8-KMaterial AgreementsFinancial Events

ONEOK INC /NEW/ 8-K Report, Material Agreement (Sep 27, 2005)

Filed September 27, 2005For Securities:OKE

Summary

ONEOK, Inc. (OKE) filed an 8-K on September 27, 2005, reporting on amendments to its credit facilities. The company entered into a Fourth Amendment to its $1.2 billion Credit Agreement and a First Amendment to its $1 billion, 364-day Bridge Credit Facility. These amendments, effective September 1, 2005, importantly modify the definition of "Consolidated Net Worth" to exclude the impact of gains and losses from commodity hedging agreements that are recorded in other comprehensive income (loss). This change in the calculation of Consolidated Net Worth is designed to increase the amount of indebtedness ONEOK can incur while remaining in compliance with the debt-to-capital ratio covenants within both the Credit Agreement and the Bridge Facility. This adjustment offers the company greater financial flexibility regarding its borrowing capacity, which is a key consideration for investors assessing its capital structure and potential for future growth or acquisitions.

Key Highlights

  • 1ONEOK, Inc. amended its $1.2 billion Credit Agreement and its $1 billion Bridge Credit Facility.
  • 2The amendments are effective as of September 1, 2005.
  • 3The core change is the modification of the definition of 'Consolidated Net Worth'.
  • 4The amendments exclude gains and losses from commodity hedging agreements recognized in other comprehensive income (loss) from the calculation of Consolidated Net Worth.
  • 5This change is expected to increase the maximum amount of indebtedness ONEOK can incur.
  • 6The amendments ensure continued compliance with debt-to-capital ratio covenants in both credit facilities.
  • 7This provides ONEOK with enhanced financial flexibility for borrowing.

Frequently Asked Questions

The primary purpose of these amendments is to adjust the calculation of 'Consolidated Net Worth' by excluding unrealized gains and losses from commodity hedging activities that are recorded in other comprehensive income (loss). This adjustment provides ONEOK with greater financial flexibility by effectively increasing its borrowing capacity under the existing credit agreements while maintaining compliance with debt covenants.

By excluding certain hedging-related gains and losses from the calculation of Consolidated Net Worth, the amendments allow ONEOK to incur more debt while still meeting its debt-to-capital ratio covenants. This means the company can potentially take on additional leverage without violating its loan agreements.

The Fourth Amendment to the Credit Agreement involves ONEOK, Inc., Bank of America, N.A. (as Administrative Agent, Lender, and Letter of Credit Issuer), and other Lenders. The First Amendment to the Bridge Facility involves ONEOK, Inc. and a syndicate of banks, co-managed by Citigroup Global Markets Inc. and UBS Securities LLC.

Both the Fourth Amendment to the Credit Agreement and the First Amendment to the Bridge Facility are effective as of September 1, 2005.