© 2012 The Texas Lawbook.
By Natalie Posgate
Staff Writer for The Texas Lawbook
Tulsa, Okla.-based Williams Partners has agreed to acquire $2.4 billion in chemical and pipeline assets from its affiliated business, The Williams Companies.
The primary asset in the transaction is 83 percent of interest in the olefins production facility in Geismar, La. Other important assets include a refinery-grade propylene splitter and, through its subsidiary Williams Olefins Feedstock Pipelines, LLC, certain feedstock and product pipelines.
Baker Botts is representing Williams Partners in the transaction. Houston corporate partner Josh Davidson is leading the deal, while Houston tax partner Mike Bresson, Austin associates Sally Russell, Alyssia Bernazal and special counsel Chuck Campbell of Houston, are assisting.
Davidson and Russell previously worked with Williams Partners on seven top-down transactions by representing the company’s Conflicts Committee of the Board of Directors of the general partner.
Gibson, Dunn & Crutcher is representing Williams, along with some of the company’s in-house lawyers.
The deal announced is consistent with a recent private letter ruling by the IRS in which the tax agency treated revenues derived from certain operations that turn natural gas liquids into olefins for the purpose of plastic production as generating income to a master limited partnership (MLP), which is how Williams Partners is structured.
Davidson says the Williams transaction is important because it is the first to involve a MLP acquiring an ethylene cracker and may lead other chemical companies to consider forming MLPs for some of their assets.
“At least 90 percent of a MLP’s gross income each year must be qualifying, meaning it must come from certain permitted sources, typically involving minerals or natural resources,” he said. “The market appears to be expecting other chemical companies to consider forming their own MLPs.”
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