROCEEDSWeWill I receive accrued and unpaid interest from and after December 1, 2005 to the Expiration Date? If I surrender my Debentures for conversion, will I receive the $0.075 dividend on the Common Stock declared by the Williams’ Board on November 17, 2005? receive any cash proceeds from the exchange offer. We will pay all expenses relatedbe entitled to the exchange offer, other than any commissions or concessionsdividend on the Common Stock even if you have validly surrendered and not validly withdrawn your Debentures for conversion prior to the record date.How will fluctuations in the trading price of the Common Stock affect the amount I will receive if I surrender Debentures for conversion? any broker or dealer andDebentures converted pursuant to the outOffer, you will receive (1) 4.5907 shares of pocket expensesCommon Stock issuable upon conversion of the dealer managers. Except as otherwise providedDebentures in accordance with their terms and (2) the sectionConversion Consideration. If the market price of this exchange offer prospectus entitled “The Exchangethe Common Stock declines, the value of the shares of Common Stock you will receive will decline. The trading value of the Common Stock could fluctuate depending upon any number of factors, including those specific to Williams and those that influence the trading prices of equity securities generally, many of which are beyond Williams’ control.When will I receive the Conversion Consideration for surrendering my Debentures for conversion pursuant to the Offer? Transfer Taxes,” we will payConditions to the transfer taxes, if any,Offer”), Debentures validly surrendered for conversion in accordance with the procedures set forth herein prior to 5:00 p.m., New York City time, on the exchangeExpiration Date, will, upon the terms and subject to the conditions of any Income PACS.MARKET FOR COMMON STOCK AND INCOME PACSOur common stockthe Offer, be accepted for conversion and payment by the Income PACS areCompany of the Conversion Consideration, and payments will be made therefor promptly on the Settlement Date. Williams intends to deposit the Conversion Consideration with the Conversion Agent or return Debentures surrendered for Conversion pursuant to the Offer, as applicable, on the third business day following the Expiration Date. If the Offer is not consummated, no such conversion will occur and no payments will be made. Unless the Offer is terminated, all conditions to the Offer will be either satisfied or waived by the Company on or prior to the Expiration Date.Will the Common Stock I receive upon conversion of the Debentures be freely tradable? symbols “WMB”symbol “WMB.” Generally, the Common Stock you will receive upon conversion will be freely tradable, unless you are an affiliate of Williams, as that term is defined in the Securities Act, or you acquired your Debentures from an affiliate of Williams in an unregistered transaction.Can I still convert my Debentures into shares of Common Stock if I do not participate in the Offer? “WMB PrI,Williams makes the election described above, subject to adjustment for certain events. See “Description of Debentures — Conversion Rights.”If the Offer is consummated and I do not participate or I do not surrender all of the Debentures that I hold, how will my rights and obligations under the Debentures be affected? Are any Debentures held by the Company’s officers or directors? Is Williams making a recommendation regarding whether I should surrender my Debentures for conversion pursuant to the Offer? respectively.and the other documents incorporated by reference herein.Does Williams have the authority to issue the Common Stock upon conversion of the Debentures? What are the conditions to the Offer? When does the Offer expire? Under what circumstances can the Offer be extended, amended or terminated? How will I be notified if the Offer is extended, amended or terminated? What risks should I consider in deciding whether or not to surrender my Debentures for conversion pursuant to the Offer? What are the material United States federal income tax consequences of the Offer? Will the Company receive any proceeds from the Offer? How do I surrender my Debentures for conversion pursuant to the Offer? May I surrender for conversion only a portion of the Debentures that I hold? What happens if some or all of my Debentures are not accepted for conversion? What is the deadline and what are the procedures for withdrawing previously surrendered Debentures? Who do I call if I have any questions on how to surrender my Debentures for conversion or any other questions relating to the Offer? sets forthshows the high and low sales pricereported sale prices and dividends declaredpaid per share of our common stock and high and low sales price per Income PACS on the New YorkCommon Stock Exchange duringin the periods shown:consolidated transaction reporting system in “The Dow Jones News Retrieval Service” for the stated calendar quarter. Common Stock Income PACS High Low Dividends High Low First Quarter $ 26.35 $ 14.05 $ 0.20 $ 26.15 $ 17.50 Second Quarter 24.41 5.30 0.20 26.39 11.50 Third Quarter 6.73 0.78 0.01 12.90 3.45 Fourth Quarter 3.10 1.30 0.01 8.30 6.05 First Quarter $ 4.84 $ 2.51 $ 0.01 $ 9.80 $ 7.75 Second Quarter 9.04 4.63 0.01 13.53 9.40 Third Quarter 9.57 6.05 0.01 13.44 9.82 Fourth Quarter 10.73 8.79 0.01 14.80 12.00 First Quarter $ 11.47 $ 8.49 $ 0.01 $ 14.86 $ 11.95 Second Quarter 12.36 9.56 0.01 14.15 12.36 Third Quarter 12.67 11.36 0.01 14.54 12.79 Fourth Quarter (through October 7, 2004) 13.00 12.04 — 14.44 13.45 High Low Dividends 2005 Fourth Quarter (through December 28, 2005) $ 25.72 $ 19.54 $ 0.075 (1) Third Quarter 25.32 18.91 0.075 Second Quarter 19.40 15.62 0.05 First Quarter 19.48 15.18 0.05 2004 Fourth Quarter 17.18 12.04 0.05 Third Quarter 12.67 11.36 0.01 Second Quarter 12.36 9.56 0.01 First Quarter 11.47 8.49 0.01 2003 Fourth Quarter 10.73 8.79 0.01 Third Quarter 9.57 6.05 0.01 Second Quarter 9.04 4.63 0.01 First Quarter 4.84 2.51 0.01 (1) Only shareholders of record on December 9, 2005, were entitled to the $0.075 per share dividend on the Common Stock declared by the Board on November 17, 2005 and paid on December 26, 2005. Because the Expiration Date of the Offer follows the record date set by the Board, you will not be entitled to the dividend on the Common Stock even if you have validly surrendered and not validly withdrawn your Debentures for conversion prior to the record date. September 16, 2004, the day before commencement of the exchange offer,December 28, 2005, the last reported sale price of the Income PACS on the New YorkCommon Stock Exchange was $13.34 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.05 per share. On October 7, 2004, the last reported sale price of the Income PACS on the New York Stock Exchange was $14.20 per Income PACS and the last reported sale price of our common stock on the New York Stock Exchange was $12.83$23.25 per share. As of October 6, 2004,December 15, 2005, there were 517,455,520 shares of common stock outstanding, owned by approximately 13,50012,693 record holders of record. Asthe Common Stock.October 6, 2004, there were 44,000,000 Income PACS outstanding. No Growth PACS were outstandingthe Common Stock as of October 6, 2004.September 30, 2005 was $9.00. Future dividends will be payable on our common stock only when, as and if declared by our board of directors, and will be dependent upon business conditions, earnings, our cash requirements and other relevant factors. We do not anticipate any change in our dividend policy in 2004.3024table sets forth consolidatedfinancial data for the nine months ended September 30, 2004 and 2005 (the “Interim Selected Data”) have been derived from the Third Quarter Report and include, in Williams’ management’s opinion, all adjustments necessary to present fairly the data for such periods. The following financial data as of the datesDecember 31, 2004 and 2003 and for the periods presented. The financial data for each of thethree years during the five-year period ended December 31, 2003 have been derived from our consolidated financial statements as audited by Ernst & Young LLP, independent registered public accounting firm. The financial data2004 and the Interim Selected Data are qualified in their entirety by,an integral part of, and should be read in conjunction with, our auditedthe consolidated financial statements and notes thereto in the Annual Report and Third Quarter Report, as well as the related notes thereto and the relatedsections entitled “Management’s Discussion and Analysis of Financial ConditionConditions and Results of Operations” all of which are incorporated herein by reference. All other amounts have been prepared from our financial records. Certain amounts below have been restated or reclassified. See Item 8, “Notes to Consolidated Financial Statements — Note 1 — Description of business, basis of presentation and summary of significant accounting policies” in our annual report on Form 10-Kthe Annual Report for discussion of changes in 2004, 2003 and 2002. Results for the year ended December 31, 2003, as amended, which is incorporated in this exchange offer prospectus by reference. The financial data asyears 2001 and 2000 also include amounts related to the discontinued operations of and for the six months ended June 30, 2003 and June 30, 2004 have been derived from, and should be read in conjunction with,Williams Communications Group, our unaudited consolidated financial statements, the notes thereto and the related “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our quarterly report on Form 10-Q for the quarter ended June 30, 2004, which is incorporated in this exchange offer prospectus by reference.previously owned communications subsidiary (“WilTel”). Six Months Ended June 30 Year Ended December 31 2004 2003(1) 2003 2002 2001 2000 1999 (Unaudited) (Dollars in millions, except per share amounts) Revenues(2) $ 6,114.2 $ 8,388.4 $ 16,644.7 $ 3,393.9 $ 4,899.5 $ 4,859.2 $ 3,558.8 Income (loss) from continuing operations(3) (19.5 ) 70.6 28.2 (597.1 ) 640.5 666.5 87.7 Income (loss) from discontinued operations(4) 11.2 145.9 240.9 (157.6 ) (1,118.2 ) (142.2 ) 68.5 Extraordinary gain(5) — — — — — — 65.2 Cumulative effect of change in accounting principles(6) — (761.3 ) (761.3 ) — — — — Diluted earnings (loss) per common share: Income (loss) from continuing operations (0.04 ) 0.07 — (1.33 ) 1.28 1.49 0.19 Income (loss) from discontinued operations 0.02 0.28 0.46 (0.30 ) (2.23 ) (0.32 ) 0.16 Extraordinary gain — — — — — — 0.15 Cumulative effect of change in accounting principles — (1.45 ) (1.47 ) — — — — Cash dividends per common share 0.02 0.02 0.04 0.42 0.68 0.60 0.60 Net cash provided (used) by operating activities(7) $ 615.1 $ 468.9 $ 770.1 $ (515.3 ) $ 1,828.6 N/A N/A Ratio of earnings to fixed charges(8)(9) — 1.14 1.00 — 2.36 2.48 1.23 31 As of December 31 As of June 30, 2004 2003 2002 2001 2000 1999 (Unaudited) (Dollars in millions) Total assets $ 26,168.4 $ 27,021.8 $ 34,988.5 $ 38,614.2 $ 34,776.6 $ 21,682.1 Short-term notes payable and long-term debt due within one year 276.6 938.5 2,077.1 2,510.4 3,193.2 1,525.1 Long-term debt 9,483.0 11,039.8 11,075.7 8,285.0 6,316.8 6,211.6 Stockholders’ equity 3,998.9 4,102.1 5,049.0 6,044.0 5,892.0 5,585.2 Nine Months Ended September 30, Year Ended December 31, 2005 2004 2004 2003 2002 2001 2000 (Millions, except per share amounts) Revenues(1) $ 8,907.5 $ 9,497.1 $ 12,461.3 $ 16,651.0 $ 3,434.5 $ 4,899.5 $ 4,859.2 Income (loss) from continuing operations(2) 248.6 (2.3 ) 93.2 (57.5 ) (618.4 ) 640.5 666.5 Income (loss) from discontinued operations(3) (1.8 ) 92.6 70.5 326.6 (136.3 ) (1,118.2 ) (142.2 ) Cumulative effect of change in accounting principles(4) — — — (761.3 ) — — — Diluted earnings (loss) per common share: Income (loss) from continuing operations 0.42 (0.01 ) 0.18 (0.17 ) (1.37 ) 1.28 1.49 Income (loss) from discontinued operations — 0.18 0.13 0.63 (0.26 ) (2.23 ) (0.32 ) Cumulative effect of change in accounting principles — — — (1.47 ) — — — Total assets(5) 33,655.8 25,559.1 23,993.0 27,021.8 34,988.5 38,614.2 34,776.6 Short-term notes payable and long-term debt due within one year(5) 122.4 276.6 250.1 938.5 2,077.1 2,510.4 3,193.2 Long-term debt(5) 7,598.7 8,667.1 7,711.9 11,039.8 11,075.7 8,285.0 6,316.8 Preferred interests in consolidated subsidiaries(5) — — — — — 976.4 877.9 Williams obligated mandatorily redeemable preferred securities of Trust(5) — — — — �� — — 189.9 Stockholders’ equity(5)(6) 5,154.4 4,008.7 4,955.9 4,102.1 5,049.0 6,044.0 5,892.0 Cash dividends per common share 0.175 0.03 0.08 0.04 0.42 0.68 0.60 (1) Certain amounts have been reclassified as described in Note 2 to Consolidated Financial Statements contained in our quarterly report on Form 10-Q for the quarter ended June 30, 2004, which is incorporated by reference into this exchange offer prospectus.(2) As discussed in Note 1 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K forof the year ended December 31, 2003, as amended,Annual Report, the adoption of Emerging Issues Task Force Issue No.EITF 02-3 (EITF 02-3) requires that revenues and costs of sale from non-derivative contracts and certain physically settled derivative contracts be reported on a gross basis. Prior to the adoption on January 1, 2003, these revenues were presented net of costs. As permitted byEITF 02-3, prior year amounts havenot been restated. (3) See Note 4 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of asset sales, impairments and other accruals in 2003, 2002 and 2001 and Also, see Note 3 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of write-downs of certain assets related to WilTel Communications, formerly Williams Communications Group, (WilTel) in 2002 and 2001. See Note 1 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K forof the year ended December 31, 2003, as amended,Annual Report for discussion of revenue recognized in 2003 related to the correction of prior period items. (4)(2) See Note 4 of Notes to Consolidated Financial Statements of the Annual Report for discussion of asset sales, impairments and other accruals in 2004, 2003 and 2002. (3) See Note 2 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K forof the year ended December 31, 2003, as amended,Annual Report for the discussion of the 2004, 2003 2002 and 2001 income (losses) from discontinued operations. The2002 income (loss) from discontinued operationsoperations. Results for the years 2001 and 2000 and 1999 relatesalso include amounts related to the discontinued operations of WilTel; Kern River Gas Transmission; Williams Gas Pipelines Central; the Colorado soda ash mining; Mid-America and Seminole pipelines; retail travel centers; bio-energy; Midsouth refinery; Texas Gas Transmission; Williams Energy Partners; Alaska refining, retail and pipeline, Canadian liquids (2000 only) and the Canadian straddle plants (2000 only).WilTel. (5)(4) The extraordinary gain for 1999 relates to the sale of our retail propane business, Thermogas L.L.C.(6) See Note 1 of Notes to Consolidated Financial Statements contained in our annual report on Form 10-K for the year ended December 31, 2003, as amended, for discussion of the 2003 cumulative effect of change in accounting principles.principles includes a $762.5 million charge related to the adoption of EITF 02-3, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities,” slightly offset by $1.2 million related to the adoption of SFAS No. 143, “Accounting for Asset Retirement Obligations.” The $762.5 million charge primarily consists of the fair value of power tolling, load serving, transportation and storage contracts. These contracts did not meet the definition of a derivative and, therefore, are no longer reported at fair value. (7)(5) Includes cash provided by operating activities of discontinued operations of $11.5 million and $64.8 million for the six months ended JuneAt September 30 2004 and 2003, respectively, and $162.2 million, $583.2 million and $461.2 million for the years endedor December 31, 2003, 2002 and 2001, respectively. The amounts for the years ended December 31, 2000 and 1999 as previously reported are not comparable due to the restatement reflected in our annual report on Form 10-K for the year ended December 31, 2003, as amended.appropriate. (8)(6) Earnings were inadequate to cover fixed charges by $14.5 millionStockholders’ equity for 2001 includes the January 2001 common stock issuance, the issuance of common stock for the six months ended June 30, 2004Barrett acquisition and by $909.6 million for the year ended December 31, 2002.impact of the WilTel spinoff.32(9) The ratio has been computed by dividing earnings by fixed charges. For purposes of computing these ratios, earnings means the following: income (loss) from continuing operations before income taxes, minority interest in income (loss) of consolidated subsidiaries, and equity earnings; plus fixed charges (discussed below) and an adjustment to reflect actual distributions from equity investments; less capitalized interest and preferred distributions. Fixed charges means the sum of the following: interest accrued, including a proportionate share from equity-method investees; that portion of rental expense that we believe to represent an interest factor; and the pretax effect of preferred distributions.3326EXCHANGE OFFERPurpose and Effects of the Exchange OfferGeneral We are making the exchange offer as part of our ongoing strategy to reduce our overall indebtedness. The exchange offer allows us to retire the notes included in the Income PACS instead of having them remain outstanding if a remarketing of the notes is successful.Terms of the Exchange Offer We are offering to exchange one (1.0000) share of our common stock plus $1.47 in cash for each validly tendered and accepted FELINE PACS in the form of an Income PACS, up to an aggregate of 43,900,000 Income PACS, uponexchange offer prospectusConversion Offer Prospectus and in the related letterLetter of transmittal. Income PACS validly tenderedTransmittal and not withdrawn will be subjectany supplements or amendments hereto or thereto, Williams hereby offers to proration as describedpay an amount in this exchange offer prospectus (1) if we determine there iscash upon conversion of any likelihood that the New York Stock Exchange continued-listing condition described below may not be satisfied based on consultations with the New York Stock Exchange or (2) if more than 43,900,000 Income PACS are validly tendered and not withdrawn. We are only tendering for Income PACS. We are not tendering for Growth PACS. If you hold Growth PACS and would like to participate in the exchange offer, then before tendering, you must recreate Income PACS from your Growth PACS. See the section of this exchange offer prospectus entitled “Description of FELINE PACS — Recreating Income PACS” for a discussion on how to recreate Income PACS from Growth PACS. Any Income PACS tendered but not accepted because they were not validly tendered shall remain outstanding upon completionall of the exchange offer. Income PACS accepted$299,987,000 outstanding principal amount of the Debentures equal to the Conversion Consideration in the exchange offer, including the underlying purchase contracts and notes, will be retired and cancelled. We intendaddition to treat the exchange of your Income PACS for shares of our common stock plus cashCommon Stock issuable upon conversion pursuant to the exchange offer as a cash settlementoriginal terms of the purchase contractDebentures. Holders that validly surrender and redemption of the notedo not validly withdraw their Debentures for its adjusted issue price. See the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences — Federal Income Tax Treatment of Participation in the Exchange.” By tendering your Income PACS, you will lose your rightconversion prior to receive quarterly contract adjustment payments and interest payments on the notes payable after the completion of the exchange offer.Expiration Date The term “expiration date” means 5:00 p.m., New York City time, on October 18, 2004. However, if we extend the periodExpiration Date will, subject to the terms and conditions of the Offer, receive the Conversion Consideration.exchange offer remains open, the term “expiration date of this exchange offer” means the latest time and date to which the exchange offer is so extended.Source of CashConversion Consideration to be Paid inpaid pursuant to the Exchange Offer If Income PACS aggregating 43,900,000 units, the maximum amount we will or other consideration.exchange, are validly tenderedconversion and accepted for exchange by us, we willto pay an aggregate of approximately $65 million in cash to exchanging holders. We intend to fund the cash componentrelated Conversion Consideration is conditioned upon satisfaction of the exchange consideration from our available cash.ExchangeOffer.” As described therein, subject to applicable securities laws and the terms set forth in this Conversion Offer Notwithstanding any other provision Prospectus, Williams reserves the right, prior to the expiration of the exchange offer toOffer on the contrary, the exchange offer is subject to the following conditions that we may not waive:the registration statement of which this exchange offer prospectus forms a part shall have become effective and no stop order suspending the effectiveness of the registration statement34 • to waive any and no proceedings for that purpose shall have been instituted or be pending, or to our knowledge, be contemplated or threatened by the SEC;•there being no likelihood that the acceptance for exchange of the outstanding Income PACS pursuantall conditions to the exchange offer will cause the outstanding Income PACS to be de-listed from the New York Stock Exchange for any reason; andOffer; • to extend the satisfaction of the following conditions set forth in the dealer manager agreement as of the expiration date of the exchange offer (any of which may be waived by the dealer managers in their discretion):Offer;• to terminate the Offer, but only if any condition to the offer is not satisfied (see “Terms of the Offer — Conditions to the Offer); or • otherwise to amend the Offer in any respect. Valid Surrender Debentures Held by Record Holders Surrender of Debentures Held Through a Custodian Surrender of Debentures Held Through DTC Book-Entry Delivery Procedures Signature Guarantees • by a Holder of Debentures (or by a participant in DTC whose name appears on a security position listing as the accuracy in all material respectsowner of such Debentures) who has