UGI (NYSE:UGI) Corporation's (NYSE:UGI) fully-owned subsidiary, UGI Utilities, Inc., has entered into a Note Purchase Agreement for the private placement of $175 million in senior notes, according to a recent 8-K filing with the Securities and Exchange Commission. The transaction, completed on Thursday, involves the issuance of two series of senior notes: $50 million of 5.24% Senior Notes, Series A, due November 30, 2029, and $125 million of 5.52% Senior Notes, Series B, due November 30, 2034.
The notes, unsecured and ranking equally with other unsecured and unsubordinated debt of UGI Utilities, were funded on the day of the agreement. Interest is payable semiannually, with the proceeds intended for refinancing existing debt and general corporate purposes. The agreement also includes customary covenants and events of default, ensuring the maintenance of UGI Utilities' operational and financial obligations.
In other recent news, UGI Corporation has demonstrated a significant rise in its adjusted earnings per share (EPS) for the third quarter of fiscal year 2024, marking $0.06 compared to a breakeven in the prior year.
This progress is attributed to strategic moves such as the divestiture of its natural gas-fired facility in Pennsylvania and LPG business in Switzerland. Furthermore, Mizuho (NYSE:MFG) Securities has upgraded UGI's stock from Neutral to Outperform, expressing confidence in UGI's potential for earnings growth and stability. The incoming CEO, Bob Flexon, is also expected to have a positive influence on UGI's future.
UGI Corp has also appointed KPMG as the new auditor for the fiscal year ending September 30, 2025, following the dismissal of Ernst & Young LLP. There were no disagreements with EY on accounting principles or practices, financial statement disclosure, or auditing scope or procedure during the fiscal years audited by EY. In addition, UGI Corp has made considerable strides in strengthening its balance sheet, reducing debt by approximately $300 million since the beginning of fiscal 2023.
InvestingPro Insights
UGI Corporation's recent $175 million senior notes issuance through its subsidiary UGI Utilities aligns with the company's strong financial position and commitment to shareholder value. According to InvestingPro data, UGI boasts a market capitalization of $5.22 billion and a favorable P/E ratio of 7.57, indicating that the stock may be undervalued relative to its earnings.
InvestingPro Tips highlight UGI's impressive track record of dividend payments. The company has maintained dividend payments for 54 consecutive years and has raised its dividend for 31 consecutive years. This commitment to shareholder returns is further evidenced by UGI's current dividend yield of 6.14%, which is significant in today's market environment.
The company's financial health is also reflected in its profitability. InvestingPro Tips indicate that UGI has been profitable over the last twelve months and analysts predict continued profitability this year. This financial stability supports UGI's ability to manage its new debt issuance effectively.
For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips for UGI, providing a deeper understanding of the company's financial position and future prospects.
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