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EXHIBIT 99-6
THE WILLIAMS COMPANIES, INC.
EXCHANGE OFFER
QUESTIONS AND ANSWERS
Q. WHY IS WILLIAMS OFFERING TO EXCHANGE ITS 9.60% QUARTERLY INCOME
CAPITAL SECURITIES (QUICS) FOR ITS $2.21 CUMULATIVE PREFERRED STOCK,
$1.00 PAR VALUE (THE "PREFERRED STOCK") (WHICH CONSTITUTE ALL OUTSTANDING
SHARES OF THE PREFERRED STOCK)?
A. The principal purpose of the Exchange Offer is to improve the Company's
after-tax cash flow by replacing shares of the Preferred Stock with the
QUICS. The potential cash flow benefit to the Company arises because
interest payable on the QUICS will be deductible by the Company for federal
income tax purposes, while the dividends payable on the shares of the
Preferred Stock are not deductible.
The Company believes the Exchange Offer is fair to holders of shares of the
Preferred Stock, although the Company has not received any report, opinion
or appraisal relating to the fairness of Exchange. The Exchange Offer will
result in the holders obtaining a security that is senior to the Preferred
Stock, that provides for a higher interest rate than the equivalent
dividend on the Preferred Stock and that provides for a definite maturity
date. THE COMPANY, ITS BOARD OF DIRECTORS AND ITS EXECUTIVE OFFICERS MAKE
NO RECOMMENDATION AS TO WHETHER ANY SHAREHOLDER SHOULD EXCHANGE ANY OR ALL
OF SUCH SHAREHOLDER'S SHARES OF THE PREFERRED STOCK PURSUANT TO THE
EXCHANGE OFFER. SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO
EXCHANGE THEIR SHARES OF THE PREFERRED STOCK AND, IF SO, HOW MANY SHARES TO
EXCHANGE.
Q. WHAT DO THE TERMS "BENEFICIAL OWNER," "REGISTERED HOLDER," "NOMINEE"
AND "CUSTODIAN" MEAN?
A. BENEFICIAL OWNER. The beneficial owner is one whose shares of the
Preferred Stock are held by a broker, dealer, bank, trust company or other
institution and registered in the name of such institution. A beneficial
owner who wishes to tender such shares should contact such registered
holder promptly and instruct it whether or not to tender such shares on
behalf of such beneficial owner.
REGISTERED HOLDER. The registered holder of shares of the Preferred Stock
is the person or institution in whose name such shares are actually
registered on the register kept by the Company at its office or agency for
such purpose. If shares of the Preferred Stock are registered directly in
the name of the holder who is the beneficial owner of such shares, such
beneficial holder is also the registered holder. If shares of the Preferred
Stock are registered in the name of a broker, dealer, bank, trust company
or other institution, such institution is the registered holder of such
shares. Generally, the registered holder of shares of the Preferred Stock
completes the Letter of Transmittal in order to tender such shares.
However, if the registered holder or physical holder does not want to
complete the Letter of Transmittal itself, such holder may ask any broker,
dealer, bank or trust company to complete the Letter of Transmittal on its
behalf and effect the tender of such shares.
NOMINEES AND CUSTODIAN. These terms refer to the broker, dealer, bank,
trust company or other institution that holds shares of the Preferred Stock
on behalf of a beneficial owner of such shares. Although such shares belong
to such beneficial owner, such institution is the registered holder of such
shares and, accordingly, such shares are registered in the name of such
institution and such beneficial holder will need to contact such
institution and provide it with completed Instructions with Respect to the
Tender of shares of the Preferred Stock form in order to tender such
shares.
Q. WHAT ARE QUICS?
The QUICS are unsecured debt securities to be issued by The Williams
Companies which are subordinate in right to payment to its senior
indebtedness and to all obligations of its subsidiaries.
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However, the QUICS are senior to the claims of the holders of The Williams
Companies' capital stock, including the shares of the Preferred Stock. In
addition, the QUICS will have the following terms:
- - The QUICS will have a 30 year stated maturity, whereas the shares of the
Preferred Stock have no stated final maturity.
- - The QUICS will bear interest at 9.60% per annum and are payable quarterly
on the day before the date you would have received dividend payments on the
shares of the Preferred Stock, if they were not tendered.
