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UNITED STATES 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
Date of Report (Date of Earliest Event Reported): August 24, 2006
UGI Corporation
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(Exact name of registrant as specified in its charter)
Pennsylvania 1-11071 23-2668356
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
460 No.Gulph Road, King of Prussia,
Pennsylvania 19406
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(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: 610 337-1000
Not Applicable
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Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
First Amendment Agreement.
On August 24, 2006, UGI Corporation (the "Company") entered into a First
Amendment Agreement (the "Amendment") to the Purchase and Sale Agreement, dated
January 26, 2006 (the "Agreement" and collectively with the Amendment, the
"Purchase Agreement"), with Southern Union Company ("SUG"). The Amendment also
amended the Employee Agreement, dated January 26, 2006, between the Company and
SUG (as amended, the "Employee Agreement"). The Purchase Agreement provides for
the acquisition by the Company of the natural gas utility business of PG Energy,
an operating division of SUG, and the capital stock of PG Energy Services, Inc.
from SUG.
The Amendment provides for the assumption by the Company of sponsorship of and
all assets (held in trust), liabilities and obligations under the Employees'
Retirement Plan of Southern Union Company Pennsylvania Division (the "SUG
Pension Plan"), after SUG contributed an amount equal to the unfunded accrued
benefit obligation to the SUG Pension Plan. The Amendment also amended the
definition of the working capital target and certain of the employee related
provisions, insurance related provisions and indemnification provisions in the
Purchase Agreement.
Assignment and Assumption Agreements.
On August 24, 2006, the Company also entered into an Assignment and Assumption
Agreement (the "Assignment Agreement") with UGI Penn Natural Gas, Inc.
("UGIPNG"), a subsidiary of the Company's wholly owned subsidiary, UGI
Utilities, Inc. ("UGI Utilities"). Under the Assignment Agreement, the Company
assigned to UGIPNG (i) its rights to acquire the natural gas utility business
and stock being acquired from SUG under the Purchase Agreement, and (ii) its
rights under the Employee Agreement. In addition, UGIPNG agreed to assume, pay
and perform (i) all obligations of the Company with respect to the business and
stock being acquired in accordance with the terms and conditions of the Purchase
Agreement and (ii) all obligations of the Company in accordance with the
Employee Agreement, other than certain obligations relating to the SUG Pension
Plan which were assigned to and assumed by UGI Utilities, the parent of UGIPNG
pursuant to an Assignment and Assumption Agreement dated August 24, 2006 between
the Company and UGI Utilities (the "Pension Assignment"). The rights to acquire
an immaterial amount of unregulated assets were separately assigned to UGI
Energy Services, Inc., a wholly owned subsidiary of the Company.
Transition Services Agreement.
On August 24, 2006, the Company executed a Transition Services Agreement (the
"Transition Services Agreement") with SUG defining the terms under which the
parties will provide certain services and licenses to each other or designated
affiliates over the course of a transition period following the August 24, 2006
acquisition by UGIPNG of the natural gas utility business of PG Energy, an
operating division of SUG, and the capital stock of PG Energy Services, Inc.
from SUG.
Columbia Gas Transmission -- FSS Service Agreement No. 79615.
On August 24, 2006, UGIPNG received assignment of and assumed the obligations of
PG Energy under a Service Agreement dated August 16, 2004 (the "Columbia FSS
Service Agreement") with Columbia Gas Transmission Corporation ("Columbia"),
under Columbia's FERC Rate Schedule FSS. The Columbia FSS Service Agreement will
remain in effect until March 31, 2010. UGIPNG holds a right of first refusal
under FERC regulations for extension of the Columbia FSS Service Agreement upon
expiration of the current term.
The Columbia FSS Service Agreement provides UGIPNG with firm natural gas storage
service. Under the terms of the Columbia FSS Service Agreement, UGIPNG can
inject into storage up to 5,641 Dth of natural gas per day, store up to a
maximum quantity of 797,898 Dth of natural gas in Columbia storage facilities
and withdraw up to 11,282 Dth per day of natural gas. The storage service is
used to meet the peak consumption needs of UGIPNG's retail customers during the
winter season.
UGIPNG pays maximum tariff rates for FSS service from Columbia, which includes
reservation, capacity, injection and withdrawal charges together with fuel
retention and applicable surcharges. The rates for service are subject to change
from time to time in accordance with FERC ratemaking procedures. The Columbia
FSS Service Agreement is subject to the general terms and conditions of
Columbia's FERC Gas Tariff.
Columbia Gas Transmission -- SST Service Agreement No. 79616.
