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MarketScreener Homepage  >  Equities  >  Nasdaq  >  RGC Resources, Inc.    RGCO

RGC RESOURCES, INC.

(RGCO)
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RGC RESOURCES INC : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Other Events, Financial Statements and Exhibits (form 8-K)

02/23/2021 | 03:49pm EDT

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



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