UGI Corp Announces Liquidity Boosting Moves On COVID-19 Fears
Zacks Investment Research | Mar 27, 2020 08:36AM ET
UGI Corporation’s (NYSE:UGI) subsidiary, UGI Utilities, recently announced that it has entered into a Note Purchase Agreement for a $150 million private placement to reduce short-term borrowings. Another subsidiary, UGI Energy Services, has increased its Revolving Credit Facility by $60 million to $260 million and also extended the maturity of the credit facility to March 2025.
As of Feb 29, 2020, the company’s total available liquidity balance was $1.15 billion. Jointly these transactions have increased the company’s short-term liquidity by nearly $210 million.
Strengthening Financial Position & Outlook
At present, debt-to-capital ratio of the company is 59.27%, higher than the industry level of 48.80%. Moreover, the current ratio is 0.81, which implies that the company has average liquid assets to meet short-term obligations. The recent note purchase agreement and revolving credit facility will increase the company’s liquidity to meet these obligations and counter the coronavirus-induced crisis.
The company anticipates investing nearly $850 million in fiscal 2020. The recent Fed rate cut to near zero level will facilitate borrowing of funds with near to zero interest rates. Notably, with increased short-term liquidity, the company will be able to carry out necessary investments.
The company will continue to update its views taking into consideration the impact of both warm weather and COVID-19 on its second quarter and fiscal 2020 results.
Price Movement
Shares of UGI have lost 52.7%, compared with the Zacks Investment Research
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