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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
April 5, 2000
(Date of earliest event reported)
KINDER MORGAN, INC.
(Exact name of registrant as specified in its charter)
KANSAS 1-6446 48-0290000
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1301 McKinney, Suite 3400
Houston, Texas 77010
(Address of principal executive offices, including zip code)
713-844-9500
(Registrant's telephone number, including area code)
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ITEM 2. DISPOSITION OF ASSETS.
On April 5, 2000, Kinder Morgan, Inc., a Kansas corporation, and
certain of its subsidiaries (the "Company"), completed the disposition of
certain assets to ONEOK, Inc., an Oklahoma corporation ("ONEOK"), pursuant to
the Stock and Asset Purchase Agreement dated February 8, 2000, as amended by the
First Amendment to Stock and Asset Purchase Agreement dated April 5, 2000 (the
"Agreement"). The Agreement provided for the sale to ONEOK of (i) all of the
Company's natural gas gathering and processing business in Oklahoma, Kansas and
West Texas, (ii) the Company's marketing and trading business, and (iii) certain
of the Company's storage and transmission pipelines in the mid-continent region.
ONEOK (i) paid approximately $108 million plus an amount equal to net
working capital at closing, (ii) assumed the operating lease associated with the
Bushton, Kansas gas processing plant, and (iii) assumed long-term capacity
commitments on Natural Gas Pipeline Company of America and on Kinder Morgan
Interstate Gas Transmission LLC (formerly KN Interstate Gas Transmission Co.).
An additional $6 million of consideration will be paid to the Company upon final
closing of the sale to ONEOK of a small mid-continent pipeline.
On April 5, 2000, the Company issued a press release, a copy of which
is attached hereto as Exhibit 99.3 and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Substantially the same information as that required by Item 7 (pro
forma financial information) has been previously reported by Kinder
Morgan, Inc. on its Form 10-K filed with the Securities and Exchange
Commission for the fiscal year ended December 31, 1999.
(c) Exhibits.
The following materials are filed as exhibits to this Current Report on
Form 8-K.
Exhibit
Number Description
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99.1 Stock and Asset Purchase Agreement dated February 8, 2000 by and
among Kinder Morgan, Inc., MidCon Gas Services Corp., KN Gas
Gathering, Inc., KN Services, Inc. and ONEOK, Inc. (incorporated
by reference from Exhibit 99.2 to the Company's Current Report on
Form 8-K filed February 8, 2000).
*99.2 First Amendment to Stock and Asset Purchase Agreement dated April
5, 2000 among the Company, MidCon Gas Services Corp., KN
Services, Inc., KN Gas Gathering, Inc., and ONEOK.
*99.3 Press Release dated April 5, 2000.
* Filed herewith.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Kinder Morgan, Inc.
By: /s/ Joseph Listengart
--------------------------------------
Joseph Listengart
Vice President, General Counsel and
Secretary
Date: April 20, 2000
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EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.1 Stock and Asset Purchase Agreement dated February 8, 2000 by and
among Kinder Morgan, Inc., MidCon Gas Services Corp., KN Gas
Gathering, Inc., KN Services, Inc. and ONEOK, Inc. (incorporated
by reference from Exhibit 99.2 to the Company's current Report on
Form 8-K filed February 8, 2000).
*99.2 First Amendment to Stock and Asset Purchase Agreement dated April
5, 2000 among the Company, MidCon Gas Services Corp., KN
Services, Inc., KN Gas Gathering, Inc., and ONEOK.
*99.3 Press Release dated April 5, 2000.
* Filed herewith.
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EXHIBIT 99.2
FIRST AMENDMENT TO STOCK AND ASSET PURCHASE AGREEMENT
This First Amendment to Stock and Asset Purchase Agreement is made and
entered into this 5th day of April, 2000 (the "Amendment"), by and among Kinder
Morgan, Inc., MidCon Gas Services Corp., KN Services, Inc. and KN Gas Gathering,
Inc. (collectively referred to as the "Sellers") and ONEOK, Inc. (the "Buyer").
WHEREAS, Sellers and Buyer entered into that certain Stock and Asset
Purchase Agreement dated February 8, 2000 (the "Agreement");
WHEREAS, Sellers and Buyer desire to amend the Agreement on the terms
and conditions as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements contained herein, the parties hereto agree as follows:
1. All capitalized terms used in this Amendment shall have the same
meanings as specified in the Agreement.