not completed the representations and warranties made by usbox marked “Special Issuance Instructions” or the box marked “Special Delivery Instructions” in the dealer manager agreement;Letter of Transmittal or • for the delivery by us to the dealer managersaccount of customary officers’ and secretary’s certificates asa member firm of a registered national securities exchange, a member of the expiration date;National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States (each, an “Eligible Institution”).Backup Withholding Determination of Validity • specify the name of the person who surrendered the Debentures to be withdrawn; • contain the deliverydescription of the Debentures to be withdrawn and the aggregate principal amount represented by us to the dealer managers of a “comfort letter” from our independent registered public accounting firm with respect to certain information contained or incorporated by reference in this exchange offer prospectus;such Debentures; and • be signed by the deliveryHolder of such Debentures in the same manner as the original signature on the Letter of Transmittal by uswhich such Debentures were surrendered (including any required signature guarantees), if any, or be accompanied by (x) documents of transfer sufficient to have the dealer managers of legal opinions rendered by our counsel asTrustee register the transfer of the expiration date.Debentures into the name of the person withdrawing such Debentures and (y) a properly completed irrevocable proxy that authorized such person to effect such revocation on behalf of such Holder. The New York Stock Exchangeconsider de-listing the outstanding Income PACS if, following the exchange, the number of publicly-held Income PACS is less than 100,000, the number of holders of Income PACS is less than 100, the aggregate market valuebe deemed to be not validly surrendered for conversion for purposes of the Income PACS is less than $1 millionOffer. for any other reason based on the suitability for the continued listingperson will be under any duty to give notification of the Income PACSany defects or irregularities in light of all pertinent facts as determined by the New York Stock Exchange. In the event that a significant number of holders tender their Income PACS or a significant number of the Income PACS are tendered in the offer such that we believe there is any likelihood that the Income PACS could be de-listed from the New York Stock Exchange, we may accept a pro rata amount of the Income PACS tendered in order to ensure that the Income PACS continue to be listed on the New York Stock Exchange. Therefore, while we are making this exchange offer for up to 43,900,000 Income PACS, we may not accept 43,900,000 Income PACS if doing so may result in the de-listing of the Income PACS. If the Income PACS are likely to be de-listed, we are required to prorate the offer to ensure that the Income PACS remain listed on the New York Stock Exchange. If we decide to prorate the offer such that we will only accept an aggregate number of Income PACS that is lower than the 43,900,000 Income PACS that we are currently seeking to exchange, we will extend the exchange offer for a period of ten business days and provide holders with notice of withdrawal, or incur any liability for failure to give any such extension as described below under “— Extension, Delay in Acceptance, Amendment or Termination.”notification. In addition, notwithstanding31exchange offerOffer and in addition to (and not in limitation of) Williams’ rights to extend and/or amend the contrary, we willOffer, Williams shall not be required to accept for exchange Income PACS tenderedconversion pursuant to the exchange offerOffer, pay Conversion Consideration in respect of, and may delay the acceptance for conversion and payment of Conversion Consideration in respect of, any Debentures surrendered for conversion pursuant to the Offer, in each event subject toRule 14e-l(c) under the Exchange Act, and may terminate or extend the exchange offerOffer, if any condition to the exchange offer is not satisfied. We may also, subject to Rule 14e-1 under the Securities Exchange Act of 1934, which requires that an offeror pay the consideration offered or return the securities deposited by or on behalf of the holders thereof promptly after the termination or withdrawal of a tender offer, postpone the acceptance for exchange of Income PACS validly tendered and not withdrawn prior to the expiration date of the exchange offer, if any one of the conditions described above is not satisfied or any one of the following conditions has occurred, and the occurrence thereof has not been waived by us in our sole discretion:there shall have been instituted, threatened or be pending any action or proceeding before or by any court, governmental, regulatory or administrative agency or instrumentality, or by any other person, in connection with the exchange offer, that is, or is reasonably likely to be, in our reasonable judgment, materially adverse to our business, operations, properties,occurred:35 (1) there shall have been instituted, threatened or be pending any action or proceeding (or there shall have been any material adverse development to any action or proceeding currently instituted, threatened or pending) before or by any court, governmental, regulatory or administrative agency or instrumentality, or by any other person, in connection with the Offer that, in the sole judgment of Williams, either (a) is, or is reasonably likely to be, materially adverse to the business, operations, properties, condition (financial or otherwise), assets or liabilities of Williams and its subsidiaries, taken as a whole, or prospects, or which(b) would or might in our reasonable judgment, prohibit, prevent, restrict or delay consummation of the exchange offer;Offer; • (2) an order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been proposed, enacted, entered, issued, promulgated, enforced or deemed applicable by any court or governmental, regulatory or administrative agency or instrumentality that, in our reasonablethe sole judgment of Williams, either (a) is, or is reasonably likely to be, materially adverse to the business, operations, properties, condition (financial or otherwise), assets or liabilities of Williams and its subsidiaries, taken as a whole, or (b) would or might prohibit, prevent, restrict or delay consummation of the exchange offer, or that is, or is reasonably likely to be, materially adverse to our business, operations, properties, condition, assets, liabilities or prospects;Offer; • (3) there shall have occurred or be likely to occur any material adverse change to ourevent affecting the business operations, properties, condition, assets, liabilities, prospects or financial affairs;affairs of Williams that, in the sole judgment of Williams, would or might prohibit, prevent, restrict or delay consummation of the Offer; •there (4) the Trustee shall have occurred:objected in any respect to, or taken action that could, in the sole judgment of Williams, adversely affect the consummation of, the Offer or shall have taken any action that challenges the validity or effectiveness of the procedures used by Williams in the making of the Offer or the acceptance for conversion of, or payment of Conversion Consideration in respect of, Debentures surrendered for conversion pursuant to the Offer; or • (5) there has occurred (a) any general suspension of, or limitation on prices for, trading in securities in U.S. securities or financial markets;•any material adverse change in the price of our common stock in United States securities or financial markets;•markets, (b) any decline of more than 20% in the price of the Debentures or the Common Stock since the date of commencement of the Offer, (c) a declaration of a banking moratorium or any suspension of payments in respect toof banks in the United States;•States or other major financial markets, (d) any limitation (whether or not mandatory) by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, or other event that, in ourthe reasonable judgment of the Company, might affect the extension of credit by banks or other lending institutions; or• institutions, (e) a commencement or a materially significant worsening of a war or armed hostilities or other national or international calamity including but not limited to, catastrophic terrorist attacks againstdirectly or indirectly involving the United States or its citizens.(f) in the case of any of the foregoing existing on the date hereof, a material acceleration or worsening thereof. These to the exchange offer are for ourthe sole benefit of Williams and may be asserted by us in our reasonable discretion or may be waived by us, in whole or in part, in our reasonable discretion on or before the expiration date of the exchange offer, whether or not any other condition of the exchange offer also is waived andWilliams regardless of the circumstances giving rise to the failure of any such condition. We have not made a decision as to what circumstances would lead us to waive any such condition and may be waived by Williams, in whole or in part, at any such waiver would depend on circumstances prevailing at the time of such waiver. Any determination by us concerning the events described in this section will be final and binding upon all persons.Extension, Delay in Acceptance, Amendment or Termination We expressly reserve the right to extend the exchange offer for such period or periods as we may determine in our sole discretion from time to time, by giving oral, confirmed in writing, or written noticethe sole discretion of Williams. Notwithstanding the previous sentence, unless the Offer is terminated, all conditions to the exchange agent andOffer will be either satisfied or waived by making public announcement by press releaseWilliams prior to 9:the Expiration Date. The failure by Williams at any time to exercise any of the foregoing rights will not be deemed a waiver of any other right, and each right will be deemed an ongoing right which may be asserted at any time and from time to time, but only prior to the Expiration Date.General a.m.p.m., New York City time, on any record date but on or prior to the next succeeding interest payment date, Holders of such Debentures at the close of business on the record date will receive the interest payable on the corresponding interest payment date notwithstanding the conversion. Therefore, such Debentures, upon surrender for conversion, must be accompanied by payment in next day funds equal to the amount of interest that the registered Holder of such Debentures on such record date is entitled to receive. Notwithstanding the foregoing, no such payment need be made (1) if Williams has specified a redemption date that is after a record date and on or prior to the next interest payment date, (2) if Williams has specified a repurchase date following a change of control that is during such period or (3) to the extent of any overdue interest, if overdue interest exists at the time of conversion with respect to such Debenture.• the principal amount of the Debenture; and • accrued but unpaid interest attributable to the period from the most recent interest payment date to the date of conversion, subject to the fourth preceding sentence above. • Williams issues Common Stock as a dividend or distribution on its Common Stock; • Williams issues to all holders of its Common Stock certain rights or warrants to purchase its Common Stock at less than the then current market value; • Williams subdivides or combines its Common Stock; or • Williams distributes to all holders of its Common Stock, shares of its capital stock, evidences of indebtedness or assets, including securities but excluding: • rights or warrants specified above; • any dividends or distributions in connection with the liquidation or winding up of Williams; • dividends or distributions specified above; and • cash distributions. If Williams distributes capital stock of, or similar equity interests in, its subsidiary or any other business unit of Williams’, then the conversion rate will be adjusted based on the market value of the securities so distributed relative to the market value of Common Stock, in each case based on the average closing sale prices of those securities (where such closing sale prices are available) for the 10 trading days commencing on and including the fifth trading day after the date on which “ex-dividend trading” commences for such distribution on the New York Stock Exchange or such other national or regional exchange or market on which the securities are then listed or quoted; • Williams distributes cash, excluding any dividend or distribution in connection with its liquidation, dissolution or winding up or any quarterly cash dividend on Common Stock to the extent that the aggregate cash dividend per share of Common Stock in any quarter does not exceed the greater of: • the amount per share of Common Stock of the next preceding quarterly cash dividend on the Common Stock to the extent that the preceding quarterly dividend did not require an adjustment of the conversion rate pursuant to this clause, as adjusted to reflect subdivisions or combinations of the Common Stock; and • 10% of the average of the last reported sale price of the Common Stock during the ten trading days immediately prior to the declaration date of the dividend, calculated at the time of each distribution. If an adjustment is required to be made under this clause as a result of a distribution that is a quarterly dividend, the adjustment would be based upon the amount by which the distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant to this clause. If an adjustment is required to be made under this clause as a result of a distribution that is not a quarterly dividend, the adjustment would be based upon the full amount of the distribution; • Williams or one of its subsidiaries makes a payment in respect of a tender offer or exchange offer for Common Stock to the extent that the cash and value of any other consideration included in the payment per share of Common Stock exceeds the closing sale price per share of Common Stock on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer; and • someone other than Williams or one of Williams’ subsidiaries makes a payment in respect of a tender offer or exchange offer in which, as of the closing date of the offer, Williams’ board of directors is not recommending rejection of the offer. The adjustment referred to in this clause will only be made if: • the tender offer or exchange offer is for an amount that increases the offeror’s ownership of Common Stock to more than 25% of the total shares of Common Stock outstanding; and • the cash and value of any other consideration included in the payment per share of Common Stock exceeds the closing sale price per share of Common Stock on the business day next succeeding the last date on which tenders or exchanges may be made pursuant to the tender or exchange offer. However, the adjustment referred to in this clause will generally not be made if as of the closing of the offer, the offering documents disclose a plan or an intention to cause Williams to engage in a consolidation or merger or a sale of all or substantially all of Williams’ assets. • any reclassification of Common Stock; • a consolidation, merger or combination involving Williams; or • a sale or conveyance to another person or entity of all or substantially all of Williams’ property and assets; • the principal amount of the withdrawn Debentures; • if certificated debentures have been issued, the certificate numbers of the withdrawn Debentures, or, if the Holder’s Debentures are not certificated, the Holder’s withdrawal notice must comply with appropriate DTC procedures; and • the principal amount, if any, which remains subject to the repurchase notice. previously scheduled expirationrepurchase date, then, on and after such date:• those Debentures will cease to be outstanding; • interest will cease to accrue; and • all the Holder’s other rights as a Holder will terminate, other than the right to receive the repurchase price upon delivery of the Debentures. exchange offer. During any extensionDebentures has been made or the Debentures have been delivered to the paying agent.exchange offer, all Income PACS previously tenderedExchange Act and not accepted for purchase will remain subjectany other securities laws and regulations thereunder to the exchange offerextent such laws and may, subject toregulations are applicable in connection with the termsrepurchase of the exchange offer,Debentures as a result of a change of control.accepted for exchange by us. We also expressly reservedeemed to have occurred when any of the right, at any time or from time to time, subjectfollowing has occurred:• the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger, other acquisition transaction or a series of such transactions, of shares of Williams’ capital stock entitling that person to exercise 50% or more of the total voting power of all shares of Williams’ capital stock entitled to vote generally in elections of directors, other than any acquisition by Williams, any of Williams’ subsidiaries or future subsidiaries or any of Williams’ employee benefit plans; • the first day on which a majority of the members of the board of directors of Williams are not “continuing directors,” which means, as of any date of determination, any member of the board of directors of Williams who: • was a member of the board of directors throughout the 24 consecutive months preceding the date of determination; or • was nominated for election or elected to the board of directors with the approval of a majority of the continuing directors who were members of the board at the time of such director’s nomination or election; or • the consolidation, combination or merger of Williams with or into any other person, any merger of another person into Williams, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of Williams’ properties and assets to another person, other than: • any transaction: (a) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Williams’ capital stock; and (b) pursuant to which Holders of Williams’ capital stock immediately prior to such transaction are entitled to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Williams’ capital stock entitled to vote generally in elections of directors of the continuing or surviving person immediately after giving effect to such transaction; or • any merger solely for the purpose of changing Williams’ jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of Common Stock of the surviving entity. applicable law, to:Rule 13d-3 promulgated by the SEC under the Securities Exchange Act of 1934 referred to herein as the “Exchange Act”. The term “person” includes any syndicate or group which would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.• the closing sale price per share of the Common Stock for any five full trading days, not including extended hours trading, within the period of ten consecutive trading days ending immediately after the later of the change of control or the public announcement of the change of control, in the case of a change of control under the first bullet point above, or the period of ten consecutive full trading days, not including extended hours trading, ending immediately before the change of control, in the case of a change of control under the third bullet point above, equals or exceeds 110% of the conversion price per share of the Common Stock in effect on each of those trading days, as adjusted; or • at least 90% of the consideration in the transaction or transactions constituting a change of control consists of shares of Common Stock traded or to be traded immediately following such change of control on a national securities exchange or the Nasdaq National Market and, as a result of such delay the acceptance for exchange of Income PACS for administrative purposes, as such may be required by difficulties in determining the final proration percentage, if any, or calculating soliciting dealer fees, subject to and in accordance with applicable law;3639 •waivetransaction or transactions, the Debentures become convertible into such Common Stock and any condition (other than those conditions we have identifiedrights attached thereto.