Debt, Banking Arrangements, and Leases

12 Months Ended

Dec. 31, 2017

Debt, Banking Arrangements, and Leases [Text Block]

Note 13 – Debt, Banking Arrangements, and Leases

Long-Term Debt



	December 31,
	2017			2016
	(Millions)
Transco:
6.05% Notes due 2018	$	250		$	250
7.08% Debentures due 2026	8			8
7.25% Debentures due 2026	200			200
7.85% Notes due 2026	1,000			1,000
5.4% Notes due 2041	375			375
4.45% Notes due 2042	400			400
Other financing obligation	231			—
Northwest Pipeline:
5.95% Notes due 2017	—			185
6.05% Notes due 2018	250			250
7.125% Debentures due 2025	85			85
4% Notes due 2027	250			—
Williams Partners L.P.:
7.25% Notes due 2017	—			600
5.25% Notes due 2020	1,500			1,500
4.125% Notes due 2020	600			600
4% Notes due 2021	500			500
3.6% Notes due 2022	1,250			1,250
3.35% Notes due 2022	750			750
6.125% Notes due 2022	—			750
4.5% Notes due 2023	600			600
4.875% Notes due 2023	—			1,400
4.3% Notes due 2024	1,000			1,000
4.875% Notes due 2024	750			750
3.9% Notes due 2025	750			750
4% Notes due 2025	750			750
3.75% Notes due 2027	1,450			—
6.3% Notes due 2040	1,250			1,250
5.8% Notes due 2043	400			400
5.4% Notes due 2044	500			500
4.9% Notes due 2045	500			500
5.1% Notes due 2045	1,000			1,000
Term Loan, variable interest rate, due 2018	—			850
Debt issuance costs	(96		)	(90		)
Net unamortized debt premium (discount)	(6		)	107
Long-term debt, including current portion	16,497			18,470
Long-term debt due within one year	(501		)	(785		)
Long-term debt	$	15,996		$	17,685

The terms of our senior unsecured notes are governed by indentures that contain covenants that, among other things, limit: (1) our ability and the ability of our subsidiaries to create liens securing indebtedness and (2) mergers, consolidations, and sales of assets. The indentures also contain customary events of default, upon which the trustee or the holders of the senior unsecured notes may declare all outstanding senior unsecured notes to be due and payable immediately.

The following table presents aggregate minimum maturities of long-term debt, excluding net unamortized debt premium (discount) and debt issuance costs, for each of the next five years:



	December 31, 2017
	(Millions)
2018	$	502
2019	2
2020	2,102
2021	502
2022	2,002

Issuances and retirements

On July 6, 2017, we repaid our $850 million variable interest rate term loan that was due December 2018 using proceeds from the sale of our Geismar Interest.

On June 5, 2017, we issued $1.45 billion of 3.75 percent senior unsecured notes due 2027. We used the proceeds for general partnership purposes, primarily the July 3, 2017 repayment of $1.4 billion of 4.875 percent senior unsecured notes that were due in 2023.

On April 3, 2017, Northwest Pipeline issued $250 million of 4.0 percent senior unsecured notes due 2027 to investors in a private debt placement. Northwest Pipeline used the net proceeds to retire $185 million of 5.95 percent senior unsecured notes that matured on April 15, 2017, and for general corporate purposes. As part of the issuance, Northwest Pipeline entered into a registration rights agreement with the initial purchasers of the unsecured notes. Under the terms of the agreement, Northwest Pipeline was obligated to file and consummate a registration statement for an offer to exchange the notes for a new issue of substantially identical notes registered under the Securities Act of 1933, as amended, within 365 days from closing and to use commercially reasonable efforts to complete the exchange offer. Northwest Pipeline has filed the registration statement, which became effective in January 2018. The exchange offer is expected to be completed in the first quarter of 2018.

On February 23, 2017, using proceeds received from the Financial Repositioning (see Note 1 – General, Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies), we early retired $750 million of 6.125 percent senior unsecured notes that were due in 2022.

We retired $600 million of 7.25 percent senior unsecured notes that matured on February 1, 2017.

Northwest Pipeline retired $175 million of 7 percent senior unsecured notes that matured on June 15, 2016.

Transco retired $200 million of 6.4 percent senior unsecured notes that matured on April 15, 2016.

On January 22, 2016, Transco, issued $1 billion of 7.85 percent senior unsecured notes due 2026 to investors in a private debt placement. In January 2017, Transco completed an exchange of these notes for substantially identical new notes that are registered under the Securities Act of 1933, as amended. Transco used the net proceeds to repay debt and to fund capital expenditures.

Other financing obligation

During the construction of Transco’s Dalton expansion project, we received funding from a partner for its proportionate share of construction costs related to its undivided ownership interest in the project. Amounts received were recorded within noncurrent liabilities and 100 percent of the costs associated with construction were capitalized on our Consolidated Balance Sheet. Upon placing the project in service during the third quarter of 2017, we began leasing this partner’s undivided interest in the lateral, including the associated pipeline capacity, and reclassified approximately $237 million of funding previously received from our partner from noncurrent liabilities to debt to reflect the financing obligation payable to our partner over an expected term of 35 years.

