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UGI EXPECTS PETROLANE ACQUISITION BY AUGUST; PLANS STOCK ISSUE IN FALL TO FUND INCREASED OWNERSHIP INTEREST

 VALLEY FORGE, Pa., May 18 /PRNewswire/ -- UGI Corp. (NYSE: UGI) reported today that its AmeriGas subsidiary expects to complete its acquisition of a major stake in Petrolane Gas Service Limited Partnership, one of the nation's two largest propane marketers, by Aug. 1.
 James A. Sutton, chairman and chief executive officer of UGI, told shareholders at the holding company's annual meeting that the preliminary results of voting of Petrolane's creditors indicate an overwhelming acceptance of a pre-packaged plan to reorganize the company under the U.S. Bankruptcy Code.
 The solicitation period for acceptance of the plan expired yesterday (May 17), Sutton said.
 According to the plan, approximately $1 billion of Petrolane's debt will be restructured and Petrolane's current bondholders and AmeriGas will become the company's owners.
 With the creditors' acceptance of the pre-packaged plan, Petrolane and its related companies will now file for reorganization in the U.S. Bankruptcy Court in New York, Sutton explained. UGI and AmeriGas are hoping for the court's approval in 30 to 60 days. Closing of various financial restructuring transactions will take another 10 days.
 "Initially, AmeriGas will own 10 percent of Petrolane," he continued. "But in about six months, AmeriGas will acquire an additional 20 percent of the company in exchange for up to $51 million."
 Of the $51 million, Petrolane itself will contribute $19 million from a new line of credit. The AmeriGas contribution will come primarily from an offering of additional UGI common shares in the fall, he said. AmeriGas can acquire the remaining 70 percent of Petrolane within five years for 26 percent of the stock of AmeriGas.
 He said the acquisition is not expected to dilute UGI's earnings after a 12-month transition period. In addition to its equity interests, UGI will receive an annual management fee of $11.6 million from Petrolane. AmeriGas will be reimbursed for its expenses to operate the business.
 On the importance of the acquisition, Sutton said, "a revitalized Petrolane operating under AmeriGas cost-efficient programs and systems can provide significant growth in cash flow and earnings. The combined AmeriGas and Petrolane entities will benefit from economies of scale and constitute the largest propane marketing organization in the U.S."
 He said the acquisition also will free UGI and AmeriGas management to actively pursue additional propane acquisitions.
 He cautioned that the acquisition is still subject to regulatory approvals and approval of the bankruptcy court. But he said he is optimistic that UGI's two-year effort to acquire the propane marketer will be successful.
 On shareholder value, he said UGI's total return of 28.4 percent in 1992 and annualized total return of 21.7 percent for the five-year period ended last December were higher than the results in the same periods of Standard & Poor's 500 Stock Index and a peer group of gas utilities.
 In utility operations, the gas utility will invest $24 million in this new and shortened fiscal year in growth activities to increase its market share, Sutton reported. "The economy in the service area is improving, the demand for natural gas is strong, and we are adding new customers at the same high rate as a year ago," he said.
 However, he expressed concerns about the impact of the Federal Energy Regulatory Commission's Order No. 636, which is restructuring natural gas pipelines to promote competition in gas markets.
 The order's provisions will mean the pass-through of higher FERC- approved costs to the gas utility and to its core customers. He pointed out that the magnitude of the cost of Order 636 and the extent of recovery that will be permitted by Pennsylvania regulators are not presently known.
 He said the electric utility is investing in system improvements and has strengthened its long-term power supply requirements with a new power purchase agreement.
 AmeriGas is focusing on expense reduction and marketing programs to offset competitive pressures on margins and profits, Sutton said. "We will also see AmeriGas implementing its plans and systems to accommodate the acquisition and integration of Petrolance."
 Shareholders re-elected all eight members of the board of directors to another term and approved the appointment of Coopers & Lybrand as independent certified public accountants for 1993.
 UGI's directors are: Sutton; James W. Stratton, president, Stratton Management Co.; Robert C. Forney, retired, former executive vice president and director, E.I. duPont & Co., Inc.; David I.J. Wang, retired, former executive vice president and director, International Paper Co.; Richard C. Gozon, president and chief operating officer, Alco Standard Corp.; Cyrus H. Holley, president and sole owner, Management Consulting Services; Quentin I. Smith Jr., retired, former chairman and chief executive officer, Towers, Perrin, Forster & Crosby, and Stephen D. Ban, president and chief executive officer, Gas Research Institute.
 /delval/
 -0- 5/18/93
 /CONTACT: Vince Testa of UGI, 215-337-1000/
 (UGI)


CO: UGI Corporation; AmeriGas; Petrolane Gas Service; Limited
 Partnership ST: Pennsylvania IN: UTI OIL SU: TNM


MK-CC -- PH025 -- 9847 05/18/93 14:13 EDT
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Date:May 18, 1993
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