Debt |
9 Months Ended |
|---|---|
Jun. 30, 2025 | |
| Debt Disclosure [Abstract] | |
| Debt | Note 8 — Debt Significant Financing Activities The following significant financing activities occurred during Fiscal 2025. Utilities UGI Utilities Senior Notes. In July 2025, UGI Utilities entered into a note purchase agreement with a consortium of lenders. Pursuant to the note purchase agreement, UGI Utilities expects to issue $150 aggregate principal amount of 5.10% Senior Notes due November 15, 2030, and $125 aggregate principal amount of 5.68% Senior Notes due November 15, 2035. The senior notes are expected to be funded on or before November 14, 2025. These senior notes, when funded, are unsecured and will rank equally with UGI Utilities’ existing outstanding senior debt. The note purchase agreement contains customary covenants and default provisions and requires compliance with certain financial covenants including a leverage ratio and priority debt ratio as defined in the agreement. UGI Utilities expects to use the net proceeds from the issuance of the senior notes primarily to refinance indebtedness and for general corporate purposes. In November 2024, UGI Utilities entered into a note purchase agreement with a consortium of lenders. Pursuant to the note purchase agreement, UGI Utilities issued $50 aggregate principal amount of 5.24% Senior Notes due November 30, 2029, and $125 aggregate principal amount of 5.52% Senior Notes due November 30, 2034. The note purchase agreement contains customary covenants and default provisions and requires compliance with certain financial covenants including a leverage ratio and priority debt ratio as defined in the agreement. These senior notes are unsecured and rank equally with UGI Utilities’ existing outstanding senior debt. The net proceeds from these issuances were used to reduce short-term borrowings and for general corporate purposes. Mountaineer 2025 Credit Agreement. In May 2025, Mountaineer entered into the Mountaineer 2025 Credit Agreement providing for borrowings up to $150, including a $20 sublimit for letters of credit. Mountaineer may request an increase in the amount of loan commitments to a maximum aggregate amount of $250, subject to certain terms and conditions. In connection with the entering into of the Mountaineer 2025 Credit Agreement, Mountaineer paid off in full and terminated the Mountaineer 2023 Credit Agreement, dated as of November 2019. Borrowings under the Mountaineer 2025 Credit Agreement can be used to refinance Mountaineer’s existing indebtedness, finance the working capital needs of Mountaineer and for general corporate purposes. The Mountaineer 2025 Credit Agreement is scheduled to expire in May 2030, and Mountaineer has the option, with the consent of the lenders, to extend the maturity date to May 2031, and then to May 2032. Borrowings under the Mountaineer 2025 Credit Agreement bear interest, subject to our election, at either (i) the base rate plus the applicable margin, as defined in the agreement or (ii) the adjusted Term SOFR rate plus the applicable margin, as defined in the agreement. The Mountaineer 2025 Credit Agreement contains customary covenants and default provisions and requires compliance with certain financial covenants including a maximum leverage ratio and a minimum interest coverage ratio as defined in the agreement. Mountaineer Senior Notes. In April 2025, Mountaineer entered into a note purchase agreement which provides for the private placement of (1) $50 aggregate principal amount of 6.11% Senior Notes due June 1, 2035, and (2) $20 aggregate principal amount of 6.21% Senior Notes due June 1, 2037. Pursuant to the note purchase agreement, these senior notes were funded on May 30, 2025. These senior notes are unsecured and rank equally with Mountaineer’s existing outstanding senior debt. The net proceeds from the issuance of the senior notes were used to reduce short-term borrowings and for general corporate purposes. The note purchase agreement contains customary covenants and default provisions and requires compliance with certain financial covenants including a leverage ratio and interest coverage ratio as defined in the agreement. Midstream & Marketing Energy Services Receivables Facility. Energy Services has a Receivables Facility with an issuer of receivables-backed commercial paper. In October 2024, the expiration date of the Receivables Facility was extended to October 2025. The Receivables Facility provides Energy Services with the ability to borrow up to $150 of eligible receivables during the period October 18, 2024 to April 30, 2025, and up to $75 of eligible receivables during the period May 1, 2025 to October 17, 2025, with the option to request an increase