2. Schedule 1.1(d) to the Agreement is amended and restated in its
entirety to read as set forth on Schedule 1.1(d) attached hereto. Exhibit A
attached to this Amendment is a partial list of vehicles and Exhibit B attached
to this Amendment is a partial list of computer equipment that are identified by
Buyer as personal property to be conveyed to Buyer. Buyer acknowledges that both
Exhibit A and Exhibit B were prepared by Buyer and are subject to change based
on the provisions of this paragraph 2 and does not include telephones, facsimile
machines, servers, printers or other computer equipment. Within 30 days after
the Closing, the Sellers and Buyer agree to use their reasonable best efforts to
identify all vehicles, telephones and related equipment, fax machines, printers,
computers and other computer-related equipment presently used primarily in the
business or required to support the business of the Stock Entities and the KN
Gas Assets, so that all such equipment and vehicles not presently owned by the
Stock Entities will be conveyed to the Stock Entities (or other entity
designated by Buyer) within such 30 day period. Sellers, based on Buyer's
consent, shall be entitled to retain up to a maximum of 8 computers that
otherwise would be included in the transfer to Buyer for Sellers' continued
operations. At such time as the parties agree on the transfer of the additional
equipment and vehicles not presently listed on Schedule 1.1(d), such schedule
shall automatically be deemed to be amended to include such additional equipment
and vehicles.
3. A new section 1.3(l) is hereby added to the Agreement as follows:
(l) If the amount paid at Closing pursuant to Section
1.3(a)(iii) is either greater than or less than the actual severance
expenses incurred in excess of $5,150,000 (as determined within 90 days
after Closing), then either party may notify the other of the
discrepancy and each party hereby agrees to negotiate in good
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faith to resolve such difference and make the appropriate party whole
in accordance with Section 1.3(a)(iii). Sellers agree to supply Buyer
sufficient facts or documents in order that Buyer may reasonably
verify the actual payment of severance expenses during such 90 day
period.
4. The first two sentences of Section 1.8 of the Agreement are hereby
amended in their entirety as follows:
Sellers and Buyer shall agree on or before 60 days after the Closing to
a final allocation of the Cash Consideration (together with any assumed
liabilities and all other capitalizable costs) for the KN Gas Assets
(the "Asset Allocation"). The final Asset Allocation shall be set forth
on Schedule 1.8 to be delivered at such time of agreement.
Attached as Exhibit C to this Amendment is a preliminary Asset Allocation
pursuant to Section 1.8 of the Agreement that sets forth the categories of
assets allocations that will be subject to final agreement within 60 days after
the Closing pursuant to Section 1.8 of the Agreement. Sellers and Buyer
acknowledge that Exhibit C is preliminary and represents the reasonable best
estimate of each party hereto with respect to the matters set forth on Exhibit
C.
5. The third, fourth and fifth sentences of Section 1.10 of the
Agreement are hereby amended in their entirety as follows:
The allocation of purchase price among the assets of Stock Entities
shall be determined by the Sellers and Buyer on or before 60 days after
Closing, shall be set forth on Schedule 1.10 to be delivered at such
time of agreement, and shall be made in the manner required by Sections
338 and 1060 of the Code and the Treasury Regulations promulgated
thereunder, and any comparable provisions of state, local or foreign
law or regulations as appropriate. Such allocation shall be used for
purposes of determining the modified aggregate deemed sales price under
the applicable Treasury Regulations and in reporting the deemed sale of
assets of the Stock Entities in connection with the 338(h)(10)
Election. The Buyer and Sellers shall report, act, and file in all
respects and for all purposes consistent with the allocation set forth
on Schedule 1.10 to be delivered at the time of agreement of such
allocation.
Attached as Exhibit D to this Amendment is a preliminary allocation of the
purchase price pursuant to Section 1.10 of the Agreement which allocation is
subject to final agreement within 60 days after the Closing pursuant to Section
1.10 of the Agreement. Sellers and Buyer acknowledge that Exhibit D is
preliminary and represents the reasonable best estimate of each party hereto
with respect to the matters set forth on Exhibit D.
