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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
AUGUST 8, 2001
(DATE OF REPORT)
AMERIGAS PARTNERS, L.P.
AMERIGAS FINANCE CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-13692 23-278918
DELAWARE 33-92734-01 23-2800532
(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
460 N. GULPH ROAD
KING OF PRUSSIA, PENNSYLVANIA 19406
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(610) 337-1000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS
On August 7, 2001, Columbia Energy Group, Columbia Propane Corporation,
Columbia Propane, L.P., AmeriGas Propane, L.P., AmeriGas Partners, L.P.
(NYSE:APU) and AmeriGas Propane, Inc. amended and restated their January 30,
2001 Purchase Agreement relating to the purchase of the retail propane
distribution businesses of Columbia Energy Group, a subsidiary of NiSource,
Inc.(NYSE: NI). The closing under the Amended and Restated Agreement is expected
to occur by August 31, 2001.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
10.1 Amended and Restated Purchase Agreement by and among Columbia
Energy Group, Columbia Propane Corporation, Columbia Propane, L.P., AmeriGas
Propane, L.P., AmeriGas Partners, L.P. and AmeriGas Propane, Inc., dated as
of August 7, 2001.
10.2 Purchase Agreement by and among Columbia Propane, L.P., CP
Holdings, Inc., Columbia Propane Corporation, National Propane Partners,
L.P., National Propane Corporation, National Propane SPG, Inc., and Triarc
Companies, Inc. dated as of April 5, 1999 is incorporated herein by reference
to Exhibit 10.5 to the Current Report on Form 8-K of National Propane
Partners L.P. dated April 14, 1999.
ITEM 9. REGULATION FD DISCLOSURE
As previously reported, on January 30, 2001, AmeriGas Partners L.P.
("AmeriGas Partners") along with its operating partnership, AmeriGas Propane,
L.P., ("AmeriGas Propane"), and their general partner, AmeriGas Propane, Inc.,
entered into an agreement which was amended and restated on August 7, 2001, to
buy the propane distribution businesses of Columbia Energy Group (collectively
"Columbia Propane"), for approximately $202 million subject to a working capital
adjustment ("the Columbia Purchase Agreement"). These businesses are conducted
through Columbia Propane Corporation and its 99% owned subsidiary, Columbia
Propane, L.P. Columbia Propane, based in Richmond, Virginia, is currently the
seventh largest retail propane marketer in the United States, selling
approximately 308 million gallons annually from 186 locations in 29 states. For
the twelve months ended March 31, 2001, approximately 79% of propane gallons
Columbia Propane sold were to retail customers, while the remaining 21% were to
wholesale customers. For that period, residential customers accounted for 38% of
total propane gallons sold by Columbia Propane; industrial/commercial customers,
32%; motor fuel customers, 1%; and agricultural customers, 8%. Upon completion
of this acquisition, AmeriGas Propane will be the largest propane retail
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August 8, 2001
propane distributor in the United States, distributing more than one billion
gallons of propane annually to retail customers from approximately 700 locations
in 46 states.
The acquisition of Columbia Propane involves a series of steps, as a result
of which:
- Columbia Propane Corporation will transfer substantially all of its assets
to AmeriGas Propane;
- Columbia Propane Corporation will become a direct wholly owned subsidiary
of AmeriGas Propane;
- Columbia Propane, L.P. will be owned approximately 98% directly by
AmeriGas Propane and approximately 1% indirectly through Columbia Propane
Corporation;
- Columbia Energy Group will purchase $50 million of AmeriGas Propane's
common limited partnership units;
- AmeriGas Propane will purchase from Columbia Propane Corporation and
become the payee under a $138 million intercompany note of Columbia
Propane, L.P. due in July 2009; and
- AmeriGas Propane will make a capital contribution to Columbia Propane,
L.P. of assets with a net fair market value approximately $280 million, in
exchange for a limited partnership interest in Columbia Propane, L.P. of
equal value, based upon the net agreed value assigned to the assets, as
confirmed by an independent valuation firm.
The remaining approximately 1% interest in Columbia Propane, L.P. is owned by
an affiliate of Triarc Companies, Inc.("Triarc") as a special limited partner.
