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 10, 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 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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"). The
assets to be sold include the gas supply contracts between
Highland Energy and its customers and related business records.
The date of transfer is set as the date from the first meter read
performed for each of the end user customers on or after August
1, 2006.
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. Atmos will pay 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.
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 13, 2006 By: s/Howard T. Lyon
Howard T. Lyon
Vice-President, Treasurer and Controller
(Principal Financial Officer)