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company of our general partner, Ferrell Companies, currently beneficially owns approximately 23.4% of our outstanding common units. Ferrell Companies is owned 100% by an employee stock ownership trust.relevant historical periods.

Business

We are a leading distributor of propane and related equipment and supplies to customers in the United States. We believe that we are the second largest retail marketer of propane in the United States as measured by the volume of our retail sales in fiscal 20202023 and a leading national provider of propane by portable tank exchange.

We serve residential, industrial/commercial, portable tank exchange, agricultural, wholesale and other customers in all 50 states, the District of Columbia and Puerto Rico.customers. Our operations primarily include the distribution and sale of propane and related equipment and supplies with concentrations in all 50 states, the Midwest, Southeast, SouthwestDistrict of Columbia and Northwest regions of the United States.Puerto Rico. Sales from propane distribution are generated principally from transporting propane purchased from third parties to propane distribution locations and then to tanks on customers’ premises or to portable propane tanks delivered to nationwide and local retailers. Sales from portable tank exchanges, nationally branded under the name Blue Rhino, are generateddelivered primarily through a network of partnership-owned distribution outlets and to a lesser extent through independently-owned distribution outlets. Our market areas for our residential and agricultural customers are generally rural while our market areas for our industrial/commercial and portable tank exchange customers are generally urban.suburban.

In the residential and industrial/commercial markets, propane is primarily used for space heating, water heating, cooking and other propane fueled appliances. In the portable tank exchange market, propane is used primarily for outdoor cooking using gas grills. In the agricultural market, propane is primarily used for crop drying, space heating, irrigation and weed control. In addition, propane is used for a variety of industrial applications, including as an engine fuel burned in the internal combustion engines of vehicles and forklifts and as a heating or energy source in manufacturing and drying processes.

A substantial majority of our gross margin from propane and other gas liquids sales is derived from the distribution and sale of propane and related risk management activities. Our gross margin from the retail distribution of propane is primarily based on the cents-per-gallon difference between the sales price we charge our customers and our costs to purchase and deliver propane to our propane distribution locations.

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In addition, we lease tanks to some of our independent distributors involved with our delivery of propane for portable tank exchanges. Our owned and independent distributors provide portable tank exchange customers with a national delivery presence that is generally not available from most of our competitors.

In our past three fiscal years, our total annual propane sales volumes in gallons were:

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In fiscal 2020,2023, no one customer accounted for 10% or more of our consolidated revenues.

We utilize marketing programs targeting both new and existing customers by emphasizing:

Some of our propane distribution locations also conduct the retail sale of propane appliances and related parts and fittings, as well as other retail propane related services and consumer products.

Our other activities in our propane operations and related equipment sales segment include the following:

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by portable tank exchange business experiences higher volumes in the spring and summer, which include the majority of the grilling season. These volumes add to our operating profits during our first and fourth fiscal quarters due to those counter-seasonal business activities. These sales also provide us the ability to better utilize our seasonal resources at our propane distribution locations. Other factors affecting our results of operations include competitive conditions, volatility in energy commodity prices, demand for propane, timing of acquisitions and general economic conditions in the United States.

We use information on temperatures to understand how our results of operations are affected by temperatures that are warmer or colder than normal. We define “normal” temperatures based on a 10-year average of information published by the National Oceanic and Atmospheric Administration. Based on this information we calculate a ratio of actual heating degree days to normal heating degree days. Heating degree days are a general indicator of weather impacting propane usage. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for weather trends compared to the prior fiscal year as well as to normal heating degree days.

We believe that our broad geographic distribution helps us reduce exposure to regional weather and economic patterns. During times of colder-than-normal winter weather, we have been able to take advantage of our large, efficient distribution network to avoid supply disruptions, thereby providing us a competitive advantage in the markets we serve.

Risk Management Activities – Commodity Price Risk

We employ risk management activities that attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies on a short-term basis. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts. We enter into propane sales commitments with a portion of our customers that provide for a contracted price agreement for a specified period of time. These commitments can expose us to product price risk if not immediately hedged with an offsetting propane purchase commitment.

Our risk management strategy involves taking positions in the forward or financial markets that are equal and opposite to our positions in the physical products market in order to minimize the risk of financial loss from an adverse price change. This risk management strategy is successful when our gains or losses in the physical product markets are offset by our losses or gains in the forward or financial markets. Our propane related financial derivatives are designated as cash flow hedges.

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A portion of our propane inventory is purchased under supply contracts that typically have a one-year term and a price that fluctuates based on spot market prices. In order to limit overall price risk, we will enter into fixed price over-the-counter propane forward and/or swap contracts that generally have terms of less than 36 months. We may also use options to hedge a portion of our forecasted purchases, which generally do not exceed 36 months in the future. Executing our price risk management strategy includes regularly issuing letters of credit and posting cash collateral.

We also incur risks related to the price and availability of propane during periods of much colder-than-normal weather, temporary supply shortages concentrated in certain geographic regions and commodity price distortions between geographic regions. We attempt to mitigate these risks through our transportation activities by utilizing our transport truck and railroad tank car fleet to distribute propane between supply or storage locations and propane distribution locations. The propane we sell to our customers is generally transported from gas processing plants and refineries, pipeline terminals and storage facilities to propane distribution locations or storage facilities by our leased railroad tank cars, our owned or leased highway transport trucks, common carrier,carriers, or owner-operated transport trucks.

Risk Management Activities – Transportation Fuel Price Risk

From time to time, we employ risk management activities that attempt to mitigate price risks related to the purchase of gasoline and diesel fuel for use in the transport of propane from supply or storage locations and from retail fueling stations. When employed, we attempt to mitigate these price risks through the use of financial derivative instruments.

When employed, our risk management strategy involves taking positions in the financial markets that are not more than the forecasted purchases of fuel for our internal use in both the supply and retail propane delivery fleet in order to minimize the risk of decreased earnings from an adverse price change. This risk management strategy locks in our purchase price and is successful when our gains or losses in the physical product markets are offset by our losses or gains in the financial markets. Our transport fuel financial derivatives are not designated as cash flow hedges.

Industry

Natural gas liquids are derived from petroleum products and are sold in compressed or liquefied form. Propane, the predominant natural gas liquid, is typically extracted from natural gas or separated during crude oil refining. Although propane is gaseous at normal pressures, it is compressed into liquid form at relatively low pressures for storage and transportation. Propane is a clean-burning energy source, recognized for its transportability and ease of use relative to alternative forms of stand-alone energy sources.

Based upon industry publications propane accounts for approximately 4% of energy consumption in the United States, a level which has remained relatively constant for the past two decades. Propane competes primarily with natural gas, electricity and fuel oil as an energy source principally on the basis of price, availability and portability. Propane serves as an alternative to natural gas in rural and urban areas where natural gas is unavailable or portability of product is required. Propane is generally more expensive than natural gas on an equivalent British Thermal Unit (“BTU”) basis in locations served by natural gas, although propane is often sold in such areas as a standby fuel for use during peak demands and during interruption in natural gas service. The expansion of natural gas into traditional propane markets has historically been inhibited by the capital costs required to expand distribution and pipeline systems. Although the extension of natural gas pipelines tends to displace propane distribution in the neighborhoods affected, we believe that new opportunities for propane sales arise as more geographically remote neighborhoods are developed.

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expensive than fuel oil. However, many industrial customers who use propane as a heating fuel have the capacity to switch to other fuels, such as fuel oil, on the basis of availability or minor variations in price. Sustained low propane prices have begun to change that dynamic, causing fuel oil customers to convert to propane.

Competition

In addition to competing with marketers of other fuels, we compete with other companies engaged in the propane distribution business. Competition within the propane distribution industry stems from two types of participants: the larger, multi-state marketers, including farmers’ cooperatives, and the smaller, local independent marketers, including rural electric cooperatives. Based on our propane sales volumes in fiscal 2020,2023, we believe that we are the second largest retail marketer of propane in the United States and a leading national provider of propane by portable tank exchange.

Most of our retail propane distribution locations compete with three or more marketers or distributors, primarily on the basis of reliability of service and responsiveness to customer needs, safety and price. Each retail distribution outlet operates in its own competitive environment because propane marketers typically reside in close proximity to their customers to lower the cost of providing service.

Business Strategy

Our business strategy includes the following:

Expand our market share through disciplined acquisitions and organic growth, as accretive opportunities become available

We expect to continue the expansion of our propane customer base through both the acquisition of other propane distributors and through organic growth. We intend to concentrate on propane acquisition activities in geographical areas within or adjacent to our existing operating areas, and on a selected basis in areas that broaden our geographic coverage. We also intend to focus on acquisitions that can be efficiently combined with our existing propane operations to provide an attractive return on investment after taking into account the economies of scale and cost savings we anticipate will result from those combinations.

Our goal is to improve the operations and profitability of our propane operations and related equipment sales segment by integrating best practices and leveraging our established national organization and technology platforms to help reduce costs and enhance customer service. We believe that our enhanced operational synergies, improved customer service and ability to better track the financial performance of operations provide us a distinct competitive advantage and better analysis as we consider future opportunities.

We believe that we are positioned to successfully compete for growth opportunities within and outside of our existing operating regions. Our efforts will focus on adding density to our existing customer base, providing propane and complementary services to national accounts and providing other product offerings to existing customer relationships. This continued expansion will give us new growth opportunities by leveraging the capabilities of our operating platforms.

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Governmental Regulation - Environmental and Safety Matters

Our operations are subject to various federal, state and local environmental, health, safety and transportation laws and regulations governing the storage, distribution and transportation of propane. However, propane is not currently subject to any price or allocation regulation and has not been defined by any federal environmental law as an environmentally hazardous substance.

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Agency established a Cap & Tradecap-and-trade program that requires certain covered entities, including propane distribution companies, to purchase allowances to compensate for the GHG emissions created by their business operations or obtain qualifying offset credits. The impact of new legislation and regulations will depend on a number of factors, including (i) which industry sectors would be impacted, (ii) the timing of required compliance, (iii) the overall GHG emissions cap level, (iv) the allocation of emission allowances to specific sources, and (v) the costs and opportunities associated with compliance.

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partnership because it is a partnership are potentiallymay be able to invest in debt securities of the operating partnership because Ferrellgasthe Finance Corp. acts as a co-issuer and co-obligor. Because of its structure and pursuant to the reduced disclosure format, a discussion of the results of operations, liquidity and capital resources of Ferrellgasthe Finance Corp. is not presented in this Annual Report on Form 10-K. See Note B – Contingencies“Contingencies and commitments –” to Ferrellgasthe Finance Corp.’s financial statements for a discussion of the debt securities with respect to which Ferrellgasthe Finance Corp. has served and is serving as a co-issuer and co-obligor.