Credit Facilities



	December 31, 2017
	Available		Outstanding
	(Millions)
Long-term credit facility (1)	$	3,500	$	—
Letters of credit under certain bilateral bank agreements			1

__________


(1)	In managing our available liquidity, we do not expect a maximum outstanding amount in excess of the capacity of our credit facility inclusive of any outstanding amounts under our commercial paper program.

Long-term credit facilities

On February 2, 2015, we along with Transco, Northwest Pipeline, the lenders named therein, and an administrative agent entered into the Second Amended & Restated Credit Agreement with aggregate commitments available of $3.5 billion, with up to an additional $500 million increase in aggregate commitments available under certain circumstances. In November 2017, the maturity date of the facility was extended to February 2, 2021. However, the co-borrowers may request an additional extension of the maturity date for a one year period to allow a maturity date as late as February 2, 2022, under certain circumstances. The agreement allows for swing line loans up to an aggregate amount of $150 million, subject to available capacity under the credit facility, and letters of credit commitments of $1.125 billion. Transco and Northwest Pipeline are each able to borrow up to $500 million under this credit facility to the extent not otherwise utilized by the other co-borrowers.

The agreement governing our credit facility contains the following terms and conditions:

•

Various covenants may limit, among other things, a borrower’s and its material subsidiaries’ ability to grant certain liens supporting indebtedness, merge or consolidate, sell all or substantially all of its assets, enter into certain affiliate transactions, make certain distributions during an event of default, enter into certain restrictive agreements, and allow any material change in the nature of its business.


•	If an event of default with respect to a borrower occurs under the credit facility, the lenders will be able to terminate the commitments for all borrowers and accelerate the maturity of any loans of the defaulting borrower under the credit facility agreement and exercise other rights and remedies.

•

Other than swing line loans, each time funds are borrowed, the borrower must choose whether such borrowing will be an alternate base rate borrowing or a Eurodollar borrowing. If such borrowing is an alternate base rate borrowing, interest is calculated on the basis of the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus one half of 1 percent, and (c) a periodic fixed rate equal to the London Interbank Offered Rate (LIBOR) plus 1 percent, plus, in the case of each of (a), (b), and (c), an applicable margin. If the borrowing is a Eurodollar borrowing, interest is calculated on the basis of LIBOR for the relevant period plus an applicable margin. Interest on swing line loans is calculated as the sum of the alternate base rate plus an applicable margin. The borrower is required to pay a commitment fee based on the unused portion of the credit facility. The applicable margin and the commitment fee are determined for each borrower by reference to a pricing schedule based on such borrower’s senior unsecured long-term debt ratings.

Significant financial covenants under the agreement require the ratio of debt to EBITDA, each as defined in the credit facility, be no greater than 5.00 to 1, except for the fiscal quarter and the two following fiscal quarters in which one or more acquisitions has been executed, in which case the ratio of debt to EBITDA is to be no greater than 5.5 to 1.

The ratio of debt to capitalization (defined as net worth plus debt) must be no greater than 65 percent for each of Transco and Northwest Pipeline. We are in compliance with these financial covenants as measured at December 31, 2017.

As of February 20, 2018, there are no amounts outstanding under our long-term credit facility.

Commercial Paper Program

On February 2, 2015, we amended and restated the commercial paper program for the ACMP Merger and to allow a maximum outstanding amount of unsecured commercial paper notes of $3 billion. The maturities of the commercial paper notes vary but may not exceed 397 days from the date of issuance. The commercial paper notes are sold under customary terms in the commercial paper market and are issued at a discount from par, or, alternatively, are sold at par and bear varying interest rates on a fixed or floating basis. Proceeds from these notes are used for general partnership purposes, including funding capital expenditures, working capital, and partnership distributions. At December 31, 2017, no Commercial paper was outstanding. At December 31, 2016, $93 million of Commercial paper was outstanding at a weighted-average interest rate of 1.06 percent, which was classified in Current liabilities in the Consolidated Balance Sheet, as the outstanding notes have maturity dates less than three months from the date of issuance.

Cash Payments for Interest (Net of Amounts Capitalized)

Cash payments for interest (net of amounts capitalized) were $855 million in 2017, $891 million in 2016, and $795 million in 2015.

Leases-Lessee

The future minimum annual rentals under noncancelable operating leases, are payable as follows:



	December 31, 2017
	(Millions)
2018	$	33
2019	32
2020	27
2021	26
2022	24
Thereafter	126
Total	$	268

Total rent expense was $55 million in 2017, $59 million in 2016, and $62 million in 2015 and primarily included in Operating and maintenance expenses and Selling, general, and administrative expenses in the Consolidated Statement of Comprehensive Income (Loss).

WILLIAMS PARTNERS L.P. 8-K