• a default in the payment of designated senior indebtedness occurs and is continuing beyond any applicable period of grace which Williams refers to herein as conditions we cannot waive) or otherwise amend the terms of the exchange offer in any respect prior to the expiration of the exchange offer, by giving oral, confirmed in writing, or written notice of such waiver or amendment to the exchange agent subject to and in accordance with applicable law;a “payment default”; or • terminatea default, other than a payment default, on any designated senior indebtedness occurs and is continuing that permits holders of any of the designated senior indebtedness to accelerate its maturity, or withdrawin the exchange offer if any condition to the exchange offercase of a lease that is not satisfied, by giving oral, confirmed in writing, or written notice of such termination or withdrawal to the exchange agent.designated senior indebtedness, a default occurs and is continuing that permits Other than an extension of the exchange offer or the administrative purposes described above, we are not aware of any circumstance that would cause us to delay acceptance of any validly tendered Income PACS. If we make a material change in the terms of the exchange offer or the information concerning the exchange offer, or waive a material condition of the exchange offer, we will promptly disseminate disclosure regarding the changes to the exchange offer and extend the exchange offer, if required by law, to ensure that the exchange offer remains open a minimum of five business days from the date we disseminate disclosure regarding the changes. If we make a change in the number of Income PACS sought or the amount of consideration offered in the exchange, we will promptly disseminate disclosure regarding the changes and extend the exchange offer, if required by law, to ensure that the exchange offer remains open a minimum of ten business days from the date we disseminate disclosure regarding the changes. Any waiver, amendment or modification will apply to all Income PACS tendered, regardless of when or in what order such Income PACS were tendered. Any extension, amendment or termination will be followed promptly by public announcement thereof, with the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the first business day after the previously scheduled expiration date of the exchange offer. Except as set forth above or as otherwise required by law, without limiting the manner in which we may choose to make any public announcement, we will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release. We expressly reserve the right, in our sole discretion, to terminate the exchange offer if any of the conditions set forth above under “— Conditions to the Exchange Offer” shall have occurred. Any such termination will be followed promptly by a public announcement of such termination. In addition, if we terminate the exchange offer, we will give immediate notice thereof to the exchange agent. If the exchange offer is terminated, withdrawn or otherwise not completed, the consideration will not be paid or become payable to you, even if you have validly tendered your Income PACS in connection with the exchange offer, and any Income PACS you have tendered that we have not accepted for exchange will be returned promptly to you.Priority of Exchanges and ProrationPriority of exchangesUpon the terms and subject to the conditions of the exchange offer, if 43,900,000 or fewer Income PACS are validly tendered and not validly withdrawn on or prior to the expiration date of the exchange offer, we will accept for exchange all validly tendered Income PACS if, and only if, the acceptance of such tendered Income PACS would not result in the de-listing of the Income PACS from the New York Stock Exchange.Upon the terms and subject to the conditions of the exchange offer, if more than 43,900,000 Income PACS are validly tendered and not validly withdrawn on or prior to the expiration date of the exchange offer, we will accept Income PACS from all holders who validly tender Income PACS, on a pro rata basis with appropriate adjustment to avoid fractional units as described below under “ — Proration.”3740In addition, if we determine that there is any likelihood that the New York Stock Exchange continued-listing condition may not be met, we may accept a pro rata amount of the Income PACS tendered in the exchange offer to ensure that the Income PACS continue to be listed on the New York Stock Exchange after the consummation of the exchange offer. Any Income PACS tendered but not accepted because of proration will be returned to you. We will announce this proration percentage, if it is necessary, after the expiration date of exchange offer.ProrationIf, for any reason, proration of tendered Income PACS is required, we will determine the final proration factor promptly after the expiration date of the exchange offer in a manner consistent with Rule 13e-4(f)(3) of the Securities Exchange Act of 1934. Proration for each holder validly tendering Income PACS will be based on the ratio of the number of Income PACS validly tendered by the holder to the total number of Income PACS validly tendered by all holders. This ratio will be applied to holders tendering Income PACS to determine the number of Income PACS, rounded up or down as nearly as practicable to the nearest whole unit, that will be purchased from each holder pursuant to the exchange offer. For instance, if 44,000,000 Income PACS are validly tendered and not withdrawn, the proration factor would be 99.772% (43,900,000 divided by 44,000,000). Accordingly, a holder who validly tendered 100,000 Income PACS would have 99,772 Income PACS accepted for exchange by us (99.772% multiplied by 100,000), and we would return 228 Income PACS to such holder. In addition, notwithstanding the foregoing, we may accept all Income PACS tendered by holders who own, beneficially or of record, an aggregate of not more than 99 Income PACS and who have validly tendered and not withdrawn all such Income PACS, before prorating Income PACS validly tendered by others. Because of the potential difficulty in determining the number of Income PACS validly tendered and not withdrawn, we do not expect that we will be able to announce the final proration percentage until three to five business days after the expiration date of the exchange offer. The preliminary results of any proration will be announced by press release promptly after the expiration date of the exchange offer. Holders may obtain preliminary proration information from the dealer managers and the information agent, and may be able to obtain this information from their brokers. In the event of proration, we anticipate that we will commence exchange of the tendered Income PACS promptly after the expiration date of the exchange offer, but no later than five business days after the expiration date of the exchange offer. As described in the section of this exchange offer prospectus entitled “Material U.S. Federal Income Tax Consequences,” you may be required to recognize taxable gain or loss with respect to the notes that are part of your Income PACS. If you are required to recognize taxable gain or loss with respect to such notes, the amount of gain or loss recognized by you will depend in part on the adjusted basis you have in the notes that are part of your Income PACS. If any of your notes has an adjusted basis that is different from any of your other notes and we prorate the tendered Income PACS, you may wish to designate which of the Income PACS are to be purchased in the exchange. The letter of transmittal provides you the opportunity to designate the order of priority in which Income PACS are to be purchased, if we prorate the tendered Income PACS.Procedures for Tendering Income PACSOnly a holder of Income PACS may participate in the exchange offer. If you hold Growth PACS, see the section of this exchange offer prospectus entitled “Description of FELINE PACS — Recreating Income PACS” for a discussion of how to recreate Income PACS from Growth PACS.How to tender if you are a beneficial owner If you beneficially own Income PACS that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender those Income PACS, you should contact the registered holder promptly and instruct it to tender your Income PACS on your behalf.38If you are a beneficial owner and wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your Income PACS, either: •the lessor either to terminate the lease or to require Williams to make appropriate arrangementsan irrevocable offer to register ownershipterminate the lease following an event of default under the lease, and the trustee receives a notice of such default which Williams refers to herein as a “payment blockage notice” from any person permitted to give such notice under the Indenture which Williams refers to herein as a “non-payment default”.• in case of a payment default, on the date on which such default is cured or waived or ceases to exist; and • in case of a non-payment default, on the earlier of the Income PACSdate on which such non-payment default is cured or waived or ceases to exist and 179 days after the date on which the payment blockage notice is received, if the maturity of any of the designated senior indebtedness has not been accelerated or in your name;the case of any lease, 179 days after notice is received if Williams has not received notice that the lessor under such lease has exercised its right to terminate the lease or require Williams to make an irrevocable offer to terminate the lease following an event of default under the lease.• an event has occurred that with the giving of notice or the lapse of time, or both, would constitute an event of default and Williams has not taken commercially reasonable steps to cure the event, referred to herein as a “potential event of default”; or • obtain a properly completed power fromWilliams has given notice of its intention to begin an interest deferral period, as described under “— Option to Extend Interest Payment Period” and has not rescinded the registered holder of your Income PACS.notice, or any deferral period is continuing;The transferregistered ownership may take considerable time and may not be completed priorits subsidiaries to the expiration datedo any of the exchange offer.How to tender generally To participate in the exchange offer,following each referred to herein as a holder must: • complydeclare or pay any dividends on, make distributions regarding, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the capital stock of Williams, other than: (1) purchases of the capital stock of Williams in connection with employee or agent benefit plans or under any dividend reinvestment plan; (2) in connection with the automated tender offer program proceduresreclassifications of DTC described below;any class or series of Williams’ capital stock, or the exchange or conversion of one class or series of Williams’ capital stock for or into another class or series of its capital stock; (3) the purchase of fractional interests in shares of Williams’ capital stock in connection with the conversion or exchange provisions of that capital stock or the security being converted or exchanged; (4) dividends or distributions in Williams’ capital stock, or options, warrants or rights to acquire capital stock, or repurchases or redemptions of capital stock solely from the issuance or exchange of capital stock; (5) any declaration of a dividend in connection with the implementation of a shareholders’ rights plan, or issuances of stock under any such plan in the future, or redemptions or repurchases of any such rights pursuant to any such shareholders’ rights plan; or •complete, sign and date (6) repurchases of Common Stock in connection with acquisitions of businesses made by Williams or any of its subsidiaries, which repurchases are made in connection with the lettersatisfaction of transmittal, or a facsimileindemnification obligations of the lettersellers of transmittal;such businesses; • havemake any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities, including other Debentures, issued by Williams that rank equally with or junior to the signature on the letter of transmittal guaranteed if the letter of transmittal so requires;Debentures; and • mailmake any guarantee payments with respect to any guarantee by Williams of the debt securities, including other guarantees, of any of its subsidiaries, if such guarantee ranks equally with or deliver the letter of transmittal or facsimilejunior in interest to the exchange agent prior to the expiration date of the exchange offer.Debentures. In addition, either: • Williams is the surviving person, or the resulting, surviving or transferee person, if other than Williams, is organized and existing under the laws of the United States, any state thereof or the District of Columbia; • the exchange agent must receiveresulting, surviving or transferee person assumes all of Williams’ obligations under the Income PACS alongDebentures and the Indenture;• after giving effect to such transaction, there is no event of default, and no event which, after notice or passage of time or both, would become an event of default; and • Williams has delivered to the trustee an officers’ certificate and an opinion of counsel each stating that such consolidation, merger, sale, conveyance, transfer or lease complies with these requirements. • failure for 30 days to pay interest or liquidated damages on the Debentures when due, whether or not the payment is prohibited by subordination provisions, provided that a valid extension of the interest payment period by Williams shall not constitute a default in the payment of interest for this purpose; • failure to pay principal of or premium, if any, on the Debentures when due whether at maturity, by declaration or otherwise, whether or not the payment is prohibited by subordination provisions; • default in Williams’ obligation to convert the Debentures into shares of its Common Stock upon exercise of a Holder’s conversion right; • default in Williams’ obligation to repurchase the Debentures at the option of a Holder upon a change of control, whether or not the payment is prohibited by subordination provisions; • default in Williams’ obligation to redeem the Debentures after it has exercised its option to redeem, whether or not the payment is prohibited by subordination provisions; • failure to observe or perform any other covenant contained in the Indenture for 90 days after written notice to Williams from the trustee or the Holders of at least 25% in principal amount of the outstanding Debentures; • failure to pay at final stated maturity, giving effect to any applicable grace periods and any extensions thereof, the principal amount of any other junior subordinated indebtedness of Williams or the acceleration of the final stated maturity of any such other junior subordinated indebtedness, which acceleration is not rescinded, annulled or otherwise cured within 90 days of receipt by Williams of notice from the Holders thereof of any such acceleration, if the aggregate principal amount of such indebtedness, together with the letterprincipal amount of transmittal priorany other such junior subordinated indebtedness in default for failure to pay principal at final stated maturity or which has been accelerated (in each case with respect to which the expiration date of the exchange offer;90-day period described above has elapsed), aggregates $250 million or more at any time; or • the exchange agent must receive, prior to the expiration date of the exchange offer, a timely confirmation of book-entry transfer of such Income PACS into the exchange agent’s account at DTC according to the procedure for book-entry transfer described belowcertain events involving Williams’ bankruptcy, insolvency or a properly transmitted agent’s message.reorganization. To be validly tendered,exchange agent must receive any physical deliverytrustee or the Holders of at least 25% in principal amount of the letter of transmittaloutstanding Debentures may declare the principal, premium, if any, and other required documents at its address indicatedaccrued and unpaid interest, including liquidated damages, if any, on the cover pageoutstanding Debentures to be immediately due and payable. In case of certain events of bankruptcy or insolvency involving Williams, the principal, premium, if any, and accrued and unpaid interest, including liquidated damages, if any, on the Debentures will automatically become due and payable. However, if Williams cures all defaults, except the nonpayment of principal, premium, if any, interest, including liquidated damages, if any, that became due as a result of the letteracceleration, and meet certain other conditions, with certain exceptions, this declaration may be cancelled and the Holders of transmittal.a majority of the principal amount of outstanding Debentures may waive these past defaults.exchange agent must receive such documents priorHolders of a majority of outstanding Debentures will have the right to direct the time, method and place of any proceedings for any remedy available to the expiration datetrustee, subject to limitations specified in the Indenture.exchange offer. The tender by a holder that is not withdrawn prior toDebentures may pursue any remedy under the expiration date of the exchange offer will constitute a binding agreement between the holder and us in accordance with the terms and subject to the conditions described in this exchange offer prospectus andIndenture, except in the letter of transmittal.The method of delivery of the Income PACS, the letter of transmittal and all other required documents to the exchange agent is at your election and risk. Rather than mail these items, we recommend that you use an overnight or hand delivery service. In all cases, you should allow sufficient time to assure delivery to the exchange agent before the expiration date of the exchange offer. You should not send the letter of transmittal or Income PACS to us. You may request your brokers, dealers, commercial banks, trust companies or other nominees to effect the above transactions for you.Signatures and signature guarantees If you are using a letter of transmittal or a notice of withdrawal (as described below), you must have signatures guaranteed by a member firmcase of a registered national securities exchange or of the National Association of Securities Dealers. Inc., a commercial bank or trust company having an office or correspondentdefault in the United States,payment of principal, premium, if any, or an “eligible guarantor institution” withininterest, including liquidated damages, if any, on the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934. In addition, such entity must be a member of39one of the recognized signature guarantee programs identified in the letter of transmittal. Signature guarantees are not required, however, if the Income PACS are tendered: • bythe Holder has given the trustee written notice of an event of default;• the Holders of at least 25% in principal amount of outstanding Debentures make a registered holder who has signedwritten request, and offer reasonable indemnity, to the lettertrustee to pursue the remedy;• the trustee does not receive an inconsistent direction from the Holders of transmittala majority in principal amount of the Debentures;• the Holder or Holders have offered reasonable security or indemnity to the trustee against any costs, liability or expense of the trustee; and • the exchange considerationtrustee fails to be receivedcomply with the request within 60 days after receipt of the request and offer of indemnity.• extend the fixed maturity of any Debenture; • reduce the rate or extend the time for payment of interest, including liquidated damages, if any, of any Debenture; • reduce the principal amount or premium of any Debenture; • reduce any amount payable upon redemption or repurchase of any Debenture; • adversely change Williams’ obligation to redeem any Debenture on a redemption date; • adversely change Williams’ obligation to repurchase any Debenture upon a change of control; • impair the right of a Holder to institute suit for payment on any Debenture; • change the currency in which any Debenture is payable; • impair the exchange offer isright of a Holder to be issued directlyconvert any Debenture or reduce the number of common shares or any other property receivable upon conversion;• reduce the quorum or voting requirements under the Indenture; • subject to such registered holder and such holder has not completedspecified exceptions, modify certain of the box entitled “Special Issuance Instructions”provisions of the Indenture relating to modification or “Special Delivery Instructions” onwaiver of provisions of the letter of transmittal;Indenture; or • reduce the percentage of Debentures required for the account of a member firm of a registered national securities exchange orconsent to any modification of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the United States, or an eligible guarantor institution.Indenture.When you need endorsements or powers of attorney If the letter of transmittalWilliams is signed by a person other than the registered holder of any Income PACS, the Income PACS must be endorsed or accompanied by a properly completed power of attorney. The power of attorney must be signed by the registered holder as the registered holder’s name appears on the Income PACS. A member firm of a registered national securities exchange orpermitted to modify certain provisions of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent inIndenture without the United States, or an eligible guarantor institution must guarantee the signature on the power of attorney.If the letter of transmittal or any Income PACS are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, those persons should so indicate when signing. Unless waived by us, they should also submit evidence satisfactory to us of their authority to deliver the letter of transmittal.Tendering through DTC’s automated tender offer program The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s automated tender offer program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange agent, transmit their acceptanceconsent of the exchange offer electronically. They may do so by causing DTC to transfer the Income PACS to the exchange agent in accordance with its procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming partHolders of the book-entry confirmation, to the effect that: • DTC has received an express acknowledgment from a participant in its automated tender offer program that it is tendering Income PACS that are the subject of such book-entry confirmation;secure any Debentures; • evidence the assumption of Williams’ obligations by a successor person; • add covenants for the protection of the Holders of Debentures; • cure any ambiguity or correct any inconsistency in the Indenture, so long as such participant has received and agrees to be bound byaction will not adversely affect the interests of Holders;• establish the forms or terms of the letterDebentures;• evidence the acceptance of transmittal;appointment by a successor trustee; and • make other changes to the agreement may be enforced againstIndenture or forms or terms of the Debentures, provided no such participant.change individually or in the aggregate with all other such changes has or will have a material adverse effect on the interests of the Holders of the Debentures.Determination of Validity We will determine in our sole discretion all questions as to the validity, form, eligibility, including time of receipt,Form, Denomination and acceptance and withdrawal of tendered Income PACS. We reserve the absolute right to reject any and all Income PACS not validly tendered or any Income PACS whose acceptance by us would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defects or irregularities either before or after the expiration date of the exchange offer. