Business Context and Reporting Period
This Form 8-K filing by Suburban Propane Partners, L.P. (the "Partnership") is dated December 5, 2003. The report details a proposed acquisition of substantially all assets and operations of Agway Energy, a regional marketer of propane and refined fuels, through an asset purchase agreement entered into on November 10, 2003.
Key Financial Metrics and Transaction Details
- Acquisition Price: $206.0 million in cash, subject to purchase price adjustments.
- Target Financials (Agway Energy FY ended June 30, 2003): Served over 400,000 active customers; sold approximately 106.3 million gallons of propane and 356.8 million gallons of refined fuels.
- Financing: The Partnership plans to fund the transaction via capital markets. A $210.0 million 364-day credit facility commitment has been secured from investment banking institutions to fund all or a portion of the purchase price.
- Target Market Position: Agway Energy is the eighth largest retail propane marketer in the U.S. (per LP/Gas Magazine, Feb 2003) with approximately 139 distribution centers.
Material Changes and Process Status
The filing announces a material change in the Partnership's asset base pending the successful conclusion of a bankruptcy court-supervised auction. Agway, Inc. (parent of Agway Energy) is a debtor-in-possession under Chapter 11, though Agway Energy itself is not a debtor. The Bankruptcy Court approved bid procedures on November 24, 2003, designating the Partnership as the "stalking horse" (lead bidder). An auction is scheduled for December 18, 2003.
Outlook, Risks, and Contingencies
- Closing Contingency: There is no assurance the Partnership will be the successful bidder at the auction or that the acquisition will be consummated.
- Regulatory Approval: Closing is expected shortly after the auction, subject to necessary regulatory approvals.
- Pro Forma Data: Unaudited pro forma condensed combined financial statements for the year ended September 27, 2003, are included as Exhibit 99.2.
- Historical Data: Combined financial statements for Agway Energy for fiscal years ended June 30, 2001, 2002, and 2003, are included as Exhibit 99.1.
Investor Verification Checklist
- Confirm the outcome of the auction scheduled for December 18, 2003, to determine if the Partnership remains the successful bidder.
- Review Exhibit 99.1 for Agway Energy's audited financial statements and Exhibit 99.2 for the unaudited pro forma impact on the Partnership.
- Verify the final purchase price after any adjustments and the specific terms of the $210.0 million interim financing facility.
- Monitor for receipt of necessary regulatory approvals required to close the transaction.