We have agreements to transfer, on an ongoing basis, a portion of our trade accounts receivable through Ferrellgas Receivables, LLC (“Ferrellgas Receivables”), a consolidated and wholly-owned, qualifying special purpose subsidiary of the operating partnership that maintains an accounts receivable securitization facility. We retain servicing responsibilities for transferred accounts receivable but have no other continuing involvement with the transferred receivables. The accounts receivable securitization facility is more fully described in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Financing Activities - Accounts receivable securitization facility” and in Note G – Accounts and notes receivable, net and accounts receivable securitization – to our consolidated financial statements provided herein.

Available Information

We file annual, quarterly and current reports and other information with the Securities and Exchange Commission (the “SEC”). You may read and download our SEC filings over the Internet from several commercial document retrieval services as well as at the SEC’s website at www.sec.gov. Our SEC filings are also available on our website at www.ferrellgas.com at no cost as soon as reasonably practicable after our electronic filing or furnishing thereof with the SEC. Please note that any Internet addresses provided in this Annual Report on Form 10-K are for informational purposes only and are not intended to be hyperlinks. No information found and/or provided at such Internet addresses is intended or deemed to be incorporated by reference herein.

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ITEM 1A.   RISK FACTORS.

Various factors exist that pose risk to our business and the risk factors listed below outline some of the most significant risks, uncertainties, and assumptions that may affect our business. These risks are categorized by: (1) those related to our business and industry, (2) those inherent in an investment in our Class A Units, Class B Units or our debt securities and others related to our capital structure and financing arrangements, (3) those arising from our partnership structure and relationship with our general partner, and (4) those related to tax. Despite their ordering, these categories are not listed by priority, significance, or materiality. Additional risks, uncertainties, and assumptions may exist that are unforeseen, or currently deemed immaterial, that create potential for a material impact on our business. You should carefully consider the risks outlined below, in addition with other information outlined or incorporated by reference in this Annual Report.

Risks Related to our Business and Industry

There is substantial doubt about our ability to continue as a going concern, which will affect our ability to obtain future financing and may require us to curtail our operations.

Our consolidated financial statements were prepared under the assumption that we will continue as a going concern. Ferrellgas Partners has $357.0 million outstanding principal amount of its 8.625% unsecured senior notes due 2020, which matured on June 15, 2020 but have not been repaid and are classified as current in the consolidated balance sheets of Ferrellgas Partners as of July 31, 2020. Additionally, the operating partnership has $500.0 million in unsecured notes due May 1, 2021, that are also classified as current in the consolidated financial statements as of July 31, 2020. The ability of Ferrellgas Partners to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Given these concerns, Ferrellgas Partners believes there is substantial doubt about its ability to continue as a going concern.

The independent registered public accounting firm for Ferrellgas Partners and the operating partnership expressed substantial doubt as to the ability of each of them to continue as a going concern in their reports dated October 15, 2020 included herein. We believe there continues to be substantial doubt regarding the ability of Ferrellgas Partners and the operating partnership to continue as going concerns. In addition to the maturity of Ferrellgas Partners Notes that were due on June 15, 2020 but remain outstanding, we have outstanding senior unsecured notes in the aggregate principal amount of $1,475.0 million, of which $500.0 million matures in 2021, $475.0 million matures in 2022 and $500.0 million matures in 2023, and we have outstanding senior secured notes in the aggregate principal amount of $700.0 million which mature in 2025. If we are unable to continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our audited consolidated financial statements, and it is likely that investors will lose all or part of their investment. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern,

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investors or other financing sources may be unwilling to provide additional funding to us on commercially reasonable terms or at all.

The reorganization of Ferrellgas Partners or other actions that may be required to address the Ferrellgas Partners Notes that were due June 15, 2020 but remain outstanding and the upcoming maturities of the operating partnership’s notes may have an adverse impact on us and our operations.

Because the limited partnership interests in the operating partnership are the sole material asset of Ferrellgas Partners, it is likely that assets and/or cash flows of the operating partnership and its subsidiaries would be necessary for any out-of-court restructuring of the Ferrellgas Partners Notes, if such a restructuring is achievable, and any such restructuring may require the operating partnership to incur additional debt. The covenants in the indentures that govern the operating partnership’s notes restrict, but do not prohibit, the ability of the operating partnership and its subsidiaries to make distributions or other restricted payments to Ferrellgas Partners. Although the operating partnership and its subsidiaries have $185.0 million of capacity under the most restrictive of the operating partnership’s indentures to make distributions or other restricted payments to Ferrellgas Partners through direct or indirect means, this capacity does not allow the operating partnership or its subsidiaries to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on the Ferrellgas Partners Notes. Payments or distributions made by the operating partnership to Ferrellgas Partners may be challenged as a fraudulent conveyance.

If we are unable to access the financing markets, including through our accounts receivable securitization facility, it may adversely impact our business and liquidity.

Market conditions may impact our ability to access the financing markets on terms acceptable to us or at all. For example, due to our secured indebtedness we may be unable to make additional borrowings under or may be required to repay outstanding borrowings under our accounts receivable securitization facility. See “—Our ability to meet financial ratio requirements under our accounts receivable securitization facility may be affected by many factors, some of which are beyond our control, and any failure to meet such requirements could result in loss of our access to or termination of that facility.” If we are unable to access the financing markets, including through our accounts receivable securitization facility, we would be required to use cash on hand to fund operations and repay outstanding debt, including the Ferrellgas Partners Notes and upcoming maturities on the operating partnership’s senior unsecured notes. There is no assurance that we will be able to generate sufficient cash to fund our operations and refinance such debt. A failure to generate such cash would have a material adverse effect on our business. Additionally, even if we are able to generate sufficient cash to refinance such debt, cash available to the company for working capital and other corporate uses could be reduced. Market conditions may also impact our ability to utilize letters of credits or other financial instruments we use to conduct our business. See “—In connection with our senior secured notes offering in April 2020, we terminated our Senior Secured Credit Facility, including the letter of credit sub-facility thereunder, and were required to cash-collateralize our letters of credit outstanding thereunder and make an $11.5 million cash deposit with the administrative agent under that facility. Our inability to access and employ the cash that collateralizes our outstanding and future letters of credit or the $11.5 million cash deposit held by the administrative agent under our terminated Senior Secured Credit Facility may impact our liquidity.”

Weather conditions, including warm winters, dry or warm weather in the harvest season and poor weather in the grilling season, may reduce the demand for propane, which could have a material adverse effect on our results of operations, cash flows, financial condition or liquidity.

Weather conditions have a significant impact on the demand for propane for heating, agricultural, and recreational grilling purposes. Many of our customers rely heavily on propane as a heating fuel. Accordingly, our sales volumes of propane are highest during the five-month winter-heating season of November through March and are directly affected by the temperatures during these months. During fiscal 2020,2023, approximately 54%55% of our propane sales volume was attributable to sales during the winter-heating season. Actual weather conditions can vary substantially from year to year, which may significantly affect our financial performance or condition. Furthermore, variations in weather in one or more regions in which we operate can significantly affect our total propane sales volume and therefore our financial performance or condition. The agricultural demand for propane is also affected by weather, as dry or warm weather during the harvest season may reduce the demand for propane used in some crop drying applications.

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Sales from portable tank exchanges experience higher volumes in the spring and summer, which includes the majority of the grilling season. Sustained periods of poor weather, particularly in the grilling season, can negatively affect our portable tank exchange revenues. In addition, poor weather may reduce consumers’ propensity to purchase and use grills and other propane-fueled appliances thereby reducing demand for portable tank exchange.

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suppliers were to default or difficulties in alternative transportation were to arise, the cost of procuring replacement supplies and transporting those supplies from alternative locations might be materially higher and, at least on a short-term basis, our margins could be reduced.

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has remained relatively constant for the past two decades, and accounts for approximately 5% of energy used to heat homes in the United States. We foresee no growth or a small decline in total national demand for propane in the near future. Year-to-year industry volumes are primarily impacted by fluctuations in temperatures and economic conditions. Our ability to grow our sales volumes within the propane distribution industry is primarily dependent upon our ability to acquire other propane distributors and integrate those acquisitions into our operations and upon the success of our marketing efforts to acquire new customers organically. If we are unable to compete effectively in the propane distribution business, we may lose existing customers or fail to acquire new customers.

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gradual expansion of the nation’s natural gas distribution systems has resulted, and may continue to result, in the availability of natural gas in some areas that previously depended upon propane. Although propane is similar to fuel oil in some applications and market demand, propane and fuel oil compete to a lesser extent primarily because of the cost of converting from one to the other and due to the fact that both fuel oil and propane have generally developed their own distinct geographic markets.

The U.S. Environmental Protection Agency (the “EPA”) has determined that carbon dioxide and other GHGs are regulated pollutants under the Clean Air Act. As a result of this determination, in August 2015 the EPA announced its Clean Power Plan rule, which requires states to submit plans for the reduction of GHG emissions from power plants. The Clean Power Plan was anticipated to result in a shift away from coal-based sources of energy to natural gas and renewables. Upon publication of the Clean Power Plan rule in October 2015, more than two dozen States as well as industry and labor groups challenged the rule in the U.S. Court of Appeals for the D.C. Circuit. On February 9, 2016, the U.S. Supreme Court stayed implementation of the Clean Power Plan rule while legal challenges to the rule proceed. However, in August 2018, the EPA announced its proposal to replace the Clean Power Plan rule with the Affordable Clean Energy rule. Under the Affordable Clean Energy rule, coal-fired power plants would be required to make efficiency improvementsany acquisitions on favorable terms or at all. There is also a risk we will not be able to reduce their GHG emissions, but it generally scaled backsuccessfully integrate acquired operations or achieve any expected cost savings or other synergies. We may also assume or become subject to known or unknown liabilities, including environmental liabilities, and we may not be protected against any such liabilities by indemnification from the obligations undersellers or insurance. There is no assurance that any acquisitions made will not be dilutive to our earnings and distributions and that any additional equity we issue as consideration for an acquisition will not be dilutive to our unitholders or any additional debt we incur to finance an acquisition will not affect the Clean Power Plan and allows individual states greater authorityoperating partnership’s ability to make their own plans for regulating GHG emissions from coal-fired power plants. On June 19, 2019, the EPA issued the final Affordable Clean Energy rule. On July 8, 2019, two health advocate groups filed a petition for review in the U.S. Court of Appeals for the D.C. Circuit claiming that the rule is inadequate. Additional actions, including by 22 states, were subsequently brought challenging the rule. The outcome of the pending litigation and its impact ondistributions to Ferrellgas Partners or service our business is therefore uncertain. Although this rule may increase demand for natural gas, other regulations governing drilling for natural gas may make natural gas extraction more expensive. Accordingly, the resulting impact on demand for propane and our business is uncertain and may change as implementation of the rule moves forward. We cannot predict the effect that the development of alternative energy sources might have on our financial position or results of operations.existing debt.

Our operations, capital expenditures and financial results may be affected by regulatory changes and/or market responses to global climate change.change, including competition from other energy sources in response to such changes.