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Income PACS must be cured within a time period that we will determine. Neither we, the exchange agent40nor any other person will have any duty to give notification of any defects or irregularities nor will any of them incur any liability for failure to give such notification. Tenders of Income PACS will not be considered to have been made until any defects or irregularities have been cured or waived. Any Income PACS received by the exchange agent that The Debentures are not validly tendered and as to which the defects or irregularities have not been cured or waived will be returned promptly by the exchange agent to the tendering owners, unless otherwise provided in the letter of transmittal, promptly following the expiration date of the exchange offer.issued:Withdrawals of Tenders You may validly withdraw Income PACS that you tender at any time prior to the expiration date of the exchange offer, which is 5:00 p.m., New York City time, on October 18, 2004, unless we extend it. In addition, if not previously returned, you may withdraw any Income PACS that you tender that are not accepted by us for exchange after November 15, 2004, which is 40 business days from September 17, 2004. For a withdrawal of Income PACS to be effective, a written notice of withdrawal must be received by the exchange agent prior to the expiration date or, if not previously accepted by us, after November 15, 2004, in both cases, at the address set forth on the back cover page of this exchange offer prospectus. Any notice of withdrawal must: • specify the name of the person who tendered the Income PACS to be withdrawn;in fully registered form; • identify the Income PACS to be withdrawn, including the name and number of the account at the applicable book-entry transfer facility to be credited;without interest coupons; and • be signed by the holder in the same manner as the original signature on the letterdenominations of transmittal by which the Income PACS were tendered, including any required signature guarantees, or be accompanied by documents$50 principal amount and integral multiples of transfer sufficient to have the trustee or other applicable person register transfer of the Income PACS into the name of the person withdrawing the tender.$50. If we extend the exchange offer, are delayed in our acceptance of the Income PACS for exchange or are unable to accept Income PACS pursuant to the exchange offer for any reason, then, without prejudice to our rights under the exchange offer, the exchange agent may retain tendered Income PACS and such Income PACS may not be withdrawn except as otherwise provided in this exchange offer prospectus, subject to provisions under the Securities Exchange Act of 1934 that provide that an issuer making an exchange offer shall either pay the consideration offered or return tendered securities promptly after the termination or withdrawal of the exchange offer. If you have tendered your Income PACS through a custodian but wish to withdraw them, you must withdraw your tender through the custodian prior to the expiration date of the exchange offer. All questions as to the validity, form and eligibility, including time or receipt, of notices of withdrawal will be determined by us. Our determination will be final and binding on all parties. Any Income PACS withdrawn will be deemed not to have been validly tendered for purposes of the exchange offer and no exchange consideration will be issued in exchange unless the Income PACS so withdrawn are validly retendered. Any Income PACS that have been tendered but which are effectively withdrawn will be credited by the exchange agent to the appropriate account at DTC without expense to the withdrawing person promptly after withdrawal. Properly withdrawn Income PACS may be retendered by following one of the procedures described above under “— Procedures for Tendering Income PACS” at any time prior to the expiration date of the exchange offer.Acceptance; Exchange of Income PACS We will issue the exchange consideration, and cause it to be delivered, upon the terms of the exchange offer and applicable law in exchange for Income PACS validly tendered in the exchange offer promptly after the expiration date of the exchange offer and our acceptance of the validly tendered Income PACS. For purposes of the exchange offer, we will be deemed to have accepted for exchange validly4145tendered Income PACSGlobal Debenture, Book-Entry Formdefectively tendered Income PACS with respect to which we have waived such defect, when, as and if we give oral, confirmed in writing, or written notice of such acceptance to the exchange agent. We will pay for Income PACS accepted for exchange by us pursuant to the exchange offer by depositing the exchange considerationmore global debentures deposited with the exchange agent.trustee as custodian for The exchange agent will actDepository Trust Company which Williams refers to herein as your agent for the purpose“DTC”, and registered in the name of receiving consideration from us and transmittingCede & Co. as DTC’s nominee. Record ownership of the global debentures may be transferred, in whole or in part, only to another nominee of DTC or to a successor of DTC or its nominee, except as set forth below. A Holder may hold its interests in the global debentures directly through DTC if such consideration to you. In all cases, payment for Income PACS accepted for exchange by us pursuant to the exchange offerHolder is a participant in DTC, or indirectly through organizations which are direct DTC participants if such Holder is not a participant in DTC. Transfers between direct DTC participants will be made,effected in the ordinary way in accordance with DTC’s rules and delivered, promptly afterwill be settled in same-day funds. Holders may also beneficially own interests in the expiration dateglobal debentures held by DTC through certain banks, brokers, dealers, trust companies and other parties that clear through or maintain a custodial relationship with a direct DTC participant, either directly or indirectly.exchange offer and assuming receipt byglobal debentures, Cede & Co. for all purposes will be considered the exchange agent of: • timely confirmation of a book-entry transfer of the Income PACS into the exchange agent’s account at DTC, pursuantwill not be entitled to the procedures set forthhave certificates registered in “— Procedures for Tendering Income PACS — Tendering through DTC’s automated tender offer program” above;their names; • a properly completed and duly signed letterwill not receive or be entitled to receive physical delivery of transmittal, or facsimile copy, or a properly transmitted agent’s message;certificates in definitive form; and • any other documents required bywill not be considered Holders of the letter of transmittal.global debentures.
If we do not accept any Income PACS tendered for exchange pursuant
Under no circumstances will we paybeneficial interest on the exchange consideration regardless of any delay in making such payment.
Return of Unaccepted Income PACS
Any tendered Income PACS that are not accepted for exchange by us, including due to the proration provisions, will be returned without expense to their tendering holder. In the case of Income PACS tendered by book-entry transfer in the exchange agent’s account at DTC accordingglobal security to the procedures described above, such non-exchanged Income PACS will be credited to an account maintained with DTC. These actions will occur promptly after the expiration or termination of the exchange offer.
Compliance With State Securities Laws
We are making the exchange offer to all holders of outstanding Income PACS. We are not aware of any jurisdiction in which the making of the exchange offer is not in compliance with applicable law. If we become aware of any jurisdiction in which the making of the exchange offer would not be in compliance with applicable law, we will make a good faith effort to comply with any such law. If, after such good faith effort, we cannot comply with any such law, the exchange offer will not be made to, nor will tenders of Income PACS be accepted from or on behalf of, the holders of Income PACS residing in any such jurisdiction.
Foreign Securities Matters
No action has been or will be taken in any jurisdiction other than in the United States that would permit a public offering of our shares of common stock, or the possession, circulation or distribution of this exchange offer prospectus or any other material relating to us or our shares of common stock in any jurisdiction where action for that purpose is required. Accordingly, our shares of common stock may not be offered or sold, directly or indirectly, and neither this exchange offer prospectus nor any other offering material or advertisements in connection with our shares of common stockpersons may be distributed or published, in or from any country or jurisdiction except in compliance with any applicable rules and regulations of any such country or jurisdiction. This exchange offer prospectus does not constitute an offer to sell or a solicitation of an offer to buy in any jurisdiction where such offer or solicitation would be unlawful. Persons into whose possession this exchange offer prospectus comes are advised to inform
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limited.
Exchange Agent
Information Agent
D.F. King & Co., Inc. has been appointed as the information agent for the exchange offer. We have agreed to pay the information agent reasonable and customary fees for its services and will reimburse the information agent for its reasonable out-of-pocket expenses. Any questions and requests for assistance or requests for additional copies of this exchange offer prospectus or of the letter of transmittal should be directed to the information agent at the address set forth on the back cover of this exchange offer prospectus.
Dealer Managers
The dealer managers for the exchange offer are Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Banc of America Securities LLC. We have agreed to pay the dealer managers compensation for their services as dealer managers in connectiontransactions with this exchange offer, which compensation is based on the total number of validly tendered and accepted Income PACS and varies from $0.1250 for each validly tendered and accepted Income PACS,Williams. However, if 26,340,000 or fewer Income PACS are accepted, to $0.1375 for each validly tendered and accepted Income PACS, if more than 26,340,000 Income PACS are accepted. Of the 44,000,000 Income PACS that are outstanding, (i) if 26,340,000 Income PACS are validly tendered and accepted, the compensation payable to the dealer managers would be approximately $3.3 million and (ii) if 43,900,000 are validly tendered and accepted, the compensation payable to the dealer managers would be approximately $6.0 million.
The dealer managers and their affiliates have rendered and may in the future render various investment banking, lending and commercial banking services and other advisory services to us and our subsidiaries. The dealer managers have received, and may in the future receive, customary compensation from us and our subsidiaries for such services. The dealer managers may from time to time hold Income PACS and shares of our common stock in their proprietary accounts, and, to the extent they own Income PACS in these accounts at the time of the exchange offer, the dealer managers may tender these Income PACS, although a dealer manager will not be paid a fee for Income PACS tendered by that dealer manager for its own account. During the course of the exchange offer, the dealer managers may trade shares of our common stock for their own account or for the accounts of their customers. As a result, the dealer managers may hold a long or short position in our common stock.
JPMorgan Chase Bank, an affiliate of J.P. Morgan Securities Inc., is the purchase contract agent for the Income PACS and the trustee of the notes formingor any affiliate continues to have any conflicting interest and a part of the Income PACS. JPMorgan Chase Bank has in the past and may in the future receive customary compensation for such services.
Merrill Lynch, Pierce, Fenner & Smith Incorporated is the remarketing agent for the notes forming a part of the Income PACS and will receive a fee in connection with a successful remarketing of such notes in an amount not to exceed 0.25% of the Treasury portfolio price applicable to the notes (for the November 2004 remarketing) or 0.25% of the principal amount of the notes (for the February 2005 remarketing).
Fees and Expenses
We will bear the fees and expenses of soliciting tenders for the exchange offer. We are making the principal solicitation by mail and overnight courier. However, where permitted by applicable law, additional
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Soliciting Dealer Fees. We will pay a fee to soliciting dealers of an amount equal to $0.0625 for each validly tendered and accepted Income PACS in the exchange offer for beneficial owners whose ownership is equal to or fewer than 10,000 units. Any fees payable pursuant to this paragraph shall be paid in full to a soliciting dealer if such soliciting dealer is designated (as herein described), in which case such fees shall be payable in full to such designated soliciting dealer (which designated soliciting dealer may be a dealer manager). Reference to a soliciting dealer shall include a dealer manager designated as a soliciting dealer.
A designated soliciting dealer is an entity obtaining the tender, if the applicable letter of transmittal includes its name in the “Solicited Tenders” box and it is:
Soliciting dealers will include any of the organizations described above even when the activities of such organization in connection with the exchange offer consist solely of forwarding to clients materials relating to the exchange offer, including the applicable letter of transmittal, and tendering Income PACS as directed by beneficial owners thereof. No soliciting dealer is required to make any recommendation to holders of Income PACS as to whether to tender or refrain from tendering in the exchange offer. No assumption is made, in making payment to any soliciting dealer, that its activities in connection with the exchange offer included any activities other than those described in this paragraph. For all purposes noted in all materials relating to the exchange offer, the term “solicit” shall be deemed to mean no more than “processing shares tendered” or “forwarding to customers materials regarding the exchange offer.”
No such soliciting dealer fee shall be payable to a soliciting dealerdefault occurs with respect to the tender of Income PACS by a holder unlessDebentures, the letter of transmittal accompanyingtrustee must eliminate such tender designates such soliciting dealer. No such feeconflict or resign.
By accepting any soliciting dealer fee, a person shall be deemed to have represented that:
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Transfer Taxes
Holders who tender their Income PACS for exchange will not be obligated to pay any transfer taxes. If, however:
then the amount of any transfer taxes, whether imposed on the registered owner or any other persons, will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption from them is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed directly to the tendering holder.
No Appraisal Rights
No appraisal or dissenters’ rights are available to holders of Income PACS under applicable law in connection with the exchange offer.
Accounting Treatment
As consideration for the exchange of the Income PACS, we will issue our common stock and pay cash. We will record as an increase to stockholders’ equity the fair value of the stock purchase contracts and the fair value of the common stock issued. We will reduce our liabilities for (1) the carrying amount of the senior notes retired, (2) the accrued interest on the senior notes retired and (3) the unpaid portion of contract adjustment payments that were recorded when the Income PACS were originally issued. We will record an expense from debt extinguishment in our income statement to the extent that the consideration allocated to the senior notes retired differs from their carrying amount. The amount of expense will depend upon the number of Income PACS tendered and the fair value of our common stock on the date the exchange offer is consummated.
Subsequent Repurchases of Income PACS; Discharge of Notes
Whether or not the exchange offer is consummated, we or our affiliates may from time to time acquire Income PACS, other than pursuant to the exchange offer, through open market purchases, privately negotiated transactions, tender offers, exchange offers or otherwise, upon such terms and at such prices as we may determine, which may be more or less than the prices to be paid pursuant to the exchange offer and could be for cash or other consideration. Rule 13e-4 under the Securities Exchange Act of 1934, as amended, however, prohibits us and our affiliates from purchasing any Income PACS, other than pursuant to the exchange offer, from the date of this exchange offer prospectus until at least ten business days after the expiration or termination of the exchange offer. Any possible future purchases by us will depend on many factors, including the results of the exchange offer, the market price of the Income PACS, our business and financial position, and general economic and market conditions. We do not currently plan to effect any open-market repurchases of Income PACS if such purchases would cause the Income PACS to be de-listed from the New York Stock Exchange. Nothing contained in the exchange offer will prevent us or our affiliates from exercising rights under the indenture to defease or otherwise discharge our obligations thereunder with respect to the indenture and/or the notes by depositing cash and/or securities with the trusteeconstrued in accordance with, the termslaws of the indenture.State of New York.
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The following describes the material differences between the rights of holders of the Income PACS and holders of shares of our common stock. While we believe that the description covers the material differences between the Income PACS and our common stock, this summary may not contain all of the information that is important to you. You should carefully read this entire exchange offer prospectus and the other documents we refer to for a more complete understanding of the differences between being a holder of Income PACS and a holder of shares of our common stock.
Ranking
In any liquidation, dissolution or winding up of Williams, our common stock would rank below all debt claims against Williams, including the notes that are part of the Income PACS. As a result, holders of our common stock will not be entitled to receive any payment or other distribution of assets upon the liquidation or dissolution until after our obligations to our debt holders have been satisfied. In addition, holders of shares of our preferred stock, if any, that may be issued will have priority over the holders of our common stock with respect to the distribution of our assets in the event of our liquidation or dissolution.
Governing Document
As a holder of Income PACS, your rights currently are set forth in, and you may enforce your rights under, the purchase contract agreement, the pledge agreement, the remarketing agreement and the indenture and supplemental indenture governing the notes. After completion of the exchange offer, holders of shares of our common stock will have their rights set forth in, and may enforce their rights under, Delaware General Corporation Law and our restated
Payments
Holders of Income PACS are entitled to quarterly contract adjustment payments, quarterly interest payments, or both, as described in the section of this exchange offer prospectus entitled “Description of FELINE PACS — Current Payments.” Holders of shares of our common stock are entitled to receive ratable dividends as declared by our board of directors out of funds legally available for such purpose.
Redemption
We may redeem the notes that comprise part of the Income PACS upon the occurrence of the tax events described in the section of this exchange offer prospectus entitled “Description of the Notes — Tax Event Redemption.” The shares of our common stock are not subject to redemption.
Listing
The Income PACS are listed and traded on the New York Stock Exchange under the symbol “WMB PrI,” and our common stockamended, Williams is listed and traded on the New York Stock Exchange under the symbol “WMB.” The Growth PACS and the notes are not listed on the New York Stock Exchange or any other national securities exchange.
Voting Rights
Holders of purchase contracts forming part of the Income PACS or Growth PACS, in their capacities as such holders, have no voting rights in respect of our common stock. Holders of shares of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders.
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Maturity
The notes that comprise part of the Income PACS will mature on February 16, 2007, and the purchase contracts that comprise part of the Income PACS will settle on February 16, 2005. The concept of maturity is not applicable to our common stock.
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DESCRIPTION OF CAPITAL STOCK
Common Stock
Under our restated certificate of incorporation, as supplemented, we are authorized to issue up to 30,000,000 shares of preferred stock, par value $1.00 per share, in one or more series. See “Outstanding Preferred Stock” below. As of the date of this prospectus, we areWilliams is authorized to issue up to 960,000,000 shares of common stock, par value $1.00 per share.Common Stock. As of October 6, 2004, weDecember 15, 2005, Williams had 517,455,520589,042,687 issued and outstanding shares of common stock.Common Stock. In addition, as of October 6, 2004, 26,568,497at December 15, 2005, options to purchase 20,504,005 shares of common stockCommon Stock were subject to options or deferred rights outstanding under various stock and compensation incentive plans. On May 15, 2003, Williams’ shareholders approved an amendment to Williams’ 2002 Incentive Plan that allows Williams to commence a one-time only stock option exchange program in which any eligible employee will be given an opportunity to exchange certain outstanding options for a proportionately lesser number of options at a lower exercise price. The program excludes Williams’ directors, executive officers, andnon-U.S. citizen employees working outside the U.S. Williams has the authority, in Williams’ sole discretion, to determine whether and when the exchange program will commence, and to postpone the exchange program for any reason. The number of shares of Common Stock which the Holders of these purchase contracts are required to purchase is subject to adjustment based on the market value of Common Stock. The outstanding shares of Common Stock are fully paid and nonassessable. The holders of our common stockCommon Stock are not entitled to preemptive or redemption rights. Shares of our common stockCommon Stock are not convertible into shares of any other class of capital stock. Computershare Limited, formerly EquiServe Trust Company, N.A. (“Computershare”), is the transfer agent and registrar for our common stock.Common Stock.
