What is an Accelerated Share Repurchase (ASR) agreement?

An Accelerated Share Repurchase (ASR) agreement is a contract where a company buys back its own stock from a financial institution (like a bank) at an accelerated pace. In this case, ONEOK is agreeing to repurchase a large block of shares upfront, with the final number of shares or cost potentially adjusted later based on market trading prices.

How will this share repurchase affect ONEOK's earnings per share (EPS)?

By reducing the number of outstanding shares, the company's earnings will be divided among a smaller pool of shares. This typically leads to an increase in earnings per share (EPS), which can be viewed positively by investors as it suggests higher profitability on a per-share basis.

What does the market price adjustment provision mean for ONEOK?

The market price adjustment provision means the final cost or number of shares repurchased could be adjusted depending on the average trading price of ONEOK's stock during the ASR period. If the average trading price is higher than anticipated (less a discount), ONEOK might owe Bank of America more money or deliver more shares. Conversely, if the price is lower, ONEOK might receive a credit or fewer shares back. ONEOK has the option to settle any adjustment payment in cash or in additional shares.

Is this share repurchase a new strategy for ONEOK?

No, this ASR is being executed pursuant to ONEOK's previously announced stock repurchase program, indicating it's a continuation of their existing strategy to return value to shareholders through buybacks.

OKE 8-K: Material Agreements

Summary

ONEOK Inc. (OKE) announced on June 27, 2007, the entry into a material definitive agreement for an accelerated share repurchase (ASR) program with Bank of America, N.A. Under this agreement, ONEOK will repurchase approximately 7.5 million shares of its common stock for a total of $370 million, funded by existing cash reserves. This strategic move is expected to reduce the number of outstanding shares used for earnings per share (EPS) calculations to approximately 104 million, potentially enhancing EPS figures for investors.

Key Highlights

1ONEOK Inc. entered into an Accelerated Share Repurchase (ASR) agreement on June 27, 2007.
2The ASR involves the repurchase of 7,500,000 shares of common stock from Bank of America, N.A.
3The total cost of the share repurchase is $370 million.
4The repurchase will be funded using cash on hand.
5The number of outstanding shares for EPS calculation will decrease to approximately 104 million.
6The transaction is subject to a market price adjustment provision based on the volume-weighted average trading price of OKE's stock.
7The ASR is part of ONEOK's previously announced stock repurchase program.

ONEOK INC /NEW/ 8-K Report, Material Agreement (Jun 29, 2007)

Summary

Key Highlights

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