Williams, a Tule, Oklahoma-origin Company in different energy functions, is to determine if it should accept a funding offer by Berkshire Hathaway and Lehman Brothers. The offer is for one-year credit ease which would allow the company with smooth finances in tough times.
Evaluate the terms of the proposed 900 $ million ﬁnancing from the perspective of both parties. How would you calculate the return to investors in this transaction? If you need more information, what information do you need?
What is the purpose of each of the terms of the proposed ﬁnancing?
Conduct an analysis of Williams sources and uses of funds during the ﬁrst half of 2002. How do you expect these numbers to evolve over the second half of 2002? What is the problem facing Williams? How did it get into this situation? How has it tried to address the problem it is facing?
Some might describe Williams as ﬁnancially distressed. What evidence is there that Williams business may be compromised as a result of its previous ﬁnancial decisions?
“Tough times demand tough decisions” As the CEO of Williams, would you recommend accepting the proposed 900 $ million ﬁnancing oﬀer? If not, what alternatives would you pursue?