8-KMaterial AgreementsRegulation FDExhibits & Filings

ATMOS ENERGY CORP 8-K Report, Material Agreement (Jul 1, 2010)

Filed July 1, 2010For Securities:ATO

Summary

Atmos Energy Corporation (ATO) announced on July 1, 2010, that it has entered into a significant share repurchase agreement with Goldman Sachs for $100 million. This agreement allows Atmos to buy back its own common stock, indicating management's confidence in the company's valuation and a commitment to returning capital to shareholders. The repurchase will occur through an accelerated share repurchase (ASR) program. Under this program, Atmos will pay $100 million to Goldman Sachs and will initially receive approximately 2,958,580 shares, representing 80% of the value based on the June 30, 2010 closing price. The final settlement will occur in March 2011 or potentially sooner, depending on market conditions and the volume-weighted average price (VWAP) of the stock during the calculation period. This structure allows for flexibility and potential upside for Atmos if the stock price remains below a certain threshold.

Key Highlights

  • 1Atmos Energy Corp. entered into a $100 million accelerated share repurchase (ASR) agreement with Goldman Sachs.
  • 2The ASR program aims to reduce outstanding share count and return capital to shareholders.
  • 3Atmos will initially receive approximately 2,958,580 shares, representing 80% of the repurchase value based on the June 30, 2010 closing price.
  • 4The calculation period for the ASR begins July 2, 2010, and is scheduled to end in March 2011, with potential for acceleration or extension.
  • 5The final settlement will be determined by the volume-weighted average price (VWAP) during the calculation period.
  • 6If the VWAP is below approximately $33.80 (125% of the June 30 closing price), Goldman Sachs will owe Atmos additional shares.
  • 7If the VWAP exceeds approximately $33.80, Atmos may be required to pay additional cash or issue shares to Goldman Sachs.

Frequently Asked Questions

The primary purpose of the agreement is for Atmos Energy Corp. to repurchase shares of its common stock through an accelerated share repurchase (ASR) program. This is generally seen as a way for the company to return capital to shareholders and potentially increase earnings per share by reducing the number of outstanding shares.

Atmos will pay $100 million to Goldman Sachs. Initially, Atmos will receive approximately 80% of the expected shares, based on the June 30, 2010 closing price. A final settlement will occur in March 2011, where the exact number of shares repurchased will be determined based on the volume-weighted average price (VWAP) during the calculation period, with adjustments for the initial 80% delivery.

The final settlement depends on the stock's volume-weighted average price (VWAP) during the calculation period. If the VWAP is lower than approximately $33.80, Goldman Sachs will owe Atmos additional shares. Conversely, if the VWAP is higher than approximately $33.80, Atmos may need to pay additional cash or issue more shares to Goldman Sachs, potentially increasing its outstanding share count or cash outflow.

The calculation period for determining the final number of shares begins on July 2, 2010, and is scheduled to end in March 2011. However, the end date may be accelerated by Goldman Sachs or extended under certain circumstances, such as significant disruptions to trading.