We
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Preferred Stock Purchase Rights
On September 21, 2004, weWilliams entered into an amended and restated rights agreement with EquiServe Trust Company, N.A.,Computershare, as rights agent (“EquiServe”).agent. The amended and restated rights agreement amends and restates the rights agreement dated February 6, 1996 between us and EquiServe, as successor in interest to The First Chicago Trust Company of New York, as rights agent, which provides for a dividend of one-third preferred stock purchase right for each outstanding share of our common stock. The amendedWilliams’ Common Stock (subject to adjustment for stock splits, stock dividends and restated rights agreement affects the issued and outstanding common stock of the Company. The rights agreement was amended to:
recapitalizations with respect to Williams’ Common Stock). The rights trade automatically with shares of common stockCommon Stock and become exercisable only under the circumstances described below. The rights are designed to protect the interests of Williams and its stockholders against coercive takeover tactics. The purpose of the rights is to encourage potential acquirers to negotiate with our board of directorsWilliams’ Board prior to attempting a takeover and to provide the boardBoard with leverage in negotiating on behalf of all stockholders the terms of any proposed takeover. The rights may have anti-takeover effects. The rights should not, however, interfere with a merger or other business combination approved by our board of directors.Williams’ Board.
Until a right is exercised, the right does not entitle the holder to additional rights as a Williams’ stockholder, including, without limitation, the right to vote or to receive dividends. Upon becoming exercisable, each right entitles its holder to purchase from usWilliams one two-hundredth of a share of Series A Junior Participating Preferred Stock at an exercise or purchase price of $50.00 per right, subject to adjustment. Each one two-hundredth of a share of Series A Junior Participating Preferred Stock entitles the holder to receive quarterly dividends payable in cash of an amount per share equal to:
• | the greater of (a) $120, or (b) 1,200 times the aggregate per share amount of all cash dividends; plus | |
• | 1,200 times the aggregate per share amount payable in kind of all non-cash dividends or other distributions other than dividends payable in | |
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The dividends on the Junior Participating Preferred Stock are cumulative. Holders of Junior Participating Preferred Stock have voting rights entitling them to 1,200 votes per share on all matters submitted to a vote of ourWilliams’ stockholders.
In general, the rights will not be exercisable until the distribution date, which is the earlier of (a) the date of the first Section 11(a)(ii) Event (as defined below) or the date of the first Section 13 Event (as defined below) and (b) the close of business on the 10th business day (or such later date as our board of directorsWilliams’ Board shall determine) after the commencement of a tender or exchange offer for 15% or more of ourWilliams’ outstanding common stock.Common Stock. Below we referreference to thea person or group acquiring at least 15% of our common stockWilliams’ Common Stock as an acquiring person.
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In the event that at any time after someone becomes an acquiring person prior to the earlier of the redemption date or the expiration date as defined in the amended and restated rights agreement, or the expiration datea Section 13 Event as described in Section 13 of the amended and restated rights agreement (a “Section 13 Event”), either (a) we are involved in a merger or other business combination in which we are not the surviving corporation, (b) we are involved in a merger or other business combination in which we are the surviving corporation but all or a part of our common stock is changed or exchanged, or (c) 50% or more of our assets, cash flow or earning power is sold or transferred,occurs, each right becomes exercisable and each right will entitle its holder to receive common stockCommon Stock of the acquiring personprincipal party having a value equal to two times the exercise price of the right.
The rights will expire at the close of business on September 21, 2014, unless redeemed before that time. At any time prior to the earlier of (a) a Section 11(a)(ii) Event, (b) the date of the first Section 13 Event, and (c) September 21, 2014, our board of directorsWilliams’ Board may redeem the rights in whole, but not in part, at a price of $0.01 per right. Prior to the date of the first Section 11(a)(ii) Event or the date of the first Section 13 Event, weWilliams may amend the amended and restated rights agreement in any respect without the approval of the rights holders. However, after the date of the first Section 11(a)(ii) Event or the date of the first Section 13 Event, the amended and restated rights agreement may not be amended in any way that would adversely affect the holders of rights (other than any acquiring person or a principal party). The Junior Participating Preferred Stock ranks junior to all other series of ourWilliams’ preferred stock as to the payment of dividends and the distribution of assets unless the terms of the series specify otherwise. YouHolders should refer to the applicable provisions of the amended and restated rights agreement, which weWilliams filed with the SEC as Exhibit 4.1 to ourWilliams’ Current Report onForm 8-K filed September 21, 2004.
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The summaryfollowing discussion sets forth the opinion of counsel to the Company, Gibson, Dunn & Crutcher LLP, regarding the material U.S. federal income tax consequences of conversion pursuant to the Offer. This discussion deals only with Debentures and Common Stock held as capital assets (generally, property held for investment) by a beneficial owner.
The FELINE PACS were issued under a purchase contract agreement between JPMorgan Chase Bank, the purchase contract agent, and us. On October 6, 2004, 44,000,000 Income PACS were issued and outstanding, and no Growth PACS were outstanding.
Each Income PACS consists of a unit comprising:
(1) a purchase contract pursuant to which
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(2) either
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“Applicable ownership interest” means, with respect to an Income PACS and the U.S. Treasury securities in the Treasury portfolio:
As long as a FELINE PACS is in the form of an Income PACS, the note or the appropriate applicable ownership interest in the Treasury portfolio, as applicable, forming a part of the Income PACS will be pledged to the collateral agent to secure the holder’s obligation to purchase common stock under the related purchase contract.
Creating Growth PACS
Unless the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or a tax event redemption, each holder of Income PACS has the right, at any time on or prior to the fifth business day immediately preceding February 16, 2005, to substitute for the related notes held by the collateral agent, zero-coupon U.S. Treasury securities maturing on February 15, 2005, which we refer to as Treasury securities, in a total principal amount at maturity equal to the aggregate principal amount of the notes for which substitution is being made. This substitution will create Growth PACS, and the applicable notes will be released to the holder. The
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Because Treasury securities are issued in multiples of $1,000, holders of Income PACS may make this substitution only in integral multiples of 40 Income PACS. If the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or a tax event redemption, holders of Income PACS may make substitutions only in multiples of 32,000 Income PACS, at any time on or prior to the second business day immediately preceding February 16, 2005. In such a case, holders would also obtain the release of the appropriate applicable ownership interest in the Treasury portfolio rather than a release of the applicable notes.
Each Growth PACS consists of a unit with a stated amount of $25 and contains two components:
(1) a purchase contract pursuant to which
(2) a 1/40, or 2.5%, undivided beneficial ownership interest in a Treasury security that matures on February 15, 2005 and has a principal amount at maturity of $1,000.
Contract adjustment payments are payable by us on these Growth PACS on each payment date from the later of January 14, 2002 and the last payment date on which contract adjustment payments were made. In addition, original issue discount, or OID, will accrue on the related Treasury securities.
Recreating Income PACS
Unless the Treasury portfolio has replaced the notes as a component of the Income PACS as a result of a successful remarketing of the notes or a tax event redemption, each holder of Growth PACS has the right, at any time on or prior to the fifth business day immediately preceding February 16, 2005, to substitute for the related Treasury securities held by the collateral agent notes in an aggregate principal amount equal to the aggregate principal amount at maturity of the Treasury securities. This substitution would create Income PACS, and the applicable Treasury securities would be released to the holder.
Because Treasury securities are issued in integral multiples of $1,000, holders of Growth PACS may make this substitution only in integral multiples of 40 Growth PACS. If the Treasury portfolio has replaced the notes as a component of the Income PACS as the result of a successful remarketing of the notes or a tax event redemption, holders of the Growth PACS may make this substitution at any time on or prior to the second business day immediately preceding February 16, 2005, but using the appropriate applicable ownership interest in the Treasury portfolio instead of notes and only in integral multiples of 32,000 Growth PACS.
For example, to create 40 Income PACS, the Growth PACS holder will:
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Upon that deposit and the receipt of an instruction from the purchase contract agent, the collateral agent will release the related Treasury securities from the pledge under the pledge agreement, free and clear of our security interest, to the purchase contract agent. The purchase contract agent will then
The substituted notes will be pledged with the collateral agent to secure the Income PACS holder’s obligation to purchase common stock under the related purchase contracts.
Holders that elect to substitute pledged securities, thereby creating Growth PACS or recreating Income PACS, are responsible for any fees or expenses payable in connection with the substitution.
Current Payments
Holders of Income PACS are entitled to receive aggregate cash payments at the rate of 9.00% of the $25 stated amount per year from and after the original issue date up to but excluding February 16, 2005, payable quarterly in arrears. The quarterly payments on the Income PACS consist of interest on the related note or cash distributions on the applicable ownership interest in the Treasury portfolio, as applicable, payable at the rate of 6.50% of the $25 stated amount per year, and quarterly contract adjustment payments payable by us at the rate of 2.50% of the $25 stated amount per year, subject to our right to defer the payment of such contract adjustment payments. In addition, OID for U.S. federal income tax purposes will accrue on the related notes.
Holders who create Growth PACS will be entitled to receive quarterly contract adjustment payments payable by us at the rate of 2.50% of the $25 stated amount per year, subject to our right to defer the payments of such contract adjustment payments.
Our obligations with respect to the contract adjustment payments are subordinate and junior in right of payment to our senior indebtedness. “Senior indebtedness” with respect to the contract adjustment payments means indebtedness of any kind provided the instrument under which such indebtedness is incurred does not expressly provide otherwise. The notes are our senior unsecured obligations and rank equal in right of payment with all of our other senior unsecured obligations.
Voting and Certain Other Rights
Holders of purchase contracts forming part of the Income PACS or Growth PACS, in their capacities as such holders, have no voting or other rights in respect of our common stock.
Interest of Directors and Officers; Current Transactions Concerning the Income PACS
Based on our records and on information provided to us by our executive officers and directors, neither we nor any of our executive officers, directors, subsidiaries or affiliates, or associates of the foregoing beneficially own Income PACS. Further, based on our records and on information provided to us by our executive officers and directors, neither we nor any of our executive officers, directors, subsidiaries or affiliates, or associates of the foregoing, engaged in any transactions involving Income PACS during the sixty business days preceding the date of this exchange offer prospectus.
Neither we nor, to our knowledge, any of our principal executive officers or directors is a party to any contract, arrangement, understanding or relationship, whether or not legally enforceable, with any other person or entity with respect to any of our securities, including any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loan or option arrangements, puts or call, guaranties of loans, guarantees against loss or the giving or withholding of proxies, consents or authorization.
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DESCRIPTION OF THE PURCHASE CONTRACTS
The summary of the purchase contracts, the remarketing agreement and pledge agreement set forth below summarizes the material provisions of those agreements. You should refer to the actual terms of the agreements for the definitive terms and conditions of the purchase contracts, the remarketing agreement and pledge agreement.
Purchase of Common Stock
Each purchase contract underlying a FELINE PACS obligates the holder of the purchase contract to purchase, and us to sell, on February 16, 2005, for an amount in cash equal to $25, the stated amount of the FELINE PACS, newly issued shares of common stock equal to the “settlement rate.” The settlement rate will be calculated, subject to adjustment under the circumstances described in “— Anti-Dilution Adjustments,” as follows:
“Applicable market value” of our common stock means the average of the closing price per share of common stock on each of the twenty consecutive trading days ending on the third trading day immediately preceding February 16, 2005.
“Closing price” of our common stock on any date of determination means the closing sale price (or, if no closing price is reported, the last reported sale price) of our common stock on the New York Stock Exchange on that date or, if the common stock is not listed for trading on the New York Stock Exchange on any such date, as reported in the composite transactions for the principal United States national or regional securities exchange on which the common stock is so listed. If the common stock is not so listed on a United States national or regional securities exchange, the closing price means the last closing sale price of the common stock as reported by the Nasdaq Stock Market, or, if the common stock is not so reported, the last quoted bid price for the common stock in the over-the-counter market as reported by the National Quotation Bureau or similar organization. If the bid price is not available, the closing price means the market value of the common stock on the date of determination as determined by a nationally recognized independent investment banking firm retained by us for this purpose.
A “trading day” means a day on which the common stock is not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business and has traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the common stock.
We will not issue any fractional shares of common stock pursuant to the purchase contracts. In lieu of fractional shares otherwise issuable (calculated on an aggregate basis) in respect of purchase contracts being settled by a holder of Income PACS or Growth PACS, the holder will be entitled to receive an amount of cash equal to the fraction of a share times the applicable market value.
On the business day immediately preceding February 16, 2005, unless:
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then
The common stock will then be issued and delivered to the holder or the holder’s designee, upon presentation and surrender of the certificate evidencing the FELINE PACS and payment by the holder of any transfer or similar taxes payable in connection with the issuance of the common stock to any person other than the holder.
Remarketing
Pursuant to the remarketing agreement and subject to the terms of the supplemental remarketing agreement among the remarketing agent, the purchase contract agent and us, unless a tax event redemption has occurred, the notes of Income PACS holders will be remarketed and sold to third parties on November 10, 2004, the third business day immediately preceding November 16, 2004.
The remarketing agent must use its reasonable efforts to remarket these notes at an aggregate price of approximately 100.5% of the Treasury portfolio purchase price described below. The portion of the proceeds from the remarketing equal to the Treasury portfolio purchase price will be applied to purchase a Treasury portfolio consisting of:
The Treasury portfolio will be substituted for the notes and will be pledged to the collateral agent to secure the Income PACS holders’ obligation to purchase our common stock under the purchase contracts.
In addition, the remarketing agent may deduct, as a remarketing fee, an amount not exceeding 25 basis points (0.25%) of the Treasury portfolio purchase price from any amount of the proceeds in excess of the Treasury portfolio purchase price. The remarketing agent will then remit any remaining portion of the proceeds for the benefit of the holders. Income PACS holders whose notes are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with the remarketing.
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As used in this context, “Treasury portfolio purchase price” means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the quotation agent on the third business day immediately preceding November 16, 2004 for the purchase of the Treasury portfolio described above for settlement on November 16, 2004.
“Quotation agent” means Merrill Lynch Government Securities, Inc. or its successor or any other primary U.S. government securities dealer in New York City selected by us.
If (1) despite using its reasonable efforts, the remarketing agent cannot remarket the related notes, other than to us, at a price equal to or greater than 100% of the Treasury portfolio purchase price, or (2) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case resulting in a failed remarketing, the notes will continue to be a component of Income PACS, and another remarketing may be attempted as described below.
If the remarketing of the notes on the third business day preceding November 16, 2004 has resulted in a failed remarketing, and unless a tax event redemption has occurred, the notes of Income PACS holders who have failed to notify the purchase contract agent on or prior to the fifth business day immediately preceding February 16, 2005 of their intention to settle the related purchase contracts with separate cash will be remarketed on the third business day immediately preceding February 16, 2005.
The remarketing agent must then use its reasonable efforts to remarket these notes at a price of approximately 100.5% of the aggregate principal amount of the notes. The portion of the proceeds from this remarketing equal to the aggregate principal amount of the notes will be automatically applied to satisfy in full the Income PACS holders’ obligations to purchase common stock.
In addition, the remarketing agent may deduct, as a remarketing fee, an amount not exceeding 25 basis points (0.25%) of the aggregate principal amount of the remarketed notes from any amount of the proceeds in excess of the aggregate principal amount of the remarketed notes. The remarketing agent will then remit any remaining portion of the proceeds for the benefit of the holders. Income PACS holders whose notes are remarketed will not otherwise be responsible for the payment of any remarketing fee in connection with the remarketing.
If (1) despite using its reasonable efforts, the remarketing agent cannot remarket the related notes, other than to us, at a price equal to or greater than 100% of the aggregate principal amount of the notes, or (2) the remarketing has not occurred because a condition precedent to the remarketing has not been fulfilled, in each case resulting in a failed remarketing, the collateral agent will, for our benefit and at our direction, exercise its rights as a secured party to dispose of the notes in accordance with applicable law and satisfy in full each holder’s obligation to purchase common stock under the related purchase contracts.
We will cause a notice of any failed remarketing to be published on the second business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to beThe Wall Street Journal, including, in the case of a second failed remarketing, the procedures that must be followed if a note holder wishes to exercise its right to put its note to us as described in this exchange offer prospectus. In addition, we will request, not later than seven nor more than 15 calendar days prior to a remarketing date, that the depositary notify its participants holding notes, Income PACS and Growth PACS of the remarketing and the procedures to be followed in the remarketing. If required by applicable law, we will endeavor to ensure that a registration statement with regard to the full amount of the notes to be remarketed will be effective in a form that will enable the remarketing agent to rely on it in connection with the remarketing process. Merrill Lynch, Pierce, Fenner & Smith Incorporated will be the remarketing agent.
