Williams Communications to Issue $1.4 Billion of Notes Due 2004

Williams Communications (WCG Quote - Cramer on WCG - Stock Picks) plans to issue $1.4 billion of structured notes due 2004 and will use the proceeds for capital spending on telecom assets.

The company, a provider of voice, data and Internet services to communications companies, expects to complete the private placement sale by the end of the month. Williams Communications' parent Williams Cos.(WMB Quote - Cramer on WMB - Stock Picks) will issue stock to the buyers of the notes if Williams Communications defaults.

Earlier this month, Citicorp USA and Lehman Commercial Paper agreed to underwrite an additional $950 million of loans for Williams Communications, bringing the communication services concern's total senior credit facilities to $2 billion.

In February, Williams Communications, which is based in Tulsa, Okla., said it would issue 24.3 million additional shares to Williams. The parent now owns 420 million shares, or 86% of the unit's stock, up from 85% before the transaction.

In recent New York Stock Exchange trading, shares of Williams Communications gained 5 cents, or 0.4%, to $11.30, while Williams Cos. rose $1.26, or 3%, to $43.06.