Parent Of Retail Supplier To Acquire Utility With Competitive Supply Program Open To Small Customer Rate Classes

January 4, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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UGI Corporation announced that it has signed a definitive agreement to acquire Mountaintop Energy Holdings LLC, owner of Mountaineer Gas Company (Mountaineer), the largest gas local distribution company in West Virginia, for an enterprise value of $540 million, which includes the assumption of approximately $140 million of debt.

"The acquisition will increase UGI’s regulated utility rate base and customers served by nearly 14% and 30%, respectively, and is consistent with its strategy to focus growth investments on natural gas and renewable energy solutions opportunities," UGI said

Mountaineer Gas Company has transportation service tariff that is open to the residential (RS) and general service rate classes, in addition to larger rate classes

Mountaineer serves nearly 215,000 customers across 50 of the state’s 55 counties. The customer base is approximately 90% residential, with the remaining 10% comprised of commercial and industrial customers.

"Over the past two years, we have indicated our intention to rebalance our business mix by investing more to build out our natural gas businesses. This transaction is an important step in the rebalancing efforts and will support UGI’s long-term annual commitments to grow EPS and dividends by 6% - 10% and 4%, respectively," said John L. Walsh, President and Chief Executive Officer of UGI

"The transaction is expected to be accretive to adjusted EPS in the first full year of combined operations. UGI expects to finance the acquisition through debt and / or equity-linked securities and existing liquidity to optimize accretion while maintaining a strong balance sheet. UGI does not expect to issue common equity to finance the acquisition," UGI said

The transaction is subject to customary regulatory and other closing conditions, including approval by the Public Service Commission of West Virginia. Federal antitrust clearance is also required pursuant to the U.S. Hart-Scott-Rodino Antitrust Improvements Act. Assuming fulfillment of all conditions, the transaction is expected to close in the second half of calendar year 2021.

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