There continues to be concern, both nationally and internationally, about climate change and the contribution of GHG emissions, most notably carbon dioxide, to global warming. Because propane is considered a clean alternative fuel under the federal Clean Air Act Amendments of 1990, we anticipate that this will provide us with a competitive advantage over other sources of energy, such as fuel oil and coal, to the extentas new climate change laws and regulations become effective. At the same time, increased regulation of GHG emissions, especially in the transportation sector, could impose significant additional costs on us, our suppliers and our customers. In recent years, there hasNumerous proposals have been an increase inmade and are likely to continue to be made at the national, regional and state initiatives aimed at regulatinglevels of government to monitor and limit GHG emissions. For example, the California Environmental Protection Agency established a Cap-and-Trade programThese efforts include cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that requires certain covered entities, including propane distribution companies, to purchase allowances to compensate for thelimit GHG emissions created by their business operations or obtain qualifying offset credits.from certain sources. The impact of new legislation and regulations will depend on a number of factors, including (i) which industry sectors would be impacted, (ii) the timing of required compliance, (iii) the overall GHG emissions cap level, (iv) the allocation of emission allowances to specific sources, and (v) the costs and opportunities associated with compliance. At this time, we cannot predict the effect that climate change regulation may have on our business, financial condition or operations in the future.

Energy efficiencyFurthermore, increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as volatility in seasonal temperatures and technology advancesincreased frequency and severity of storms, floods and other climatic events. To the extent weather conditions are affected by climate change or demand is impacted by regulations associated with climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of the changes, leading either to increased investment or decreased revenues.

Propane competes with other sources of energy, some of which can be less costly for equivalent energy value and which also may reduce demandbecome more prevalent in response to climate change regulation and other factors. See “Item I. Business – Industry” for propane,additional information on our competition for customers against suppliers of electricity, natural gas and increases in propane prices may cause our residential customers to increase their conservation efforts.fuel oil.

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Economic and political conditions may harm the energy business disproportionately to other industries.

Deteriorating regional and global economic and political conditions, including U.S. sanctions on Iran oil exports and conflict, unrest and economic instability in oil producing countries and regions, and the ongoing conflict between Russia and Ukraine, may cause significant disruptions to commerce throughout the world. If those disruptions occur in areas of the world which are tied to the energy industry, such as the Middle East, it is most likely that our industry will be either affected first or affected to a greater extent than other industries. These conditions or disruptions may:

The revenues we receive from our portable tank exchange operations are concentrated with a limited number of retailers under non-exclusive arrangements that may be terminated at will.

A majority of the propane gallons sales that we generate from our delivery of propane by portable tank exchange are concentrated with a limited number of retailers. If one or more of these retailers were to materially reduce, terminate, or require price reductions or other adverse modifications or concessions in our selling terms, our results from our delivery of propane from portable tank exchanges may decline. For fiscal 2020, four retailers represented approximately 51% of our portable tank exchange net revenues. None of our significant retail accounts associated with portable tank exchanges are contractually bound to offer portable tank exchange service or products or to use us for delivery of propane by portable exchange. Additionally, we compete with a number of large national and regional firms that may be capable of providing services and products at a similar scale for our significant retail accounts. Consequently, any of those retailers could choose at any time to reduce materially or terminate its business with us, use one or more of our competitors for delivery of propane by portable tank exchange or related propane products or cease to provide portable tank exchanges services or products at all. Continued relations with a retailer depend upon various factors, including price, customer service, consumer demand and competition. In addition, most of our significant retailers have multiple vendor policies and may seek to accept a competitor’s delivery of propane by portable tank exchange, or accept products competitive with our propane related products, at new or existing locations of these significant retailers.

If the distribution locations that some of our national tank exchange customers rely upon for the delivery of propane do not perform up to the expectations of these customers, if we encounter difficulties in managing the operations of these distribution locations or if we or these distribution locations are not able to manage growth effectively, our relationships with our national tank exchange customers may be adversely impacted and our delivery of propane to our national tank exchange customers may decline.

We rely on company-owned and independently-owned distributors to deliver propane to some of our national tank exchange customers. Accordingly, our success depends onimpair our ability to maintain and manage distributor relationships and operations and on the distributors’ ability to set up and adequately service accounts. National tank exchange customers impose demanding service requirements on us, and we could experience a loss of consumereffectively market or customer goodwill if our distributors do not adhere to our quality control and service guidelinesacquire propane or fail to ensure the timely delivery of an adequate supply of propane to our national customers. The poor performance of a distribution location for a national tank exchange customer could jeopardize our entire relationship with that national tank exchange customer and cause our delivery of propane to that particular customer to decline.

Potential retail partners may not be able to obtain necessary permits or may be substantially delayed in obtaining necessary permits, which could adversely affectimpair our ability to increase our delivery of propane by portable tank exchange to new retail locations.raise equity or debt capital for acquisitions, capital expenditures or ongoing operations.

Local ordinances, which vary from jurisdiction to jurisdiction, generally require retailers to obtain permits to store and sell propane tanks. These ordinances influence retailers’ acceptance of propane by portable tank exchange, distribution methods, propane tank packaging and storage. The ability and time required to obtain permits varies by jurisdiction. Delays in obtaining permits have from time to time significantly delayed the installation of new retail

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locations. Some jurisdictions have refused to issue the necessary permits, which has prevented some installations. Some jurisdictions may also impose additional restrictions on our ability to market and our distributors’ ability to transport propane tanks or otherwise maintain its portable tank exchange services.

We are subject to operating and litigation risks, and related costs or liabilities may not be covered by insurance.

We are subject to all operating hazards and risks normally incidental to the handling, storing and delivering of combustible liquids such as propane. These operations face an inherent risk of exposure to general liability claims in the event that they result in injury or destruction of property. As a result, we have been, and are likely to be, a defendant in various legal proceedings arising in the ordinary course of business. Our insurance policies do not cover all losses, costs or liabilities that we may experience, and insurance companies that currently insure companies in our industry or in the energy industry generally may cease to do so or substantially increase premiums. Although we maintain insurance policies with insurers in such amounts and with such coverages and deductibles as we believe are reasonable and prudent, we cannot guarantee that such insurance will be adequate to protect us from all material expenses related to potential future claims for personal injury and property damage or that such levels of insurance will be available in the future at economical prices.

A significant increase in motor fuel prices may adversely affect our profits.

Motor fuel is a significant operating expense for us in connection with the purchase and delivery of propane to our customers. The price and supply of motor fuel is unpredictable and fluctuates based on events we cannot control, such as geopolitical developments, including impacts from Russian military actions in Ukraine, supply and demand for oil, gas, and refined fuels, actions by oil and gas producers, actions by motor fuel refiners, conflict, unrest or economic instability in oil producing countries and regions, regional production patterns and weather conditions. We may not be able to pass any increases in motor fuel prices on to our customers. As a result, any increases in these prices may adversely affect our profitability and competitiveness.

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systems may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, sabotage, or other disruptions.

The efficient execution of our business is dependent upon the proper functioning of our internal systems, and we depend on our management information systems to process orders, manage inventory, manage accounts receivable collections, maintain distributor and customer information, maintain cost-efficient operations and assist in delivering propane on a timely basis. In addition, our staff of management information systems professionals relies heavily on the support of several key personnel and vendors. Any disruption in the operation of those management information systems, including a cyber-security breach or loss of employees knowledgeable about the operation of such systems, termination of our relationship with one or more of these key vendors or failure to continue to modify and upgrade such systems effectively as our business expands could negatively affect our business, financial condition or reputation.

We may incur significant costs in order to comply with privacy and data security laws and regulations, and any failure to comply with such laws and regulations could result in significant penalties or other liabilities or costs.

There are numerous laws and regulations regarding privacy and the storage, sharing, use, processing, transfer, disclosure and protection of personal data, the scope of which is changing, subject to differing interpretations, and may be inconsistent between jurisdictions. For example, California recently adopted the California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020, and limits how we may collect and use personal data.data, in addition to imposing severe statutory damages and providing consumers with a private right of action for certain data breaches. The California Privacy Rights Act (“CPRA”) amends and expands the CCPA, providing consumers with additional rights with respect to their personal data and establishing a regulatory agency dedicated to enforcing compliance. Other states, including Virginia, Colorado, and Connecticut, have enacted similar privacy legislation effective in 2023, with additional states, including Oregon, Texas, and Utah, having enacted similar privacy legislation, which would be effective in the upcoming year. The effects of the CCPA and CPRA and other states’ data privacy laws are potentially are far-reaching and may require us to modify our data processing practices and policies and incur substantial compliance-related costs and expenses. TheseIt remains unclear how various provisions will be interpreted and other dataenforced. Data privacy laws and their interpretations continue to develop and may be inconsistent from jurisdiction to jurisdiction. Non-compliance with these laws could result in penalties or significant legal liability. Although we take reasonable efforts to comply with all applicable laws and regulations, there can be no assurance that we will not be subject to regulatory action, including fines, in the event of an incident. We or our third-party service providers could be adversely affected if legislation or regulations are expanded to require changes in our or our third-party service providers’ business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our or our third-party service providers’ business, results of operations or financial condition.

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James Ballengee owes us approximately $18.3 million under a promissory note. Mr. Ballengee recently defaulted on the first payment thereunder and there can be no assurance that the balance or any portion thereof will be recovered.

In connection with the closing of our acquisition of Bridger Logistics, LLC (“Bridger”) in June 2015, Bridger entered into a ten-year transportation and logistics agreement (the “Jamex TLA”) with Jamex Marketing, LLC (“Jamex”) pursuant to which Jamex would be responsible for certain payments to Bridger and also for sourcing crude oil volumes for Bridger’s largest customer at that time. On September 1, 2016, Bridger, Jamex, Ferrellgas Partners, L.P. and certain other affiliated parties entered into a group of agreements that terminated the Jamex TLA, as summarized below.

On September 1, 2016, we entered into a Secured Promissory Note (the “Jamex Secured Promissory Note”) with Jamex pursuant to which Jamex agreed to pay us a principal amount of $49.5 million plus interest, which principal amount was due over time pursuant to an amortization schedule and with a final maturity date of December 17, 2021. Jamex’s obligations under the Jamex Secured Promissory Note were fully guaranteed by certain subsidiaries and affiliates of Jamex, and were partially guaranteed (up to a maximum of $20 million) by James Ballengee, the individual owner of Jamex, and another entity owned by Mr. Ballengee. The Jamex Secured Promissory Note obligations of Jamex and those other fully guaranteeing entities were secured by certain assets owned by those entities, actively traded marketable securities and cash, which were held in a controlled account and were subject to seizure by us in the event of default.

