Williams, 2002 Solution

Williams, 2002
Copyright: Students Helpline BD.COM
R U WORRIED ABOUT?

Assignments Presentation Slides Term Paper Case Studies Solution Research Proposal Abstract/Dissertation Writing Internship Report So, Contact: Students Helpline +88016-76320749
helpline4students@yahoo.com
Visit @: www.studentshelplinebd.com
http://www.helpline4students2012.blogspot.com
Case Back Ground

The collapse of its telecommunications business, softness in the energy markets and ongoing enquiries from regulators about its
reporting and energy trading had put Williams under financial stress.
3 Copyright: Students Helpline BD.COM
Problem Statement
Whether to accept a secured credit agreement from Lehman Brothers and Berkshire Hathaway? Whether the newly independent and debt laden Williams communication could survive on its own under the economic downturn of
the industry and whether they should take steps to support its former subsidiary?
Company analysis

The Williams Companies Inc. Steven J. Malcolm- the president, Chairman and CEO. Had been a part of the Tulsa Community since 1918 Products:
Exploration and production, Pipe lines, energy trading and telecommunications.
Engaged in many different types of energy activities including
purchase, sale, transportation and transmission of energy related commodities. Also involved in exploration and refining with several direct investments in international energy projects located in south America and Lithonia. Part of Williams growth during the 1990 could be attributed to the profitability of its telecommunications business. In October 1999, Williams listed WCG (Williams Communication Group) in an IPO along with private placement.
SWOT analysis of
Strength:
Warren Buffet, a billionaire,
Williams Companies Inc.

Weakness:
Highly leveraged. Loss of income in recent year Low bond ratings (B1) Share price decreasing Potential bankrupt Tied to the telecommunication
was interested to purchase some subsidiaries of the company.

A diversified company having
too many products for which any loss project cannot affect it much
Have so many assets that it can
subsidiary which is under economic downturn.
collect cash by selling assets.
SWOT analysis (Contd)

Opportunities:
Have a good
Threats:
Oversupply of
opportunity to recover the economic downturn losses by taking some strong initiatives.
telecommunication services.
The future of energy trading
was uncertain as market participants assessed their exposure to the former trading firm.
Cash took more priority over
earnings.
R U WORRIED ABOUT?

Industry Analysis
Porters five forces analysis
Rivalry among existing competitors # High Threat of new entrants # low. Threat of substitute products # moderate.
Bargaining power of buyers # moderate

Bargaining power of suppliers # Moderate
Business Risk
Business risk is moderate because:
It is an utility based company. It is somehow dependent on technology It is a company having various kinds of products which
ultimately balance their business risk.
To raise cash, some important operating and financing decisions:

Malcolm had a four pronged plan: Selling assets. Reaching a resolution for its energy and trading book Managing and monitoring cash and businesses. Right sizing Williams to reflect the new scope of operations.
Recommendation
Whether to accept a secured credit agreement from
Lehman Brothers and Berkshire Hathaway? Answer: yes We hope that they will be able to maintain the covenants
Their historical interest coverage ratio is above 2.0 and they
will maintain it in the near future. Fixed charge coverage ratio at least 1.15 Limit capital expenditure in excess of $300 The rest of the terms and condition of the covenants
Recommendation (contd)
Whether the newly independent and debt laden Williams communication could survive on its own under the economic downturn of
the industry and whether they should take steps to support its former subsidiary? Answer:
R U WORRIED ABOUT?

THANK YOU FOR BEING WITH US
R U WORRIED ABOUT?


Williams, 2002 Solution

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Williams, 2002 Solution

Uploaded by

Copyright:

Available Formats

Williams, 2002

Copyright: Students Helpline BD.COM

Case Back Ground

3 Copyright: Students Helpline BD.COM

Engaged in many different types of energy activities including

Williams Companies Inc.

was interested to purchase some subsidiaries of the company.

subsidiary which is under economic downturn.

collect cash by selling assets.

6 Copyright: Students Helpline BD.COM

SWOT analysis (Contd)

Copyright: Students Helpline BD.COM

Bargaining power of buyers # moderate

9 Copyright: Students Helpline BD.COM

ultimately balance their business risk.

10 Copyright: Students Helpline BD.COM

To raise cash, some important operating and financing decisions:

Copyright: Students Helpline BD.COM

Copyright: Students Helpline BD.COM

Copyright: Students Helpline BD.COM

THANK YOU FOR BEING WITH US

Copyright: Students Helpline BD.COM

You might also like