Oneok plans long-term debt in spinoff of natural gas distribution line

By Susanna Moon

Chicago, July 25 - Oneok, Inc. announced plans to issue long-term debt in connection with the spinoff of the company's natural gas distribution business to be called ONE Gas, Inc.

When the company is spun off, Oneok will reduce its long-term debt with proceeds from a one-time cash distribution from ONE Gas of about $1.1 billion to $1.2 billion as part of the transfer of natural gas distribution assets to ONE Gas from Oneok, according to a company press release.

ONE Gas will fund this payment to Oneok by issuing its own long-term debt.

At closing, Oneok said it expects to have $1.1 billion to $1.3 billion of total long-term debt outstanding.

ONE Gas is expected to have $1.1 billion to $1.2 billion of total long-term debt outstanding and be rated higher than Oneok is currently rated by Standard & Poor's and Moody's Investor Service, the company said.

ONE Gas expects to have a capital structure, balance sheet and financial policies consistent with investment-grade credit metrics.

With regard to credit, Oneok said it does not expect to change its conservative financial policies. The company said its pro-forma credit ratings are expected to be in line with its general partner peers and it that it expects to receive a slightly lower credit rating.

ONE Gas will consist of Oklahoma Natural Gas Co., Kansas Gas Service and Texas Gas Service, and the company will be based in Tulsa, Okla.

Oneok is a Tulsa, Okla.-based natural gas company.

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