On June 25, 2018, we and Mr. Ballengee entered into an Omnibus Agreement (the “Omnibus Agreement”) that, among other things, terminated and cancelled the Jamex Secured Promissory Note and other related agreements. In connection with the termination and cancellation of such agreements, (1) Mr. Ballengee and Jamex paid Bridger (then one of our subsidiaries) $17.3 million towards the remaining balance due under the Jamex Secured Promissory Note and Mr. Ballengee executed a new unsecured promissory note in favor of the operating partnership with an original principal amount of $18.3 million (the “Revised Jamex Promissory Note”), (2) Bacchus, a company controlled by Mr. Ballengee, executed a guaranty agreement to guarantee Mr. Ballengee’s obligations under the Revised Jamex Promissory Note, (3) we agreed to dismiss without prejudice certain indemnification claims against Jamex and any affiliates of Jamex related to the Eddystone litigation and to toll the statute of limitations with respect thereto, and to dismiss with prejudice the tortious interference claim asserted by us against Mr. Ballengee related to the Eddystone litigation, and (4) Mr. Ballengee agreed to dismiss with prejudice, or cause to be dismissed, all counterclaims by him or his affiliates, as the case may be, with respect to such actions.

Mr. Ballengee is an individual with various business investments and other personal assets; however, we cannot be sure that we will be able to collect any or all of the amounts owed under the Revised Jamex Promissory Note. We have no control over Mr. Ballengee or his various investments and assets. If we are unable to collect the amounts owed under the Revised Jamex Promissory Note, it could have a material and adverse effect on our cash flows, liquidity and results of operations.

On July 1, 2020, Mr. Ballengee defaulted on the Revised Jamex Promissory Note by failing to make the first payment in the amount of $2.5 million. As a result, as of July 31, 2020, Ferrellgas recorded a bad debt reserve against $17.3 million of the Revised Jamex Promissory Note and is pursuing collections from Mr. Ballengee.

Risks Inherent in an Investment in our CommonClass A or Class B Units or our Debt Securities and Other Risks Related to Our Capital Structure and Financing Arrangements

We are currently prohibited from making cash distributions to our unitholders by the terms of the indenture governing the outstanding notes of Ferrellgas Partners and, accordingly, do not anticipate making such cash distributions in the foreseeable future. A variety other factors may limit our ability to pay cash distributions to our unitholders.

Although the partnership agreements of Ferrellgas Partners and the operating partnership require those entities to distribute all of their “available cash” to the holders of their equity interests, because of restrictions in the indenture governing the outstanding notes of Ferrellgas Partners, we have not paid any cash distributions to our unitholders since the distribution paid in the first quarter of fiscal 2019 for the three months ended July 31, 2018, we are currently

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prohibited from paying cash distributions to our unitholders and we do not anticipate making any such cash distributions in the foreseeable future.

The indenture governing Ferrellgas Partners’ unsecured senior notes due June 15, 2020, which remain outstanding, contains a covenant that restricts the ability of Ferrellgas Partners to make certain restricted payments, including distributions on its common units. Under this covenant, subject to the limited exception described below, Ferrellgas Partners may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indenture generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of July 31, 2020, Ferrellgas Partners’ consolidated fixed charge coverage ratio was 1.40x.

If the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas Partners may make restricted payments of up to $50.0 million in total over a sixteen quarter period. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018 and September 2018 while this ratio was less than 1.75x, Ferrellgas Partners has used substantially all of its capacity under the limited exception and therefore is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions have been or will be paid to common unitholders for the three months ended July 31, 2020, and the general partner expects that this covenant will continue to prohibit Ferrellgas Partners from making common unit distributions unless and until the Ferrellgas Partners Notes are restructured, refinanced or otherwise satisfied. While there can be no assurance of success, as part of our debt and interest expense reduction strategy, we are presently considering potential solutions to address the past due maturity of the Ferrellgas Partners Notes. The potential solutions include, among others, restructuring, refinancing or a transaction to exchange new notes for some or all of these notes.

Even if Ferrellgas Partners were not prohibited by its indenture from paying cash distributions to unitholders, a variety of other factors may limit its ability to pay such distributions, and we cannot provide any assurance as to when or in what amounts, if any, Ferrellgas will be able to pay such distributions. These other factors include limitations on the ability of the operating partnership to make distributions to Ferrellgas Partners under the terms of the operating partnership’s debt agreements and other factors described more fully in the risk factors below, as well as the actual amounts of our available cash. Available cash is generally all of our cash receipts, less cash disbursements and adjustments for net changes in reserves. The actual amounts of available cash will depend upon numerous factors, including:

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Cash distributions are dependent primarily on cash flow, including from reserves and, subject to limitations, working capital borrowings and, as noted above, are subject to restrictive covenants in the indentures governing the outstanding notes of Ferrellgas Partners and the operating partnership. Cash distributions are not dependent on profitability (as defined under financial reporting rules), which is affected by non-cash items. Therefore, cash distributions might be made during periods when we record losses and might not be made during periods when we record profits.

Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes of the operating partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas Partners. Under these covenants, subject to the limited exception described below, the operating partnership may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indentures generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of July 31, 2020, the operating partnership’s consolidated fixed charge coverage ratio was 1.70x.

Under the covenants in the indentures governing the operating partnership’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may still make restricted payments in limited amounts determined under the indentures governing the operating partnership’s unsecured notes. The distributions made by the operating partnership on June 15, 2019 and December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made from capacity under this limited exception to the ratio requirement under the indentures governing the operating partnership’s unsecured notes.

The indenture governing the operating partnership’s senior secured first lien notes due 2025 contains a similar but, in some respects, different restricted payments covenant. The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x. In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, the operating partnership generally may not make a restricted payment unless the operating partnership’s consolidated leverage ratio (defined in the secured notes indenture generally to mean the ratio of consolidated total debt to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is no greater than 5.5x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. The consolidated leverage ratio test applies regardless of whether the operating partnership’s consolidated fixed coverage ratio is at least 1.75x or below 1.75x. As of July 31, 2020, the operating partnership’s consolidated leverage ratio was substantially in excess of 5.5x. Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity available under the similar exception in the unsecured notes indentures. However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount when the operating partnership does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently has capacity for such specified restricted payments that is substantially the same as the capacity under the most restrictive of the operating partnership’s unsecured notes indentures.

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As described above, Ferrellgas Partners’ unsecured notes due 2020 matured on June 15, 2020, and the outstanding principal amount of those notes was due to be paid on that date, together with accrued interest to the maturity date. Although the operating partnership has some capacity to make distributions under the operating partnership’s unsecured and secured notes indentures, this capacity will not allow the operating partnership to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 that was due at the maturity of those notes. Additionally, the restrictions in these indentures currently limit the ability of the operating partnership to make distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.

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Ferrellgas Partners or the operating partnership may be unable to refinance their past due or other indebtedness at or prior to maturity or pay that indebtedness if it becomes due earlier than scheduled.

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities in the normal course of business. Ferrellgas Partners has $357.0 million in unsecured notes due June 15, 2020, which remain outstanding and are classified as current in the consolidated financial statements. The ability of Ferrellgas Partners to restructure, refinance or otherwise satisfy these notes is uncertain considering the level of other outstanding indebtedness. Recognizing that achieving the elements that would be necessary to effectively restructure or refinance Ferrellgas Partners’ balance sheet is uncertain, our independent auditors have concluded that such uncertainty raises substantial doubt about our ability to continue as going concerns. We have engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to assist in our ongoing process to reduce existing debt and address our debt maturities. The successful outcome of our debt reduction strategy continues to remain uncertain.

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The bankruptcy of Ferrellgas Partners would not constitute an event of default under the operating partnership’s indentures or otherwise accelerate the operating partnership’s notes, even though Ferrellgas Partners has provided a guarantee of the operating partnership’s senior secured notes and has pledged the limited partnership interests in the operating partnership that it holds to secure such note guarantee. The imposition of the automatic stay in a Ferrellgas Partners bankruptcy will prevent the collateral agent from (without relief from the bankruptcy court, which is only granted under certain circumstances) exercising remedies in respect of the pledged limited partnership interests during the pendency of the bankruptcy. In such a bankruptcy, as discussed further below, the holders of the operating partnership’s secured notes would be entitled to only a secured claim in the amount of the value of the pledged limited partnership interests, which is likely to be minimal, and an unsecured deficiency claim for the value of the excess of the guarantee claim’s principal amount. However, in a bankruptcy of Ferrellgas Partners, a discharge of Ferrellgas Partners’ note guarantee or the confirmation of a plan of reorganization free and clear of Ferrellgas Partners’ note guarantee would result in an event of default that would permit the holders to accelerate the operating partnership’s secured notes (which would, in turn, permit the holders of the operating partnership’s unsecured notes to accelerate such unsecured notes), except in the case of a plan of reorganization of Ferrellgas Partners that is accepted by the requisite percentage of holders of such secured notes (in amount and number) as required for class acceptance under the U.S. bankruptcy code.

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If Ferrellgas Partners or the operating partnership is unable to meet its debt service obligations or other financial obligations, they could be forced to:

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They may then be unable to obtain such financing or capital or sell their assets on satisfactory terms, if at all. Their failure to make payments, whether after acceleration of the due date of that indebtedness or otherwise, or our failure to refinance the indebtedness would impair their operating capacity and cash flows.

The operating partnership has utilized substantially all of its capacity and the capacity of its subsidiaries to incur secured indebtedness (other than certain refinancing indebtedness) that was available under the indentures governing the Ferrellgas Partners Notes and the operating partnership’s notes. Consequently, our ability to raise additional secured debt as part of a restructuring is significantly limited. Moreover, we do not have a revolving credit facility as part of our capital structure and, as a consequence, we are required to satisfy working capital needs through cash on our balance sheet, cash flows from operations and our accounts receivable securitization facility. See “—The availability of cash from our accounts receivable securitization facility may be affected by many factors, some of which are beyond our

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control,” “—Our ability to meet financial ratio requirements under our accounts receivable securitization facility may be affected by many factors, some of which are beyond our control, and any failure to meet such requirements could result in loss of our access to or termination of that facility” and “—If we are unable to access the financing markets, including through our accounts receivable securitization facility,Credit Facility, it may adversely impact our business and liquidity.”

The availability of cash from our accounts receivable securitization facility may be affected by many factors, some of which are beyond our control.

We typically sell accounts receivableMarket conditions may impact our ability to access the financing markets on terms acceptable to us or at all. In addition, there are limitations on our ability to utilize fully all commitments under our accounts receivable securitization facilityCredit Facility. Availability under our Credit Facility is determined by reference to fund our working capital requirements and we no longer have a traditional secured credit facility to fund working capital requirements. We also issued lettersborrowing base comprised of credita combination of $50.0 million by utilizing our liquidity available on the accounts receivable securitization facility. We purchase product from suppliers and make payments with terms that are typically within five to ten days of delivery. If we were to experience an unexpected significant increase in these requirements or have insufficient funds to fund operations, our needs could exceed our immediately available resources. Events that could cause increases in these requirements include, but are not limited to the following:

In addition, vendors may require additional collateral or limit credit to our operations given our capital structure, which will impose additional constraints and demands on our capital resources and limit our operational and financial flexibility. Our ability to enter leasing transactions at favorable terms could also be impacted.

