Suburban Propane to Acquire Assets from Equilibrium Capital Group

Suburban Propane Partners, LP, Whippany, N.J., a nationwide distributor of propane and other energy products to local communities, as well as an investor in low carbon energy alternatives, announced that its wholly-owned subsidiary, Suburban Renewable Energy, LLC , reached an agreement to acquire a platform of renewable natural gas (RNG) assets from Equilibrium Capital Group, a leading sustainability-driven asset management firm. In addition to the purchase of two operational biogas facilities, the parties have formed a partnership to serve as a long-term growth platform for the identification, development and operation of additional RNG projects; including an existing pipeline of identified RNG projects that are in various stages of development.

Strategic rationale includes:

• Aligns with Suburban's ongoing strategic initiatives to invest in the energy transition to cleaner alternatives
• Provides immediate and meaningful scale to Suburban's existing portfolio of renewable energy investments and assets
• Includes RNG projects that are currently operating and a pipeline of RNG projects to be developed
• Opportunity for synergies between the acquired assets and Suburban's existing investments in rDME, hydrogen and RNG
• Expands Suburban's operational expertise in RNG through the ongoing involvement and partnership with the Equilibrium team
• Provides a platform for accelerated growth in the renewable fuels sector
• Significantly enhances Suburban's position in the rapidly growing market for RNG as a drop-in replacement for traditional natural gas, and which will benefit from tax credits under several state low carbon fuel standards and the Inflation Reduction Act of 2022
• Is expected to be accretive to Suburban's distributable cash flow in fiscal 2024 as earnings benefit from ongoing expansion and production efficiency efforts

The RNG platform to be acquired is diversified across feedstocks, geographies and revenue streams, and complements Suburban Renewables' ongoing activity to construct, own and operate an RNG facility at Adirondack Farms in Peru, N.Y. While the acquisition will immediately enhance and increase Suburban Renewables' presence in RNG production and distribution, the partnership with Equilibrium through the joint venture arrangement will provide visible growth and experienced management in the rapidly developing waste-to-energy economy. RNG can be produced from multiple organic waste streams; including agricultural and food waste, helping to reduce methane emissions, while offering a low carbon solution as a drop-in replacement for traditional natural gas.

"This investment meaningfully advances our strategic goal of building out a renewable energy platform to help drive the energy transition to a low carbon economy. We are excited to be partnering with the Equilibrium team, which has a proven track record of sourcing, developing and managing high quality renewable natural gas producing assets," said Michael Stivala, president and CEO of Suburban. "We look forward to building upon and advancing this opportunity as we seek to leverage Equilibrium's seasoned management team with a well-established network of operators, engineering and construction providers and off-takers, and a strong commitment to sustainable investments. The scalable platform complements our existing portfolio of renewable energy assets, either as a stand-alone RNG distributor, or as a pathway to rDME and hydrogen production."

"Bio-fuels and renewable natural gas are now mainstream commodities in the transition to low carbon energy and decarbonization of our economy. The major challenge will be scaling cost-effective production supplies to meet market demand. Equilibrium is taking our experience investing in, developing, and operating scalable RNG production infrastructure, and partnering with Suburban's market leadership and expertise in gas logistics, trading and user applications, to build assets that drive towards these goals," said Dave Chen, CEO of Equilibrium Capital.

The purchase price of $190.0 million for the two operating facilities, along with transaction fees and expenses, will be funded with borrowings of approximately $120.0 million under Suburban's revolving credit facility, and the assumption of approximately $80.0 million of outstanding green bonds with an attractive interest rate. The RNG platform will include the following assets and the formation of an RNG development company with Equilibrium, as follows:

• Large-scale RNG facility in Stanfield, Arizona that is currently operating and includes seven anaerobic digesters, manure rights from approximately 55,000 dairy cattle and an interconnect with an interstate pipeline
• An operating facility in Columbus, Ohio that is currently receiving tipping fees from several large food and beverage providers for processing food waste into fertilizer and biogas, and has an active development project to upgrade the biogas into RNG for use in the transportation sector
• Option rights for a third RNG facility in the Midwest that is currently being developed by Equilibrium
• The creation of a development company to invest in and develop approximately $155.0 million of future RNG projects, of which Suburban Renewables will own approximately 70% and Equilibrium will own approximately 30% once such projects are fully funded

The parties have cleared the necessary regulatory approvals for a simultaneous signing and closing of the transactions.