Ending months of speculation, Oneok Inc. said Thursday that it has decided not to purchase Westar Energy Inc.’s 42.5% stake in Oneok. The company’s board of directors said it decided that Oneok’s energies would be better spent on focusing on building shareholder value through growth, profitability and performance.

Westar offered the stake to Oneok in late May under the terms of its shareholder agreement with the company. Westar’s equity holdings in Oneok consist of approximately 4.7 million shares of common stock and 19.9 million shares of series A convertible preferred stock, which it acquired in 1997 as consideration for Oneok’s purchase of Westar’s gas distribution assets in Kansas. Oneok had until Aug. 28 to make a decision whether to purchase all the shares at $21.77/share as specified in the sale notice for a total price of $971.1 million.

In a conference call Thursday afternoon, Oneok said that because it has decided not to purchase the shares Westar has until Sept. 30, 2003 to complete a sale. Westar can only unload the Oneok shares on the market or to another party as common stock.

“Our management team and board of directors reviewed the opportunities available to us under the terms of our Shareholder Agreement with Westar,” said David Kyle, CEO of Oneok. “After careful deliberation and consultation with our legal and financial advisors, we concluded that, at this time and under these conditions, purchasing Westar’s shares is not in the best interest of the company and our shareholders. We believe we can build greater value by preserving our financial flexibility and continuing to execute on our proven growth strategy.”

Oneok said it has transformed itself over the past several years from a mid-sized Oklahoma gas provider into a profitable and diversified leader in the energy industry. Oneok has built a combination of regulated and non-regulated businesses focused on the Mid Continent region. Its asset-backed energy marketing operations reach more than 28 states, while the company continues to be a key player in the retail natural gas markets in Oklahoma and Kansas.

“At a time when our industry is facing significant challenges, Oneok’s powerful asset mix, strategic focus and strong balance sheet have enabled us to achieve solid results,” Kyle added. “Going forward, we intend to focus on maintaining a strong balance sheet and continue building value by seeking attractive opportunities to maximize our existing assets and operations and positively impact our earnings performance.”

Two months after it first gave notice that it was reviewing alternatives, Westar, a subsidiary of Topeka, KS-based Western Resources Inc. gave Oneok Inc. notice Thursday of its intention to sell all of its interests — common and preferred stock — in the Tulsa, OK-based gas distributor.

In late April, Westar acknowledged that it was “reviewing alternatives” for changing its investment in Oneok (see Daily GPI, April 29). In May, the company said that it was planning to sell its stake in Oneok (see Daily GPI, May 24). Westar enlisted JP Morgan to advise it in the sale of the holdings.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.