As is typical in the propane industry, our retail customers do not pay upon receipt, but generally pay between 30 and 60 days after delivery. During the winter heating season, we experience significant increases in accounts receivable and propane inventory levelsthat fluctuates over time and thus a significant decline in working capital availability. Although we have the ability to fund working capital with sales of accounts receivable under our accounts receivable securitization facility, we cannot predict the effect that increases in propane prices and colder-than-normal winter weather may have on future working capital availability.

Our ability to meet financial ratio requirements under our accounts receivable securitization facilityborrowing base may be affectedfurther reduced by many factors, somediscretionary actions of which are beyond our control, and any failure to meet such requirements could result in loss of our access to or termination of that facility.

Our ability to satisfy financial ratio requirements under our accounts receivable securitization facility may be affected by events beyond our control. A breach of any of these financial ratios could result in a default under our accounts receivable securitization facility. See “—Restrictive covenants in the agreements governing our indebtedness and other financial obligations, including our accounts receivable securitization facility, may reduce our operating flexibility.”

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The agreement governing our accounts receivable securitization facility requires us to maintain at least a fixed charge coverage ratio of not less than 1.00 to 1.00 and a secured leverage ratio of not greater than 3.00 to 1.00. If at any time we are not in compliance with these financial maintenance covenants or are otherwise in default under the agreement governing our accounts receivable securitization facility, we will be unable to access that facility for working capital or other cash requirements and the facility may be terminated.

In connection with our senior secured notes offering in April 2020, we terminated our Senior Secured Credit Facility, including the letter of credit sub-facility thereunder, and were required to cash-collateralize our letters of credit outstanding thereunder and make an $11.5 million cash deposit with the administrative agent under that facility. Our inability to access and employ the cash that collateralizes our outstanding and future letters of credit or the $11.5 million cash deposit held by the administrative agent under our terminated Senior Secured Credit Facility may impact our liquidity.

In connection with the closing of our senior secured notes offering in April 2020, we terminated our Senior Secured Credit Facility, including the letter of credit sub-facility thereunder. We do not have in place a credit facility providing for the issuance of letters of credit, and we were required to provide cash collateral to secure all of the letters of credit outstanding under our terminated Senior Secured Credit Facility. Additionally, in connection with the repayment and termination of our Senior Secured Credit Facility, we were required to make an $11.5 million cash deposit with the administrative agent under that facility. As of July 31, 2020, we had $95.8 million of restricted cash, which includes $78.2 million of pledged cash collateral for letters of credit outstanding, an $11.5 million cash deposit made with the administrative agent under the terminated Senior SecuredCredit Facility. See Note H “Debt” to the consolidated financial statements for details. If we are unable to access the financing markets, including through our Credit Facility, and $6.1 million of additional pledged collateral. Due to restrictions on the incurrence of indebtedness under the indentures governing our outstanding notes, we expect that, for the foreseeable future, we will continue towould be required to use cash collateralize all ofon hand to fund operations and repay outstanding debt. There is no assurance that we will be able to generate sufficient cash to fund our existingoperations and future letters of credit. Our inability to access and employ the cash that collateralizes our outstanding and future letters of creditrepay or the $11.5 million cash deposit held by the administrative agent under our terminated Senior Secured Credit Facility may impact our liquidity.refinance such debt.

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Our substantial indebtedness and other financial obligations could impair our financial condition and our ability to satisfy our obligations.

We have substantial indebtedness and other financial obligations. As of July 31, 2020, we had:

We have long and short-term payment obligations with maturity dates ranging from fiscal 2020 to 2029 that bear interest at rates ranging from 6.5% to 10.7%. As of July 31, 2020, the long-term obligations do not contain any sinking fund provisions but do require the following aggregate principal payments, without premium, during the following fiscal years:

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All of the indebtedness and other obligations described above are obligations of the operating partnership and do not include the Ferrellgas Partners Notes, which matured on June 15, 2020 but have not yet been repaid. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Recent Developments — Forbearance Agreement with respect to Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020” for additional discussion on the Ferrellgas Partners Notes. Also see “—Risks Related to our Business and Industry —There is substantial doubt about our ability to continue as a going concern, which will affect our ability to obtain future financing and may require us to curtail our operations” and “—Ferrellgas Partners or the operating partnership may be unable to refinance its indebtedness at or prior to maturity or pay that indebtedness if it becomes due earlier than scheduled.”

Subject to the restrictions in the agreements governing the operating partnership’s indebtedness and other financial obligations and the indenture governing the Ferrellgas Partners Notes, we may incur significant additional indebtedness and other financial obligations from time to time, which may be secured and/or structurally senior to our existing notes, in order to finance working capital, capital expenditures, investments, acquisitions or for other purposes. If we do so, the risks related to our high level of indebtedness could intensify.

Our substantial indebtedness and other financial obligations, including our past due Ferrellgas Partners Notes and our upcoming debt maturities, could have important consequences to our security holders. For example, it could:

The indentures governing the Ferrellgas Partners Notes and the operating partnership’s notes and the agreement governing our accounts receivable securitization facility contain restrictive covenants that limit our ability to engage in activities that may be in our long term best interest. Our failure to comply with those covenants could result in an event

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of default which, if not cured or waived, could result in the acceleration of all of our debt. Additionally, certain restrictive covenants will go into effect upon certain defaults or events of default or acceleration of our indebtedness and further limit our ability to incur or refinance debt or liens. See “—Risks Related to our Business and Industry—There is substantial doubt about our ability to continue as a going concern, which will affect our ability to obtain future financing and may require us to curtail our operations.”

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We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

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We do not have a traditional revolver or senior credit facility. Accordingly, subject to limited ability to incur additional indebtedness, we will be required to satisfy working capital needs through cash on our balance sheet, cash flows from operations and our accounts receivable securitization.

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Restrictive covenants in the Indentures, the Credit Agreement and the agreements governing our other future indebtedness and other financial obligations including our accounts receivable securitization facility, may reduce our operating flexibility.

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flexibility and ability to make cash distributions to holders of Class A Units and Class B Units. The indenture governingIndentures, the Ferrellgas Partners NotesCredit Agreement and the agreements governingOpCo LPA Amendment contain important exceptions to these covenants.

The Indentures and the operating partnership’s indebtedness and other financial obligationsCredit Agreement contain, and any indenture or other agreement that will govern indebtednessdebt incurred by Ferrellgas Partners or the operating partnershipus in the future may contain, various covenants that limit our ability andto take certain actions as described in Note H “Debt” to the consolidated financial statements included elsewhere herein. These covenants also limit the ability of specified subsidiaries of ours to, among other things:

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Certain of the agreements governing the operating partnership’s indebtedness impose additional restrictions after the occurrencepartnership to make distributions to Ferrellgas Partners and during the continuance of certain events of default.

These restrictions couldtherefore effectively limit the ability of Ferrellgas Partners the operating partnershipto make distributions to its Class A Unitholders and our other subsidiaries to:

TableClass B Unitholders. See Note I “Preferred units” for a discussion of Contentslimitations related to distributions.

The agreement governing our accounts receivable securitization facility requires, and some of the agreements governing our future indebtedness and other financial obligations may also require, the maintenance of specified financial ratiosIndentures and the satisfaction of other financial conditions. Our ability to meet those financial ratios and conditions can be affected by unexpected downturns in business operations beyond our control, such as significantly warmer-than-normal weather, a volatile energy commodity cost environment, deterioration in credit quality of key business partners, or an economic downturn. Accordingly, we may be unable to meet these ratios and conditions. This failure could impair our operating capacity and cash flows and could restrict our ability to incur debt or to make cash distributions, even if sufficient funds were available. See “—The availability of cash from our accounts receivable securitization facility may be affected by many factors, some of which are beyond our control,” “—Our ability to meet financial ratio requirements under our accounts receivable securitization facility may be affected by many factors, some of which are beyond our control, and any failure to meet such requirements could result in loss of our access to or termination of that facility” and “—If we are unable to access the financing markets, including through our accounts receivable securitization facility, it may adversely impact our business and liquidity.”

Our breach of any of these covenants or the operating partnership’s failure to meet any of these ratios or conditions could result in a default under the terms of the relevant indebtedness, which could cause such indebtedness or other financial obligations and, by reason of any cross-default provisions that may exist, any of Ferrellgas Partners’ or the operating partnership’s other existing or future debt, to become immediately due and payable. If we were unable to repay those amounts, the holders of such debt could initiate a bankruptcy proceeding or liquidation proceeding or, in the case of secured debt, proceed against their collateral in accordance with state law and the rights granted under the relevant debt agreements. If our lenders or noteholders accelerate the repayment of borrowings or other amounts owed, we may not have sufficient assets to repay our indebtedness or other financial obligations, including our outstanding notes and any future debt obligations.

The agreements governing the indebtedness of Ferrellgas Partners and the operating partnership contain important exceptions to the covenants, including the covenants that restrict our ability to sell assets, and we may utilize such exceptions.

The indentures governing the operating partnership’s notes and the Ferrellgas Partners NotesCredit Agreement contain important exceptions to the covenants, including the covenants that restrict our ability to sell assets and make restricted payments. The indentures governingFor example, the Indentures initially permit the operating partnership to make $60 million plus the amount of the operating partnership’s notes permit itAvailable Cash from Operating Surplus (as defined in the Indentures) for the preceding fiscal quarter (so long as the operating partnership’s fixed coverage ratio is at least 1.75x) or $25 million (if the operating partnership’s fixed coverage ratio is below 1.75x) plus an additional $25 million, in each case, of restricted payments for any purpose, subject to compliance with applicable conditions, as well as to make certain limitedadditional restricted payments to Ferrellgas Partners in order to repay a limited amount of the Ferrellgas Partners Notes. Wefor specified purposes. Furthermore, we may utilize exceptions to sell assets as part of a restructuring and such asset sales may be on unfavorable terms. Furthermore, we also may use other exceptions

The operating partnership issued $700.0 million aggregate initial liquidation preference of Preferred Units, the terms of which restrict us from undertaking certain actions while such Preferred Units are outstanding.

The Preferred Units are entitled to quarterly distributions in cash or payment in kind and are redeemable at the option of the operating partnership at any time, or at the option of the holders no earlier than March 30, 2031, subject to the covenantsterms as described in more detail under Note I “Preferred units” to our debtconsolidated financial statements included elsewhere herein.

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Ferrellgas Partners and the operating partnership are required to distribute all of their available cash to their equity holders and Ferrellgas Partners and the operating partnership are not required to accumulate cash for the purpose of meeting their future obligations to holders of their debt securities, which may limit the cash available to service those debt securities.

Subject to the limitations on restricted payments and other covenants contained in the agreements governing the existing and future indebtedness of Ferrellgas Partners and the operating partnership, the partnership agreements of both Ferrellgas Partners and the operating partnership require us to distribute all of our available cash each fiscal quarter to our limited partners and our general partner and do not require us to accumulate cash for the purpose of meeting obligations to holders of any debt securities of Ferrellgas Partners or the operating partnership. Available cash is generally all of our cash receipts, less cash disbursements and adjustments for net changes in reserves. As a result of these distribution requirements, we do not expect either Ferrellgas Partners or the operating partnership to accumulate significant amounts of cash. Depending on the timing and amount of our cash distributions and because we are not required to accumulate cash for the purpose of meeting obligations to holders of any debt securities of Ferrellgas Partners or the operating partnership, such distributions could significantly reduce the cash available to us in subsequent periods to make payments on any debt securities of Ferrellgas Partners or the operating partnership.