of $50. The interest rate of the Receivables Facility was replaced with a SOFR based interest rate effective with the extension in October 2024. Energy Services uses the Receivables Facility to fund working capital, margin calls under commodity futures contracts, capital expenditures, dividends and for general corporate purposes. AmeriGas Propane AmeriGas Partners Senior Notes. In May 2025, AmeriGas Partners and AmeriGas Finance Corp. issued $550 aggregate principal amount of 9.5% Senior Notes due June 2030. The 9.5% Senior Notes rank equally with AmeriGas Partners’ existing and future outstanding senior notes. The net proceeds from the issuance of the 9.5% Senior Notes, together with cash on hand and other sources of liquidity, were used for the early repayment, pursuant to a tender offer and notice of redemption, of all AmeriGas Partners 5.875% Senior Notes having an aggregate principal amount of $664, plus tender and make whole premiums and accrued and unpaid interest. The 9.5% Senior Notes indenture contains customary covenants and default provisions. In February 2025, UGI International borrowed $221 under its revolving credit facility. The proceeds from these borrowings were subsequently used to fund an intercompany loan of $221 to AmeriGas Partners. In March 2025, AmeriGas Partners and AmeriGas Finance Corp, using the cash on hand from borrowings under the intercompany loan, redeemed all of the $218 outstanding aggregate principal balance of the 5.50% Senior Notes due May 2025, plus accrued and unpaid interest. As of June 30, 2025, borrowings outstanding on the intercompany loan were $200. In conjunction with the early repayment of these senior notes, the Partnership recognized a pre-tax loss of $9 primarily comprising tender and make whole premiums and the write-off of unamortized debt issuance costs, which is reflected in “Loss on extinguishments of debt” on the Condensed Consolidated Statement of Income for the three and nine months ended June 30, 2025. AmeriGas Senior Secured Revolving Credit Facility. In October 2024, AmeriGas OLP amended the AmeriGas Senior Secured Revolving Credit Facility to increase total commitments from $200 to a total of $300. The maximum borrowings permitted to be made at any time under the credit agreement is equal to the lesser of (x) the Formula Amount for the borrowing base and (y) the Maximum Revolving Advance Amount, each as defined in the agreement. UGI Corporation UGI Corporation 2025 Credit Agreement. In October 2024, UGI entered into a new UGI Corporation 2025 Credit Agreement, consisting of (1) a $475 senior secured revolving credit facility, including a $10 sublimit for letters of credit and (2) a $400 senior secured variable-rate term loan. The revolving credit facility is scheduled to expire in October 2028 and the term loan facility is scheduled to mature in October 2027. Borrowings under the credit agreement are secured by a pledge of UGI’s equity in its material subsidiaries, as defined in the UGI Corporation 2025 Credit Agreement, excluding UGI Utilities and Mountaintop Energy Holdings, LLC, subject to certain additional exceptions and carveouts. Proceeds from the UGI Corporation 2025 Credit Agreement were used to prepay all borrowings under the UGI Corporation Credit Facility Agreement due August 29, 2025 and, concurrent with such repayment, terminated the agreement. Borrowings under the UGI Corporation 2025 Credit Agreement bear interest, subject to our election, at a rate per annum equal to (i) the alternative base rate plus the applicable rate as defined in the agreement or (ii) the adjusted Term SOFR rate plus the applicable rate as defined in the agreement. The Company has entered into an interest rate swap agreement that will generally fix the underlying market-based interest rate on the variable-rate loan through September 2027. Borrowings under the credit agreement can be used for general corporate purposes and ongoing working capital needs of the Company. Because management currently intends to maintain a substantial portion of the amounts outstanding under the $475 revolving credit facility beyond twelve months, and has the ability to do so under the terms of the UGI Corporation 2025 Credit Agreement, borrowings under this revolving credit facility have been classified as “Long-term debt” on the Condensed Consolidated Balance Sheet. In August 2025, the Company amended its UGI Corporation 2025 Credit Agreement to add an additional revolving credit facility of $300, the borrowings of which, if any, can be used solely to fund the cash consideration in the event of early conversion requests of the UGI Corporation Senior Notes (see “UGI Corporation Senior Notes” below). The $300 credit facility is