8-K
Rgc Resources Inc (RGCO)
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): February 22, 2021
RGC RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
| Virginia | 000-26591 | 54-1909697 |
|---|---|---|
| (State or other jurisdiction<br>of incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
| 519 Kimball Ave., N.E. Roanoke, Virginia | 24016 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 540-777-4427
(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 240.425) | | --- | --- || ¨ | 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 13c-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
|---|---|---|
| Common Stock, $5 Par Value | RGCO | NASDAQ Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 if the Securities Exchange Act of 1934.
| Emerging growth company | ¨ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
| ¨ | |
|---|---|
| ITEM 1.01 | ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT |
| --- | --- |
On February 22, 2021, Roanoke Gas Company (“Roanoke” or the "Company"), the utility subsidiary of RGC Resources, Inc. ("Resources"), modified its existing Revolving Line of Credit Note ("the Note"). The Note originally provided for tiered borrowing limits that ranged from $3 million to a maximum of $28 million throughout its term. The First Modification to Promissory Note (the "Modification"), included as Exhibit 10.1, amends that tiered structure and, effective March 1, 2021 and through July 19, 2021, allows Roanoke the capacity to borrow up to the $28 million maximum. All other terms of the Note remain unchanged.
The purpose of the Modification is to increase the Company's working capital availability in response to recent commodity price fluctuations. Due to the impact of recent winter weather, including a polar vortex that caused below-average temperatures across most of the United States, national natural gas demand rapidly increased during mid-February 2021, resulting in significant increases in related commodity prices.
The Continuing Guaranty previously entered into by Resources with Wells Fargo remains in effect.
| ITEM 2.03 | CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT |
|---|
The information required by this Item 2.03 is set forth in Item 1.01 above in respect of the Note, which is incorporated herein by reference.
| ITEM 8.01 | OTHER EVENTS |
|---|
The winter weather event on and around February 13, 2021 to February 20, 2021 impacted natural gas supply and market pricing throughout the United States, including the supply and pricing points that Roanoke utilizes for delivery of natural gas to its Roanoke, Virginia service territory. During this time, the Company’s purchases exceeded $21.00 per dekatherm (“DTH”). These excessive prices resulted in an aggregate increase of natural gas purchases for these eight days of approximately $3.0 million. Comparatively, the Company’s entire fiscal 2020 natural gas purchases totaled $14.9 million.
Roanoke buys the commodity of natural gas at wholesale rates and passes that price on to customers without any markup. Beginning with March bills, the Company plans to implement rates to begin the recovery of these increased gas costs. Accordingly, customer’s will see higher than normal bills as the cost of gas will increase approximately 68%.
A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information disclosed under this Item, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.
| ITEM 9.01 | FINANCIAL STATEMENT AND EXHIBITS |
|---|---|
| (d) Exhibits. | |
| --- | --- |
| 10.1 | First Modification to Promissory Note by and between Roanoke Gas Company and Wells Fargo Bank, N.A., dated as of March 1, 2021 |
| 99.1 | Roanoke GasCompanyMarch Bills to Increase Due to Higher Natural Gas Costs press release, dated February 23, 2021 |
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.
| RGC RESOURCES, INC. | ||
|---|---|---|
| Date: February 23, 2021 | By: | /s/ Randall P. Burton, II |
| Randall P. Burton, II | ||
| Vice President, Secretary, Treasurer and CFO | ||
| (Principal Financial Officer) |
Document
Exhibit 10.1
Form 8K
Filed: February 23, 2021
FIRST MODIFICATION TO PROMISSORY NOTE
This modification to PROMISSORY NOTE (this “Modification”) dated March 1, 2021, is entered into by and between ROANOKE GAS COMPANY (“Borrower”), and Wells Fargo Bank, National Association (“Bank”).
RECITALS
WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of that certain Revolving Line of Credit Note (Variable Maximum) in the stated amount of $28,000,000.00, executed by Borrower and payable to the order of Bank, dated March 25, 2020, as modified from time to time (the "Note"), which Note is subject to the terms and conditions of a credit agreement between Borrower and Bank dated March 31, 2016, as amended from time to time (the "Agreement”).
