What is the Apollo minority equity investment, and how does it affect ONEOK's capital structure?

Apollo-affiliated AP Falcon Holdings will contribute $9 billion in cash for Class B units in ONEOK Holdings, L.L.C., a new holding company above ONEOK, L.L.C. The investment is nonvoting, structurally subordinate to all senior debt, and carries no liquidation preference. Management says it funds the Brazos acquisition and lets ONEOK retire about $5 billion of debt, reducing pro forma 2027 leverage to roughly 3.25x debt-to-EBITDA without issuing common equity. It is accounted for as a noncontrolling interest within permanent equity, and the rating agencies view it as credit-enhancing.

How is the Apollo investor's return structured, and what happens to common shareholders?

During the Initial Period, the Class B member receives 15% of OpCo cash flow from operations each quarter, which ONEOK can raise to 20%. Its return is capped at a 7.0% IRR for the first nine years, and distributions above that level reduce its capital balance. Value above the cap accrues to ONEOK common shareholders. ONEOK may buy out the Class B interest starting on the eighth anniversary, or earlier if the balance falls to $200 million. The Class A member can choose to repurchase or redeem the units at a price set to achieve the applicable Base Return.

What are the main constraints or risks for investors in the Apollo structure?

The Class B interest carries a Distribution Trigger: if ONEOK or its parent pays a dividend or repurchases equity, a matching Quarterly Distribution to the Class B member is required, which can limit shareholder returns. Deferred distributions accumulate as balances owed to the Class B member. Investor consent rights apply to specified HoldCo actions, and the Class B member has a change-of-control put and a material-breach redemption right. Standstill restrictions also apply to Apollo and its affiliates. The filing and press release caution that the transaction may not close, that the Brazos deal requires HSR clearance, and that anticipated accretion and synergies may not be realized.

What is the Brazos Midland acquisition, and why is management calling it accretive?

ONEOK Rockies Midstream will acquire 100% of Brazos Midland, LLC for a base cash price of $4.425 billion, subject to customary adjustments. The assets include about 600,000 dedicated acres under fixed-fee contracts with a weighted average remaining term of over 12 years, roughly 700 miles of gathering pipelines, and 1.2 Bcf/d of processing capacity after the Cassidy II plant, expected in Q3 2027. Management says the deal more than doubles ONEOK's Midland processing capacity to about 2.3 Bcf/d and is immediately accretive to earnings and free cash flow per share. The implied multiple is about 7.5x 2027E EBITDA including ~$80 million of synergies.

What does the tender offer mean for holders of ONEOK senior notes?

ONEOK is offering to buy back up to $2 billion of principal across 20 series of senior notes, with priority levels that determine acceptance. Holders who tender by the early deadline of 5:00 p.m. NYC time on September 14, 2026 receive the Early Tender Consideration, which is a fixed spread over the Treasury yield plus an early premium of $50 per $1,000 principal, along with accrued interest. Tenders after that deadline, up to the September 29, 2026 expiration, receive the Tender Offer Consideration, which is $50 less per $1,000. Completion is conditioned on the Apollo investment and reorganization closing. Some notes trade below par, and ONEOK may also redeem certain notes under make-whole provisions. Holders should consult their own advisers.

OKE 8-K: Material Agreements & Securities & Listing

01—Abstract

Summary

Summary of the 8-K filed August 31, 2026. Cited figures are marked; the original filing is the authoritative source.

ONEOK (OKE) filed an 8-K on August 31, 2026 disclosing three linked transactions announced August 30, 2026: a $9 billion^a nonvoting minority equity investment from Apollo-affiliated funds, a $4.425 billion cash acquisition of Brazos Midland's Permian Midland Basin gathering and processing assets, and a roughly $5 billion debt reduction program funded by the Apollo proceeds.

Under the Contribution Agreement dated August 28, 2026, Apollo's affiliate contributes $9 billion^b for Class B units in a new holding company, ONEOK Holdings, L.L.C., which holds ONEOK, L.L.C. (OpCo). The Class B investor receives 15% of OpCo cash flow from operations during the Initial Period (rising to 20% at ONEOK's option or if leverage exceeds 4.50x), with its return capped at a 7.0% IRR for the first nine years.

Distributions above that cap reduce the investor's capital balance, and value above the cap accrues to ONEOK common shareholders. Management says the transactions reduce pro forma 2027 debt-to-EBITDA to about 3.25x without issuing common equity, and they support potential dividend increases and buybacks. The Brazos acquisition implies about 7.5x estimated 2027 EBITDA including roughly $80 million^c of synergies, and about 6.0x estimated 2028 EBITDA.

The company expects it to be immediately accretive to earnings and free cash flow per share, and to close in Q4 2026 subject to HSR clearance. The minority investment is expected to close in the first half of September 2026. The filing also describes a tender offer for up to $2 billion^d of 20 series of senior notes, with an early tender deadline of September 14, 2026 and an expiration of September 29, 2026, along with a reorganization that converts ONEOK into a subsidiary of a new holding company, Falcon TopCo, renamed ONEOK, Inc. Investors should weigh the accretion and deleveraging benefits against the structural complexity of the Apollo instrument.