The Ferrellgas Partners Notes are structurally subordinated to all indebtedness and other liabilities of the operating partnership and its subsidiaries.

The Ferrellgas Partners Notes are structurally subordinated to all existing and future claims of creditors of the operating partnership and its subsidiaries, including claims of:

This structural subordination is due to the fact that the operating partnership and its subsidiaries are not guarantors or co-obligors of the Ferrellgas Partners Notes, and the obligations of Ferrellgas Partners under the Ferrellgas Partners Notes are non-recourse to the operating partnership and its subsidiaries and their respective assets. Accordingly, holders of the Ferrellgas Partners Notes have a claim as a creditor only against Ferrellgas Partners, and Ferrellgas Partners’ claim against the operating partnership and its subsidiaries is only as an equity holder in the operating partnership. As a result, upon any distribution in a bankruptcy, liquidation, reorganization or similar proceeding relating to Ferrellgas Partners or its property, the creditors of the operating partnership and its subsidiaries will be entitled to be paid in full before any payment may be made with respect to the Ferrellgas Partners Notes. Thereafter, holders of the Ferrellgas Partners Notes would share ratably in the remaining assets, if any, with any other creditors of Ferrellgas Partners, including its trade creditors and all other holders of its indebtedness. In any of these cases, Ferrellgas Partners may have insufficient funds to pay all of its creditors, and holders of the Ferrellgas Partners Notes may therefore receive, if anything, less, ratably, than creditors of the operating partnership and its subsidiaries. As of July 31, 2020, the operating partnership had approximately $2.5 billion of outstanding indebtedness and other liabilities to which the Ferrellgas Partners Notes structurally rank junior.

Ferrellgas Partners or the operating partnershipWe may be unable to repurchase their notesthe OpCo Notes or repay or repurchase other debt or other securities upon a change of control, and it may be difficult to determine whether a change of control has occurred.control.

Upon the occurrence of a “change of control” under the indentures governing the notes of Ferrellgas Partners or the operating partnership, the applicable issuerIndentures, we or a third party will be required under the terms of the applicable indenture to make a change of control offer to repurchase the notesOpCo Notes at 101% of their principal amount, plus accrued and unpaid interest. The applicable issuerAdditionally, a change of control under the Credit Facility constitutes an event of default that permits the lenders to accelerate the maturity of borrowings under the Credit Agreement and terminate their commitments to lend thereunder. We may not have the financial resources to purchase its notes in that circumstance,

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the OpCo Notes, particularly if a change of control event triggers a similar repurchase requirement for, or results in the acceleration of, other indebtedness. The obligationindebtedness, including under our Credit Facility. In addition, the Preferred Units have similar change of control provisions which require us to offer to redeem the operating partnership to repay any accelerated indebtedness of the operating partnership will be structurally seniorPreferred Units at a price equal to the claims of holders of Ferrellgas Partners’ debt securities if Ferrellgas Partners defaults on its obligations to repurchase its debt securities upon a change of control. Future debt agreements may also contain similar provisions. In addition, future debt agreements of Ferrellgas Partners or the operating partnership may contain other restrictions on the ability of Ferrellgas Partners or the operating partnership to repurchase its notes upon a change of control.then-current liquidation preference per unit, plus accrued and unpaid distributions. These restrictions could prevent the applicable issuerus from satisfying itsour obligations to purchase its notessuch securities unless it iswe are able to refinance the indebtedness or obtain waivers or consents from the holders of such indebtedness. The applicable issuer’sthereof. Our failure to make or consummate a change of control repurchase offer or pay the change of control purchase price or repay borrowings when due would allow the trustee and the holders of the notes to declare the notes tosuch indebtedness be immediately due and payable.

In addition, certain important events, such as leveraged recapitalizations, may not constitute a “change of control” under our indentures that would require us to repurchase the notes, even though those corporate events could increase the level of our indebtedness or otherwise adversely affect our capital structure, credit ratings or the value of our notes.

The exercise by the holders of our notesindebtedness under the OpCo Notes or the Credit Agreement of their right to require us to repurchase the notes pursuant toor repay such indebtedness upon a change of control offer could cause a default under the agreements governing our other indebtedness or other securities, including future agreements, even if the change of control itself does not, due to the financial effect of such repurchases on us. In the event a change of control offerrepurchase or repayment is required to be made at a time when we are prohibited from purchasing notes,or repaying such indebtedness, we could attempt to refinance the indebtedness that contains such prohibitions. If we do not obtain a consent or repay such indebtedness, we will remain prohibited from purchasing notes. In that case, our failure to purchase tendered notesor repay such indebtedness would constitute an event of default under one or more of our indentures which could, in turn, constitute a default under our other indebtedness. Finally, our ability to pay cash to the holders of our notessuch indebtedness upon a repurchasechange of control may be limited by our then existing financial resources.

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We may not be able to relist our common units on the NYSE or another national securities exchange and we expect our common unitsClass A Units to be quoted on the OTC Pink Market for the foreseeable future. Unitholders may face limited availability of market quotations for our common units,Class A Units, reduced liquidity for the trading of our common unitsClass A Units and potentially lower trading prices for our common units.Class A Units. In addition, we could experience a decreased ability to issue additional securities and obtain additional financing in the future, and it could impair our ability to provide equity incentives to our employees. There can be no assurance that the trading market for our common unitsClass A Units will improve in the future or that any improvement will be sustained.

There may be no active trading market for our debt securities, which may limit a holder’s ability to sell our debt securities.

Our existing debt securitiesThe OpCo Notes are not, and we do not expect that any debt securities we may issue in the future to be, listed on any securities exchange quoted through any automated quotation system. An established market for our debt securities may not develop, or if one does develop, it may not be maintained. Although underwriters may advise us that they intend to make a market in our debt securities, they are not obligated to do so and may discontinue such market-making activity at any time without notice. In addition, market-making activity is subject to the limits imposed by the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). For these reasons, weWe cannot assure a debt holder that:

that a liquid market for the debt securities will develop, or that the holder will be able to sell its debt securities or receive a specific price upon any sale of its debt securities. If a public market for theour debt securities did develop, the debt securities could trade at prices that may be higher or lower than their principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar debt securities and our financial performance. Historically, the market for non-investment grade debt, such as our debt securities, has been subject to disruptions that have caused substantial fluctuations in the prices of these securities.factors.

Our general partner has broad discretion to determine the amount of “available cash” for distribution to holders of our equity securities through the establishment and maintenance of cash reserves, thereby potentially lessening and limiting the amount of “available cash” eligible for distribution.

Subject to thecertain restrictions, on distributions in the applicable indentures as discussed above, our general partner determines the timing and amount of our distributions and has broad discretion in determining the amount of funds that will be recognized as “available cash.” Part of this discretion comes from the ability of our general partner to establish and make additions to our reserves. Decisions as to amounts to be placed in or released from reserves have a direct impact on the amount of available cash for distributions because increases and decreases in reserves are taken into account in computing available cash. Funds within or added to our reserves are not considered to be “available cash” and are therefore not required to be distributed. Each fiscal quarter, our general partner may, in its reasonable discretion, determine the amounts to be placed in or released from reserves, subject to restrictions on the purposes of the reserves. Reserves may be made, increased or decreased for any proper purpose, including, but not limited to, reserves:

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The decision by our general partner to establish, increase or decrease our reserves may limit the amount of cash available for distribution to holders of our equity securities. Holders of our equity securities will not receive payments required by such securities unless we are able to first satisfy our own obligations and the establishment of any reserves.

Ferrellgas Partners may selldilute existing interests of unitholders by selling additional limited partner interests, dilutinginterests. Ferrellgas Partners may also dilute existing interests of unitholders.Class A Units by converting Class B Units to Class A Units.

The partnership agreement of Ferrellgas Partners generally allows Ferrellgas Partners to issue additional limited partner interests and other equity securities.securities, subject to consent by holders of the Requisite Class B Units (defined as (a) if the holder that initially holds a majority of the Class B Units (the “Initial Class B Majority Holder”) holds at least 50% of the Class B Units, holders of at least 50% of the outstanding Class B Units or (b) if the Initial Class B Majority Holder holds less than 50% of the Class B Units, holders of at least one-third of the outstanding Class B Units). When Ferrellgas Partners issues additional equity securities, a unitholder’s proportionate partnership interest in such class will decrease. Such an issuance could negatively affect the amount of cash distributed to unitholders and the market price of commonsuch units. The issuance of additional common units will also diminish the relative voting strength of the previously outstanding commonclass of units. In addition, Ferrellgas Partners may issue preferred or other securities that could have a preferred right to distributions or other priority economic terms, which could negatively affect the value of commonour outstanding units. See Note J “Equity (Deficit)” to the consolidated financial statements included elsewhere herein for more information related to the Class B units.

TableClass A Units and, in certain cases, holders of ContentsFerrellgas Partners’ Class B Units and the operating partnership’s Preferred Units.

Class A Unitholders will have no right to elect our general partner or the directors of our general partner on an annual or other continuing basis. See Note J “Equity (Deficit)” to the consolidated financial statements included elsewhere herein for Board rights related to the Class B Units. Under certain circumstances, holders of the Preferred Units may have the right to appoint a majority of the Board of Directors of our general partner after March 30, 2031. See Note I “Preferred units” to the consolidated financial statements included elsewhere herein.

Our general partner may not be removed except pursuant to:

Because Ferrell Companies is the parent of our general partner and beneficially owns 23.4% of our outstanding common units, and James E. Ferrell, Interim Chief Executive Officer and President of our general partner; and Chairman of the Board of Directors of our general partner, indirectly owns 4.9% of our outstanding common units, amendments to the agreement of limited partnership of Ferrellgas Partners or the removal of our general partner are unlikely if neither Ferrell Companies, nor Mr. Ferrell consents to such action.

Our general partner has a limited call right with respect to the limited partner interests of Ferrellgas Partners.

If at any time not more than 20% of the then-issued and outstanding limited partner interests of any class of Ferrellgas Partners are held by persons other than our general partner and its affiliates ourand upon the election of a successor general partner hasby the right, which it may assign to anyvote of its affiliates or to us, to acquire all, butthe holders of not less than all,a majority of the remaining limitedoutstanding Class A Units entitled to vote; provided that holders of the Class B Units will have the right to remove the general partner interestsunder certain circumstances.

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Our general partner’s liability to us and our unitholders may be limited.