In connection with the acquisition, AmeriGas Propane is assuming various
restrictions relating to Columbia Propane, L.P. and the intercompany note. These
restrictions, which effectively continue until July 2009, limit AmeriGas
Propane's ability to, among other things:
- prepay, defease, purchase or otherwise retire the intercompany note unless
it is replaced by equivalent debt with no greater amortization;
- modify the intercompany note so as to eliminate or limit the recourse
liability of Triarc;
- convert Columbia Propane, L.P. into a corporation for federal income tax
purposes, including by way of any merger or consolidation;
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- allow any third party to assume, guarantee or indemnify against or
otherwise incur any liability relating to the intercompany note; or
- take or fail to take any action that would reduce the share of the
intercompany note allocated to Triarc for federal income tax purposes.
Without becoming obligated to indemnify Triarc for any resulting tax losses,
AmeriGas Propane may not:
- make any material change in the federal income tax positions, methods,
principles or elections of Columbia Propane, L.P.;
- sell or dispose of certain assets of Columbia Propane, L.P. if doing so
would result in a gain of more than $5 million per year on a cumulative
basis to be allocated to Triarc; or
- increase the carrying value of certain assets of Columbia Propane, L.P.
for income tax purposes.
The Columbia Propane entities which AmeriGas Propane is acquiring are
obligated to indemnify Triarc and its affiliates for tax or other cash losses
they may incur as a result of the breach of the foregoing restrictions and any
other actions in violation of the purchase agreement under which Columbia
Propane Corporation acquired Columbia Propane from Triarc (the "1999
Columbia/Triarc Purchase Agreement," included as Exhibit 10.2 to this Report)
that cause Triarc to recognize a taxable gain or result in other losses for
Triarc. These include breaches resulting from AmeriGas Propane's acquisition of
Columbia Propane and related transactions. Under the Columbia Purchase
Agreement, AmeriGas Propane has agreed to apportion between AmeriGas Propane and
Columbia Propane any losses under the Triarc indemnity due to AmeriGas Propane's
acts or omissions or resulting from AmeriGas Propane's acquisition of Columbia
Propane and related transactions as follows:
- If the Triarc indemnity is triggered as a result of AmeriGas Propane's
acquisition of Columbia Propane, AmeriGas Propane has agreed with Columbia
Propane to be responsible for one-third of the first $3 million of such
losses and two-thirds of any additional losses, with the remaining portion
being borne by Columbia Energy Group.
- If the Triarc indemnity is triggered as a result of any acts or omissions
by AmeriGas Propane, AmeriGas Propane, Inc., the Columbia Propane entities
AmeriGas Propane is acquiring, or any of AmeriGas Propane's affiliates
following the acquisition (or any breaches of certain other
representations, warranties and covenants), AmeriGas Propane will be
responsible for all of the Triarc indemnity.
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- If the Triarc indemnity is triggered as a result of any acts or omissions
by Columbia Energy or its affiliates prior to AmeriGas Propane's
acquisition of Columbia Propane, Columbia Energy will be responsible for
all of the Triarc indemnity.
In addition, AmeriGas Propane has agreed with Columbia Propane Corporation
to take all actions necessary to ensure that Columbia Propane Corporation will
have sufficient available funds to satisfy all of its obligations and
liabilities to Triarc under the indemnification provisions of the 1999
Columbia/Triarc Purchase Agreement. This obligation will be limited to the
amount of payments expressly required to be made by Columbia Propane Corporation
under the 1999 Columbia/Triarc Purchase Agreement, and will be subject to the
limitations contained in that agreement that are applicable to Columbia Propane
Corporation and all set-off rights and other defenses applicable to it.
Pursuant to the Columbia Purchase Agreement, AmeriGas Propane and Columbia
Energy have agreed to indemnify each other for losses and expenses incurred as a
result of a breach of the parties' respective representations, warranties and
covenants contained in the Columbia Purchase Agreement, subject to various
limitations and exceptions.
For the twelve months ended March 31, 2001, Columbia Propane generated
approximately $29 million of earnings before interest expense, income taxes,
depreciation and amortization ("EBITDA"), without giving effect to allocation of
charges by the current parent entity, Columbia Energy Group, on total revenues
of $397 million. The six-month period ended March 31, 2001, was a period of
rapidly escalating product costs and market volatility, which may have resulted
in higher-than-normal unit margins for Columbia Propane during this period.
