8-KLeadership ChangesAcquisitions & DispositionsMaterial Agreements+2

ONEOK INC /NEW/ 8-K Report, Material Agreement (Apr 12, 2006)

Filed April 12, 2006For Securities:OKE

Summary

ONEOK, Inc. (OKE) has filed an 8-K report detailing significant corporate actions completed on April 6, 2006. The primary event is the completion of a series of transactions resulting in ONEOK's 100% ownership of the general partner interest in Northern Border Partners, L.P. (NBP). These transactions involved the contribution of ONEOK's gathering, processing, and pipelines and storage segments to NBP in exchange for NBP Class B units, and the sale of its natural gas liquids segment to NBP for cash. Additionally, ONEOK acquired the remaining outstanding common stock of Northwest Border, an affiliate of TransCanada Corporation, which held a significant portion of NBP's general partner interest. In conjunction with these asset dispositions and acquisitions, ONEOK entered into a Fifth Amendment to its $1.2 billion credit agreement, primarily to accommodate the NBP transactions. The amendment removed a representation requirement for no material adverse change prior to borrowing and added a covenant regarding control over NBP's management. Furthermore, a Services Agreement was established, obligating ONEOK to provide services to NBP and its subsidiaries, with costs allocated consistently with existing affiliate practices. These strategic moves significantly alter ONEOK's asset base and operational structure, marking a substantial shift in its business focus.

Key Highlights

  • 1ONEOK completed transactions to gain 100% ownership of Northern Border Partners, L.P. (NBP) general partner interest.
  • 2ONEOK contributed its gathering, processing, pipelines, and storage segments to NBP in exchange for NBP Class B units.
  • 3ONEOK sold its natural gas liquids segment to NBP for $1.35 billion in cash.
  • 4ONEOK acquired remaining NBP general partner interests by purchasing Northwest Border from TransCanada for $30 million net.
  • 5A Fifth Amendment to ONEOK's $1.2 billion credit agreement was executed to facilitate these transactions.
  • 6A new Services Agreement was put in place for ONEOK to provide services to NBP and its subsidiaries.
  • 7Several key ONEOK executives assumed additional roles within NBP, reflecting the integrated nature of the post-transaction structure.

Frequently Asked Questions

ONEOK completed a series of transactions that resulted in it owning 100% of the general partner interest in Northern Border Partners, L.P. (NBP). This involved contributing its gathering, processing, and pipelines/storage segments to NBP in exchange for NBP Class B units, selling its natural gas liquids segment to NBP for cash, and acquiring the remaining general partner interest in NBP.

ONEOK entered into a Fifth Amendment to its $1.2 billion credit agreement. This amendment was necessary to accommodate the NBP transactions. Key changes included the deletion of the requirement for ONEOK to represent that no material adverse change had occurred as a condition to borrowing, and the addition of a covenant requiring ONEOK to maintain control over NBP's management and policies.

The Services Agreement ensures that ONEOK will provide essential services to NBP and its subsidiaries. These services will be similar in type and amount to those provided to ONEOK's other affiliates, and the costs will be allocated and billed monthly in a consistent manner, adhering to applicable laws.

Several key ONEOK executives, including the CEO, President, and CFO, have also taken on significant roles within NBP. This indicates a high degree of integration and centralized management following the completion of the transactions, with ONEOK executives overseeing both the parent company and its newly consolidated NBP interests.