6. Notwithstanding any other provision of the Agreement, Schedule
3.19(a)(iii) is hereby amended to delete all references to the following leases:
(i) 5th floor Allen Center 1; (ii) Furniture Lease (5th Floor Allen Center 1,
Lakewood, Colorado or wherever located); (iii) Lease - Lombard, Illinois; (iv)
Lease - Lakewood, Colorado, (143 Union Street, 4th Floor); and (v) Parking
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Expenses - Allen Center Garage. The failure to list those leases on Schedule
3.19(a)(iii) shall not be deemed to be a breach of any representation or
warranty of the Sellers. Sellers agree to retain all of the foregoing leases and
Buyer shall not be responsible for or liable for any expenses or other
obligations thereunder and the foregoing leases shall not be conveyed to Buyer
as a part of the transactions contemplated by the Agreement. In consideration of
the retention of the leases by Sellers, the Cash Consideration to be paid by
Buyer at Closing shall be increased by $572,714 Sellers hereby agree that Buyer
or its affiliates will be entitled to occupy, at no additional cost to Buyer and
at Buyer's option, all or a portion of the Allen Center 5th Floor lease space,
all of the Lombard, Illinois space (Suite 108 consisting of approximately 3,500
square feet on the first floor) for up to four months subsequent to the Closing,
and up to the following number of parking slots at the Allen Center for the
following months:
<TABLE>
<CAPTION>
Month Parking Slots
----- -------------
<S> <C>
April 75
May 60
June 45
July 30
</TABLE>
Buyer agrees to turn back to Sellers any of the above parking slots at such time
as Buyer determines it no longer needs such slots. In addition to the foregoing,
Buyer has agreed to reimburse the Sellers for any tenant improvement cost
incurred in connection with and allowed in the sublease of the Allen Center 5th
Floor space by the current tenant; provided, however, that Buyer's costs shall
be limited to 50% of the total tenant improvement allowance paid by Sellers or
their affiliates within 18 months of the Closing, such 50% of the allowance not
to exceed $12.50 per square foot. Buyer shall not be responsible for any tenant
improvement allowance with respect to any portion of the Allen Center 5th Floor
space which Sellers or their affiliates occupy as a result of their
determination not to sublease such space. In addition to the foregoing, during
Buyer's occupancy of the space in the Allen Center, Lakewood, Colorado and the
Lombard, Illinois lease space, Buyer shall be entitled to the use of a total of
six copiers at the three leased spaces and the roof top lease at the Allen
Center and shall have no additional cost for the following services: utilities,
carpet cleaning, security, cable television and light bulbs. In addition,
Sellers agree that Buyer or its affiliates will be entitled to occupy, at no
additional cost to Buyer and at Buyer's option, all of the lease space at 143
Union Street, 4th Floor, Lakewood, Colorado through September 2000.
7. Based upon the request of Sellers' employees and notwithstanding the
provisions of Section 8.2(c) of the Agreement, at the Closing, the Sellers will
not cause the Trustee of the KN Plan to transfer the account balances of
Continued Employees in the KN Plan to the Trustee of the Buyer Savings Plan.
Buyer shall have no obligation or responsibility for any account balances for
Continued Employees relating to their employment with any one or more of the
Sellers or their affiliates prior to the Closing.
8. Notwithstanding any other provisions of the Agreement related to
indemnification or limits thereon (but subject to the process described in
Sections 11.4 through 11.8 of the Agreement), Buyer agrees to indemnify and hold
the Sellers' Parties harmless from any Damages suffered by the Sellers' Parties
as a result of, caused by, arising out of, or in any way relating to any
Environmental Claim relating to the ownership, operation or conduct of the
businesses or affairs of
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Buyer and any of its affiliates and any of their respective actions after the
Closing related to (i) any of the equipment, piping or other personal property
or equipment owned by Buyer or any of its affiliates located on or within the
real property, easements or leased property owned or controlled by any of the
Sellers or their affiliates, and (ii) any of the equipment, piping or other
personal property or equipment owned by Buyer or any of its affiliates on any of
the Property or the Easements.
9. Notwithstanding any other provisions of the Agreement related to
indemnification or limits thereon (but subject to the process described in
Sections 11.4 through 11.8 of the Agreement), Sellers agree to indemnify and
hold the Buyer Parties harmless from any Damages suffered by the Buyer Parties
as a result of, caused by, arising out of, or in any way relating to any
Environmental Claim relating to the ownership, operation or conduct of the
businesses or affairs of Sellers and any of their affiliates and any of their
respective actions after the Closing related to (i) any of the equipment, piping
or other personal property or equipment owned by Sellers or any of their
affiliates on or within the Property or the Easements, and (ii) the equipment,
piping or other personal property or equipment owned by Sellers or any of their
affiliates on the real property, easements or leased property owned or
controlled by any of the Sellers or their affiliates.
