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A last-minute refinancing struck this summer kept


(WMB) - Get Free Report

out of bankruptcy. But five weeks later, the storm of questions surrounding that deal has continued to build.

Sure, a $900 million loan from

Lehman Brothers


and Warren Buffett's

Berkshire Hathaway

(BRK.A) - Get Free Report

kept the company's stock from completing what, until then, was a summerlong plunge to zero. In fact, Williams shares have more than tripled off their July lows, as investors reassess the company's still-sticky liquidity situation.

But critics say the steep terms of the financing mean that creditors now have their foot in the door and that their taking control of the once-lucrative energy company is only a matter of time, regardless of what happens to the stock.

"This is bankruptcy refinancing," said Karl Miller, an energy industry veteran who now leads an investment fund and has no financial interest in the company. "The company would have been better off under reorganization."

Fear of Light

To illustrate his point, Miller pointed to "loan shark" terms in the loan Williams recently inked with Lehman and Berkshire. For starters, Williams pledged $2 billion worth of assets to secure a one-year loan worth less than half that amount. The company then agreed to pay the equivalent of 30% interest, including a $135 million "deferred setup fee," on a heavily overcollateralized loan.

Williams said it had little choice in the matter.

"The key drivers of that decision were basically liquidity, speed and cash," said Williams spokesman Kelly Swan. "Obviously, the financing came at a very critical time for the company. Despite the cost, it was clearly a necessary step."

Miller disagreed, calling the move a selfish one by management and a reckless one by the company's board of directors. He said the lenders now control Williams' best assets and, he believes, will ultimately control the company itself. Even reorganization -- allowing unsecured creditors and common shareholders to keep their spots in line -- would have been better, he said.

"This allows management to keep their jobs for another year -- potentially," he said. "Meanwhile, all these fees going out the door could have been saved and put into the reorganization effort."

Fear of Darkness

The numbers investors know about are bad enough, according to the skeptics' view. But other terms, listed as "intentionally omitted" in Williams' regulatory filings, have yet to even surface. Peter Cohan, a Massachusetts author and investment strategist, fears the worst.

"One can only assume they are so outrageous that they would even embarrass Williams management, a team that swore up and down that it would never let Williams Communications go into bankruptcy -- that is, right up until the moment when it tossed WCG and its shareholders into the dumpster," Cohan said of the undisclosed terms. He has no financial stake in the companies.

Cohan has long been critical of management teams at both Williams and its former subsidiary Williams Communications, which filed for bankruptcy less than a year after it was spun off to the public.

Both Cohan and Miller described the parent's own escape from bankruptcy as a "deal with the devil." Miller said the bankers alone will come out ahead on Williams' financing arrangements.

Even so, Tulsa money manager Fredric E. Russell said he still has hope for his firm's 198,000 shares in Williams's stock. And the market itself has shown optimism. Since Williams' near-brush with bankruptcy, the stock has recovered to $3.22. But the same stock fetched 10 times that amount less than one year ago.

"There is no such thing as a win-win situation," Miller said. "There has to be a winner, and there has to be a loser."

"Clearly, Williams is the loser -- because management has put the company in a losing situation."