Early Settlement Upon Cash Merger
Prior to the settlement date, if we are involved in a merger in which at least 30% of the consideration for our common stock consists of cash or cash equivalents, which we refer to as a cash
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Notice to Settle With Cash
A holder of FELINE PACS may settle the related purchase contract with separate cash prior to 11:00 a.m., New York City time, on the business day immediately preceding February 16, 2005. If a successful remarketing of the notes has not occurred on November 10, 2004, a holder of an Income PACS wishing to settle the related purchase contract with separate cash must notify the purchase contract agent by use of a notice substantially in the form of “Notice to Settle by Cash” attached as an exhibit to the purchase contract agreement completed and executed as indicated on or prior to 5:00 p.m., New York City time, on the fifth business day immediately preceding February 16, 2005. If a successful remarketing of the notes occurs on November 10, 2004, a holder of an Income PACS (which will then consist of a purchase contract and the Treasury portfolio) wishing to settle the related purchase contract with separate cash must notify the purchase contract agent by presenting the documents referred to above on or prior to 5:00 p.m., New York City time, on the second business day immediately preceding February 16, 2005. If a holder of an Income PACS consisting of a purchase contract and the related note who has given notice of its intention to settle the related purchase contract with separate cash fails to deliver the cash to the collateral agent on the business day immediately preceding February 16, 2005, the collateral agent will, for our benefit and at our direction, exercise its right as a secured party to dispose of, in accordance with applicable law, the related note to satisfy in full, from the disposition of the note, the holder’s obligation to purchase common stock under the related purchase contracts.
Contract Adjustment Payments
Contract adjustment payments in respect of Income PACS and Growth PACS are fixed at a rate per year of 2.50% of the $25 stated amount per purchase contract. Contract adjustment payments payable
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Contract adjustment payments are payable to the holders of purchase contracts as they appear on the books and records of the purchase contract agent on the relevant record dates, which is on the first day of the month in which the relevant payment date falls. These distributions will be paid through the purchase contract agent, who will hold amounts received in respect of the contract adjustment payments for the benefit of the holders of the purchase contracts relating to the FELINE PACS.
If any date on which contract adjustment payments are to be made on the purchase contracts related to the FELINE PACS is not a business day, then payment of the contract adjustment payments payable on that date will be made on the next succeeding day which is a business day, and no interest or payment will be paid in respect of the delay. A business day means any day other than a Saturday, Sunday or any other day on which banking institutions in New York City or Chicago, Illinois are permitted or required by any applicable law to close or on which the trustee for the notes is closed for business.
Our obligations with respect to contract adjustment payments are subordinated and junior in right of payment to our obligations under any of our senior indebtedness.
Option to Defer Contract Adjustment Payments
We will have the right to defer payment of all or part of the contract adjustment payments on the purchase contracts until no later than the purchase contract settlement date. We will pay interest on any deferred contract adjustment payment at a rate of 9.00% per year, compounded quarterly, until paid. If the purchase contracts are settled early or terminated, a holder of Income PACS will have no right to receive any deferred and unpaid contract adjustment payments. In the event we exercise our option to defer the payment of contract adjustment payments, then until the deferred contract adjustment payments have been paid, we and our subsidiaries will not, with certain exceptions, declare or pay dividends on, make distributions with respect to, or redeem, purchase or acquire, or make a liquidation payment with respect to, any of our capital stock. We have no present intention of exercising our right to defer the payment of the contract adjustment payments.
Anti-Dilution Adjustments
The formula for determining the settlement rate is subject to adjustment, without duplication, upon the occurrence of certain events, including:
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The “current market price” per share of common stock on any day means the average of the daily closing prices for the ten consecutive trading days ending not later than the earlier of the day in question and the day before the “ex date” with respect to the issuance or distribution requiring the computation. For purposes of this paragraph, the term “ex date,” when used with respect to any issuance or distribution, shall mean the first date on which the common stock trades regular way on the applicable exchange or in the applicable market without the right to receive the issuance or distribution.
In the case of certain reclassifications, consolidations, mergers, sales or transfers of assets or other transactions pursuant to which the common stock is converted into the right to receive other securities, cash or property, each purchase contract then outstanding would, without the consent of the holders of the related Income PACS or Growth PACS, as the case may be, become a contract to purchase only the kind and amount of securities, cash and other property receivable upon such reorganization event (except as otherwise specifically provided, without any interest thereon and without any right to dividends or distributions thereon which have a record date that is prior to the purchase contract settlement date) which would have been received by the holder of the related Income PACS or Growth PACS immediately prior to the date of consummation of such transaction if such holder had then settled such purchase contract.
If at any time we make a distribution of property to our stockholders which would be taxable to the stockholders as a dividend for U.S. federal income tax purposes (i.e., distributions out of our current or accumulated earnings and profits or evidences of indebtedness or assets, but generally not stock dividends or rights to subscribe for capital stock) and, pursuant to the settlement rate adjustment provisions of the purchase contract agreement, the settlement rate is increased, this increase may give rise to a taxable dividend to holders of FELINE PACS.
In addition, we may make increases in the settlement rate to avoid or diminish any income tax to holders of our capital stock resulting from any dividend or distribution of capital stock (or rights to acquire capital stock) or from any event treated as such for income tax purposes or for any other reasons.
Adjustments to the settlement rate are calculated to the nearest 1/10,000th of a share. No adjustment in the settlement rate will be required unless the adjustment would require an increase or decrease of at least one percent in the settlement rate. However, any adjustments which are not required to be made because they would have required an increase or decrease of less than one percent will be carried forward and taken into account in any subsequent adjustment.
We will be required to provide an officer’s certificate to the purchase contract agent setting forth the adjusted settlement rate and its calculation and, within ten business days following the adjustment of the settlement rate, to provide written notice to the holders of FELINE PACS of the occurrence of that event and a statement specifying in reasonable detail the method by which the adjustment to the settlement rate was determined and the revised settlement rate.
Each adjustment to the settlement rate will result in a corresponding adjustment to the number of shares of common stock issuable upon early settlement of a purchase contract.
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Termination
The purchase contracts, and our rights and obligations and the rights and obligations of the holders of the FELINE PACS under the purchase contracts, including the right and obligation to purchase common stock and the right to receive accumulated contract adjustment payments or deferred contract adjustment payments, will immediately and automatically terminate upon the occurrence of certain events of bankruptcy, insolvency or reorganization with respect to us. Upon any termination, the collateral agent will release the related notes, the appropriate applicable ownership interest of the Treasury portfolio or the Treasury securities, as the case may be, held by it to the purchase contract agent for distribution to the holders, subject, in the case of the Treasury portfolio or the Treasury securities, to the purchase contract agent’s disposition of the subject securities for cash, and the payment of this cash to the holders, to the extent that the holders would otherwise have been entitled to receive less than $1,000 principal amount at maturity of any such security. Upon any termination, however, the release and distribution may be subject to a delay. In the event that we become the subject of a case under the U.S. Bankruptcy Code, the delay may occur as a result of the automatic stay under the Bankruptcy Code and continue until the automatic stay has been lifted.
Pledged Securities and Pledge Agreement
Pledged securities are pledged to the collateral agent, for our benefit, pursuant to the pledge agreement to secure the obligations of holders of FELINE PACS to purchase common stock under the related purchase contracts. The rights of holders of FELINE PACS to the related pledged securities are subject to our security interest created by the pledge agreement.
No holder of Income PACS or Growth PACS is permitted to withdraw the pledged securities related to the Income PACS or Growth PACS from the pledge arrangement except
Subject to the security interest and the terms of the purchase contract agreement and the pledge agreement, each holder of Income PACS, unless the Treasury portfolio has replaced the notes as a component of Income PACS as a result of a successful remarketing of the notes or a tax event redemption, is entitled through the purchase contract agent and the collateral agent to all of the proportional rights and preferences of the related notes, including distribution, voting, redemption, repayment and liquidation rights. Each holder of Growth PACS and each holder of Income PACS, if the Treasury portfolio has replaced the notes as a component of Income PACS as a result of a successful remarketing of the notes or a tax event redemption, will retain beneficial ownership of the related Treasury securities or the appropriate applicable ownership interest of the Treasury portfolio, as applicable, pledged in respect of the related purchase contracts. We have no interest in the pledged securities other than our security interest.
Unless (i) the purchase contracts have terminated prior to February 16, 2005, (ii) the related pledged securities have been transferred to the purchase contract agent for distribution to the holders, and (iii) a holder fails to present and surrender the FELINE PACS certificate evidencing the holder’s Income PACS or Growth PACS to the purchase contract agent, the collateral agent will, upon receipt, if any, of payments on the pledged securities, distribute the payments to the purchase contract agent, which will in turn distribute those payments to the persons in whose names the related Income PACS or Growth PACS are registered at the close of business on the record date immediately preceding the date of payment.
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DESCRIPTION OF THE NOTES
General
The notes were issued as a separate series of securities under an Indenture dated as of November 10, 1997, as supplemented by a supplemental indenture dated as of January 14, 2002 between us and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as trustee. The notes were issued in the aggregate principal amount of $1,100,000,000. The notes will mature on February 16, 2007. The notes may not be redeemed prior to their stated maturity except as described below. The notes constitute senior debt securities.
The notes are our direct, senior and unsecured obligations and rank without preference or priority among themselves and equally with all of our existing and future unsecured and unsubordinated indebtedness. The notes are not subject to a sinking fund provision. Unless a tax event redemption has occurred prior to February 16, 2007, the entire principal amount of the notes will mature and become due and payable, together with any accrued and unpaid interest, on February 16, 2007. Except for a tax event redemption, the notes are not redeemable by us.
Notes forming a part of the Income PACS were issued in certificated form, in denominations of $25 and integral multiples of $25, without coupons, and may be transferred or exchanged, without service charge but upon payment of any taxes or other governmental charges payable in connection with the transfer or exchange, at the offices described below. Payments on notes issued as a global security are made to the depositary, a successor depositary or, in the event that no depositary is used, to a paying agent for the notes. Principal and interest with respect to certificated notes is payable, the transfer of the notes is registrable and notes are exchangeable for notes of other denominations of a like aggregate principal amount, at the office or agency maintained by us for this purpose in the Borough of Manhattan, The City of New York. However, at our option, payment of interest may be made by check mailed to the address of the holder entitled to payment or by wire transfer to an account appropriately designated by the holder entitled to payment. JPMorgan Chase Bank is the paying agent, transfer agent and registrar for the notes. We may at any time designate additional transfer agents and paying agents with respect to the notes, and may remove any transfer agent, paying agent or registrar for the notes. We are at all times required to maintain a paying agent and transfer agent for the notes in the Borough of Manhattan, The City of New York.
Any monies deposited with the trustee or any paying agent, or held by us in trust, for the payment of principal of or interest on any note and remaining unclaimed for two years after such principal or interest has become due and payable will, at our request, be repaid to us or released from trust, as applicable, and the holder of the note must thereafter look, as a general unsecured creditor, only to us for the payment thereof.
The indenture does not contain provisions that afford holders of the notes protection in the event of a highly leveraged transaction or other similar transaction involving us that may adversely affect the holders.
Interest
Each note bears interest initially at the rate of 6.50% per year from the original issue date, payable quarterly in arrears on February 16, May 16, August 16 and November 16 of each year, each an “interest payment date,” commencing May 16, 2002, to the person in whose name the note is registered at the close of business on the first day of the month in which the interest payment date falls. The original issue discount rules that apply to contingent payment debt instruments should govern the income inclusions with respect to the notes for U.S. federal income tax purposes.
The applicable interest rate on the notes will be reset on the third business day immediately preceding November 16, 2004 to the reset rate described below under “— Market Rate Reset,” unless the
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The amount of interest payable for any period will be computed on the basis of a 360-day year consisting of twelve 30-day months.
Market Rate Reset
The reset rate will be equal to the sum of the reset spread and the rate of interest on the applicable benchmark Treasury in effect on the third business day immediately preceding November 16, 2004 or February 16, 2005, as the case may be, and will be determined by the reset agent. In the case of a reset on the third business day immediately preceding November 16, 2004, the reset rate will be the rate determined by the reset agent as the rate the notes should bear in order for the notes included in Income PACS to have an approximate aggregate market value on the reset date of 100.5% of the Treasury portfolio purchase price described under “Description of the Purchase Contracts — Remarketing.” In the case of a reset on the third business day immediately preceding February 16, 2005, the reset rate will be the rate determined by the reset agent as the rate the notes should bear in order for each note to have an approximate market value of 100.5% of the principal amount of the note. The reset rate will in no event exceed the maximum rate permitted by applicable law.
The “applicable benchmark Treasury” means direct obligations of the United States, as agreed upon by us and the reset agent (which may be obligations traded on a when-issued basis only), having a maturity comparable to the remaining term to maturity of the notes, which will be two years or two and one-quarter years as applicable. The rate for the applicable benchmark Treasury will be the bid side rate displayed at 10:00 A.M., New York City time, on the third business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, in the Telerate system (or if the Telerate system is no longer available on that date or, in the opinion of the reset agent (after consultation with us), no longer an appropriate system from which to obtain the rate, such other nationally recognized quotation system as, in the opinion of the reset agent (after consultation with us), is appropriate). If this rate is not so displayed, the rate for the applicable benchmark Treasury will be, as calculated by the reset agent, the yield to maturity for the applicable benchmark Treasury, expressed as a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and applied on a daily basis, and computed by taking the arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New York City time, on the third business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, of three leading U.S. government securities dealers selected by the reset agent (after consultation with us) (which may include the reset agent or an affiliate thereof). Merrill Lynch, Pierce, Fenner & Smith Incorporated will be the reset agent.
On the seventh business day immediately preceding November 16, 2004 or February 16, 2005, the applicable benchmark Treasury to be used to determine the reset rate on the third business day prior to November 16, 2004 or February 16, 2005, as applicable, will be selected, and the reset spread to be added to the rate on the applicable benchmark Treasury in effect on the third business day immediately preceding November 16, 2004 or February 16, 2005, as applicable, will be established by the reset agent, and the reset spread and the applicable benchmark Treasury will be announced by us (the “reset announcement date”). We will cause a notice of the reset spread and the applicable benchmark Treasury to be published on the business day following the reset announcement date by publication in a daily newspaper in the English language of general circulation in New York City, which is expected to beThe Wall Street Journal.We will request, not later than seven nor more than 15 calendar days prior to the reset announcement date, that the depositary notify its participants holding notes, Income PACS or Growth PACS of the reset announcement date and of the procedures that must be followed if any owner of Income PACS wishes to settle the related purchase contract with cash on the business day immediately preceding February 16, 2005.
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Optional Remarketing
On or prior to the fifth business day immediately preceding November 16, 2004, in the case of the remarketing to be conducted on the third business day preceding November 16, 2004, or February 16, 2005, in the case of the remarketing, if any, to be conducted on the third business day preceding February 16, 2005, but no earlier than the payment date immediately preceding November 16, 2004 or February 16, 2005, as applicable, holders of notes that are not components of Income PACS may elect to have their notes remarketed in the same manner as notes that are components of Income PACS by delivering their notes along with a notice of this election to the collateral agent. The collateral agent will hold the notes in an account separate from the collateral account in which the pledged securities will be held. Holders of notes electing to have their notes remarketed will also have the right to withdraw the election on or prior to the fifth business day immediately preceding November 16, 2004 or February 16, 2005, as applicable.
Put Option Upon a Failed Remarketing
If the remarketing of the notes on the third business day immediately preceding February 16, 2005 has occurred and has resulted in a failed remarketing, holders of notes following February 16, 2005 will have the right to put the notes to us on April 1, 2005, upon at least three business days’ prior notice, at a price equal to 100% of the principal amount, plus accrued and unpaid interest, if any.
Tax Event Redemption
If a tax event occurs and is continuing, we may, at our option, redeem the notes in whole, but not in part, at any time at a price, which we refer to as the redemption price, equal to, for each note, the redemption amount described below plus accrued and unpaid interest, if any, to the date of redemption. Installments of interest on notes which are due and payable on or prior to a redemption date will be payable to the holders of the notes registered as such at the close of business on the relevant record dates. If, following the occurrence of a tax event, we exercise our option to redeem the notes, the proceeds of the redemption will be payable in cash to the holders of the notes. If the tax event redemption occurs prior to November 16, 2004, or if the notes are not successfully remarketed on the third business day immediately preceding November 16, 2004, prior to February 16, 2005, the redemption price for the notes forming a part of the Income PACS will be distributed to the collateral agent, who in turn will purchase the Treasury portfolio described below on behalf of the holders of Income PACS and remit the remainder of the redemption price, if any, to the purchase contract agent for payment to the holders. The Treasury portfolio will be substituted for the notes and will be pledged to the collateral agent to secure the Income PACS holders’ obligations to purchase our common stock under the purchase contracts.
“Tax event” means the receipt by us of an opinion of nationally recognized independent tax counsel experienced in such matters to the effect that, as a result of
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be treated as a United States person. |
Awhich amendment, change or proposed change“non-U.S. Holder” is effective or which interpretation or pronouncement is announced on or after January 7, 2002, there is more than an insubstantial risk that interest or original issue discount on the notes would not be deductible, in whole or in part, by us for U.S. federal income tax purposes.
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The Treasury portfolio to be purchased on behalfa beneficial owner of the holders of Income PACS will consist of interest or principal strips of U.S. Treasury securities which mature on or prior to February 15, 2005 in an aggregate amount equal to the aggregate principal amount of the notes included in Income PACS and with respect to each scheduled interest payment date on the notes that occurs after the tax event redemption date and on or before February 16, 2005, interest or principal strips of U.S. Treasury securities which mature on or prior to that interest payment date in an aggregate amount equal to the aggregate interest payment that would be due on the aggregate principal amount of the notes on that date if the interest rate of the notes was not reset on the applicable reset date.
