[8-K] RGC Resources Inc Reports Material Event

Rhea-AI Filing Summary

RGC Resources, Inc. (RGCO) subsidiary RGC Midstream, LLC entered a $53.6 million Credit Agreement with Atlantic Union Bank and CoBank on September 5, 2025, replacing Midstream's existing debt. The facility bears interest at one month Term SOFR plus 155 basis points with monthly interest payments and scheduled quarterly principal payments aligned with Mountain Valley Pipeline shipper agreements that expire June 2044. Resources provided a guaranty of Midstream's obligations.

Midstream also executed interest rate swaps converting $35.6 million of the variable-rate exposure to an effective fixed rate of 5.061%, and redesignated existing swaps so total hedged notional equals $53.6 million. Separately, Midstream obtained two project Notes with Atlantic Union for MVP Southgate and MVP expansion totaling potential draws of $1.85 million and $3.65 million, at Term SOFR plus 175 basis points reducible to plus 155 basis points upon project operations. The Credit and Loan Agreements include customary fees and financial covenants, including consolidated long-term indebtedness limits, priority indebtedness limits, and a minimum consolidated interest coverage ratio of 1.50 to 1.00.

Positive

• $53.6 million refinance replaces existing debt, simplifying capital structure and refinancing risk
• Interest rate swaps convert $35.6 million to fixed rate and, combined with existing swaps, hedge the full $53.6 million notional
• Principal schedule aligned with MVP shipper agreements, matching debt service to contracted revenue timing
• Parent guaranty provides additional lender support which may lower borrowing costs or improve terms

Negative

• Financial covenants (65% long-term indebtedness cap, 15% priority indebtedness cap, 1.50x interest coverage) may constrain operational flexibility
• Portion of project financing ($1.85M and $3.65M) carries a higher initial spread (SOFR+175bps) until projects commence, exposing timing risk
• Parent exposure increases because Resources guaranteed Midstream obligations, concentrating credit risk at the parent level

Insights

Financial Analyst

TL;DR: Refinance reduces immediate refinancing risk and locks fixed-rate exposure on most debt, supporting cashflow predictability.

The $53.6 million refinance replaces prior debt and centralizes bank relationships with Atlantic Union and CoBank. Converting $35.6 million to a fixed effective 5.061% rate and redesignating swaps to cover the full $53.6 million reduces Midstream's exposure to short-term rate volatility, improving interest expense visibility. Quarterly principal amortization matched to MVP shipper agreements aligns debt service with contracted cash inflows, which is credit-positive if shipper volumes and payments remain as contracted. The parent guaranty enhances lender comfort but also places Resources on the hook for Midstream obligations, consolidating credit risk at the parent level.

Risk Analyst

TL;DR: Hedging and scheduled amortization lower market risk but covenants and project-linked pricing retain operational and covenant risk.

The interest rate swaps materially reduce interest-rate risk for the hedged notional, yet a portion of exposure remains variable until project milestones reduce margins. The project Notes carry a higher spread until operations commence, tying future borrowing costs to project execution. Financial covenants such as a 65% consolidated long-term indebtedness cap and a 1.50x interest coverage floor could constrain flexibility if cashflows weaken. Monitoring covenant headroom and MVP shipper performance will be important to assess covenant compliance risk.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported): September 5, 2025

RGC RESOURCES, INC.

(Exact name of Registrant as specified in its charter)

Virginia	000-26591	54-1909697
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

519 Kimball Ave., N.E. Roanoke, Virginia	24016
(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)

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 230.425)

☐ 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 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $5 Par Value	RGCO	NASDAQ Global Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 if the Securities Exchange Act of 1934.

Emerging growth company             ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On September 5, 2025, RGC Midstream, LLC (“Midstream”), a wholly owned subsidiary of RGC Resources, Inc. (“Resources”), entered into a Credit Agreement ("Agreement") borrowing $53,600,000 with Atlantic Union Bank (“Atlantic Union”) and CoBank, ACB ("CoBank").  The Agreement bears an interest rate of one month Term SOFR plus 155 basis points with interest payable monthly.  Midstream will repay principal based on a schedule aligned with the terms of the Mountain Valley Pipeline ("MVP") shipper agreements, which will expire in June 2044.  Quarterly principal payments will be due each October, January, April and July.  In connection with this Agreement, Resources executed a Guaranty in favor of Atlantic Union and CoBank guaranteeing timely payment and performance of obligations by Midstream. The loan matures on September 5, 2032.