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions set forth in the Note, and have agreed to modify the Note to reflect said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree that the Note shall be modified as follows:
- Subsection (v) under Adjustments in Availability, Paragraph (c) under the heading “BORROWING AND REPAYMENT” is hereby deleted in its entirety, and the following substituted therefor:
“(v) $28,000,000.00 from March 1, 2021 up to and including July 19, 2021;”
- The effective date of this Modification shall be the date that all of the following conditions set forth in this Section have been satisfied, as determined by Bank and evidenced by Bank’s system of record. Notwithstanding the occurrence of the effective date of this Modification, Bank shall not be obligated to extend credit under this Modification or any other Loan Document until all conditions to each extension of credit set forth in the Agreement have been fulfilled to Bank's satisfaction.
(a) Approval of Bank Counsel. All legal matters incidental to the effectiveness of this Modification shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and substance satisfactory to Bank, each of the following, duly executed by all parties:
(i)This Modification and each other instrument or document required hereby.
(ii)Such other documents as Bank may require under any other Section of this Modification.
Exhibit 10.1
Form 8K
Filed: February 23, 2021
Except as expressly set forth herein, all terms and conditions of the Note remain in full force and effect, without waiver or modification. All terms defined in the Note or the Agreement shall have the same meaning when used in this Modification. This Modification and the Note shall be read together, as one document.
Borrower certifies that as of the date of this Modification there exists no Event of Default under the Note, nor any condition, act or event which with the giving of notice or the passage of time or both would constitute any such Event of Default.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby, have caused this Modification to be effective as of the effective date set forth herein.
| ROANOKE GAS COMPANY | WELLS FARGO BANK,<br>NATIONAL ASSOCIATION | ||
|---|---|---|---|
| By: | /s/ Paul W. Nester | By: | /s/ Matthew S. Churchill |
| PAUL W. NESTER, | MATTHEW S. CHURCHILL, | ||
| PRESIDENT, CHIEF EXECUTIVE OFFICER | SENIOR VICE PRESIDENT | ||
| By: | /s/ Randall P. Burton, II | ||
| RANDALL P. BURTON, II, | |||
| CHIEF FINANCIAL OFFICER, TREASURER, SECRETARY |
Document
Exhibit 99.1
Form 8K
Filed: February 23, 2021
NEWS RELEASE
ROANOKE GAS COMPANY
Release Date: February 23, 2021
Contact: Paul W. Nester
President and CEO
Telephone: 540-777-3837
ROANOKE GAS COMPANY
MARCH BILLS TO INCREASE DUE TO HIGHER NATURAL GAS COSTS
ROANOKE, Va. (February 23, 2021)— Beginning February 13, 2021 and continuing through February 20, 2021, a historic winter weather event impacted natural gas supply and market pricing throughout the United States, including the supply and pricing points that Roanoke Gas Company (the “Company” or “Roanoke Gas”) utilizes for the delivery of natural gas to its Roanoke service territory. The Company’s natural gas purchases on the critical Valentine’s Day weekend exceeded $21.00 per dekatherm (“DTH”). These changes in pricing resulted in an aggregate increase in the cost of natural gas purchases for these eight days of approximately $3.0 million. In context, the Company’s entire fiscal 2020 natural gas purchases totaled $14.9 million.
Beginning with March bills, the Company plans to implement rates to begin the recovery for these increased gas costs. Accordingly, our customers will see higher than normal bills as their cost of gas will increase approximately 68%. As a reminder, Roanoke Gas buys natural gas at a wholesale rate and passes the cost of gas to customers without any markup.
Roanoke Gas President and CEO Paul Nester stated, “Our thoughts and prayers continue to be with those in Texas and the many others throughout the country impacted by this storm.” Regarding the 68% jump in gas prices effective March 1 for Roanoke Gas customers, Nester stated, “We have worked diligently to moderate the impact to our customers. However, it may take up to 2 years for these costs to be fully recovered.” Nester further commented regarding the Company’s gas supply portfolio, “This is a real-time, real-world example of the need for the Mountain Valley Pipeline (“MVP”) and the gas it will supply our customers and others throughout the United States. If the MVP had been in service, we believe we would have saved our customers significant commodity gas costs by delivering gas from the prolific and affordable Appalachian Basin. On the critical Valentine’s Day weekend, the MVP pricing point was consistently in the $4.00 per DTH range. As these numbers indicate, the flexibility and supply diversity that MVP would have provided are material. This event has proven how much this region, our state and country need the MVP.”