GAS NATURAL INC. FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Financial Statements and Exhibits
Item 1.01 Entry into a Material Definitive Agreement.
Orwell Natural Gas Company ("Orwell") and Brainard Gas Corp. ("Brainard"), subsidiaries of Gas Natural Inc. (the "Company"), entered into an agreement on July 1, 2008 with Orwell-Trumbull Pipeline Co., LLC ("Orwell-Trumbull"), which is an entity owned by the Richard M. Osborne Trust, for transportation service on its intrastate pipeline in Northeastern Ohio (the "Agreement"). Richard M. Osborne, the Company's former chairman and CEO, is the sole trustee of the Osborne Trust. Under the Agreement, the charge on the Orwell-Trumbull pipeline is a volumetric rate of $1.01 per thousand cubic feet (Mcf) plus shrinkage. The Agreement has a 15 year term.
On or about March 12, 2015, Orwell-Trumbull filed a demand for arbitration, captioned "Orwell-Trumbull Pipeline Company, LLC v. Orwell Natural Gas Company," Case No: 01-15-0002-9137, with the American Arbitration Association with respect to a dispute under the Agreement. Orwell-Trumbull claims Orwell is in breach of the exclusivity provisions in the Agreement. Orwell filed several counterclaims, including claims for breach of contract, fraud, and unjust enrichment.
On March 31, 2015, Orwell filed a complaint on the same grounds with the Public Utilities Commission of Ohio ("PUCO") captioned "Orwell Natural Gas Company v. Orwell-Trumbull Pipeline Company LLC," Case Number, 15-0637-GA-CSS, to address issues regarding the operation of and contract rights for utilities on the Orwell-Trumbull pipeline. On June 15, 2016, the PUCO issued an opinion and order (the "Order") asserting its jurisdiction over the Agreement and modifying certain of its terms. In addition to resolving other ancillary issues, the Order made the following findings of fact and conclusions of law:
1. Section 1.1 of the Agreement is modified such that the type of service offered
by Orwell-Trumbull to Orwell is modified from interruptible to firm.
2. The arbitration clause in Section 7.6 of the Agreement is suspended until
further ordered by the PUCO and the PUCO retains jurisdiction to address
disputes under the Agreement.
3. Section 1.2 of the Agreement is modified to eliminate the sole-source
provision and to permit Orwell to utilize the transportation service of other
pipeline systems.
4. Orwell-Trumbull, Cobra Pipeline Co., Ltd., and all other pipeline companies
owned or controlled by Richard Osborne and subject to the jurisdiction of the
PUCO, are directed to file an application, pursuant to RC. Chapter 4909, to
determine just and reasonable rates.
The foregoing description of the Agreement and Order is not complete and is qualified entirely by reference to the full and complete Agreement and Order. The Agreement, which was filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended June 30, 2008, as filed with the Securities and Exchange Commission on September 30, 2008, is incorporated herein by reference. The Order is publicly available on the PUCO's online Docketing Information System at http://dis.puc.state.oh.us/.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
99.1 Press Release, dated June 20, 2016
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer
