OREANDA-NEWS. Fitch Ratings has affirmed the 'BB' Issuer Default Rating (IDR) and 'BB' senior unsecured debt rating of AmeriGas Partners, LP (APU) and its fully guaranteed financing co-borrower AmeriGas Finance Corp. Approximately \$2.3 billion in outstanding long-term debt is affected. Fitch has also assigned a 'RR3' recovery rating to APU's senior unsecured notes reflecting expectations for average recoveries in a distressed scenario. The Rating Outlook is Stable. A full list of ratings follows at the end of this release.

APU's ratings reflect the underlying strength of its retail propane distribution network, broad geographic reach, adequate credit metrics, and proven ability to manage unit margins under various operating conditions. APU's financial performance remains sensitive to weather conditions and general customer conservation, and the company must continue to manage volatile supply costs and customer conservation.

Fitch has largely viewed the retail propane sector business outlook to be moderately negative, stressing concerns over demand destruction due to fuel switching, price volatility and the impact of conservation. However, Fitch believes that APU management has exhibited its ability and intent to maintain a stable balance sheet and consistent credit metrics even in the face of varying market conditions and growth through acquisitions. APU has proven itself adept at managing its operating costs, distribution policies, and integrating acquisitions. As a result, APU has seen steady EBITDA growth, cash flow consistency and improved credit metrics over the past several years despite elevated sales volume and commodity price volatility.

KEY RATINGS DRIVERS

Scale of Business: APU is the largest retail propane distributor in the country, providing it with significant customer and geographic diversity. This broad scale and diversity helps to dampen the weather related volatility of cash flows. APU is the largest retail propane distributor in the United States with an estimated 15% market share serving approximately 2 million customers. AmeriGas has approximately 2,000 locations in all 50 states. Approximately 41% of retail gallons sold is for residential use, largely heating. Retail gallon sales are fairly evenly distributed by geography limiting the impact that unseasonably warm weather could have on a regional basis.

High Degree of Seasonality: APU is highly seasonal and dependent on the winter heating season. Approximately 75% of earnings are derived in the first two quarters of each fiscal year (September fiscal yearend). With the first quarter 2015 (1Q'15) already posted and 2Q'15 near a close with slightly warmer than normal weather, Fitch projects 2015 results to be within the company's previously projected ranges of \$635 million to \$665 million. 1Q'15 adjusted EBITDA was roughly 18% lower on a year over year basis due largely to weather which was 6.2% warmer than normal and 10% warmer than 1Q'14. APU's cylinder exchange business affords some seasonal diversity and national accounts are steady year round. The seasonal factors are embedded in Fitch's analysis and ratings.

Adequate Liquidity: Liquidity is adequate and maturities are manageable. APU's liquidity is supported by a \$525 million revolving credit facility which is typically used to fund any short-term borrowing needs. APU's short-term borrowing needs are seasonal and are typically greatest during the fall and winter heating-season months due to the need to fund higher levels of working capital. Availability under the revolver at Dec. 31, 2014 was \$207 million. Debt maturities through 2018 total \$35 million. Fitch does not expect APU to require any external financing and leverage should remain fairly constant between 3.5x and 4.0x (debt/EBITDA). A large strategic acquisition would likely require additional debt but this is not in the Fitch forecasts.

KEY ASSUMPTIONS

Fitch's key assumptions within the rating case for the issuer include:

--Maintenance capital consistent with recent historical results. --Acquisitions of roughly 10 million to 20 million gallons annually.
--Distribution growth of between 3% to 5% annually.
--Weather at or near normal for 2016-2018.

RATINGS SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to positive rating action include:

--If leverage (debt/EBITDA) were to improve to between 3.0x to 3.5x on a sustained basis and distribution coverage were to remain 1.1x on a sustained basis, Fitch would consider a positive ratings action.

Negative: Future developments that may, individually or collectively, lead to a negative rating action include:

--Leverage above 4.5x on a sustained basis, with distribution coverage below 1.0x would likely lead to a rating downgrade.
--Accelerating deterioration in customer, margin and or volume trends could lead to a negative ratings action.

Fitch has taken the following rating actions on AmeriGas:

AmeriGas Partners, L.P./AmeriGas Finance Corp.
--IDR affirmed at 'BB';
--Senior unsecured debt affirmed at 'BB' and assigned an 'RR3' recovery rating to these notes.

The Rating Outlook is Stable.