What could be the pipeline sector's second initial public offering since 2017 is in limbo as Williams Cos. Inc. pursues a lawsuit to preserve its competitive edge in the Marcellus and Utica shales, Bloomberg reported July 29.
The litigation materialized after Blue Racer made plans to go public, according to Bloomberg. Williams, along with EnCap Flatrock Midstream and Oaktree Capital Management LP, is a partner in Caiman Energy II LLC, a private equity firm that owns 50% of Appalachian midstream company Blue Racer Midstream LLC. While EnCap Flatrock Midstream co-founding partner EnCap Investments LP supports Blue Racer's IPO plans as is, however, Williams wants to change the terms to prevent Blue Racer from encroaching on its territory per a 2012 bylaw negotiated with other shareholders.
During a July 29 hearing in the Delaware Court of Chancery, according to court documents obtained by Bloomberg, a lawyer representing EnCap and Blue Racer alleged that Williams filed the suit because it wants to acquire the rest of the company. Williams general counsel and Senior Vice President T. Lane Wilson responded during an Aug. 1 earnings conference call that it wants the IPO to move forward, but not at the expense of certain "rights."
"We are cooperating in support of the efforts to IPO the Blue Racer business. That said, there are a number of rights around the structure and scope of certain filings that we have related to that IPO effort, and the litigation is really just an effort on our part to protect those rights," he said.
Responding to a query about the case, a Williams spokesman said on July 30, "Williams does not comment on matters involving pending litigation."
First Reserve Corp. owns the other 50% stake in Blue Racer, which it bought from Dominion Energy Inc. in 2018.