In June 2006, Patriots Energy Group (PEG) issued $31,795,000 of variable rate demand bonds due in 2036.  Bond proceeds of $10,257,000 were used to repay a bond anticipation note, including interest.  The remainder of bond proceeds will be used to finance the costs of acquiring, constructing and installing extensions and improvements to PEG’s gas facilities. 

This project consists of the installation of approximately 42.2 miles of 12-inch steel transmission pipeline from an existing pipeline at Kings Creek, Cherokee County, South Carolina across York County to Chester County, South Carolina and other related construction. The new pipeline will provide natural gas service to five meter and regulating stations to serve the PEG Members. In conjunction with this project, PEG entered into an agreement with the Town of Blacksburg to purchase contract rights to uprate approximately 5.0 miles of existing 6-inch transmission pipeline to an 8-inch high pressure pipeline extending from Blacksburg’s Transco tap along Highway 5 to Kings Creek. The new pipeline will be constructed in three phases. Phase I from the Blacksburg take-off at Kings Creek to the municipality of Sharon is currently scheduled to be completed on or before December 1, 2006. Phase II from the municipality of Sharon to the municipality of McConnells and Phase III from the municipality of McConnells to the take-off of the PEG line at the “Bowater take-off” are anticipated to be completed on or before December 1, 2007, which is the 2007-2008 heating season.

PEG pledged its revenues as security for payment of the bonds.  PEG simultaneously entered into a 30-year Financing Agreement with its Members to secure the financial covenants and assurances necessary to secure PEG’s indebtedness.  Under the Financing Agreement, Members are obligated to pay all costs billed by PEG for its services.