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
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
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 Gas Company March Bills to Increase Due to Higher Natural
Gas Costs press release, dated February 23, 2021
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