Summary
ONEOK, Inc. (OKE) has filed an 8-K report detailing a significant financial transaction related to its previously announced acquisition of natural gas liquids businesses from Koch Industries, Inc. The company has entered into a $1 billion, 364-day bridge credit facility to help finance a portion of this acquisition, which is valued at approximately $1.35 billion. This facility, co-managed by Citigroup Global Markets Inc. and UBS Securities LLC, is set to mature on June 26, 2006. The agreement includes standard covenants, notably a debt-to-capitalization ratio limit that must not exceed 70.0% before March 31, 2006, and 67.5% thereafter. The filing indicates that proceeds will be used for the short-term financing of the Koch acquisition, with potential prepayments required if the company engages in significant asset sales or debt/equity issuances. Investors should note the short-term nature of this financing and the financial covenants tied to the company's leverage.
Key Highlights
- 1ONEOK entered into a $1 billion, 364-day bridge credit facility on June 28, 2005.
- 2The facility is intended to finance a portion of the $1.35 billion acquisition of Koch Industries' natural gas liquids businesses.
- 3The credit facility matures on June 26, 2006, with all outstanding amounts due at that time.
- 4The agreement includes covenants such as a consolidated total debt to total capital ratio not exceeding 70.0% (pre-March 31, 2006) and 67.5% (post-March 31, 2006).
- 5Equity units are treated as 75% equity and 25% debt for covenant calculation purposes until common stock issuance.
- 6The facility has specific prepayment requirements tied to asset sales or debt/equity issuances above certain thresholds.
- 7The credit facility agreement was filed as an exhibit, along with a press release dated June 28, 2005.