- - If the Company fails to make an interest payment on any Interest Payment
Date, the Company will be subject to the Late Payment Penalty, which
requires the Company to pay the holders of QUICS, in addition to the
Overdue Interest, an amount of cash equal to 11.10%, per annum, on the
Overdue Interest, compounded quarterly, during the Late Payment Period.
Because of the Late Payment Penalty, the Company believes that it is
unlikely that it will fail to make any interest payment when due on the
QUICS. Although the quarterly dividend payments for the shares of the
Preferred Stock may be suspended, there is no monetary penalty during such
a suspension. In addition, the interest received on the QUICS will not be
eligible for the dividends received deduction for corporate holders,
whereas dividends on the shares of the Preferred Stock are eligible for the
dividends received deduction for corporate holders. Lastly, the covenants
under which the QUICS are issued do not provide any voting rights to
holders during the Deferral Period, while, under certain circumstances, the
holders of the shares of the Preferred Stock may have certain limited
voting rights.
Q. HOW DOES THE INTEREST RATE ON THE QUICS COMPARE TO THE DIVIDEND RATE
ON THE SHARES OF THE PREFERRED STOCK?
A. The effective yield for the shares of the Preferred Stock, at its stated
liquidation preference of $25 per share, is 8.84% per annum. The interest
rate on the QUICS is 9.60%, or .76% higher than the shares of the Preferred
Stock.
Q. THE NEXT DIVIDEND PAYMENT DATE (SUBJECT TO BOARD DECLARATION) FOR
THE SHARES OF THE PREFERRED STOCK WILL BE SEPTEMBER 1, 1995. WILL THE
HOLDERS THAT PARTICIPATE IN THE EXCHANGE OFFER BE ELIGIBLE FOR THAT
DIVIDEND?
A. No. However, as part of the Exchange Offer, holders of shares of the
Preferred Stock accepted for exchange in the Exchange Offer will be
entitled to receive cash equal to the accrued and unpaid dividend on such
shares accumulating after June 1, 1995, to the Issuance Date in lieu of
such dividends, to be payable on the Issuance Date to such holders.
Q. WILL THE QUICS BE LISTED?
A. Like the Preferred Stock, the QUICS are expected to be listed on the New
York Stock Exchange.
Q. WILL THE EXCHANGE CONSTITUTE A TAXABLE EVENT?
A. The Exchange Offer will be a taxable event to those holders that tender
their shares of the Preferred Stock in exchange for the QUICS. Williams
recommends that holders read the description on "Risk Factors" within the
Prospectus and/or consult their tax advisor to determine their specific
circumstances.
Q. WILL BACKUP WITHHOLDING APPLY TO PAYMENTS MADE PURSUANT TO THE
EXCHANGE OFFER OR WITH RESPECT TO THE QUICS?
A. Under federal income tax law, a 31% backup withholding tax will be imposed
on the amount of payments made pursuant to the Exchange Offer, payments
made with respect to the QUICS and payments of the proceeds of sale of
QUICS that are made to certain shareholders. In order to avoid such backup
withholding, each tendering shareholder must provide the Exchange Agent
with such shareholder's correct taxpayer identification number and certify
that such shareholder is not subject to backup
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withholding by completing Substitute Form W-9. If the Exchange Agent is not
provided with the correct taxpayer identification number, the shareholder
may be subject to a $50 penalty imposed by the Internal Revenue Service.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding
requirements. In order to satisfy the Exchange Agent that a foreign
individual qualifies as an exempt recipient, such shareholder must submit a
statement of Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. Form W-8 can be obtained from the Information
Agent. For further information concerning backup withholding and
instructions for completing the Substitute Form W-9, consult the Guidelines
for Certification of Taxpayer Identification Number on Substitute Form W-9.
Q. WHAT IS THE PROCESS FOR A HOLDER TO PARTICIPATE IN THE EXCHANGE OFFER?
A. Each holder of the shares of the Preferred Stock should receive a copy of
the Prospectus, a Letter of Transmittal, a Notice of Guaranteed Delivery, a
letter addressed to clients and Guidelines for Certification of Taxpayer
Identification Number on Substitute Forms W-9 and W-8 along with this
Question and Answer letter. Williams encourages each holder to review each
document and to contact their broker and tax advisor for assistance. In the
event holders require other sources of information, they should contact the
Information Agent or the Dealer Managers at the toll-free numbers listed in
the Prospectus or the Letter of Transmittal.
