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The board of directors of ONEOK, Inc. has unanimously approved the separation of the company's natural gas distribution business into a stand-alone, publicly traded company that will be called ONE Gas, Inc.
ONEOK shareholders of record at the close of business on Jan. 21, 2014, will retain their current shares of ONEOK stock and receive one share of ONE Gas stock for every four shares of ONEOK stock owned. No fractional shares of ONE Gas stock will be issued; however, shareholders entitled to receive a fractional share of ONE Gas stock in the distribution will receive the cash value of that fractional share instead.
Subject to the satisfaction of the conditions to closing, these ONE Gas shares will be distributed following the close of business on Jan. 31, 2014, and the transaction will close.
ONE Gas common stock is expected to begin "regular-way" trading on the New York Stock Exchange (NYSE) on Feb. 3, 2014, under the symbol "OGS." ONEOK will continue to trade on the NYSE under the ticker symbol "OKE."
ONE Gas common stock is expected to trade on a "when-issued" basis, and ONEOK common stock is expected to trade on an "ex-distribution" basis, both on the NYSE on Jan. 16, 2014.
ONEOK shareholders are advised to consult their financial and tax advisors regarding the particular consequences of the distribution, including, without limitation, the specific implications of selling ONEOK common stock on or prior to the distribution date.
At closing, Terry K. Spencer will become president and chief executive officer of ONEOK and ONEOK Partners, and a member of the ONEOK board of directors; he will remain on the ONEOK Partners board.
Spencer succeeds John W. Gibson who will retire after more than seven years as chief executive officer of ONEOK and ONEOK Partners and almost 14 years with the company, and become non-executive chairman of ONEOK, ONEOK Partners, L.P. and ONE Gas.
At closing, Pierce H. Norton II will become president and chief executive officer of ONE Gas and a member of the ONE Gas board of directors.
ONEOK will continue to hold its interests in ONEOK Partners, L.P., which include the sole general partner and limited partner interests that together represent 41.2 percent of the outstanding partnership interests, as of Dec. 31, 2013. No material impact to ONEOK Partners is expected as a result of this transaction.
ONE Gas will consist of Kansas Gas Service, Oklahoma Natural Gas Company and Texas Gas Service, and will be headquartered in Tulsa, Okla. It will be one of the largest natural gas utilities in the United States, serving more than 2 million customers in three states, and will be a 100 percent regulated, publicly traded natural gas utility.
Financing and Capital Structure
Following the separation, ONEOK will reduce its long-term debt with the proceeds from a one-time cash payment from ONE Gas – estimated to be approximately $1.13 billion – as part of the transfer of the natural gas distribution business to ONE Gas from ONEOK. ONE Gas will fund this transfer to ONEOK by issuing its own long-term debt in mid-January 2014.
Upon completion of the debt reduction, ONEOK expects to have approximately $1.1 billion in total long-term debt outstanding.
When the transaction is completed, ONE Gas is expected to have approximately $1.2 billion in total long-term debt outstanding and be rated higher than ONEOK currently is rated by Standard & Poor's and Moody's Investor Service. ONE Gas anticipates having a capital structure, balance sheet and financial policies consistent with investment-grade credit metrics.
ONE Gas Board of Directors Announced
Upon completion of the separation, the ONE Gas board of directors will consist of seven directors, including Gibson and Norton. Other members of the ONE Gas board include:
- Robert B. Evans, retired president and chief executive officer of Duke Energy Americas, a business unit of Duke Energy Corp.;
- Michael G. Hutchinson, retired partner of Deloitte & Touche, who led the firm's energy and natural resources, and audit and enterprise risk management practices in its Denver office;
- Pattye L. Moore, a member of the ONEOK board of directors since 2002 and current non-executive chairman of the board of Red Robin Gourmet Burgers; she will remain on the ONEOK board;
- Eduardo A. Rodriguez, a member of the ONEOK board of directors since 2004 and current president of Strategic Communications Consulting Group, El Paso, Texas; he will remain on the ONEOK board; and
- Douglas H. Yaeger, retired chairman, president and chief executive officer of The Laclede Group, Inc. and Laclede Gas Company.
