NEW YORK (TheStreet) -- Energy Transfer Equity (ETE) stock is declining by 11.11% to $8.80 in late-afternoon trading on Wednesday, as the company plans to leave the terms of its proposed takeover of Williams Companies (WMB) unchanged even as oil prices tumble, sources told Bloomberg.
Investors worry that lower oil prices will hinder Energy Transfer's ability to pay the $6 billion in debt it will take out to help pay for Williams Cos.
Energy Transfer could have difficulty managing the debt as lower energy production ultimately leads to lower volumes and declining cash flow for the combined company's network of 104,000 miles of oil and gas pipelines, Bloomberg notes.
Although Evercore Partners analyst Tim Schneider has urged Energy Transfer to eliminate the cash portion of the deal, doing so would be unappealing to Williams Cos. investors who must approve the deal, Bloomberg adds.
Energy Transfer instead plans to cover part of the costs through reduced quarterly distributions to unitholders, according to Bloomberg.
Separately, TheStreet Ratings team rates the stock as a "hold" with a ratings score of C.
Energy Transfer Equity's strengths such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations are countered by weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
You can view the full analysis from the report here: ETE
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.