Solely for purposes of determining the Treasury portfolio purchase price in the case of a tax event redemption date occurring after November 16, 2004, or February 16, 2005 if the remarketing of the notes on the third business day preceding November 16, 2004 resulted in a failed remarketing, “Treasury portfolio” will mean a portfolio of zero-coupon U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities which mature on or prior to February 15, 2007 in an aggregate amount equal to the aggregate principal amount of the notes outstanding on the tax event redemption date and with respect to each scheduled interest payment date on the notes that occurs after the tax event redemption date, interest or principal strips of U.S. Treasury securities which mature on or prior to that interest payment date in an aggregate amount equal to the aggregate interest payment that would be due on aggregate principal amount of the notes outstanding on the tax event redemption date if the interest rate of the notes was not reset on the applicable reset date.
“Redemption amount” means in the case of a tax event redemption occurring prior to November 16, 2004, or prior to February 16, 2005 if the remarketing of the notes on the third business day preceding November 16, 2004 resulted in a failed remarketing, for each note the product of the principal amount of the note and a fraction whose numerator is the Treasury portfolio purchase price and whose denominator is the aggregate principal amount of notes included in Income PACS, and in the case of a tax event redemption date occurring on or after November 16, 2004, or February 16, 2005 if the remarketing of the notes on the third business day preceding November 16, 2004 resulted in a failed remarketing, for each note the product of the principal amount of the note and a fraction whose numerator is the Treasury portfolio purchase price and whose denominator is the aggregate principal amount of the notes outstanding on the tax event redemption date.
“Treasury portfolio purchase price” means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City to the quotation agent on the third business day immediately preceding the tax event redemption date for the purchase of the Treasury portfolio for settlement on the tax event redemption date.
“Quotation agent” means Merrill Lynch Government Securities, Inc. or its successor or any other primary U.S. government securities dealer in New York City selected by us.
Notice of any redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each registered holder of notes to be redeemed at its registered address. Unless we default in payment of the redemption price, on and after the redemption date interest shall cease to accrue on the notes. In the event any notes are called for redemption, neither we nor the trustee will be required to register the transfer of or exchange the notes to be redeemed.
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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
�� In the opinion of White & Case LLP, special tax counsel to Williams, the following statements summarize the material U.S. federal income tax consequences of the exchange offer that may be relevant to you if you are a holder of Income PACS, to the extent that they constitute a description of the tax laws and regulations of the United States, are correct in all material respects and constitute the opinion of White & Case LLP regarding such matters. The following addresses the material U.S. federal income tax consequences of the exchange offer to holders of Income PACS. Such opinion deals only with Income PACS held as capital assets (generally, assets held for investment) and, except where explicitly addressing the material U.S. federal income tax consequences of the exchange to holders other than U.S. persons (defined below), pertains only to holders that are U.S. persons. The tax treatment of a holder may vary depending on such holder’s particular situation. Such opinion does not address all of the tax consequences that may be relevant to holders that may be subject to special tax treatment such as, for example, insurance companies, broker dealers, tax-exempt organizations, regulated investment companies, persons holding Income PACS, notes or shares of our common stock as part of a straddle, hedge, conversion transaction or other integrated investment, former U.S. citizens that have expatriated, and U.S. persons whose functional currencyDebentures who is not thea U.S. dollar. In addition, such opinion doesHolder, and is not address any aspect of state, local, or foreign tax laws. Such opinion is based on the U.S. federal income tax laws, regulations, rulings and decisions in effect as of the date of this exchange offer prospectus, which are subject to change or differing interpretations, possibly on a retroactive basis.
CERTAIN ASPECTS OF THE U.S. FEDERAL INCOME TAX TREATMENT OF THE EXCHANGE OFFER ARE NOT DIRECTLY ADDRESSED BY ANY STATUTORY, ADMINISTRATIVE OR JUDICIAL AUTHORITY AND, THEREFORE, MAY BE SUBJECT TO DIFFERING INTERPRETATION. IN ADDITION, THE TAX CONSEQUENCES OF EXCHANGING YOUR INCOME PACS IN THE EXCHANGE OFFER WILL DEPEND ON YOUR PARTICULAR CIRCUMSTANCES. ACCORDINGLY, YOU ARE URGED TO CONSULT YOUR OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF EXCHANGING YOUR INCOME PACS IN THE EXCHANGE OFFER, INCLUDING THE APPLICATION AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS TO YOUR PARTICULAR CIRCUMSTANCES.
For purposes of this opinion, the term “U.S. person” means: (1) a person who is a citizen or resident of the United States; (2) a corporation created or organized in or under the laws of the United States or any state thereof or the District of Columbia; (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (4) a trust if (a) a court within the United States is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of such trust or (b) such trust has in effect a valid election to be treated as a domestic trust for U.S. federal income tax purposes.
If a partnership (including an(or other entity treated as a partnership for U.S. federal income tax purposes) holds Income PACS,. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of the Debentures or Common Stock, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A holderbeneficial owner that is a partner ofpartnership and partners in such a partnership holding Income PACS should consult with its tax advisors with respect to the tax treatment of participation in the exchange offer.
Applicable Federal Income Tax Treatment of Income PACS — In General
We have treated each Income PACS you own as a unit consisting of two components — a note and a purchase contract — which, together, constitute an Income PACS. Your initial purchase price for each Income PACS was allocated between the two components in proportion to their respective fair market values at the time of purchase, and such allocation established your initial tax basis in the underlying note and purchase contract. In our original issuance of Income PACS, we reported the fair market value of each note as $25 and the fair market value of each purchase contract as $0. If you acquired Income PACS in the original issuance, our reporting position was binding on you (but not on the
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We have treated the notes as contingent payment debt instruments. As such, you have been required to accrue original issue discount, or OID, on your notes. Your adjusted tax basis in your notes on the date such notes are exchanged pursuant to the exchange offer will, accordingly, reflect increases to your basis in the amount of OID you have been required to include in income with respect to your notes through the date of the exchange and decreases to your basis equal to the total amount of projected payments with respect to your notes through the date of the exchange.
There is no direct authority addressing the treatment, under current law, of the contract adjustment payments, and the U.S. federal income tax treatment of such payments is therefore unclear. The quarterly contract adjustment payments may constitute taxable ordinary income to a holder when received or accrued, in accordance with such holder’s regular method of accounting. We have reported such payments on any required information returns as taxable ordinary income to the holder. Holders who may have reported such payments or accruals in a different manner are urged to consult their tax advisors.
The following opinion of White & Case LLP assumes that your reporting for U.S. federal income tax purposes of the acquisition and ownership of Income PACS has been consistent with our treatment as outlined above.
Federal Income Tax Treatment of Participation in the Exchange
On August 17, 2004, we received a private letter ruling from the IRS regarding the tax consequences to us from an exchange of an Income PACS for one share of our common stock plus a specified amount of cash, pursuant to which the purchase contract component contained in such Income PACS would be cancelled and the note component contained in such Income PACS would be redeemed. The IRS ruled that we would not recognize any gain or loss from the cancellation of the purchase contract component in such Income PACS and would be treated as having redeemed the note component of the Income PACS for its original issue price of $25.00 increased by the amount of OID included with respect to a note through the date of the exchange and decreased by the total payments made with respect to a note through the date of the exchange, its “adjusted issue price.” The IRS expressed no opinion, however, as to whether the exchange would constitute a tax-free reorganization under section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”), whether the Income PACS would be treated as a note and a purchase contract (each of which is a separate instrument for U.S. federal income tax purposes), or whether the notes would be treated as contingent payment debt instruments for U.S. federal income tax purposes.
In the opinion of White & Case LLP, the Income PACS should be treated as a note and purchase contract (each of which is a separate instrument for U.S. federal income tax purposes) and the notes should be treated as contingent payment debt instruments for U.S. federal income tax purposes. In addition, in the opinion of White & Case LLP, it is more likely than not that the exchange of Income PACS for shares of our common stock and cash will not constitute a tax-free reorganization under the Code, in whole or in part, and will be treated as the cash settlement of each purchase contract component of such Income PACS and the redemption of each note component of such Income PACS for its adjusted issue price. Such opinions, however, are not binding on the IRS or the courts, either or both of which may reach a contrary conclusion.
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Based upon the opinion of White & Case LLP, we plan to treat and to characterize the exchange as a transaction that does not constitute a tax-free reorganization under the Code in which:
(i) the note component of an Income PACS is redeemed by us for an amount equal to:
(ii) the purchase contract component of an Income PACS is cash settled for a payment to us equal to:
In the opinion of White & Case LLP, redemption of the note pursuant to this treatment will give rise to gain or loss equal to the difference between the adjusted issue price of the note as of the date of the exchange and the holder’s adjusted basis in the note. Because we have treated the notes as contingent payment debt instruments, any gain recognized on the notes will be treated as ordinary interest income. Loss recognized on such notes will be treated as ordinary loss to the extent of the holder’s prior inclusions of original issue discount on his or her notes. Any loss in excess of such amount will be treated as a capital loss. The deductibility of capital losses is subject to limitations.
In the opinion of White & Case LLP, a holder that purchased an Income PACS in our original issuance of Income PACS or when the purchase contract included in the Income PACS had positive value will recognize a capital loss equal to the amount that is treated as paid by the holder to cancel the purchase contract component of an Income PACS plus the holder’s adjusted tax basis for the purchase contract, if any. The deductibility of capital losses is subject to limitations. If you purchased an Income PACS when the purchase contract component had a negative value, the U.S. federal income tax consequences of the settlement of the purchase contract are not clear and White & Case LLP has not given its opinion regarding this matter. Depending upon how you treated the purchase of such an Income PACS, it is possible that the settlement of the purchase contract component could give rise to a capital gain or capital loss. You should consult your tax advisoradvisors regarding the U.S. federal income tax consequences of the settlementconversion pursuant to the Offer and the ownership and disposition of Common Stock.
• | dealers in securities or currencies; | |
• | financial institutions; | |
• | tax-exempt investors; | |
• | traders in securities that elect to use amark-to-market method of accounting for their securities holdings; | |
• | persons liable for alternative minimum tax; | |
• | insurance companies; | |
• | real estate investment companies; | |
• | regulated investment companies; | |
• | persons holding Debentures or Common Stock as part of a hedging, conversion, integrated or constructive sale transaction; | |
• | persons holding Debentures or Common Stock as part of a straddle; or | |
• | U.S. Holders whose functional currency is not the United States dollar. |
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ordinary income.WhiteGibson, Dunn & CaseCrutcher LLP, counsel to Williams, the surrender of the Debentures in exchange for the Conversion Consideration and Common Stock (which is sometimes referred to below as the “Conversion”) should be treated for U.S. federal income tax purposes as a holder’s basis“recapitalization” under Section 368(a)(1)(E) of the Code. Because of the absence of legal authority directly on point, this conclusion is not free from doubt. Assuming that the Conversion is treated as a “recapitalization,” a Holder that converts the Debentures pursuant to the Offer will recognize capital gain in a share of our common stock received on the exchange of an Income PACS will beamount equal to the lesser of (1) the Conversion Consideration (other than any amount attributable to accrued interest) and (2) the excess of the fair market value of the share onCommon Stock (including fractional shares) and the dateConversion Consideration received in the Conversion (other than any amount attributable to accrued interest) over the beneficial owner’s adjusted tax basis in the Debentures surrendered in the exchange. Such gain will be long-term capital gain if the Debentures have been held for more than one year at the time of Conversion. The tax basis of the exchange.Common Stock (including fractional shares) received upon Conversion will be the same as the tax basis of the Debentures surrendered, increased by the amount of gain recognized, if any, and reduced by the amount of the Conversion Consideration (to the extent not attributable to accrued interest). The holding period for the share of our common stock received in the exchange will begin on the day following the holder’s acquisition of the stock. As noted above, the foregoing treatment is not definitively supported by existing authority, and alternative characterizations of the exchange are possible. It is possible that the exchange of an Income PACS for a share of our common stock plus cash pursuant to the exchange offer may be treated as a recapitalization in which the notes are exchanged for shares of our common stock, the termination of the purchase contracts and the amount of cashCommon Stock received in the exchange by Income PACS unit holders. If the exchange of an Income PACS were characterized in this manner, no loss could be recognized by an exchanging holder, a holder’s basis in his or her shares of our common stock received in the exchange generally would be determined by reference to the holder’s adjusted basis in the note component of his or her Income PACS, andwill include the holding period of the Debentures surrendered. A Holder will generally recognize capital gain on the receipt of cash in lieu of a fractional share of Common Stock as if such stock would includefractional share had been issued and then redeemed by the periodCompany.holder heldU.S. federal income tax consequences of conversion pursuant to the notes. AgainOffer. Therefore, the IRS may take the position that the Conversion is not a recapitalization. Instead, for example, the IRS could take the position that the Conversion is a conversion of the Debentures pursuant to their terms, and that the Conversion Consideration must be recognized as ordinary income (other than interest) in the alternative,its entirety. In such case, the exchange of Income PACS inDebentures for Common Stock pursuant to the exchange offer could possiblyConversion would not be treatedtaxable, but the Conversion Consideration would be taxable as the cash settlement of the purchase contract and a recapitalization in which the notes are67redeemed for shares of our common stock and an amount of cash such that the total consideration for the notes equalsnotes. IfDebentures at such time may recognize ordinary income with respect to all or a portion of the exchange of an Income PACS were characterized in this manner, no loss could be recognized by an exchanging holdercash received equal to accrued market discount with respect to the redemptionDebentures. Such Holders should consult their own advisors regarding the treatment of the note, the holder could recognize a capital loss with respect to the cash settlementaccrued market discount in light of the purchase contract, a holder’s basis in his or her shares of our common stock received in the exchange generally would be determined by reference to the holder’s adjusted basis in the note component of his or her Income PACS,their particular facts and the holding period of such stock would include the period the holder held the notes.circumstances.
We will report cash received in lieu of a fractional interest in our common stock as a redemption of such fractional interest in exchange for cash. In the opinion of White & Case LLP, you would generally realize capital gain or loss on a redemption of a fractional interest in our common stock in an amount equal to the cash received for the fractional share over your basis (determined based on your treatment of the exchange offer, as described above) in such fractional interest. Gain or loss on this redemption will generally be short-term capital gain or loss unless the exchange is treated as a recapitalization for U.S. federal income tax purposes (in which case the gain or loss would be long-term capital gain or loss if the holder has held his or her Income PACS for more than twelve months).
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR CONCERNING THE PROPER TREATMENT OF THE EXCHANGE, AND OF ANY SUBSEQUENT DISPOSITION OF STOCK RECEIVED IN THE EXCHANGE, IN YOUR PARTICULAR CIRCUMSTANCES.
Federal Tax Aspects of Ownership of Common Stock Received in the Exchange Offer
Distributions paid by us out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) on common stock received as part of the exchange offer will constitute a dividend and will be includible in income by holders when received. Under current law, such dividends paid to individual holders may qualify for a special 15 percent tax rate on “qualified dividend income” through December 31, 2008. Dividends may also be eligible for the dividends received deduction if the holder is an otherwise qualifying corporate holder that meets the holding period and other requirements for the dividends received deduction.
Upon a disposition of our common stock, you generally will recognize capital gain or loss equal to the difference between the amount realized and your adjusted tax basis in the common stock. Such capital gain or loss generally will be long-term capital gain or loss if you held such common stock for more than one year immediately prior to such disposition. Long-term capital gains of individuals are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
Substitution of Notes to Recreate Income PACS
If you hold Growth PACS and deliver notes to the collateral agent in substitution for Treasury securities, you generally will not recognize gain or loss upon your delivery of such notes or your receipt of the Treasury securities. You will continue to take into account items of income or deduction otherwise includible or deductible, respectively, by you with respect to such Treasury securities and notes, and your adjusted tax bases in the Treasury securities, the notes and the purchase contract will not be affected by such delivery and release.
Backup Withholding Tax and Information Reporting
Unless you are an exempt recipient, such as a corporation, the exchange of Income PACS for shares pursuant to the exchange offer and the receipt of dividends on our common stock received as part of the exchange may be subject to information reporting. In addition, unless you are an exempt recipient, you may be subject to U.S. federal backup withholding tax at a current rate of 28 percent, if you fail to supply an accurate taxpayer identification number or otherwise fail to comply with applicable U.S. information reporting or certification requirements.
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Treatment Generally Applicable to Non-U.S. Holders Participating in the Exchange
The following statements applydiscussion applies only to you if you are a holder other than a “U.S. person” as defined in the third paragraph of “Material U.S. Federal Income Tax Consequences,” above.non-U.S. Holders. Special rules may apply to you if you are a “controlled foreign corporation,” “passive foreign investment company,” “foreign personal holding company” or are otherwise subject to special treatment under the Code. If you are or may be subject to these special rules, youin certain circumstances a U.S. expatriate. Suchnon-U.S. Holders should consult yourtheir own tax advisor to determine the particular U.S. federal, state and local and other tax consequences applicable to you of participating in the exchange offer.
