SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): July 25, 2006
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RGC RESOURCES, INC.
(Exact name of Registrant as specified in its charter)
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Virginia 000-26591 54-1909697
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
519 Kimball Ave., N.E. Roanoke, Virginia 24016
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 540-777-4427
(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|__| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 240.425)
|__| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|__| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|__| Pre-commencement communications pursuant to Rule 13c-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On July 10, 2006, Diversified Energy Company d/b/a Highland
Energy, a wholly owned subsidiary of RGC Resources, Inc.
("Resources" or "Company"), entered into an asset purchase and
sale agreement for the sale of the assets relating to its
energy marketing business to Atmos Energy Marketing, LLC
("Atmos"). On July 25, 2006, the sale of the assets was
closed. The assets sold included the gas supply contracts
between Highland Energy and its customers and related business
records. The effective date of transfer under the gas supply
contracts is set as the date from the first meter read
performed for each of the end user customers on or after
August 1, 2006. Prior to this transaction, Highland Energy
purchased from Atmos a majority of the natural gas that
Highland Energy resold to customers pursuant to these gas
supply contracts.
Highland Energy and Resources agreed with Atmos for a period
of three years ending July 1, 2009 to not sell any natural gas
for consumption by an existing customer at any facility
serviced under the assigned contracts with the exception of
tariff gas sales by a public utility subsidiary or affiliate.
The purchase price for the assets sold by Highland Energy is
valued at up to $414,270. The purchase price was a negotiated
amount, as may be adjusted as described below, based on the
value of the gas supply contracts and the customer
relationships. Atmos paid Highland Energy the sum of $233,216
at closing. The remaining $181,054 will be paid by Atmos to
Highland Energy on the first anniversary of the closing
provided that all such customers with assigned contracts
remain as customers of Atmos Energy as of the anniversary
date. However, the remaining balance payable will be adjusted
downward by a prescribed amount to the extent (i) a customer
pursuant an assigned contract is no longer a customer on the
anniversary date and such customer was not a customer for two
of the preceding twelve months or (ii) any customer reduces
their average natural gas consumption by more than 20 percent
from current annualized levels.
As a result of the sale of the assets of Highland Energy, the
Company recognized a loss of approximately $147,000 related to
the unassigned basis (the transportation component of the gas
purchase agreements) not acquired by Atmos. The loss reflects
the difference in the original cost of such basis in excess of
the current net realizable value that Highland Energy expects
to receive for resale of the basis in current gas market
conditions.
ITEM 9. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
2.1 Asset Purchase and Sale Agreement by and between Diversified
Energy Co. d/b/a Highland Energy and Atmos Energy Marketing,
LLC dated July 10, 2006. (Certain schedules or similar
attachments to this agreement have been omitted and Resources
agrees to furnish the Securities and Exchange Commission
supplementally a copy of any such omitted schedule or similar
attachment upon request.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
RGC RESOURCES, INC.
Date: July 27, 2006 By: s/Howard T. Lyon
Howard T. Lyon
Vice-President, Treasurer and Controller
(Principal Financial Officer)