Oneok Inc. said May 9 that it has agreed to acquire the natural gas liquids, or NGL, businesses owned by several Koch Industries Inc. companies for about $1.35 billion.
The transaction is expected to generate about $135 million to $145 million of primarily fee-based earnings before interest, taxes, depreciation and amortization in 2006, the company said. Oneok estimates the depreciation expense to be between $35 million and $40 million annually, and that the transaction will benefit
Oneok’s earnings per share.
Included in the transaction is Koch Hydrocarbon LP’s entire mid-continent NGL business that provides NGL gathering, fractionation, storage and marketing services for processors in Okla., Kan. and Texas.
The deal also includes Koch Pipeline Co. LP’s NGL pipeline distribution systems, about 1,800 miles of interstate NGL distribution pipelines that connect Conway, Kansas, and Mont Belvieu, Texas market centers.
Initial financing for the deal will be a bridge loan or through another short-term credit facility, and permanent financing will come from a combination of available cash, issuance of long-term debt and proceeds from the settlement of equity units in February 2006. The company may also use proceeds from the sale of less strategic assets, Oneok said.
UBS Investment Bank advised Oneok on the deal and Goldman Sachs & Co. advised Koch.
Closing is subject to antitrust clearance from the Federal Trade Commission under the Hart-Scott-Rodino Act.
Oneok shares fell 39 cents to close at $29.53 on the New York Stock Exchange.
—The Associated Press