The partnership agreements of Ferrellgas Partners and the operating partnership contain language limiting the liability of our general partner to us and to our unitholders. For example, those partnership agreements provide that:

Our partnership agreements eliminate the fiduciary duties that, under Delaware law, would otherwise apply to the general partner and replace them with a contractual good faith standard of care. The partnership agreements significantly limit the ability of unitholders to successfully challenge the actions of our general partner because our general partner's actions will be upheld as long as the action is reasonably believed by the general partner to be in, or not inconsistent with, the partnership’s best interests.

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Our general partner and its affiliates may have conflicts with us.

The directors and officers of our general partner have fiduciary duties to manage our general partner in a manner that is beneficial to the best interest of Ferrellgas Partners and the operating partnership and not inconsistent with the best interest of those entities. The overall governance structure of the Ferrellgas entities is focused on Ferrellgas Partners and the operating partnership and, as such, the officers and directors of the general partner or the general partner’s parent entity should generally make decisions that are reasonably believed to be in, or not inconsistent with, the best interest of the operating partnership and Ferrellgas Partners, which duties and obligations are set forth in the applicable partnership agreements. Notwithstanding, there may be situations in which our general partner’s duties to us may conflict with the duties of its officers and directors to our general partner and its stockholder.

Matters in which, and reasons that, such conflicts of interest may arise include:

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See “Conflicts of Interest” and “Fiduciary Responsibilities” below.

Ferrell Companies may transfer the ownership of our general partner, which could cause a change of our management and affect the decisions made by our general partner regarding resolutions of conflicts of interest.

Ferrell Companies, the owner of our general partner, may transfer the capital stock of our general partner without the consent of our unitholders. In such an instance, our general partner will remain bound by our partnership agreements. If, however, through share ownership or otherwise, persons not now affiliated with our general partner were to acquire its general partner interest in us or effective control of our general partner, our management and resolutions of conflicts of interest, such as those described above, could change substantially. A transfer of the ownership of our general partner also could result in a “change of control” under our debt instruments, which could result in an event of default under such debt instruments or require that we offer to repurchase our debt securities.

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Our general partner may voluntarily withdraw or sell its general partner interest.

Our general partner may withdraw as the general partner of Ferrellgas Partners and the operating partnership without the approval of our unitholders. Our general partner may also sell its general partner interest in Ferrellgas Partners and the operating partnership without the approval of our unitholders. Any such withdrawal or sale could have a material adverse effect on us and could substantially change our management and the resolution of conflicts of interest, as described above. A withdrawal by our general partner or a sale of its general partner interest also could result in a “change of control” under our debt instruments, which could result in an event of default under such debt instruments or require that we offer to repurchase our debt securities.

Our general partner has the ability to protect itself against dilution.

Whenever we issue equity securities to any person other than our general partner and its affiliates, our general partner has the right to purchase additional limited partner interests on the same terms. This allows our general partner to maintain its partnership interest in us. No other unitholder has a similar right. Therefore, only our general partner has the ability to protect itself against dilution caused by our issuance of additional equity securities.

Tax Risks

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The U.S. Internal Revenue Service (the “IRS”) could challenge our classification as a partnership for federal income tax purposes, which, if successful, would result in our being treated as a corporation for federal income tax purposes. Additionally, changes in federal or state laws could subject us to entity-level taxation. Either of these events would substantially reduce the cash available for distribution to our unitholders.

The anticipated after-tax economic benefit of an investment in our common units depends largely on our being treated as a partnership for federal income tax purposes. We believe that, under current law, we have been and will continue to be classified as a partnership for federal income tax purposes; however, we have not requested, and do not plan to request, a ruling from the IRS with respect to our treatment as a partnership for federal income tax purposes. One of the requirements for such classification is that at least 90% of our gross income for each taxable year has been and will be “qualifying income” within the meaning of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Whether we will continue to be classified as a partnership depends in part on our ability to meet this qualifying income test in the future.

If we were classified as a corporation for federal income tax purposes, we would pay tax on our income at corporate rates, currently a maximum of 21% at the federal level, and we would probably pay additional state income taxes as well. In addition, distributions would generally be taxable to the recipient as corporate dividends and no income, gains, losses or deductions would flow through to our unitholders. Because a tax would be imposed upon us at the entity level as a corporation, the cash available for distribution to our unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to our unitholders and thus would likely result in a substantial reduction in the value of our common units.

A change in current law or a change in our business could cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to entity-level taxation. The partnership agreement of Ferrellgas Partners provides that, if a law is enacted or existing law is modified or interpreted in a manner that subjects Ferrellgas Partners or the operating partnership to taxation as a corporation or otherwise subjects either of them to entity-level taxation for federal, state or local income tax purposes, certain provisions of the partnership agreement of Ferrellgas Partners will be subject to change. These changes would include a decrease in the minimum quarterly distribution and the target distribution levels to reflect the impact of such entity-level taxes.

The tax treatment of publicly traded partnerships could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis.

The present U.S. federal income tax treatment of publicly traded partnerships, including us, may be modified by administrative or judicial interpretation or legislative action at any time. Any modification to the U.S. federal income tax

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laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or impossible to meet the exception for us to be treated as a partnership for U.S. federal income tax purposes that is not taxable as a corporation, affect or cause us to change our business activities, affect the tax considerations of an investment in us and change the character or treatment of portions of our income.

We are unable to predict whether any such changes will occur. Any such changes could cause us to be treated as an association taxable as a corporation for U.S. federal income tax purposes and thereby subject us to entity-level income taxes, which would cause a material reduction in our anticipated cash flows and adversely affect the value of our common units.

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disallowed at the partnership level is then generally carried forward and may be deducted in a succeeding taxable year by a unitholder, in accordance with the unitholder’s applicable tax laws. These limitations might cause interest expense to be deducted by our unitholders in a later period than recognized in the GAAP financial statements.

There are limits on the deductibility of losses.

In the case of unitholders subject to the passive loss rules (generally, individuals, closely held corporations and regulated investment companies), any losses generated by us will only be available to offset our future income and cannot be used to offset income from other activities, including passive activities or investments. Unused losses may be deducted when the unitholder disposes of its entire investment in us in a fully taxable transaction with an unrelated party. A unitholder’s share of our net passive income may be offset by unused losses carried over from prior years, but not by losses from other passive activities, including losses from other publicly-traded partnerships.

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adjustments of items unrelated to us. A unitholder will bear the cost of any expenses incurred in connection with an examination of its personal tax return.

Pursuant to the Bipartisan Budget Act of 2015, if the IRS makes audit adjustments to our income tax returns for tax years beginning after 2017, it may collect any resulting taxes (including any applicable penalties and interest) directly from us. We will generally have the ability to shift any such tax liability to our General Partner and our unitholders in accordance with their interests in us during the year under audit, but there can be no assurance that we will be able to do so under all circumstances. If we are required to make payments of taxes, penalties and interest resulting from audit adjustments, our cash available for distribution to our unitholders might be substantially reduced.

Reporting of partnership tax information is complicated and subject to audits; we cannot guarantee conformity to IRS requirements. As a result of investing in our units, a unitholder will likely be subject to state and local taxes and return filing requirements in jurisdictions in which it is not domiciled. Additionally, unitholders may have negative tax consequences if we default on our debt or sell assets.

We will furnish each unitholder with a Schedule K-1 that sets forth that unitholder’s allocable share of income, gains, losses and deductions. In preparing these schedules, we will use various accounting and reporting conventions and adopt various depreciation and amortization methods. We cannot guarantee that these schedules will yield a result that conforms to statutory or regulatory requirements or to administrative pronouncements of the IRS. If any of the information on these schedules is successfully challenged by the IRS, the character and amount of items of income, gain, loss or deduction previously reported by unitholders might change, and unitholders might be required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.

UnitholdersWe may lose tax benefits as a result of nonconforming depreciation conventions.

Because we cannot match transferors and transferees of common units, uniformity ofbe audited by the economicIRS and tax characteristicsadjustments could be made. The rights of a unitholder owning less than a 1% interest in us to participate in the income tax audit process are very limited. Further, any adjustments in our common unitstax returns may lead to a purchaseradjustments in unitholders’ tax returns and may lead to audits of common unitsunitholders’ tax returns and adjustments of items unrelated to us. A unitholder will bear the same class must be maintained. To maintain uniformity and for other reasons, we have adopted certain depreciation and amortization conventions which we believe conformcost of any expenses incurred in connection with an examination of its personal tax return.

Pursuant to Treasury Regulations under Section 743(b)the Bipartisan Budget Act of 2015, if the Internal Revenue Code. A successful IRS challenge to those positions could reduce the amount of tax benefits available to our unitholders. A successful IRS challenge could also affect the timing of these tax benefits or the amount of gain from the sale of common units and could have a negative impact on the value of our common units or result inmakes audit adjustments to a unitholder’sour income tax returns.

As a resultreturns for tax years beginning after 2017, it may collect any resulting taxes (including any applicable penalties and interest) directly from us. We will generally have the ability to shift any such tax liability to our general partner and our unitholders in accordance with their interests in us during the year under audit, but there can be no assurance that we will be able to do so under all circumstances. If we are required to make payments of investing intaxes, penalties and interest resulting from audit adjustments, our common units, a unitholder will likelycash available for distribution to our unitholders might be subject to state and local taxes and return filing requirements in jurisdictions in which it is not domiciled.substantially reduced.

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Unitholders may have negative tax consequences if we default on our debt or sell assets.

If we default on any of our debt, the lendersholders will have the right to sue us for non-payment. That action could cause an investment loss and negative tax consequences for our unitholders through the realization of taxable income by unitholders without a corresponding cash distribution. Likewise, if we were to dispose of assets and realize a taxable gain while there is substantial debt outstanding and proceeds of the sale were applied to the debt, our unitholders could have increased taxable income without a corresponding cash distribution.

A unitholder whose common unitsClass A Units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of common units)Class A Units) may be deemed to have disposed of those common units.Class A Units. If so, the unitholder would no longer be treated for tax purposes as a partner with respect to those common unitsClass A Units during the period of the loan and may recognize gain or loss from the disposition.

Because there are no specific rules governing the U.S. federal income tax consequences of loaning a partnership interest, a unitholder whose common unitsClass A Units are the subject of a securities loan may be deemed to have disposed of the loaned units. In that case, the unitholder may no longer be treated for tax purposes as a partner with respect to those common unitsClass A Units during the period of the loan and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan, any of our income, gain, loss or deduction with respect to those common unitsClass A Units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those common unitsClass A Units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller should modify any applicable brokerage account agreements to prohibit their brokers from borrowing their common units.Class A Units.

Conflicts of Interest

Conflicts of interest could arise as a result of the relationships between us, on the one hand, and our general partner and its affiliates, on the other. The directors and officers of our general partner have fiduciary duties to manage our general partner in a manner beneficial to our general partner and its stockholder. At the same time, our general partner has a contractual good faith duty of care to manage us in a manner the general partner reasonably believes to be in, or not inconsistent with, our best interests. The contractual duties of our general partner to us and our unitholders, therefore, may conflict with the fiduciary duties of the directors and officers of our general partner to our general partner and its stockholder.

