By Mark Maurer
Companies of all stripes have had to adapt their financial operations during the coronavirus pandemic. Oil and gas businesses such as Williams Cos. have been contending with the additional hurdle of a sharp decline in energy prices, which is pushing down stock prices.
Williams, a Tulsa, Okla.-based oil and natural gas pipeline operator, has taken action by adopting a shareholder-rights plan to prevent a hostile takeover, drawing down additional debt, and changing how it processes payments.
The company entered the crisis with an untapped $4.5 billion revolving loan not due to mature until 2023. On March 16, Williams drew down $200 million from that loan to shore up its cash position -- a move that has helped the company's chief financial officer, John Chandler, sleep better. "I worried, 'What if we enter into a world where we can't access liquidity for three or four weeks?'" he said in an interview.
The company, which had total outstanding long-term debt of $22.3 billion as of Dec. 31, could opt to avoid debt markets for refinancing coming maturities until the markets become less expensive, Mizuho Securities USA LLC analysts wrote in an April 6 note.
The pandemic and fall in energy prices caused Williams's stock to plummet more than 25% in March. In response to the decline, the company on March 19 adopted a poison pill, a shareholder-rights plan meant to block an investor from accumulating a majority stake in a company. The company's executives felt the stock declines created a dangerous possibility that an investor with a short-term interest could try to take advantage of the situation, Mr. Chandler said.
Proxy adviser Institutional Shareholder Services Inc. then urged shareholders to withhold votes for the company's chairman, Stephen Bergstrom, in director elections at the annual meeting scheduled for April 28.
Williams has said the shareholder-rights plan isn't particularly restrictive. "We were obviously a little discouraged by ISS's outcome and we had a few conversations with them about that," Mr. Chandler said.
Also in response to the impact of the pandemic, Williams changed financial processes to ensure the safety of payment streams in a digital environment, Mr. Chandler said. For example, before the pandemic, the company prohibited treasury employees from requesting wire transfers via email. Requests were largely made in person. Now, the company allows emails for wire transfers, and follow-up confirmations by phone.
And while many companies have scaled back on mergers and acquisitions, Williams plans to continue monitoring for potential joint-venture deals as it focuses on reducing leverage, Mr. Chandler said. "There are probably going to be a lot of opportunities in the market," he said. "It would be great to be able to take advantage of those."
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