Registered (physical) holders must send the certificates representing
shares of the Preferred Stock to be tendered and a completed Letter of
Transmittal to the Exchange Agent or may ask any broker, dealer, bank or
trust company to do so on its behalf.
If the shares of the Preferred Stock are registered in the name of a
broker, dealer, bank, trust company or other nominee, the holder must
instruct such nominee to tender on its behalf such shares by completing the
Letter of Transmittal or by Agent's Message for book-entry transfer.
Williams recommends that holders contact the Information Agent before
beginning the process.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry
confirmation, which states that DTC has received an express acknowledgment
from the participant in DTC tendering the shares of the Preferred Stock
which are the subject of such book-entry confirmation, that such
participant has received and agrees to be bound by the terms of the Letter
of Transmittal and that the Company may enforce such agreement against such
participant.
The Letter of Transmittal must be mailed in time to reach the Exchange
Agent by the Expiration Time of the Exchange Offer. In the event the holder
is unable to fulfill the requirements of the Letter of Transmittal, the
holder must submit the Notice of Guaranteed Delivery, received by the
Exchange Agent prior to the Expiration Time, and then, within five New York
Stock Exchange trading days, the Exchange Agent must receive the
certificates, in proper form for transfer, and the completed Letter of
Transmittal.
Q. ARE THERE ANY COSTS THAT A PARTICIPATING HOLDER WILL BEAR IN CONTEXT
OF THE EXCHANGE OFFER?
A. A fee of $.50 per share will be paid to brokers that successfully solicit
tenders on behalf of The Williams Companies. In addition, the Dealer
Managers, the Information Agent and the Exchange Agent will be paid fees
for assisting with this transaction. All such fees will be paid by The
Williams Companies. However, if such holder's shares are held by a broker,
dealer, bank or trust company, the holder may be charged a fee for their
services.
Q. WHEN WILL THE EXCHANGE OFFER EXPIRE?
A. The Exchange Offer is scheduled to expire at 5:00 p.m., New York City time,
on August 21, 1995 or, if extended by the Company, in its sole discretion,
the latest date and time to which extended (the
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"Expiration Time"). The Company may decide to amend or terminate the
Exchange Offer prior to the Expiration Time, and it may decide to extend or
terminate the Exchange Offer if fewer than 1,000,000 shares of the
Preferred Stock have been tendered and not withdrawn prior to the
expiration of the Exchange Offer or if the QUICS have not been accepted for
listing on the New York Stock Exchange. The Exchange Offer is also subject
to certain additional conditions, as described further in the accompanying
Prospectus.
Q. CAN A HOLDER OF SHARES OF THE PREFERRED STOCK REVOKE ITS EXCHANGE OF
SHARES?
A. Tenders of shares of the Preferred Stock pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration Time and, unless
theretofore accepted for exchange pursuant to the Exchange Offer, may also
be withdrawn at any time after 40 business days from the date of the
Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange
Agent at the address set forth in the Letter of Transmittal. Any such
notice of withdrawal must specify (i) the holder named in the Letter of
Transmittal as having tendered certificates with respect to the shares of
the Preferred Stock to be withdrawn, (ii) if the shares of the Preferred
Stock are held in certificated form, the certificate numbers of such shares
to be withdrawn, (iii) a statement that such holder is withdrawing its
election to have such shares of the Preferred Stock exchanged, and the name
of the registered holder of such shares of the Preferred Stock, and such
notice of withdrawal must be signed by the holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the
beneficial ownership of the shares of the Preferred Stock being withdrawn.
The Exchange Agent will return the properly withdrawn shares of the
Preferred Stock promptly following receipt of notice of withdrawal. If
shares of the Preferred Stock have been tendered pursuant to the procedure
for book-entry transfer, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn shares of
the Preferred Stock and otherwise comply with DTC's procedures.
Q. TO WHOM SHOULD ADDITIONAL QUESTIONS BE ADDRESSED?
A. Additional questions or requests for information should be addressed to the
Information Agent, Morrow & Co., Inc. Banks and Brokers call toll free
1-800-662-5200; all others call toll free 1-800-566-9058.
THE ABOVE SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT IN ALL RESPECTS
TO THE PROVISIONS OF AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
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