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# Mountaineer Gas Locks In $50 Million Of Long-Dated Fixed-Rate Debt To Retire Existing Borrowings
- URL: https://www.bullished.co/mountaineer-gas-locks-in-50-million-of-long-dated-fixed-rate-debt-to-retire-existing-18a7ea74/
- Published: 2026-10-02T20:50:57.000Z
- Updated: 2026-10-03T20:38:34.000Z
- Description: UGI's West Virginia gas utility subsidiary closed a two-tranche private note placement on September 28, priced at rates between 5.95% and 6.05%.
- Author: Matteo Parrino
- Tags: SEC Filings, UGI, Industry: Utilities

Mountaineer Gas, a West Virginia natural gas utility and indirect wholly owned subsidiary of UGI, [closed a $50 million private debt placement](https://www.sec.gov/Archives/edgar/data/0000884614/000110465926113317/ugi-20260928x8k.htm?ref=bullished.co) on September 28, split across two series of long-dated senior notes. Proceeds will go primarily toward retiring existing debt, according to an 8-K UGI filed Friday with the SEC.

## What The Filing Says

The placement breaks into two tranches: [$30 million of 5.95% Series H Senior Notes](https://www.sec.gov/Archives/edgar/data/0000884614/000110465926113317/ugi-20260928x8k.htm?ref=bullished.co) due September 28, 2038, and $20 million of 6.05% Series I Senior Notes due September 28, 2041\. Pricing on both series was set earlier — on June 30, 2026 — with funding and closing occurring on September 28.

The notes are unsecured and rank equally with Mountaineer's existing and future unsecured senior debt. Interest is payable semiannually, each March 28 and September 28\. Both series are callable by Mountaineer in whole or in part at any time, subject to a make-whole payment, and callable without a make-whole premium after June 30, 2038 and June 30, 2041, respectively.

Note holders have the right to demand prepayment if UGI's ownership of Mountaineer falls below 51% — whether measured by voting power or economic interest — particularly if Mountaineer's debt rating drops below investment-grade thresholds set by Fitch, Moody's, or Standard & Poor's, or if a rating decline occurs within 60 days of a change-of-control event.

The placement was exempt from registration under the Securities Act of 1933\. Purchasers named in the [note purchase agreement](https://www.sec.gov/Archives/edgar/data/0000884614/000110465926113317/ugi-ex4d1.htm?ref=bullished.co) include State Farm Life Insurance, Teachers Insurance and Annuity Association of America, and Lincoln National Life Insurance.

## The Covenant Structure

The note purchase agreement carries a set of financial covenants that define the guardrails Mountaineer must operate within. Among the binding requirements: total debt cannot exceed 65% of total capitalization at any time; the ratio of consolidated earnings before interest, taxes, depreciation, and amortization to consolidated interest expense must stay at or above 2.00 to 1.00; and asset sales are capped at 15% of consolidated total assets in any fiscal year, with safe harbors for debt repayment and property reinvestment.

The agreement also sets a floor on consolidated tangible net worth — Mountaineer must maintain at least $70 million at all times. Priority debt, excluding certain subsidiary obligations, cannot exceed 15% of consolidated tangible net worth.

Default triggers include failure to pay principal when due, failure to pay interest within five business days of the due date, and cross-default provisions that kick in when other borrowings in aggregate principal of $25 million or more are accelerated. Judgment defaults apply when a money judgment exceeds $25 million. The agreement also includes a 30-day grace period for failures to comply with affirmative covenants.

## Where This Fits In Mountaineer's Debt Stack

The Series H and I notes are not Mountaineer's first foray into the private placement market. The new agreement lists prior note purchase agreements dating to 2017, 2019, 2022, and 2025 as material credit facilities, and the two new series join seven existing ones. Those older series carry rates ranging from 3.50% to 6.21%, with maturities extending as far out as 2052 — a pattern of staggered, long-dated fixed-rate borrowing built up over nearly a decade.

The placement required approval from the West Virginia Public Service Commission before it could close, a standard regulatory step for a state-regulated utility.

UGI shares were flat in Friday after-hours trading at $37.20, unchanged from the regular-session close, according to market data.

Investors tracking Mountaineer's debt profile will want to watch whether the subsidiary adds further note series under future purchase agreements, and how UGI's broader refinancing activity affects Mountaineer's blended interest cost as older, lower-rate notes — some carrying rates as low as 3.50% — approach maturity between 2027 and 2034.

### Sources

- [8-K Filing — UGI CORP /PA/ (UGI)](https://www.sec.gov/Archives/edgar/data/0000884614/000110465926113317/ugi-20260928x8k.htm?ref=bullished.co) — SEC EDGAR
- [Exhibit ugi-ex4d1.htm — UGI CORP /PA/ 8-K exhibit](https://www.sec.gov/Archives/edgar/data/0000884614/000110465926113317/ugi-ex4d1.htm?ref=bullished.co) — SEC EDGAR