Biographies
ONE Gas Board of Directors
John W. Gibson
John Gibson will become non-executive chairman of the board of ONEOK, ONEOK Partners and ONE Gas upon the closing of the transaction. He currently is chairman and chief executive officer of both ONEOK and ONEOK Partners after serving most recently as chairman, president and chief executive officer of ONEOK and ONEOK Partners.
Gibson joined ONEOK in 2000 as president of energy, responsible for the company's natural gas gathering and processing, and transportation and storage businesses. In 2006, he was named president and chief operating officer of ONEOK Partners, the master limited partnership that contains the midstream natural gas and natural gas liquids businesses. He was elected chief executive officer of ONEOK and president and chief executive officer of ONEOK Partners in January 2007, becoming chairman of ONEOK Partners later that year. In January 2010, he became president of ONEOK, and in May 2011, he became chairman.
Gibson began his career in the energy industry in 1974 as a refinery engineer with Exxon Company, USA. He spent 18 years with Phillips Petroleum Company in a variety of domestic and international positions in the natural gas, natural gas liquids and exploration and production businesses. Prior to joining ONEOK, Gibson was executive vice president of Koch Energy, Inc., a subsidiary of Koch Industries, responsible for its interstate natural gas pipelines and gathering and processing businesses.
A native of Kansas City, Kan., Gibson earned an engineering degree in 1974 from the University of Missouri at Rolla, now called Missouri University of Science and Technology.
Pierce H. Norton II
Pierce Norton will become president and chief executive officer and a member of the board of directors of ONE Gas upon the closing of the transaction. He currently is executive vice president, commercial, of ONEOK and ONEOK Partners. Norton is a member of the American Gas Association's board of directors and its executive committee.
Previously, Norton served as executive vice president and chief operating officer of ONEOK and ONEOK Partners, responsible for the company's natural gas gathering and processing, natural gas pipelines, natural gas liquids, natural gas distribution and energy services business segments, as well as the environment, safety and health, and technical services organizations. Prior to that, Norton was president of ONEOK Distribution Companies – Kansas Gas Service, Oklahoma Natural Gas and Texas Gas Service. He also held the position of executive vice president of natural gas, which included responsibility for all natural gas pipelines and the natural gas gathering and processing businesses within ONEOK Partners.
He began his natural gas industry career in 1982 at Delhi Gas Pipeline, a subsidiary of Texas Oil and Gas Corporation. He later worked for American Oil and Gas, with operational responsibilities for natural gas gathering and processing, and for intrastate and interstate pipelines. He then worked for KN Energy as vice president and general manager of the Heartland Region, before moving to Bear Paw Energy as vice president of business development. In 2002, he was named president of Bear Paw Energy, now called ONEOK Rockies Midstream, a subsidiary of ONEOK Partners.
An Alabama native, Norton earned a Bachelor of Science degree in mechanical engineering in 1982 from the University of Alabama in Tuscaloosa. He also is a graduate of Harvard Business School's Advanced Management Program.
Robert B. Evans
Robert Evans currently serves on the boards of directors of the general partner of Targa Resources Partners, LP, a provider of midstream natural gas and natural gas liquids services, and has since 2007; Sprague Resources, LP. since 2013; and New Jersey Resources Corp. since 2009.
Evans was president and chief executive officer of Duke Energy Americas, a business unit of Duke Energy Corp., from January 2004 until his retirement in March 2006. He served as the transition executive for Energy Services, a business unit of Duke Energy, during 2003. Evans was president of Duke Energy Gas Transmission, a business unit of Duke Energy, beginning in 1998 until he was named president and chief executive officer in 2002, a position in which he served until 2004.
Prior to his employment at Duke Energy, Evans served as vice president of marketing and regulatory affairs for Texas Eastern Transmission and Algonquin Gas Transmission from 1996 to 1998.
Evans' experience in senior leadership and board positions for other energy companies brings executive, corporate development, operations, financial and industry knowledge to the board. He has experience in the natural gas distribution business as a result of his employment at Duke Energy.
Evans received his bachelor's degree in accounting from the University of Houston in 1980.
