8-KAcquisitions & DispositionsFinancial EventsOther Events+1

ONEOK INC /NEW/ 8-K Report, Acquisition Completed (Feb 5, 2014)

Filed February 5, 2014For Securities:OKE

Summary

ONEOK, Inc. (OKE) filed an 8-K on February 4, 2014, detailing two significant corporate actions. Firstly, the company announced the successful completion of the distribution of its wholly owned subsidiary, ONE Gas, Inc. (ONE Gas), to ONEOK shareholders on January 31, 2014. ONE Gas is now an independent, publicly traded entity (ticker: OGS) focused on regulated natural gas distribution. This separation involved ONEOK transferring its natural gas distribution assets and liabilities to ONE Gas, which in turn made a substantial cash payment of approximately $1.13 billion to ONEOK, derived from debt issuance. Secondly, ONEOK announced its election to call for the redemption of its $400 million aggregate principal amount of 5.2 percent notes due 2015, with the redemption date set for March 5, 2014. This action will result in the full retirement of these specific notes. Investors should note that the company also provided pro forma financial statements, offering a look at its financial position as if the separation had occurred at an earlier date.

Key Highlights

  • 1ONEOK completed the spin-off of its natural gas distribution subsidiary, ONE Gas, Inc., on January 31, 2014.
  • 2ONE Gas is now an independent, publicly traded company under the ticker OGS.
  • 3ONEOK received approximately $1.13 billion in cash from ONE Gas as part of the separation, funded by ONE Gas's debt issuance.
  • 4ONEOK announced the redemption of its entire $400 million principal amount of 5.2% notes due 2015.
  • 5The redemption of the notes is scheduled for March 5, 2014, with all outstanding notes to be called.
  • 6The filing includes pro forma financial statements as of September 30, 2013, and for prior periods, reflecting the impact of the separation.

Frequently Asked Questions

The distribution of ONE Gas means that ONEOK shareholders now directly own shares in two separate companies. ONEOK will continue to focus on its midstream and energy services businesses, while ONE Gas will operate as an independent, publicly traded entity focused solely on regulated natural gas distribution. Shareholders received one share of ONE Gas for every four shares of ONEOK they held as of the record date.

ONEOK has elected to call for the redemption of its $400 million in 5.2% notes due 2015. While the exact strategic reasons are not detailed in this 8-K, companies often redeem debt early to take advantage of lower interest rates, improve their capital structure, or simplify their debt obligations, especially after significant corporate events like a spin-off.

As part of the separation, ONE Gas made a cash payment of approximately $1.13 billion to ONEOK. This cash infusion was generated by ONE Gas from the issuance of its own debt securities.

The 8-K filing includes unaudited pro forma condensed consolidated financial statements as of September 30, 2013, and for prior periods. These pro forma statements are designed to show how the financial statements of ONEOK might have looked if the separation of ONE Gas had occurred at an earlier point in time, providing a clearer view of the post-separation financial structure.