Fitch Rates AmeriGas Partners' $400MM Senior Notes 'BB+'.

NEW YORK -- AmeriGas Partners, L.P.'s (APU) $400 million senior notes due 2015, issued jointly and severally with its special purpose financing subsidiary Amerigas Finance Corp., are rated 'BB+' by Fitch Ratings. The Rating Outlook is Stable. An indirect subsidiary of UGI Corp. is the general partner and 44% limited partner for APU, which, in turn, is a master limited partnership (MLP) for AmeriGas Propane, L.P. (AGP), an operating limited partnership. Proceeds from the new senior notes will be utilized to repurchase outstanding 8.875% APU senior notes pursuant to an ongoing tender offer.

APU's rating reflects the underlying strength of subsidiary AGP's retail propane distribution network, broad geographic reach, improved credit metrics, and proven ability to manage product costs under various operating conditions. Additionally, the company's PPX propane cylinder exchange business provides moderate positive cash flow during the summer months when AGP's traditional propane distribution business is relatively slow. APU's rating also reflects the structural subordination of its debt obligations to approximately $433 million of first mortgage notes at AGP.

APU's financial performance will continue to be affected by weather conditions during the winter heating season, and the company must continue to manage volatile supply costs. Fitch believes that the combination of warm winter weather (6% warmer than normal) during the recent heating season and elevated commodity prices had a moderately negative impact on APU's credit metrics. Though reported financials are not yet available for the March 2005 quarter, during the 12-month period ended Dec. 31, 2004, consolidated EBITDA to interest and debt to EBITDA equaled 3.1 times (x) and 3.6x, respectively. APU's recent financial performance has generally exceeded expectations for company performance under the stress case conditions of a warm weather and high commodity price heating season environment.

The persistence of high propane prices and volatility (largely due to the rise in crude oil prices) may lead to further customer conservation, increased bad debt expense, and test APU's ability to sustain gross profit margins. However, Fitch notes that APU has managed to effectively pass through propane supply costs to customers and maintain relatively consistent gross margins during periods of volatile weather conditions and commodity prices over the past several years.