Oneok, Tulsa, Okla., paid
$40 million for the remaining general partnership interest in Northern Border. Oneok then transferred to the partnership its entire gathering and processing, natural gas liquids, and pipelines and storage segments in a $3 billion transaction. Oneok received $1.35 billion in cash and 36.5 million limited partner units.
The partnership then sold a 20% interest in Northern Border Pipeline to TransCanada affiliate
( TCLP) for $300 million. Northern Border Partners and TC PipeLines will each own a half-interest in the pipeline, with an affiliate of TransCanada becoming operator of the pipeline in April 2007.
"With the completion of these transactions, Oneok and the partnership are well positioned to grow," said Oneok chief David Kyle, who will also become chief of Northern Border. "Oneok will benefit from the expected growth of the partnership, both by acquisition and from internally generated projects. We firmly believe that our interests are clearly aligned with the limited partners and are very excited about the future."
John W. Gibson, president of Oneok Energy, will become president and chief operating officer of the partnership. William Cordes, chief executive of the partnership, will become president, Northern Border Pipeline, reporting to Gibson.
To finance the transactions, the partnership has obtained $1.1 billion, 364-day bridge-financing and renegotiated its credit revolver, expanding the facility to $750 million for a new five-year term.
Oneok intends to use $40 million of the $1.35 billion cash proceeds from the transactions to acquire the general partnership interest from TransCanada, with the remainder being used to reduce short-term debt, acquire other assets or repurchase Oneok common stock.