Sources of funds
* Selling of subsidiaries
* Long-term debt
* Asset sales
* FELINE PACS
* Selling of preferred stock
Uses of funds
* Capital expenditures
* Interest on debt
How do you expect these numbers to evolve over the second half of 2012?
We expect the asset sales and subsidiary sales to continue and increase over the second half of 2012. We expect capital expenditures to decrease in accordance with the terms of the proposed shot-term credit agreement. Interest expense will increase as more long-term debt reaches maturity and due to the addition of this proposed short-term credit financing. What is the problem that Williams is facing?
Williams is running into trouble because its subsidiaries are failing. Because Williams co-signed on their subsidiaries’ debt and the subsidiaries cannot make payments, Williams is now responsible for making those payments and assuming the debt obligations. Williams, however, cannot meet these obligations and therefore are experiencing a significant cash shortfall. This problem was brought on by poor market demand conditions and poor economic health. How did Williams get into this situation?
Williams co-signed a lot of debt of their subsidiaries. Williams subsidiaries were aggressive in taking on debt because they believed that demand would be large and increase rapidly, and therefore bought up a large amount of capacity. When demand stagnated, all of that capacity was useless and a huge loss of capital. How has it tried to address the situation?
Williams has attempted to make as much cash available as possible.
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