10. Sellers agree, at their expense, to have the properties listed on
Exhibit E attached to this Amendment surveyed within 90 days of the Closing to
determine the exact legal description of the portion of the properties that are
to be conveyed by Sellers or their affiliates to Buyer or its affiliates. The
surveys shall be certified to Sellers and Buyer and shall be in form reasonably
acceptable to Buyer.
11. Sellers agree that within 90 days of the Closing to file such
corrective conveyances as are listed on Exhibit F attached to this Amendment or
as are reasonably requested by Buyer within such 90 day period, to correct
deficiencies identified by Buyer in either the form or the method of execution
of the conveyance or the designated grantee related to conveyances of real
property, easements or rights-of-way (including any personal property or
equipment related thereto) made prior to the Closing by Sellers or their
affiliates to any of the Stock Entities or their Subsidiaries or affiliates. The
Parties have agreed to use the forms attached hereto as Exhibit G in correcting
conveyances. Notwithstanding any other provisions of the Agreement related to
indemnification or limits thereon (but subject to the process described in
Sections 11.4 through 11.8 of the Agreement), Sellers agree to indemnify and
hold the Buyer Parties harmless from any Damages suffered by the Buyer Parties
as a result of, caused by, arising out of, or in any way relating to the
preparation or filing of these corrective conveyances, including any applicable
sales or transfer taxes.
12. If requested by Buyer, Sellers agree to cooperate with Buyer and
its counsel (at no cost or expense to Sellers) with respect to Buyer's response
to any franchise taxes relating to the period on or after the Closing in
connection with the franchise fee/tax dispute between the City of El Paso and
Westar (which was assumed from AOG Gas Transmission Company, L.P. (successor to
Meridian Oil Transportation, Inc.)) arising out of the franchise ordinance dated
January 9, 1990. Notwithstanding any other provisions of the Agreement,
including, but not limited to any provisions related to indemnification or
limits thereon (but subject to the process described in Sections 11.4 through
11.8 of the Agreement), Sellers hereby agree to indemnify Buyer from 100% of any
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Damages now or hereafter incurred by any of the Stock Entities related to
franchise taxes or other related taxes imposed by the City of El Paso, Texas,
relating to any period of time prior to the Closing. Buyer or the Stock Entities
will be responsible for the payment of 100% of such taxes accruing for all
period subsequent to the Closing. The parties hereto acknowledge that Kinder
Morgan, Inc. has paid, on behalf of Westar and AOG Gas Transmission Company,
L.P. and subject to protest for refund, the franchise fees/taxes claimed by the
City of El Paso to be owed in connection with the franchise fee/tax dispute
described above. Westar and AOG Gas Transmission Company, L.P. hereto assign to
Kinder Morgan, Inc. any and all rights relating to the protest described above,
including, without limitation, the right to any refunds which may be paid in
connection therewith.
13. KN Gas agrees that upon its receipt of the conveyance of the
easements listed on Exhibit H attached to this Amendment pursuant to the Gas
Gathering Agreement dated April 1, 1997, between KN Gas and Mobil Exploration &
Producing U.S., Inc., KN Gas shall convey those easements to Buyer or its
designated affiliate in the same form as set forth in the conveyance to KN Gas
or as may otherwise be reasonably satisfactory to Buyer. KN Gas agrees to use
its reasonable best efforts to obtain and assign all of the easements described
on the attached Exhibit H. Upon obtaining the easements described on the
attached Exhibit H, KN Gas also agrees to assign to Buyer any contract rights or
other equipment related to or located on these easements or properties. To the
extent Mobil Exploration & Producing U.S., Inc. fails to consent to the
assignment to Buyer or its affiliate of the foregoing easements, contract rights
and personal properties, KN Gas agrees to use its best efforts to acquire all of
the foregoing assets, contract rights and equipment and then convey such assets
to Buyer or its affiliate. KN Gas further agrees that effective March 1, 2000,
it will cause all economic benefits of the foregoing assets and operations to be
assigned to Buyer or its affiliate, including, but not limited to execution of
an economic benefits agreement on terms and conditions reasonably satisfactory
to Buyer that will ensure its receipt of the economic benefit of these assets
and interests.
