AmeriGas Partners $60MM Senior Notes Rated `BB+' By Fitch.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 2, 2001

AmeriGas Partners, L.P.'s (AmeriGas) $60 million 10% senior notes due 2006, issued jointly and severally with its special purpose financing subsidiary AmeriGas Eagle Finance Corp., are rated `BB+' by Fitch. The Rating Outlook is Stable. Note proceeds will be downstreamed to AmeriGas Propane, L.P., the operating limited partnership (OLP) of AmeriGas, which in turn will use the proceeds to reduce outstanding bank borrowings and for general partnership purposes.

AmeriGas announced on Jan. 31, 2001 that it has signed a definitive agreement to acquire the retail propane distribution assets of Columbia Energy Group, Inc. (CEG) in a transaction valued at $208 million. Financing plans call for the transaction to be funded with approximately 75% debt and 25% new common units. The debt portion will consist of a privately placed first mortgage notes issued by the OLP, which have been assigned a preliminary `BBB' rating by Fitch. Positively, no interim debt will be issued to bridge the equity portion as the $53 million common unit component will be issued to CEG at closing. The transaction is conditioned upon AmeriGas receiving all financing commitments prior to close.

AmeriGas' rating reflects the strengthened market position resulting from the purchase of CEG's propane business combined with the expectation that AmeriGas will realize operating synergies at a level sufficient to sustain credit measures consistent with the `BB+' rating. The acquisition significantly expands the scale and scope of AGP's retail distribution network. CEG's propane business currently ranks as the nation's seventh largest retailer with annual retail volumes of about 244 million gallons and 186 customer service centers (CSCs) located primarily in the Midwest, Mid-Atlantic and Northeast states. On a post acquisition basis, AmeriGas will again rank as the nation's largest distributor with more than 1.3 million customers and normalized retail sales in excess of one billion gallons. Although Fitch expects some moderate pressure on key credit measures immediately following closing due to the recent under-performance at CEG's propane segment, AGP's credit profile should strengthen as management's cost reduction plans are implemented over the next 12 to 18 months. Fitch believes that management's cost saving estimates are reasonable given the sizable amount of blend opportunities resulting from overlapping customer service centers (CSCs). Moreover, APU's track record of successfully acquiring and integrating similar sized acquisitions has been favorable.

AmeriGas' rating also recognizes the subordination of its debt obligations to approximately $790 million secured long-term debt of the OLP, including $677 million of privately placed `BBB' rated first mortgage notes. As part of its analysis, Fitch reviewed the OLP's ability to make ongoing subordinated cash distributions to service debt at AmeriGas. Even after factoring in the additional acquisition debt to be incurred both at the OLP and AmeriGas level, cash distributions to AmeriGas (generally defined as OLP EBITDA less OLP interest expense and maintenance capital expenditures) is expected to cover projected interest at AmeriGas by more than 7 times (x). Even under a hypothetical stress case assuming warmer than normal weather and a reduction in projected acquisition related synergies, this ratio should remain above 5.0x.

AmeriGas is the one of the nation's leading retail propane distributors with a diverse base of more than 950,000 customers in 46 states. AmeriGas is the master limited partnership (MLP) for AmeriGas Propane, L.P., an operating limited partnership (OLP). An indirect subsidiary of UGI Corp. is the 2.0% general partner and a 53.5% limited partner of AmeriGas.