Michael G. Hutchinson
Michael Hutchinson currently serves on the board of directors of Westmoreland Coal Company and has since 2012. He is chairman of its audit committee and a member of its compensation committee.
Hutchinson retired as a partner from Deloitte & Touche in 2012. His Deloitte career spanned nearly 35 years, leading the energy and natural resources practice in Colorado for more than 10 years, while at the same time managing more than 150 professionals in the Denver audit and enterprise risk management practice.
Hutchinson has substantial expertise in accounting and finance matters, gained during his experience in public accounting. He served as the lead audit partner on many of the firm's largest clients in Denver from 1989 until his retirement.
His qualifications include his experience with accounting principles, financial controls and evaluating financial statements of public companies in the energy sector, particularly from an auditor's perspective.
Hutchinson received his bachelor's degree in accounting from University of Northern Colorado.
Pattye L. Moore
Pattye Moore currently serves on the board of directors of ONEOK and has since 2002. Following the separation, she will continue to serve as a director of ONEOK. She is past chair of ONEOK's corporate governance committee.
Moore also currently serves as non-executive chairman of the board of Red Robin Gourmet Burgers. In addition, Moore is a business strategy consultant, speaker and the author of Confessions from the Corner Office, a book on leadership instincts, published by Wiley & Sons in 2007. She also serves on the board of directors of QuikTrip Corporation.
She served on the board of directors of Sonic Corp. from 2000 to 2006 and was the president of Sonic from January 2002 to November 2004. She also held numerous senior management positions during her 12 years at Sonic, including executive vice president; senior vice president, marketing and brand development; and vice president, marketing.
Moore has extensive senior management, marketing, business strategy, brand development and corporate governance experience as a result of her service on the ONEOK, Red Robin, Sonic and other boards, and her consulting career. She also has corporate governance and executive compensation experience as a result of her previous board service.
She graduated from the University of Oklahoma in Norman with a bachelor's degree in journalism/public relations.
Eduardo A. Rodriguez
Eduardo Rodriguez currently serves on the board of directors of ONEOK and has since 2004. Following the separation, he will continue to serve as a director of ONEOK. He is past chair of ONEOK's audit committee.
Rodriguez is president of Strategic Communications Consulting Group, El Paso, Texas. He previously served as executive vice president and a member of the board of directors of Hunt Building Corporation, a privately held company engaged in construction and real estate development, also headquartered in El Paso, Texas.
Rodriguez spent 20 years at El Paso Electric Company, a publicly traded, investor-owned electric utility, where he served in various senior-level executive positions, including general counsel; senior vice president for customer and corporate services; and executive vice president and chief operating officer.
Rodriguez is a licensed attorney in the states of Texas and New Mexico, and is admitted to the United States District Court for the Western District of Texas. Rodriguez has had extensive senior management, operational, entrepreneurial and legal experience in a variety of industries as result of his service at Strategic Communications Consulting Group, Hunt Building Corporation and El Paso Electric Company.
Rodriguez has practiced law for more than 30 years. In addition to his extensive legal experience, his senior management positions have included responsibility for strategic planning, corporate governance and regulatory compliance.
He graduated from Texas Tech University with a bachelor's degree in political science/U.S. history and received his Juris Doctor degree from St. Mary's University School of Law.
Douglas H. Yaeger
Douglas Yaeger served as chairman, president and chief executive officer of The Laclede Group, Inc. and Laclede Gas Company from 1999 until his retirement on Feb. 1, 2012.
Previously, Yaeger served as president and chief operating officer, and executive vice president – operations and marketing of Laclede. He joined Laclede in 1990 as vice president – planning, after spending nearly 20 years in the interstate pipeline industry, including roles as executive vice president of Mississippi River Transmission Corporation and executive vice president of Arkla Energy Marketing Company.
Yaeger also served on the board of the American Gas Association and is the past chairman of its audit committee. He also served as chairman of the Missouri Energy Development Association and the Southern Gas Association.
Yaeger received a bachelor's degree in marketing from Miami University of Ohio and a Master of Business Administration degree from Saint Louis University. He also is a graduate of Harvard Business School's Advanced Management Program.