SGU Star Group LP

Risks

• Our operating results will be adversely affected if we continue to experience significant net customer attrition in our home heating oil and propane customer base.
• Because of the highly competitive nature of our business, we may not be able to retain existing customers or acquire new customers, which would have an adverse impact on our business, operating results and financial condition.
• Energy efficiency and new technology may reduce the demand for our products and adversely affect our operating results.
• If we do not make acquisitions on economically acceptable terms, our future growth will be limited.
• High product prices can lead to customer conservation and attrition, resulting in reduced demand for our products.
• Increases in wholesale product costs may have adverse effects on our business, financial condition, results of operations, or liquidity.
• Our hedging strategy may adversely affect our liquidity.
• Sudden and sharp oil price increases that cannot be passed on to customers may adversely affect our operating results.
• Significant declines in the wholesale price of home heating oil may cause price-protected customers to renegotiate or terminate their arrangements which may adversely impact our gross profit and operating results.
• Our risk management policies cannot eliminate all commodity risk, basis risk, or the impact of adverse market conditions which can adversely affect our financial condition, results of operations and cash available for distribution to our unitholders. In addition, any noncompliance with our risk management policies could result in significant financial losses.
• Our obligation to fund multi-employer pension plans to which we contribute may have an adverse impact on us.
• We rely on the continued solvency of our derivatives, insurance and weather hedge counterparties.
• Our operating results are subject to seasonal fluctuations.
• Economic conditions could adversely affect our results of operations and financial condition.
• We are subject to operating and litigation risks that could adversely affect our operating results whether or not covered by insurance.
• Our captive insurance company may not bring the benefits we expect.
• Our results of operations and financial condition may be adversely affected by governmental regulation and associated environmental and regulatory costs.
• Our operations would be adversely affected if service at our third-party terminals or on the common carrier pipelines used is interrupted.
• The risk of global terrorism and political unrest may adversely affect the economy and the price and availability of the products that we sell and have a material adverse effect on our business, financial condition and results of operations.
• The impact of hurricanes and other natural disasters could cause disruptions in supply and could also reduce the demand for the products that we sell, which would have a material adverse effect on our business, financial condition and results of operations.
• We depend on the use of information technology systems that could fail or be the target of cyber-attacks.
• If we fail to maintain an effective system of internal controls, then we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential unitholders could lose confidence in our financial reporting, which would harm our business and the trading price of our common units.
• A substantial portion of our workforce is unionized, and we may face labor actions that could disrupt our operations or lead to higher labor costs and adversely affect our business.
• Our substantial debt and other financial obligations could impair our financial condition and our ability to obtain additional financing and have a material adverse effect on us if we fail to meet our financial and other obligations.
• We are not required to accumulate cash for the purpose of meeting our future obligations to our lenders, which may limit the cash available to service the final payment due on the term loan outstanding under our Credit Agreement.
• Restrictive covenants in our Credit Agreement may reduce our operating flexibility.
• Under our Credit Agreement, the occurrence of a “change of control” is considered a default. We may be unable to repay borrowings under our Credit Agreement if the indebtedness outstanding thereunder is accelerated following a change of control.