On August 24, 2006, UGIPNG received assignment of and assumed the obligations of
PG Energy under a Service Agreement dated August 16, 2004 (the "Columbia SST
Service Agreement") with Columbia under Columbia's FERC Rate Schedule SST. The
Columbia SST Service Agreement is tied to UGIPNG's Columbia FSS Service
Agreement. The Columbia SST Service Agreement will remain in effect until March
31, 2010 and UGIPNG holds a right of first refusal under FERC regulations for
extension of the Columbia SST Service Agreement upon expiration of the current
term. The Columbia FSS Service Agreement and the Columbia SST Service Agreement
must both be extended or renewed for like time periods.
The Columbia SST Service Agreement provides for the transportation of natural
gas on the Columbia pipeline system, for injection or withdrawal into storage
under UGIPNG's Columbia FSS Service Agreement. Under the Columbia SST Service
Agreement, UGIPNG can ship up to 5,641 Dth per day of natural gas on Columbia
for injection into storage between the months of April and October, and can ship
up to 11,282 Dth per day of natural gas storage withdrawals on Columbia for
delivery to UGIPNG between the months of November and March. The Columbia SST
Service Agreement permits UGIPNG to take deliveries of up to 7,000 Dth per day
directly to the UGIPNG
distribution system at Renova without scheduling such deliveries with Columbia
in advance. This "no-notice" capability of the Columbia SST Service Agreement
provides balancing and swing flexibility to UGIPNG's distribution operations.
UGIPNG pays maximum tariff rates for SST service from Columbia, which includes
reservation, and commodity charges, together with fuel retention and applicable
surcharges. The rates for service are subject to change from time to time in
accordance with FERC ratemaking procedures. The Columbia SST Service Agreement
is subject to the general terms and conditions of Columbia's FERC Gas Tariff.
Transcontinental Gas Pipe Line -- FT Service Agreement No. 1003690.
On August 24, 2006, UGIPNG received assignment of and assumed the obligations of
PG Energy (as successor to Pennsylvania Gas and Water Company) under a Service
Agreement dated February 1, 1992 (the "1992 Transco FT Service Agreement") with
Transcontinental Gas Pipe Line Corporation ("Transco"), under Transco's FERC
Rate Schedule FT. The primary term of the agreement expired in 2004, however the
1992 Transco FT Service Agreement continues under a contractual evergreen
provision which requires three years prior written notice by either party in
order to terminate. The contract will therefore continue until at least August
23, 2009. In addition, UGIPNG holds a right of first refusal under FERC
regulations for extension of the 1992 Transco FT Service Agreement if Transco
elected to invoke its termination rights.
The 1992 Transco FT Service Agreement provides UGIPNG with the firm natural gas
transportation service on the Transco Pipeline system. Under the 1992 Transco FT
Service Agreement, UGIPNG can ship up to 48,542 Dth per day of natural gas for
delivery to UGIPNG's distribution system. The 1992 Transco FT Service Agreement
permits UGIPNG to nominate firm gas receipts from 79 separate receipt points on
the Transco pipeline system, which provides flexibility in accessing gas
supplies.
UGIPNG pays maximum tariff rates for FT service from Transco, which include
fixed and variable charges, together with fuel retention and applicable
surcharges. The rates for service are subject to change from time to time in
accordance with FERC ratemaking procedures. The 1992 Transco FT Service
Agreement is subject to the general terms and conditions of Transco's FERC Gas
Tariff.
Transcontinental Gas Pipe Line -- FT Service Agreement No. 1021106.
On August 24, 2006, UGIPNG received assignment of and assumed the obligations of
PG Energy under a Service Agreement dated July 10, 1997 (the "1997 Transco FT
Service Agreement") with Transco, under Transco's FERC Rate Schedule FT. The
1997 Transco FT Service Agreement will remain in effect until October 31, 2017.
UGIPNG holds a right of first refusal under FERC regulations for extension of
the 1997 Transco FT Service Agreement upon expiration of the current term.
The 1997 Transco FT Service Agreement provides UGIPNG with the firm natural gas
transportation service on the Transco Pipeline system. Under the 1997 Transco FT
Service Agreement, UGIPNG can ship up to 33,500 Dth per day of natural gas for
delivery to UGIPNG's distribution system. The 1997 Transco FT Service Agreement
permits UGIPNG to receive gas on a firm basis from Transco's interconnection
with the Leidy storage fields in Pennsylvania, which represents a reliable
source of year-round gas deliveries.
UGIPNG pays maximum tariff rates for FT service from Transco, which includes
fixed and variable charges, together with fuel retention and applicable
surcharges. The rates for service are subject to change from time to time in
accordance with FERC ratemaking procedures. The 1997 Transco FT Service
Agreement is subject to the general terms and conditions of Transco's FERC Gas
Tariff.