14. The parties to the Agreement agree that the "Effective Date" for
purposes of the Agreement shall be March 1, 2000, regardless of the Closing
Date.
15. Buyer hereby acknowledges as Assumed Obligations those obligations
arising under that certain Agreement for Facility Connections and Gas Processing
Operations, dated as of December 1, 1999, by and between Kinder Morgan
Interstate Gas Transmission LLC (formerly KN Interstate Gas Transmission Co.)
and KN Gas, as such agreement shall be amended by Amendment No. 1 thereto in the
form of Exhibit B to the Agreement. Nothing herein or in any Constituent
Document shall be deemed to modify or amend such Assumed Obligations.
16. Notwithstanding any other provision of the Agreement or any
schedule attached thereto, KN WesTex Gas Services Company, a Texas corporation,
shall not be included in the definition of "Subsidiaries" or be a part of any
schedule to the Agreement. Prior to the Closing, Sellers shall cause American
Oil and Gas Corporation to dividend all of its equity interest in WesTex Gas
Services Company to KMI.
17. Except as expressly amended hereby, all other terms and provisions
of the Agreement shall continue in full force and effect.
18. Article 12 of the Agreement shall apply to this Amendment and be
incorporated herein with the same force and effect as if its provisions were
reprinted as part of this Amendment.
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EXECUTED as of the date first set forth above.
ONEOK, INC.
By: /s/ Barry D. Epperson
-------------------------------
Name: Barry D. Epperson
-------------------------------
Title: Vice President
------------------------------
KINDER MORGAN, INC.
By: /s/ Joseph Listengart
-------------------------------
Name: Joseph Listengart
-------------------------------
Title: Vice President and Secretary
------------------------------
MIDCON GAS SERVICES CORP.
By: /s/ Douglas N. Schantz
-------------------------------
Name: Douglas N. Schantz
-------------------------------
Title: Executive Vice President
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KN SERVICES, INC.
By: /s/ Douglas N. Schantz
-------------------------------
Name: Douglas N. Schantz
-------------------------------
Title: Executive Vice President
------------------------------
KN GAS GATHERING, INC.
By: /s/ Joseph Listengart
-------------------------------
Name: Joseph Listengart
------------------------------
Title: Vice President and Secretary
-----------------------------
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EXHIBIT 99.3
[KINDER MORGAN, INC.]
Larry Pierce Irene Twardowski
Media Relations Investor Relations
(303) 914-4751 (713) 844-9543
ONEOK TRANSACTION COMPLETED
HOUSTON, April 5, 2000 -- Kinder Morgan, Inc. (NYSE: KMI - news) today
announced the completion of its previously announced agreement to sell all of
its natural gas gathering and processing businesses in Oklahoma, Kansas and West
Texas to ONEOK, Inc. (NYSE: OKE - news). In addition, ONEOK purchased KMI's
marketing and trading business, as well as certain storage and transmission
pipelines in the Mid-continent region.
According to Richard D. Kinder, chairman and CEO, KMI announced its
intention to exit these businesses last fall as part of its "back to basics"
strategy. "With the completion of this sale, KMI's divestiture program is more
than 80 percent complete. Going forward, we will continue to focus on growing
our core, fee-based businesses," Kinder said.
As consideration, ONEOK paid KMI approximately $108 million plus an
amount equal to net working capital at closing; assumed the operating lease
associated with the Bushton, Kan. gas processing plant; and assumed long-term
capacity commitments on Natural Gas Pipeline Company of America and on Kinder
Morgan Interstate Gas Transmission LLC. An additional $6 million of
consideration will be paid to KMI upon final closing of a small mid-continent
pipeline.
Kinder Morgan, Inc. is one of the largest midstream energy companies in
America, operating more than 30,000 miles of natural gas and products pipelines
in 26 states. It also has significant retail distribution, electric generation
and terminal assets. Kinder Morgan, Inc., through its general partner interest,
operates Kinder Morgan Energy Partners, L.P. (NYSE: KMP - news), America's
largest pipeline master limited partnership. Combined, the two companies have an
enterprise value of approximately $10 billion.
For more information, contact: www.kindermorgan.com.
This news release includes forward looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Although Kinder Morgan believes that its
expectations are based on reasonable assumptions, it can give no assurance that
such assumptions will materialize.
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