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BROOKLYN UNION ANNOUNCES 9-1/8 PERCENT FORWARD REFUNDING

 BROOKLYN UNION ANNOUNCES 9-1/8 PERCENT FORWARD REFUNDING
 BROOKLYN, N.Y., July 29 /PRNewswire/ -- The Brooklyn Union Gas Company (NYSE: BU) announced today that it has entered into a forward purchase agreement with several underwriters, led by Lehman Brothers, to issue $75 million principal amount of tax exempt bonds on or about April 29, 1993. The proceeds from the offering will be used to refund the Company's 9-1/8 percent Gas Facilities Revenue Bonds, Series 1983 A which are eligible to be redeemed as of May 1, 1993.
 On April 1, 1992, the Company redeemed three series of cumulative Preferred Stock totalling $39 million. Three more series of First Mortgage Bonds totalling $48 million were redeemed on May 1, 1992. The Company also converted to a fixed rate of 6.75 percent, $90 million of its variable rate SAVRS Bonds. Craig G. Matthews, Executive Vice President and Chief Financial Officer, said, "The rate on the newly issued bonds of 6.368 percent per annum, in addition to the other restructuring transactions earlier this year, reduces the Company's embedded cost of debt 6.79 percent, one of the lowest for a utility in the United States."
 Second Stage Rate Filing
 Pursuant to the terms of the Company's three year rate settlement approved by the Public Service Commission (PSC) in October 1991, the Brooklyn Union Gas Company has filed for a second stage rate change covering fiscal year 1993.
 The filing is for $22 million, or a 2.1 percent increase in revenues, reflecting an 11.9 percent return on utility common equity. In addition the Company will amortize to income in fiscal year 1993, $11 million in previously deferred credits to cover a total need for additional revenues of $33 million.
 Brooklyn Union's filing covers increases in labor costs, medical insurance costs, taxes and inflationary cost increases affecting other operating and maintenance expenses as well as capital costs associated with expenditures necessary to upgrade the Company's distribution system.
 The filing will be subject to review by the PSC and other parties. The Company expects approval from the PSC for rates to become effective early October 1992.
 Star Gas Corporation
 A Company subsidiary, Star Energy Inc. (SEI), owns a 45 percent minority interest in Star Gas Corporation (Star Gas), a large propane distributor with operations primarily in the eastern part of the country. As a result of the unusually warm weather in recent winters and the economic recession, Star Gas has experienced losses which have caused it to be in default under loan agreements pertaining to approximately $126 million principal amount of indebtedness. Additionally, an interest payment of $5 million due on July 10, 1992, was not made by Star Gas.
 Negotiations are currently in progress with Star Gas' lenders with a view to a secured restructuring of their respective debt arrangements with Star Gas. The possibility of alternative transactions including third party equity infusions is being explored. Star Gas is also seeking to renegotiate a line of credit for $20 million with a bank. In connection with the lender negotiations, it is possible that the stockholders of Star Gas, including SEI, may be required to relinquish a portion of their equity positions or otherwise provide additional security for any such restructuring. If Star Gas is unable to negotiate a new credit arrangement, a satisfactory restructuring or other transaction, Star Gas would be required to seek protection under the Federal bankruptcy laws.
 As of June 30, 1992, the Company's investment in SEI was approximately $22 million. Neither the Company nor SEI are guarantors of any of Star Gas' indebtedness. Based upon information currently available to the Company concerning these matters involving SEI, the Company does not believe that the ultimate resolution of these matters will have a material adverse effect on the Company's consolidated financial position.
 Brooklyn Union Gas distributes natural gas in the boroughs of Brooklyn, Staten Island, and two-thirds of Queens, a territory of 187 square miles with a population of 4,000,000. Through subsidiary and affiliate companies it is involved in oil and gas exploration and marketing, propane distribution and cogeneration projects.
 -0- 7/29/92
 /CONTACT: Jan C. Childress of Brooklyn Union Gas, 718-403-3382/
 (BU) CO: Brooklyn Union Gas Company ST: New York IN: UTI SU:


AH-OS -- NY095 -- 4859 07/29/92 19:59 EDT
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Date:Jul 29, 1992
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