Transcontinental Gas Pipe Line -- GSS Service Agreement No. 1000798.
On August 24, 2006, UGIPNG received assignment of and assumed the obligations of
PG Energy of a Service Agreement dated July 1, 1996 (the "Transco GSS Service
Agreement") with Transco under Transco's FERC Rate Schedule GSS. The Transco GSS
Service Agreement will remain in effect until March 31, 2013. Rate Schedule GSS
is an individually certificated service under FERC Regulations, so Transco is
required to file for and receive authorization to abandon service to UGIPNG
after expiration of the primary term.
The Transco GSS Service Agreement provides UGIPNG with a firm natural gas
storage and delivery service on the Transco Pipeline system. Under the terms of
the Transco GSS Service Agreement, UGIPNG can store up to a maximum quantity of
2,746,576 Dth of natural gas in Transco's storage facilities and to withdraw and
take delivery of up to 56,532 Dth per day of natural gas. The storage service is
used to meet the peak consumption needs of UGIPNG's retail customers during the
winter season.
UGIPNG pays maximum tariff rates for FT service from Transco, which includes
demand, capacity, injection and withdrawal charges together with fuel retention
and applicable surcharges. The rates for service are subject to change from time
to time in accordance with FERC ratemaking procedures. The Transco GSS Service
Agreement is subject to the general terms and conditions of Transco's FERC Gas
Tariff.
A copy of the Transition Services Agreement is attached hereto as Exhibit 10.1
and is incorporated herein by reference. The summary of the terms of the
Transition Services Agreement is qualified in its entirety by reference to the
Transition Services Agreement.
Copies of the Assignment Agreement, the Amendment, the Pension Assignment, the
Columbia FSS Service Agreement, the Columbia SST Service Agreement, the 1992
Transco FT Service Agreement, the 1997 Transco FT Service Agreement and the
Transco GSS Service Agreement, filed as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5,
10.6, 10.7 and 10.8, respectively, to UGI Utilities' Form 8-K filed on August
30, 2006, are incorporated herein by reference. The summary of the terms of the
Assignment Agreement, the Amendment, the Pension
Assignment, the Columbia FSS Service Agreement, the Columbia SST Service
Agreement, the 1992 Transco FT Service Agreement, the 1997 Transco FT Service
Agreement and the Transco GSS Service Agreement are qualified in their entirety
by reference to the respective agreements filed by UGI Utilities on August 30,
2006. Copies of the Agreement and the Employee Agreement, filed as Exhibits 10.1
and 10.2, respectively, to the Company's Form 8-K filed on January 27, 2006 are
incorporated herein by reference.
ITEM 8.01 OTHER EVENTS.
On August 24, 2006, UGIPNG, a subsidiary of the Company's wholly owned
subsidiary, UGI Utilities, completed the acquisition of the natural gas utility
business of PG Energy, an operating division of SUG, and the capital stock of PG
Energy Services, Inc. from SUG for approximately $580 million in cash, subject
to certain adjustments in accordance with the terms and conditions of the
Purchase Agreement. The acquisition was first announced by the Company on
January 27, 2006.
The purchase price for the acquisition was funded by (i) existing cash balances
of $265 million, (ii) approximately $40 million in borrowings under UGI
Utilities' unsecured, revolving credit agreement, dated as of August 11, 2006,
with Citibank, N.A., as agent, Wachovia Bank, National Association, as
syndication agent, and Citizens Bank of Pennsylvania, Credit Suisse, Cayman
Islands Branch, Deutsche Bank AG New York Branch, JPMorgan Chase Bank, N.A.,
Mellon Bank, N.A., PNC Bank, National Association, and the other financial
institutions from time to time parties thereto, and (iii) $275 million in
borrowings under UGI Utilities' Credit Agreement, dated as of August 18, 2006
with Credit Suisse Securities (USA), LLC as syndication agent, Credit Suisse,
Cayman Islands Branch, as administrative agent, Credit Suisse Securities (USA),
LLC, Citigroup Global Markets Inc. and Wachovia Capital Markets, LLC as joint
lead arrangers and the financial institutions from time to time parties thereto
as lenders.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
10.1 Transition Services Agreement, dated August 24, 2006, between UGI
Corporation and Southern Union Company.
SIGNATURES
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.
UGI Corporation
August 30, 2006 By: Margaret M. Calabrese
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Name: Margaret M. Calabrese
Title: Secretary
EXHIBIT INDEX
Exhibit No. Description
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10.1 Transition Services Agreement, dated August 24, 2006, between UGI
Corporation and Southern Union Company.