Subsequent Events

9 Months Ended

Jun. 30, 2019

Subsequent Events [Abstract]

Subsequent Events

Note 17 — Subsequent Events

CMG Acquisition. On August 1, 2019, UGI through its wholly owned indirect subsidiary, Energy Services, completed the CMG Acquisition in which it acquired all of the equity interests in CMG and CMG’s approximately 47% interest in Pennant, for a total of approximately $1,275 in cash, subject to working capital and other adjustments. The CMG Acquisition was consummated pursuant to the CMG Acquisition Agreements dated July 2, 2019. CMG and Pennant provide natural gas gathering and processing services through five discrete systems located in western Pennsylvania, eastern Ohio and the panhandle of West Virginia. The CMG Acquisition is consistent with our growth strategies, including expanding our midstream natural gas gathering and processing assets within the Marcellus and Utica production regions.

On the closing date, the CMG Acquisition was funded with cash from $600 of borrowings under the UGI Corporation Senior Credit Facility (as further described below); borrowings under the Energy Services Credit Agreement; and UGI cash on hand. Concurrent with the signing of the CMG Acquisition Agreements, Energy Services secured a committed bridge loan facility but did not draw on the bridge loan commitment, which expired on August 1, 2019.

The Company is in the early stages of allocating the purchase price to the identifiable assets acquired and liabilities assumed, which primarily comprise property, plant and equipment, customer relationships, and CMG’s equity interest in Pennant. Accordingly, it is impracticable to provide a preliminary purchase price allocation at this time. During the most recent fiscal year ended December 31, 2018, CMG’s consolidated revenues totaled approximately $80 and Pennant’s revenues totaled approximately $50.

UGI Corporation Senior Credit Facility. On August 1, 2019, UGI entered into the UGI Corporation Senior Credit Facility. The UGI Corporation Senior Credit Facility comprises (1) a five-year $250 amortizing term loan commitment; (2) a three-year $300 term loan commitment; and (3) a five-year $300 revolving credit facility (including a $10 sublimit for letters of credit). Proceeds

from borrowings under the UGI Corporation Senior Credit Facility may be used to finance the cash portion of the Proposed Merger; the CMG Acquisition; and for general corporate purposes.

Borrowings under the UGI Corporation Senior Credit Facility bear interest at rates per annum, comprising the aggregate of the applicable margin and, subject to our election, either (1) the associated prime rate or (2) an adjusted LIBOR rate. The applicable margin on the $250 term loan and $300 revolving credit facility, which is dependent upon a ratio of consolidated net indebtedness to consolidated EBITDA, as defined, and UGI’s credit ratings, ranges from 0.375% to 1.50% if the prime rate option is elected, and 1.375% to 2.50% if the LIBOR option is elected. The applicable margin on the $300 term loan, which is dependent upon a ratio of consolidated net indebtedness to consolidated EBITDA, as defined, and UGI’s credit ratings, ranges from 0.125% to 1.25% if the prime rate option is elected, and 1.125% to 2.25% if the LIBOR option is elected. We plan on entering into pay-fixed, receive-variable interest rate swaps for a portion of the borrowings under the UGI Corporation Senior Credit Facility.

Principal amounts under the UGI Corporation Senior Credit Facility $250 term loan will be due as follows: during the fourth year of the agreement, 15% of the original principal amount borrowed, in equal quarterly installments; during the fifth year of the agreement, 15% of the original principal amount borrowed in equal quarterly installments; and the remainder of the original amount borrowed at the maturity date. Borrowings under the UGI Corporation Senior Credit Facility $300 term loan are due in their entirety at the maturity date.

The UGI Corporation Senior Credit Facility restricts the ability of UGI to, among other things, incur additional indebtedness, make investments, incur liens, and effect mergers, consolidations and sales of assets. The UGI Corporation Senior Credit Facility also requires UGI to maintain a ratio of consolidated net indebtedness to consolidated EBITDA, each as defined, as of the last day of each fiscal quarter that shall not exceed (a) 4.50 to 1.00 from September 30, 2019 through March 31, 2021; (b) 4.25 to 1.00 from June 30, 2021 through March 31, 2022; and (c) 4.00 to 1.00 from June 30, 2022 through final maturity. Under certain circumstances relating to UGI’s credit ratings, UGI may also be required to maintain a ratio of consolidated EBITDA to consolidated interest expense, each as defined, as of the last day of each fiscal quarter of not less than 3.50 to 1.00.

On August 1, 2019, in order to fund a portion of the CMG Acquisition, UGI borrowed $300 under the UGI Corporation Senior Credit Facility revolving credit facility, and $300 under the $300 term loan.