Published January 13, 2015
Shares of energy trader and pipeline operator Williams Cos. on plunged on Tuesday after it delayed an earnings report to examine the impact of commitments to former unit Williams Communications.
Investors sent shares of Williams Cos. down $5.58, or 23 percent, to $18.56, making the issue the biggest percentage loser and fourth most active on the New York Stock Exchange.
Shares of other energy traders were also hurt by what some analysts saw as a resurgence of investor jitters that plagued the sector in the wake of the recent bankruptcy filing of Enron Corp., the biggest in U.S. history.
Williams Cos. plans to publish a full statement in a few weeks after completing a study of its financial obligations to loss-making Williams Communications, which has $1.4 billion in debt and a lease deal covering assets that cost $750 million.
The company did not say whether it made a profit or loss, or state its revenues. A provisional and truncated set of financial data for the fourth quarter estimated earnings per share before one-time items at 34 cents, down from 89 cents a year earlier.
The abbreviated statement from Tulsa, Oklahoma-based Williams Cos. showed a sharp drop in profits at its marketing and trading business, the main driver behind earnings in previous quarters.
Chief Executive Officer Steve Malcolm said the study was prompted by a recent credit rating agency downgrade of Williams Communications and Monday's bankruptcy filing by telecommunications firm Global Crossing Ltd.
Williams Cos. said its study is intended to eliminate credit-rating and equity-price triggers that form part of guarantees provided by Williams Cos. to its former unit.
Williams Cos. spun off to stockholders some 95 percent of the stock in the telecommunications unit in April 2000. Similar trigger clauses in financial arrangements played a key role in Enron's collapse.
UBS Warburg analyst Jay Yannello said the sharp fall in Williams' stock price and the ``collateral damage'' suffered by some of its peers were ``unwarranted'', even though there were still many unanswered questions concerning Williams Cos. obligations toward Williams Communications.
``In today's market environment investors want more clarity and less uncertainty than ever,'' Yannello said of the sell-off in Williams Cos. and similar stocks.
Mirant Corp. was down 15 percent at $9.18, Calpine Corp. was off 12 percent at $10.58 and El Paso Corp. showed a loss of 8 percent at $34.25.
Williams Cos. said it expects to be able to estimate the financial effect of the review of its financial ties with Williams Communications, if any, within the next few weeks.
It reiterated that it expects earnings per share of $2.65 to $2.75 for 2002. It estimated its full-year 2001 earnings per share, before one-time items, at $2.35.
Williams Cos.' fourth-quarter results include a charge of about 12 cents a share for credit exposure to the Enron bankruptcy. They also include a previously disclosed charge of $170 million related to a soda ash plant in Colorado.
In December Williams Cos. announced measures to strengthen its balance sheet and restore investor confidence, which was undermined by the Enron bankruptcy. The measures include cuts in capital spending, asset sales and issuance of new securities.
Other members of Williams Cos.' energy peer group, such as El Paso and Dynegy Inc., have taken similar steps to restore confidence in the wake of Enron's collapse.