The Class B interest is structurally subordinate to all ONEOK senior debt, carries no liquidation preference, and imposes a distribution trigger that restricts ordinary shareholder dividends and buybacks while the investment is outstanding. Its economics also depend on distribution levels that the board controls, and the cap is set below the company's cost of public equity. The filing and accompanying press release contain extensive forward-looking statements, and the representations and warranties in the Contribution Agreement are qualified and should not be relied on as statements of fact.

02—Key points

Key Highlights

Apollo-affiliated funds will invest $9 billion for Class B units in ONEOK Holdings, L.L.C., a nonvoting minority interest, with proceeds used to fund the Brazos acquisition and extinguish about $5 billion of debt.
The $9 billion investment's return is capped at a 7.0% IRR for the first nine years, with the cap rising to 7.35% in year 10 and 7.85% in year 15. Returns above the cap accrue to ONEOK common shareholders.
Brazos Midland acquisition: $4.425 billion cash for Permian Midland Basin assets, implying about 7.5x 2027E EBITDA (including ~$80 million synergies) and about 6.0x 2028E EBITDA, with closing expected in Q4 2026.
Management targets pro forma 2027 leverage of about 3.25x debt-to-EBITDA and states that the transactions require no common equity issuance.
Class B distributions are 15% of OpCo CFFO during the Initial Period (ONEOK may elect up to 20%), and the investor's capital is expected to decline substantially over time.
Distribution Trigger: any dividend, buyback, or capital return by ONEOK or its parent requires a matching Quarterly Distribution to the Class B member, which constrains shareholder returns while the investment is outstanding.
Tender offers for up to $2 billion across 20 series of senior notes have an early tender deadline of September 14, 2026 and an expiration of September 29, 2026, with the transaction closing in the first half of September.

03—Questions

Frequently Asked Questions

What is the Apollo minority equity investment, and how does it affect ONEOK's capital structure?
Apollo-affiliated AP Falcon Holdings will contribute $9 billion in cash for Class B units in ONEOK Holdings, L.L.C., a new holding company above ONEOK, L.L.C. The investment is nonvoting, structurally subordinate to all senior debt, and carries no liquidation preference. Management says it funds the Brazos acquisition and lets ONEOK retire about $5 billion of debt, reducing pro forma 2027 leverage to roughly 3.25x debt-to-EBITDA without issuing common equity. It is accounted for as a noncontrolling interest within permanent equity, and the rating agencies view it as credit-enhancing.
How is the Apollo investor's return structured, and what happens to common shareholders?
During the Initial Period, the Class B member receives 15% of OpCo cash flow from operations each quarter, which ONEOK can raise to 20%. Its return is capped at a 7.0% IRR for the first nine years, and distributions above that level reduce its capital balance. Value above the cap accrues to ONEOK common shareholders. ONEOK may buy out the Class B interest starting on the eighth anniversary, or earlier if the balance falls to $200 million. The Class A member can choose to repurchase or redeem the units at a price set to achieve the applicable Base Return.
What are the main constraints or risks for investors in the Apollo structure?
The Class B interest carries a Distribution Trigger: if ONEOK or its parent pays a dividend or repurchases equity, a matching Quarterly Distribution to the Class B member is required, which can limit shareholder returns. Deferred distributions accumulate as balances owed to the Class B member. Investor consent rights apply to specified HoldCo actions, and the Class B member has a change-of-control put and a material-breach redemption right. Standstill restrictions also apply to Apollo and its affiliates. The filing and press release caution that the transaction may not close, that the Brazos deal requires HSR clearance, and that anticipated accretion and synergies may not be realized.
What is the Brazos Midland acquisition, and why is management calling it accretive?
ONEOK Rockies Midstream will acquire 100% of Brazos Midland, LLC for a base cash price of $4.425 billion, subject to customary adjustments. The assets include about 600,000 dedicated acres under fixed-fee contracts with a weighted average remaining term of over 12 years, roughly 700 miles of gathering pipelines, and 1.2 Bcf/d of processing capacity after the Cassidy II plant, expected in Q3 2027. Management says the deal more than doubles ONEOK's Midland processing capacity to about 2.3 Bcf/d and is immediately accretive to earnings and free cash flow per share. The implied multiple is about 7.5x 2027E EBITDA including ~$80 million of synergies.
What does the tender offer mean for holders of ONEOK senior notes?
ONEOK is offering to buy back up to $2 billion of principal across 20 series of senior notes, with priority levels that determine acceptance. Holders who tender by the early deadline of 5:00 p.m. NYC time on September 14, 2026 receive the Early Tender Consideration, which is a fixed spread over the Treasury yield plus an early premium of $50 per $1,000 principal, along with accrued interest. Tenders after that deadline, up to the September 29, 2026 expiration, receive the Tender Offer Consideration, which is $50 less per $1,000. Completion is conditioned on the Apollo investment and reorganization closing. Some notes trade below par, and ONEOK may also redeem certain notes under make-whole provisions. Holders should consult their own advisers.

04—Continue

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