MidAmerican to buy Kern River system from Williams. (Company News).(Brief Article)

Analysts see benefits for both firms in an agreement between Berkshire Hathaway Inc. unit MidAmerican Energy Holdings Co., Des Moines, Iowa, and Tulsa-based Williams Cos. Inc. to purchase the latter's Kern River Gas Transmission Co. for $960 million in cash and debt.

The firms announced the definitive agreement Mar. 7. Based on terms of the deal, Williams will receive $450 million in cash, and MidAmerican would assume $510 million in debt for the Kern River system.

In addition, MidAmerican will continue Kern River's scheduled expansions, Williams said. In August 2001, Williams had filed with the Federal Energy Regulatory Commission to more than double the Kern River system's capacity to 1.7 bcfd by May 2003 (OGJ, Feb. 4, 2002, p. 22).

Williams said it is selling the 926 mile pipeline to raise much-needed capital and to reduce its capital expenditure requirements by nearly $1.26 billion over the next 1 years. "We are taking this decisive step to strengthen our balance sheet to meet the more conservative requirements of the rating agencies, which now require companies like Williams to reduce debt and increase cash flow to maintain an investment-grade credit rating," said Steve Malcolm, president and CEO of Williams.

In addition to the sale of the Kern River unit, Williams also announced the sale of $275 million of 9 7/8 % convertible preferred stock to MidAmerican.

Meanwhile, in a previously …