These higher-than-normal unit margins may not be sustainable or indicative of
Columbia Propane's future results. After completion of the Columbia Propane
acquisition, AmeriGas Propane anticipates being able to achieve annualized
operating cost savings and synergies over the next two fiscal years of up to $24
million as AmeriGas Propane integrates Columbia Propane into its existing
business. AmeriGas Propane expects to achieve these operating cost savings and
synergies from the elimination of redundant operations and facilities and
productivity improvements. Although AmeriGas Partners believes these forward
looking statements are reasonable, AmeriGas Partners cannot give assurance that
these operating cost savings, operating synergies and productivity improvements
will be achieved. AmeriGas Partners cautions that its actual results are likely
to differ from the estimates presented above. The differences may be material,
depending on the circumstances, and may arise because the actual facts may
differ from its assumptions. For example, AmeriGas Propane may not be able to
achieve operating synergies on a timely basis and actual costs associated with
the elimination of redundant operations and facilities may exceed its estimates.
Based upon unaudited financial statements and schedules provided to
AmeriGas Partners in connection with the Columbia purchase acquisition, for the
quarter ended June 30, 2001, Columbia Propane's retail gallons sold were 36.0
million compared to 35.9 million for the
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quarter ended June 30, 2000. Total margin for the quarter ended June 30, 2001,
was $23.2 million compared to $22.0 million for the quarter ended June 30, 2000.
Columbia Propane's EBITDA for the quarter ended June 30, 2001 was $(10.5)
million compared to $(9.0) million for the quarter ended June 30, 2000. EBITDA
excluding parent company charges was $(8.1) million for the quarter ended June
30, 2001 compared to $(7.4) million for the quarter ended June 30, 2000.
For the twelve months ended June 30, 2001, Columbia Propane's retail
gallons sold were 249.1 million. Total margin for the twelve months ended June
30, 2001 was $150.3 million. For the twelve months ended June 30, 2001, Columbia
Propane's EBITDA totaled $12.8 million. EBITDA excluding parent company charges
was $28.4 million for the twelve months ended June 30, 2001. As a result of
Columbia Propane's acquisition of National Propane Partners, L.P. in July 1999,
which substantially increased the propane business of Columbia Propane, Columbia
Propane's results for the twelve months ended June 30, 2000 are not comparable.
The above financial and operating data for Columbia Propane were derived
from unaudited financial statements and schedules that Columbia Propane prepared
and delivered to AmeriGas Partners in connection with the Columbia Propane
acquisition. Columbia Propane has been operated as a subsidiary of Columbia
Energy Group and audited consolidated financial statements do not exist.
Accordingly, the summary results above may not accurately reflect the revenues
and costs associated with Columbia Propane's business and may not be indicative
of the results that would have been achieved had Columbia Propane been operated
as a stand-alone entity.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized:
AmeriGas Partners, L.P.
By: AmeriGas Propane, Inc.
its general partner
(REGISTRANT)
By: /s/ Martha B. Lindsay
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Martha B. Lindsay
Vice President and
Chief Financial Officer
AmeriGas Finance Corp.
(REGISTRANT)
By:/s/ Martha B. Lindsay
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Martha B. Lindsay
Vice President and
Chief Financial Officer
Date: August 8, 2001
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Exhibit Index
10.1 Amended and Restated Purchase Agreement by and among Columbia
Energy Group, Columbia Propane Corporation, Columbia Propane, L.P., AmeriGas
Propane, L.P., AmeriGas Partners, L.P. and AmeriGas Propane, Inc., dated as
of August 7, 2001.
10.2 Purchase Agreement by and among Columbia Propane, L.P., CP
Holdings, Inc., Columbia Propane Corporation, National Propane Partners,
L.P., National Propane Corporation, National Propane SPG, Inc., and Triarc
Companies, Inc. dated as of April 5, 1999 is incorporated herein by reference
to Exhibit 10.5 to the Current Report on Form 8-K of National Propane
Partners LP dated April 14, 1999.