The proceeds from this note were used to refinance all of Midstream's existing debt.  Also, on September 5, 2025, Midstream executed two interest rate swap agreements totaling $35,600,000 with Atlantic Union and CoBank corresponding to the term and draw provisions of the Agreement, which effectively converts that portion of the variable rate note to a fixed rate instrument with an effective annual interest rate of 5.061%. The two existing interest rate swaps with Atlantic Union will remain in place, have been redesignated, and when combined with the new interest rate swap agreement, hedges a notional value of $53,600,000.

Additionally, on September 5, 2025, Midstream entered into a Loan Agreement for the MVP Southgate extension and MVP expansion that can be drawn to principal amounts of $1,850,000 and $3,650,000, respectively, (the "Notes") with Atlantic Union. The Notes bear an interest rate of Term SOFR plus 175 basis points, subject to reduction to Term SOFR plus 155 basis points upon operation of MVP Southgate and operation of the MVP expansion, respectively, and commencement of cash distributions from MVP with interest payable monthly commencing October 1, 2025. The loan matures on October 1, 2030, at which time the outstanding principal balance on each note is due.

Both the Credit Agreement and Loan Agreement referenced above contain certain origination and other fees, and carry the same financial covenants included in other debt agreements including the limitation of Consolidated Long Term Indebtedness to not more than 65% of Consolidated Total Capitalization, Priority Indebtedness, as defined in the Agreement, to not more than 15% of Consolidated Total Assets and Consolidated Interest Coverage Ratio to no less than 1.50 to 1.00. 

ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT

The information required by this Item 2.03 is set forth in Item 1.01 above in respect of the Agreement and Notes, which is incorporated herein by reference.

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits
10.1	Credit Agreement by and between RGC Midstream, LLC, Atlantic Union Bank and CoBank, ACB, dated as of September 5, 2025
10.2	Guaranty by RGC Resources, Inc. with Atlantic Union Bank, dated as of September 5, 2025
10.3	Interest Rate Swap Confirmation by and between RGC Midstream, LLC and Atlantic Union Bank, executed on September 5, 2025
10.4	Interest Rate Swap Confirmation by and between RGC Midstream, LLC and CoBank, executed on September 5, 2025
10.5	Loan Agreement by and between RGC Midstream, LLC and Atlantic Union Bank, dated as of September 5, 2025
10.6	Guaranty by RGC Resources, Inc. with Atlantic Union Bank, dated as of September 5, 2025
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

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: September 9, 2025	By:	/s/ Timothy J. Mulvaney
		Timothy J. Mulvaney
		Vice President, Treasurer and Chief Financial Officer
		(Principal Financial Officer)

FAQ

What debt did RGC Midstream incur and for what amount?

Midstream entered a Credit Agreement borrowing $53,600,000 and separate project Notes with potential draws of $1,850,000 and $3,650,000.

What interest rates apply to the new facilities for RGCO/Midstream?

The Credit Agreement bears interest at one month Term SOFR plus 155 basis points. The project Notes bear Term SOFR plus 175 bps, reducible to plus 155 bps upon project operations. Interest swaps produce an effective fixed rate of 5.061% on $35.6 million of the exposure.

When do the loans mature and how is principal repaid?

The Credit Agreement matures on September 5, 2032 with quarterly principal payments each October, January, April and July aligned to MVP shipper agreements. The project Notes mature on October 1, 2030 with outstanding principal due at maturity.

Does RGC Resources guarantee Midstream's debt?

Yes. RGC Resources executed a Guaranty in favor of Atlantic Union and CoBank guaranteeing timely payment and performance of Midstream's obligations.

What covenants did Midstream agree to under the Credit and Loan Agreements?

Agreed covenants include limiting Consolidated Long Term Indebtedness to not more than 65% of Consolidated Total Capitalization, Priority Indebtedness to not more than 15% of Consolidated Total Assets, and maintaining a Consolidated Interest Coverage Ratio of at least 1.50 to 1.00.