scheduled to expire in August 2026, and the Company has the option, subject to meeting certain conditions, to convert and extend the credit facility borrowings into a one year term loan. Any borrowings under the $300 credit facility bear interest, subject to our election, at a rate per annum equal to (i) the alternative base rate plus the applicable rate as defined in the agreement or (ii) the adjusted Term SOFR rate plus the applicable rate as defined by the agreement. UGI Corporation Senior Notes. In June 2024, UGI issued, in an underwritten private placement, an aggregate $700 principal amount of 5.00% UGI Corporation Senior Notes due June 2028. The UGI Corporation Senior Notes are convertible subject to the occurrence of certain events and circumstances. Upon conversion, the Company will pay cash up to the aggregate principal amount of the UGI Corporation Senior Notes. For the remainder of the amount in excess of the aggregate principal amount, if applicable, the Company will have the sole right to elect the settlement method upon conversion which can be either entirely in cash or in a combination of cash and shares of its common stock. The default settlement method as defined in the agreement is a combination settlement with a specified dollar amount of $1,000 per $1,000 principal of the UGI Corporation Senior Notes, and any incremental value settled in shares of the Company’s common stock. The initial conversion rate is 36.2319 shares of the Company’s common stock per $1,000 principal amount of the UGI Corporation Senior Notes, which represents an initial conversion price of approximately $27.60 per share of the Company’s common stock. The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events. In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time. As of June 30, 2025, an early conversion condition associated with the market price of the Company’s common stock was met, and accordingly, pursuant to an indenture dated as of June 11, 2024, the UGI Corporation Senior Notes are convertible at the option of the noteholders, in whole or in part, from July 1, 2025 through September 30, 2025. Because the Company must pay noteholders cash up to the aggregate principal amount and noteholders can convert at their sole election beginning July 1, 2025 through September 30, 2025, the Company classified the entire $700 principal amount (net of unamortized debt issuance costs of $13) of the UGI Corporation Senior Notes in "Current maturities of long-term debt" on the June 30, 2025 Condensed Consolidated Balance Sheet. Whether the UGI Corporation Senior Notes will become convertible in subsequent periods after September 30, 2025 will depend on the future occurrence of early conversion conditions. If none of the conversion conditions are met in future quarters, the UGI Corporation Senior Notes will revert to classification as "Long-term debt" on the Condensed Consolidated Balance Sheet. The Company cannot predict whether noteholders will elect to convert during the conversion period ending September 30, 2025. Whether noteholders elect to convert will depend on various factors including market conditions and the secondary market trading price of the UGI Corporation Senior Notes relative to the value of early conversion. Historically, the secondary market trading price has exhibited a premium over the value of early conversion, indicating economic value to not requesting an early conversion. The Company cannot predict if these conditions will continue. As described above, in August 2025, the Company amended its credit agreement to add a new $300 revolving credit facility, the borrowings of which, if any, can be used solely to fund the cash consideration in the event of conversion by noteholders. In addition, the Company has $279 of unused borrowing capacity under its existing $475 revolving credit facility and access to additional liquidity via subsidiaries to fund any additional cash consideration, if needed, in the event of early conversion by noteholders. To-date, no noteholders have elected to convert their notes. For the three and nine months ended June 30, 2025, the Company recognized $10 and $30, respectively, of interest expense, related to the UGI Corporation Senior Notes at the effective interest rate of 5.68%. We estimate the fair value of long-term debt by using current market rates and by discounting future cash flows using rates available for similar type debt (Level 2). The estimated fair values of the UGI Corporation Senior Notes were $967 and $744 at June 30, 2025 and September 30, 2024, respectively. See the Company’s 2024 Annual Report for additional information on our UGI Corporation Senior Notes.
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