After obtaining the necessary approvals from numerous regulatory bodies, including most recently the Kansas Commission, ONEOK’s (OKE) board of directors officially approved the spinoff of its natural gas distribution business, One Gas. The new company will be one of the largest natural gas utilities in the US and consist of the Kansas Gas Service, Oklahoma Natural Gas Company and Texas Gas Service. The transaction is expected to take place after the close on January 31st, but the new company is expected to start trading on a ‘When-Issued’ basis on January 16th. The new company will be listed on the NYSE under the ticker ‘OGS’ and Oneok shareholders as of January 21st will receive one share of OGS for every 4 shares of OKE owned.

As we previously noted, ONEOK’s long-time leader John Gibson will be stepping down after the spin and will be replaced as President and CEO by Terry Spencer. Pierce Norton will take the helm at One Gas. The new company will issue a little over a billion dollars in new long term debt in order to fund a one time payment to ONEOK which will be used to pay down its debt load. Despite this, OGS is expected to have an investment grade credit rating.

Disclosure: Author holds no position in any stock mentioned.