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$2 billion sale of Chemical Plant by Tulsa’s Williams Partners

Tulsa-based Williams Partners L.P. has announced it is selling its share of a chemical manufacturing plant in Geismar, Louisiana, site of a deadly explosion four years ago.

The sale of the company’s more than 88% ownershp of the Williams Olefins LLC will be for $2.1 billion in cash and the buyer is NOVA Chemicals. The sale will be subject to customary closing conditions.

Williams Partners explained in its announcement that upon the closing of the transaction, its subsidiaries will enter into long-term supply and transportation agreements with NOVA Chemicals to provide feedstock to the Geismar plant.The supply will be carried out via Williams Partners’ Bayou Ethane pipeline system in the Gulf Coast. It also means the agreements secure a long-term fee-based revenue stream for the partnership.

“When the Williams Olefins transaction closes, we expect to be t 97 percent fee-based revenues driven largely by natural gas volumes,” said Alan Armstrong, chief executive officer of Williams Partners’ general partner.

Williams Partners plans to use the cash proceeds from the Williams Olefins transaction to pay off its $850 million term loan and to fund a portion of the capital and investment expenditures that are a part of the partnership’s extensive growth portfolio. Williams expects that for federal tax purposes, any taxable gain generated from the transaction will be sheltered by its net operating loss carry-forwards. As a result of today’s Williams Olefins transaction announcement, Williams Partners plans to update its financial guidance at its Analyst Day event on May 11.

The Geismar operation has been a part of Williams since 1999, when it bought the plant from Atlantic Richfield Co. It was in 2013 when an explosion at the plant killed two workers. Williams said the sale of the plant will not affect the litigation from the accident.