In the opinion of White & Case LLP,Non-U.S. Holders generally will not be subject to U.S. federal income or withholding tax shouldon amounts received attributable to accrued interest or OID provided that (1) such amounts are not apply to gaineffectively connected with the conduct of a trade or income allocable tobusiness by the notes provided that: you donon-U.S. Holder in the United States, (2) thenon-U.S. Holder does not actually (or constructively)or constructively own 10 percent10% or more of the total combined voting power of all classes of our votingthe Company’s stock withinentitled to vote, (3) the meaning of the Code and the Treasury regulations; you arenon-U.S. Holder is not a controlled foreign corporation that is related to usthe Company through stock ownership; you areownership, (4) thenon-U.S. Holder is not a bank whose receipt of interest on the notesDebentures is described in section 881(c)(3)(A) of the Code;Code, and (5) either (a) you provide yourthenon-U.S. Holder provides its name and address on an IRS Form W-8BEN (or a suitable successor form) and certify,certifies, under penalty of perjury , that you areit is not a U.S.United States person or (b) a securities clearing organization, bank or other financial institution holding the Income PACSDebentures on your behalf of thenon-U.S. Holder certifies, under penalty of perjury, that it has received an IRS Form W-8BEN (or a suitable successor form) from the beneficial ownernon-U.S. Holder and provides usa copy thereof. Special rules may apply to Holders that acquired their Debentures at prices below the adjusted issue price of the Debentures.
Conversion Pursuant to the Conversion Offer |
We do
• | thenon-U.S. Holder is an individual who was present in the United States for 183 days or more during the taxable year of disposition and certain other conditions are met; | |
• | the gain is effectively connected with the conduct of a trade or business by thenon-U.S. Holder in the United States; or | |
• | the Company is or has been a “United States real property holding corporation” for U.S. federal income tax purposes. The Company believes that it may be a United States real property holding corporation but has not made a determination. Even if the Company is or has been a United States real property holding corporation, so long as the Company’s Common Stock continues to be regularly traded on an established securities market, you will not be subject to U.S. federal income or withholding tax on the Conversion if you satisfy one of the following conditions. If the Debentures are regularly traded on an established securities market, you satisfy the condition if you owned, actually or by attribution (at any time during the shorter of the five year period preceding the date of disposition or your holding period), less than or equal to five percent of the outstanding Debentures. If the Debentures are not regularly traded, you satisfy the condition if you owned, actually or by attribution (at any time during the shorter of the five year period preceding the date of disposition or your holding period), Debentures that did not have, as of any date on which you acquired Debentures, a fair market value greater than the fair market value of five percent of the outstanding Common Stock. |
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U.S. Federal Estate Tax |
U.S. withholdingfederal estate tax. The estate tax generally will apply at a rateapplies to the fair market value of 30 percent on dividends paid on the shares of our common stock received as partCommon Stock held at the time of death.Non-U.S. holders should consult with their tax advisors regarding the application of the exchange. However,estate tax to their particular facts.
U.S. Holders |
Non-U.S. Holders |
InThe Dealer Managers for the opinion of WhiteOffer are Lehman Brothers Inc. and Merrill Lynch & Case LLP,Co. Williams has agreed to pay the Dealer Managers compensation for their services in connection with the Offer, which compensation would be $1,499,935, assuming you are not subject to U.S. federal withholding tax as described above, any gain or income realized on the notes and any gain or income realized on a disposition of our common stock received as part of the exchange will not be subject to U.S. federal income tax unless: (i) such gain or income is, or is treated as, effectively connected with your conduct of a trade or businessfull participation in the United States; or (ii) you are an individual who is presentOffer. The Dealer Managers and their affiliates have rendered and may in the United States for 183 days or morefuture render various investment banking, lending and commercial banking services and other advisory services to the Company and its subsidiaries. The Dealer Managers have received, and may in the taxable yearfuture receive, customary compensation from Williams and its subsidiaries for such services. The Dealer Managers have regularly acted as underwriters and initial purchasers of that dispositionlong and certain other conditions are met; or, in the case of gain or income realized on a disposition of our common stock, we are or have been a non-publicly traded “U.S. real property holding corporation,” as described below, for U.S. federal income tax purposes.
Foreign Investment in Real Property Tax Act of 1980
Gain or loss of a non-U.S. person from the disposition of stock in a “U.S. real property holding corporation” may be treated as effectively connected with the conduct of a trade or business in the United States and subject to U.S. withholding and federal income tax. We do not know whether we are currently a U.S. real property holding corporation for U.S. federal income tax purposes. In any event, if we were to become a U.S. real property holding corporation, so long as our common stock continued to be regularly
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Backup Withholding
No backup withholdingCommon Stock offered hereby and certain tax matters will be required as a result ofpassed upon by Gibson, Dunn & Crutcher LLP. Davis Polk & Wardwell will pass upon certain legal matters in connection with the exchange of an Income PACSOffer for a share of our common stock plus cash or for dividends paid on our common stock received as part of the exchange if you are not a U.S. person and you have provided us with an IRS Form W-8BEN (or, where applicable, an IRS Form W-8ECI) and we do not have actual knowledge or reason to know that you are a U.S. person.Dealer Managers.
Federal Tax Treatment of Non-Tendering Holders
If you elect not to participate in the exchange, the exchange will have no federal income tax impact on you, and the consequences of your ownership and disposition of Income PACS, Growth PACS, notes or Treasury securities will be as described in the original prospectus supplement dated January 7, 2002.
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This exchange offer prospectus includes, or incorporates by reference, forward-looking statements. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions and other matters. Words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan” and “objective” and other similar expressions identify those statements that are forward-looking. These statements are based on management’s beliefs and assumptions and on information currently available to management. Actual results could differ materially from those contemplated by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others:
All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by their cautionary statements. We do not intend to release publicly any revisions to any forward-looking statements to reflect events or circumstances in the future or to reflect the occurrence of unanticipated events, except as required by law.
LEGAL MATTERS
The validity of the common stock to be issued in the exchange offer will be passed upon for us by James J. Bender, Senior Vice President and General Counsel of Williams, and Gibson, Dunn & Crutcher LLP, Denver, Colorado has acted as counsel to Williams in connection with the exchange offer. Certain U.S. federal income taxation matters will be passed upon for us by White & Case LLP, Washington, D.C. Davis Polk & Wardwell, New York, New York, will pass upon the validity of the dealer manager agreement for the dealer managers. As of October 6, 2004, Mr. Bender was the beneficial holder of 50,000 shares of our common stock. Mr. Bender is a participant in our stock option plan and various other employee benefit plans offered to our employees.
EXPERTS
The consolidated financial statements of Williams as of December 31, 2004 and 2003, and for each of the three years in the period ended December 31, 2004 (including the schedule appearing therein), and Williams’ management’s assessment of The Williams Companies, Inc.the effectiveness of internal control over financial reporting as of December 31, 2004, appearing in its current reportAnnual Report onForm 8-K dated June 1,10-K for the year ended December 31, 2004, and filed with the Securities and Exchange Commission on September 16, 2004,as amended, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forthstated in their reportreports thereon included therein and incorporated by reference herein. Such consolidated financial statements and schedule are incorporated by reference herein. Such consolidated financial statements and schedulemanagement’s assessment are incorporated herein by reference in reliance upon such reportreports given on the authority of such firm as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file reportsinformationdocuments required in connection with the Securities and Exchange Commission, which we refer to in this exchange offer prospectus as the SEC. You may read and copy any reports or other information that we file with the SEC at the SEC’s public reference room located at 450 Fifth Street, N.W., Washington D.C. 20549. You may also receive copiessurrenders of these documents upon payment of a duplicating fee, by calling the SEC at 1-800-SEC-0330. Our filings are also availableDebentures for conversion should be directed to the public on the SEC’s web site athttp://www.sec.gov.You may also inspect our SEC reports on our web site athttp://www.williams.com.We do not intend for information in our web site to be part of this exchange offer prospectus. We are incorporating by reference into this exchange offer prospectus information we file with the SEC, which means we are disclosing important information to you by referring you to those documents. The information we incorporate by reference is considered to be part of this exchange offer prospectus, unless we update or supersede that information by the information contained in this exchange offer prospectus or the information we file subsequently that is incorporated by reference into this exchange offer prospectus. We are incorporating by reference the following documents that we have filed with the SEC: 1. annual report on Form 10-K for the fiscal year ended December 31, 2003; 2. quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2004;3. quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2004;4. current reports on Form 8-K filed March 31, 2004, May 27, 2004, September 16, 2004 (two filed on this date) September 17, 2004, September 20, 2004, September 21, 2004 and September 29, 2004;5. the description of our Income PACS contained in our registration statement on Form 8-A filed with the SEC on January 8, 2002, as amended by an amendment to Form 8-A filed with the SEC on January 23, 2002; and6. the description of our common stock, par value $1.00 per share, contained in our registration statement on Form S-3 (Registration No. 333-85540) filed April 4, 2002.We also incorporate by reference each of the documents that we file with the SEC (excluding those filings made under Items 2.02 or 7.01 of Form 8-K (or any predecessor item)) under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this exchange offer prospectus until the expiration date of the exchange offer. The file number for the documents we file, or have filed, under the Securities Exchange Act of 1934 is 001-04174. You may request a copy of any of these filings (other than an exhibit to those filings unless we have specifically incorporated that exhibit by reference into the filing), at no cost, by telephoning or writing usConversion Agent at the address set forth below. To obtain timely delivery of any requested information, FELINE PACS holders must make any request no later than five business days prior to the expiration date of the exchange offer.Williams Companies, Inc.Investor RelationsOne Williams CenterTulsa, Oklahoma 74172Telephone Number: (918) 573-200072The exchange agentConversion Agent for the exchange offerOffer is:
JPMorgan Chase Bank Institutional Trust Services P.O. Box 2320 Dallas, Texas 75221-2320 Attention: Frank Ivins | JPMorgan Chase Bank Institutional Trust Services 2001 Bryan Street, 9th Floor Dallas, Texas 75201 Attention: Frank Ivins | JPMorgan Chase Bank Institutional Trust Services Window 4 New York Plaza, 1st Floor New York, New York 10004-2413 |
By Facsimile Transmission: | Confirm Facsimile Transmission by Telephone: | |
Attention: Frank Ivins (214) 468-6494 | (214) 468-6464 |
BY FACSIMILE:
Attention: Joanne Adamis
CONFIRM BY TELEPHONE:
(212) 623-6782
Lead Dealer Manager
Merrill Lynch & Co.
Dealer Managers
745 Seventh Avenue, 3rd Floor New York, New York 10019 Attention: Liability Management Group (212) 526-0111 (collect) (800) 443-0892 (toll free) | 4 World Financial Center, 7th Floor New York, New York 10080 Attention: Liability Management Group (212) 449-4914 (collect) (800) 654-8637 (toll free) |
Additional copies of this exchange offer prospectus, the letter of transmittal or other exchange offer materials may be obtained from the information agent and will be furnished at our expense. Questions and requests for assistance or additional copies hereof or the letter of transmittal should be directed to the information agent.
Questions and requests for information regarding the terms of the exchange offer should be directed to the lead dealer manager.
PART II
(a) Exhibits
Exhibit No. | Description | |||
1 | .1* | Form of Dealer Manager Agreement | ||
4 | .1* | Restated Certificate of Incorporation of The Williams Companies, Inc., as amended through August 3, 2004 | ||
4 | .2* | Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 4.1 to this registration statement) | ||
4 | .3* | Restated By-laws, as amended through September 15, 2004 | ||
4 | .4* | Amended and Restated Rights Agreement between The Williams Companies, Inc. and First Chicago Trust Company of New York (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed September 21, 2004) | ||
4 | .5* | Form of Senior Debt Indenture between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 to the Form S-3 (Registration No. 333-35099) filed on September 8, 1997). | ||
4 | .6* | Sixth Supplemental Indenture dated January 14, 2002, between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed on January 23, 2002). | ||
5 | .1 | Opinion of James J. Bender, Esq | ||
8 | .1 | Tax Opinion of White & Case LLP | ||
23 | .1 | Consent of Ernst & Young LLP, independent registered public accounting firm | ||
23 | .2 | Consent of James J. Bender, Esq. (included in Exhibit 5.1 to this registration statement) | ||
23 | .3 | Consent of White & Case LLP (included in Exhibit 8.1 to this registration statement) | ||
23 | .4* | Consent of Independent Petroleum Engineers and Geologists, Netherland, Sewell & Associates, Inc. | ||
23 | .5* | Consent of Independent Petroleum Engineers and Geologists, Miller and Lents, LTD. |
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Exhibit No. | Description | |||
24 | .1 | Power of Attorney | ||
99 | .1 | Form of Letter of Transmittal | ||
99 | .2* | Form of Letter to Registered Holders and Depository Trust Company Participants | ||
99 | .3* | Form of Letter to Clients | ||
99 | .4* | Form of Letter to Holders of FELINE PACS |
(a) | Exhibits |
Item 22. | Undertakings |
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
i. To include any prospectus required by section 10(a)(3) of the Securities Act of | |
1933. | |
ii. To reflect in the | |
statement. | |
iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. | |
2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities |
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offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. | |
3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. | |
4. To respond to requests for information that is incorporated by reference into the conversion offer pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. | |
5. To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired or involved therein, that was not the subject of and included in the registration statement when it became effective. | |
6. That for the purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof. |
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fideoffering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions referred to in Item 20 hereof, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange
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(d) The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective.
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October 8, 2004.December 29, 2005.
THE WILLIAMS COMPANIES, INC. |
By: | /s/ |
Name: Brian K. Shore |
Title: | Secretary |
Signature | Title | Date | ||||
* Steven J. Malcolm | President, Chief Executive Officer and Chairman of the Board of Directors | |||||
* Donald R. Chappel | Senior Vice President and Chief Financial Officer | |||||
* | Controller | |||||
* | Director | |||||
* William | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director |
II-4II-3
Signature | Title | Date | ||||
* | Director | |||||
* | Director | |||||
* Janice D. Stoney | Director | December 29, 2005 | ||||
* Joseph H. Williams | Director | December 29, 2005 | ||||
*By: | /s/ Name: Brian K. Shore As Attorney-In-Fact |
II-5II-4
Exhibit No. | Description | |||
1 | .1* | Form of Dealer Manager Agreement | ||
4 | .1* | Restated Certificate of Incorporation of The Williams Companies, Inc., as amended through August 3, 2004 | ||
4 | .2* | Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 4.1 to this registration statement) | ||
4 | .3* | Restated By-laws, as amended through September 15, 2004 | ||
4 | .4* | Amended and Restated Rights Agreement between The Williams Companies, Inc. and First Chicago Trust Company of New York (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed September 21, 2004) | ||
4 | .5* | Form of Senior Debt Indenture between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 to the Form S-3 (Registration No. 333-35099) filed on September 8, 1997). | ||
4 | .6* | Sixth Supplemental Indenture dated January 14, 2002, between The Williams Companies, Inc. and JPMorgan Chase Bank (as successor trustee to Bank One Trust Company, National Association (successor in interest to the First National Bank of Chicago)), as Trustee (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed on January 23, 2002). | ||
5 | .1 | Opinion of James J. Bender, Esq | ||
8 | .1 | Tax Opinion of White & Case LLP | ||
23 | .1 | Consent of Ernst & Young LLP, independent registered public accounting firm | ||
23 | .2 | Consent of James J. Bender, Esq. (included in Exhibit 5.1 to this registration statement) | ||
23 | .3 | Consent of White & Case LLP (included in Exhibit 8.1 to this registration statement) | ||
23 | .4* | Consent of Independent Petroleum Engineers and Geologists, Netherland, Sewell & Associates, Inc. | ||
23 | .5* | Consent of Independent Petroleum Engineers and Geologists, Miller and Lents, LTD. | ||
24 | .1 | Power of Attorney | ||
99 | .1 | Form of Letter of Transmittal | ||
99 | .2* | Form of Letter to Registered Holders and Depository Trust Company Participants | ||
99 | .3* | Form of Letter to Clients | ||
99 | .4* | Form of Letter to Holders of FELINE PACS |
Exhibit No. | Description | |||
1 | .1 | Form of Dealer Manager Agreement (originally filed November 17, 2005) | ||
4 | .1 | Restated Certificate of Incorporation of The Williams Companies, Inc., as supplemented (incorporated herein by reference to Exhibit 3.1 of registrant’s annual report on Form 10-K for the fiscal year ended December 31, 2004) | ||
4 | .2 | Certificate of Designation of Series A Junior Participating Preferred Stock (included in Exhibit 4.1 to this registration statement) | ||
4 | .3 | Restated By-laws (incorporated herein by reference to Exhibit 3.1 of registrant’s current report on Form 8-K filed September 21, 2004) | ||
4 | .4 | Amended and Restated Rights Agreement between The Williams Companies, Inc. and First Chicago Trust Company of New York (incorporated herein by reference to Exhibit 4.1 of registrant’s current report on Form 8-K filed September 21, 2004) | ||
5 | .1 | Opinion of Gibson, Dunn & Crutcher (originally filed November 17, 2005) | ||
8 | .1* | Tax Opinion of Gibson, Dunn & Crutcher | ||
12 | .1 | Statement of Computation of Ratio of Earnings to Fixed Charges (originally filed November 17, 2005) | ||
23 | .1* | Consent of Ernst & Young LLP, independent auditors | ||
23 | .2 | Consent of Gibson, Dunn & Crutcher (included in Exhibit 5.1 to this registration statement) (originally filed November 17, 2005) | ||
23 | .3* | Consent of Gibson, Dunn & Crutcher re: tax matters (included in Exhibit 8.1 to this registration statement) | ||
23 | .4 | Consent of Independent Petroleum Engineers and Geologists, Netherland, Sewell & Associates, Inc. (originally filed November 17, 2005) | ||
23 | .5 | Consent of Independent Petroleum Engineers and Geologists, Miller and Lents, LTD (originally filed November 17, 2005) | ||
24 | .1 | Power of Attorney (originally filed November 17, 2005) | ||
99 | .1* | Amendment No. 1 to the Form of Letter of Transmittal |
* |