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AIG HIGHSTAR TO ACQUIRE 6,049 MILE MIDWEST NATURAL GAS PIPELINE SYSTEM FROM WILLIAMS

NEW YORK--Sept. 16, 2002--AIG Highstar Capital, L.P. (AIG Highstar), a private equity fund sponsored by American International Group, Inc. (AIG), has announced that AIG Highstar's wholly owned portfolio company, Southern Star Central Corp. (Southern Star) has signed a Purchase and Sales Agreement with a unit of Williams (NYSE:WMB) to acquire 100 per cent of the capital stock of Williams Gas Pipelines Central, Inc. (Central Pipeline) and 100 per cent of the limited liability company membership units of Western Frontier Pipeline Company, L.L.C. (Western) for a purchase price of $380 million plus the assumption of $175 million of debt. The sale is expected to close in 60 days, subject to Hart-Scott-Rodino review.

"We are extremely pleased to be acquiring the Central Pipeline," said Christopher Lee, AIG Highstar's Managing Partner. "This is a well managed business with a strong commitment to its customers. Central Pipeline has a long history of producing stable cash flows. We are excited to acquire the tangible and intangible assets of this business at the valuations which are possible in the current environment."

The 6,000 mile Central Pipeline, with headquarters in Owensboro, KY, transports natural gas from Kansas, Oklahoma, Texas, Wyoming and Colorado to markets in the Midwest. The system's design capacity is

  • 2.3 billion cubic feet per day, with an annual throughput of 337.5 trillion British thermal units. Approximately 450 employees support the pipeline system.

AIG Highstar Capital, L.P. (Highstar) is a private equity fund formed to make structured equity investments in infrastructure related projects and operating companies. AIG is the world's leading U.S.-based international insurance and financial services organization, the largest underwriter of commercial and industrial insurance in the United States, and among the top-ranked U.S. life insurers. Its member companies write a wide range of general insurance and life insurance products for commercial, institutional and individual customers through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIG's global businesses also include financial services, retirement savings and asset management. AIG's financial services businesses include aircraft leasing, financial products, trading and market making, and customer finance. AIG has one of the largest retirement savings businesses in the United States and is a leader in asset management for the individual and institutional markets, with specialized investment management capabilities in equities, fixed income, alternative investments and real estate. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

Credit Suisse First Boston and WestLB AG acted as financial advisor to Southern Star Central in this transaction.

CONTACT: American International Group, Inc., New York
Joe Norton (PR), 212/770-3144