Checking In On Questar

One potential hurdle for Questar’s (STR) proposed spinoff was cleared earlier this week as the company’s Board of Directors approved the transaction. The new company, QEP Resources, Inc is expected to trade on the NYSE under the symbol “QEP” and will be comprised of the natural gas and oil exploration and production (E&P) and midstream field services businesses. Both parent and spinoff are expected to have $1.2b in debt on their balance sheets after the transaction is completed.

Interestingly, there will be a managerial shakeup at the two companies as a result of the transaction. Keith Rattie, Questar’s current CEO, President and Chairman will serve as Chairman of the Board for both Questar and QEP while Charles Stanley and Ronald Jibson will take the helm as President and CEO of QEP and Questar respectively. The CFO of QEP will be Richard J. Doleshek while Martin Craven will be be named CFO of Questar. The rationale behind these moves and the resulting relationship between the two companies will need to be examined in depth, especially considering incentivized management is one of the traits investors often look for in spinoff transactions. Additionally, the company provided an updated timeframe for the event and expect it to be completed within the next three months. Other hurdles to the transaction remain though, including: the market environment (seemingly deteriorating) and the ability to negotiate new credit facilities (not a given in this day and age).

Read more about Questar’s proposed spinoff in one of our earlier posts here.

Disclosure: Author holds no position in STR.