Matters in which, and reasons that, such conflicts of interest may arise include:

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Class A Units is deemed to have consented to specified conflicts of interest and actions of our general partner and its affiliates that might otherwise be prohibited, including those described above, and to have agreed that such conflicts of interest and actions do not constitute a breach by our general partner of any duty stated or implied by law or equity. Our general partner will not be in breach of its obligations under the partnership agreements of Ferrellgas Partners or the operating partnership or its duties to us or our unitholders if the resolution of such conflict is fair and reasonable to us. Under the partnership agreements, any conflict of interest and any resolution thereof will conclusively be deemed fair and reasonable to us if it is (i) approved by the audit committee of our general partner, or (ii) on terms no less favorable to us than those generally being provided to or available from unrelated third parties or (iii) fair to us, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to us). The latitude given in the partnership agreements to our general partner in resolving conflicts of interest may significantly limit the ability of a unitholder to challenge what might, in the absence of the partnership agreement provisions eliminating default fiduciary duties be a breach of fiduciary duty.

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The partnership agreements of Ferrellgas Partners and the operating partnership expressly limit the liability of our general partner by providing that our general partner, its affiliates and their respective officers and directors will not be liable for monetary damages to us, our unitholders or assignees thereof for errors of judgment or for any acts or omissions if our general partner and such other persons acted in good faith. In addition, we are required to indemnify our general partner, its affiliates and their respective officers, directors, employees, agents and trustees to the fullest extent permitted by law against liabilities, costs and expenses incurred by our general partner or such other persons if our general partner or such persons acted in good faith and in a manner it or they reasonably believed to be in, or (in the case of a person other than our general partner) not opposed to, the best interests of us and, with respect to any criminal proceedings, had no reasonable cause to believe the conduct was unlawful.

ITEM 1B.   UNRESOLVED STAFF COMMENTS.

None.

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ITEM 2.      PROPERTIES.

We own or lease the following transportation equipment at July 31, 2020:2023:

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The propane transport trailers have an average capacity of approximately 10,000 gallons. The bulk propane delivery trucks are generally fitted with tanks ranging in size from 2,600 to 3,500 gallons. Each railroad tank car has a capacity of approximately 30,000 gallons.

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We also distributed propane for portable tank exchanges from 126127 company-owned distributors and 64 independently-owned distributors at July 31, 2020.2023. In addition, we had 1112 company-owned portable tank exchange production facilities at July 31, 2020.

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We owned approximately 49.948.4 million gallons of propane storage capacity at our propane distribution locations at July 31, 2020.2023. We owned our land and buildings in the local markets of approximately 60%64% of our operating locations and leased the remaining facilities on terms customary in the industry at July 31, 2020.2023.

We owned approximately 0.8 million propane tanks at July 31, 2020,2023, most of which are located on customer property and rented to those customers. We also owned approximately 4.34.7 million portable propane cylinders at July 31, 2020,2023, most of which are used by us to deliver propane to our portable tank exchange customers and to deliver propane to our industrial/commercial customers.

At July 31, 2020,2023, we leased approximately 57.842.3 million gallons of propane storage capacity located at underground storage facilities and pipelines at various locations around the United States.

At July 31, 2020,2023, we leased 73,98854,691 square feet of office space at separate locations that comprise our corporate headquarters in the Kansas City metropolitan area.

We believe that we have satisfactory title to or valid rights to use all of our material properties. Although some of those properties may be subject to liabilities and leases, liens for taxes not yet currently due and payable and immaterial encumbrances, easements and restrictions, we do not believe that any such burdens will materially interfere with the continued use of such properties in our business. We believe that we have obtained, or are in the process of obtaining, all required material approvals. These approvals include authorizations, orders, licenses, permits, franchises, consents of, registrations, qualifications and filings with, the various state and local governmental and regulatory authorities which relate to our ownership of properties or to our operations.

ITEM 3.     LEGAL PROCEEDINGS.

Our operations are subject to all operating hazardsFor information regarding legal proceedings, see Note P “Contingencies and risks normally incidental to handling, storing, transporting and otherwise providing for use by consumers of combustible liquids such as propane and, priorcommitments” to the sales of midstream operations in fiscal 2018, crude oil. As a result, at any given time, we can be threatened with or named as a defendant in various lawsuits arising in the ordinary course of business. Other than as discussed below, we are not a party to any legal proceedings other than various claims and lawsuits arising in the ordinary course of business. It is not possible to determine the ultimate disposition of these matters; however, management is of the opinion that there are no known claims or contingent claims that are reasonably expected to have a material adverse effect on our consolidated financial condition, results of operations and cash flows.

Tank fill level litigation

We have been named as a defendant, along with a competitor,statements appearing in putative class action lawsuits filed in multiple jurisdictions. The lawsuits, which were consolidated in the Western District of Missourithis Annual Report on October 16, 2014, allege that Ferrellgas and a competitor coordinated in 2008 to reduce the fill level in barbeque cylinders and combined to persuade a common customer to accept that fill reduction, resulting in increased cylinder costs to direct customers and end-user customers in violation of federal and certain state antitrust laws. The lawsuits seek treble damages, attorneys’ fees, injunctive relief and costs on behalf of the putative class. These lawsuits have been coordinated for pretrial purposes by the multidistrict litigation panel. The Federal Court for the Western District of Missouri initially dismissed all claims brought by direct and indirect customers other than state law claims of indirect customers under Wisconsin, Maine and Vermont law. The direct customer plaintiffs filed an appeal, which resulted in a reversal of the district court’s dismissal. We filed a petition for a writ of certiorari which was denied. An appeal by the indirect customer plaintiffs resulted in the court of appeals affirming the dismissal of the federal claims and remanding the case to the district court to decide whether to exercise supplemental jurisdiction over the remaining state law claims. Thereafter, in August 2019, we reached a settlement with the direct customers, pursuant to which we agreed to pay a total of $6.25 million to resolve all claims asserted by the putative direct purchaser class.  With respect to the indirect customers, the district court exercisedForm 10-K. 

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supplemental jurisdiction over the remaining state law claims, but then granted in part our pleadings-based motion and dismissed 11 of the 24 remaining state law claims.  As a result, there are 13 remaining state law claims brought by a putative class of indirect customers.  We believe we have strong defenses and intend to vigorously defend ourselves against these remaining claims.  We do not believe loss is probable or reasonably estimable at this time related to the putative class action lawsuit.

Eddystone litigation

We and Bridger Logistics, LLC (“Bridger”), have been named, along with two former officers, in a lawsuit filed by Eddystone Rail Company ("Eddystone") on February 2, 2017 in the Eastern District of Pennsylvania (the "EDPA Lawsuit"). Eddystone indicated that it has prevailed in or settled an arbitration against Jamex Transfer Services (“JTS”), previously named Bridger Transfer Services, a former subsidiary of Bridger. The arbitration involved a claim against JTS for money due for deficiency payments under a contract for the use of an Eddystone facility used to offload crude from rail onto barges. Eddystone alleges that we transferred assets out of JTS prior to the sale of the membership interest in JTS to Jamex Transfer Holdings, and that those transfers should be avoided so that the assets can be used to satisfy the amount owed by JTS to Eddystone as a result of the arbitration. Eddystone also alleges that JTS was an “alter ego” of Bridger and Ferrellgas and that Bridger and Ferrellgas breached fiduciary duties owed to Eddystone as a creditor of JTS. We believe that we and Bridger have valid defenses to these claims and to Eddystone’s primary claim against JTS for breach of contract. The lawsuit does not specify a specific amount of damages that Eddystone is seeking; however, we believe that the amount of such damages, if ultimately owed to Eddystone, could be material to us.  We intend to vigorously defend this claim. On August 24, 2017, we filed a third-party complaint against JTS, Jamex Transfer Holdings, and other related persons and entities (the "Third-Party Defendants"), asserting claims for breach of contract, indemnification of any losses in the EDPA Lawsuit, tortious interference with contract, and contribution. On June 25, 2018, we entered into an agreement with the Third-Party Defendants which, among other things, resulted in a dismissal of the claims against the Third-Party Defendants from the lawsuit. The lawsuit is in the discovery stage; as such, management does not currently believe a loss is probable or reasonably estimable at this time. 

ITEM 4.      MINE SAFETY DISCLOSURES.

Not applicable.

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reserves established by our general partner for future requirements. To the extent necessary and due to the seasonal nature of our operations, we will generally reserve a portion of the cash inflows from our second and third fiscal quarters for distributions during our first and fourth fiscal quarters.

As more fully described inindebtedness, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Covenants,” the indenture governing the outstanding notes of Ferrellgas Partners due June 15, 2020Liquidity and the agreements governing the operating partnership’s indebtedness contain various covenants that limit our ability to, among other things, make distribution payments to our common unitholders. If we are unsuccessful with our strategy to reduce debt and interest expense, we will continue to be restricted from making distribution payments to our common unitholders. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —Recent DevelopmentsCapital Resources – Forbearance Agreement with respect to Ferrellgas Partners’ 8.625% Unsecured

Senior Notes due June 15, 2020” above for additional discussion on the Ferrellgas Partners Notes.

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​Financing Activities – Distributions.”

Recent Sales of Unregistered Equity Securities

There were none during fiscal 2020.2023.

Purchases of Equity Securities

There were none during the fourth quarter of fiscal 2020.2023.

Ferrellgas Partners Tax Matters

Ferrellgas Partners is a master limited partnership and thus not subject to federal income taxes. Instead, our common unitholdersClass A and Class B Unitholders are required to report for income tax purposes their allocable share of our income, gains, losses, deductions and credits, regardless of whether we make distributions to our common unitholders.Unitholders. Accordingly, each common unitholderUnitholder should consult its own tax advisor in analyzing the federal, state, and local tax consequences applicable to its ownership or disposition of our common units.Class A and Class B Units. Ferrellgas Partners reports its tax information on a calendar year basis, while financial reporting is based on a fiscal year ending July 31.

Common Equity of Other Registrants

There is no established public trading market for the common equity of the operating partnership, Ferrellgas Partners Finance Corp. or Ferrellgas Finance Corp. Our general partner owns all of the general partner interest, and Ferrellgas Partners owns all of the limited partner interest (other than the limited partner interests represented by the Preferred Units), in the operating partnership. All of the common equity of Ferrellgas Partners Finance Corp. is held by Ferrellgas Partners and all of the common equity of Ferrellgas Finance Corp. is held by the operating partnership. There are no equity securities of the operating partnership, Ferrellgas Partners Finance Corp. or Ferrellgas Finance Corp. authorized for issuance under any equity compensation plan. During fiscal 2020,2023, there were no issuances of equity securities of the operating partnership, Ferrellgas Partners Finance Corp. or Ferrellgas Finance Corp.

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Equity Compensation Plan Information

None.

ITEM 6.      SELECTED FINANCIAL DATA.RESERVED.

Ferrellgas qualifies as a smaller reporting company as defined in Item 10(f)(1) of SEC Regulation S-K, and is not required to provide the information required by this Item. Ferrellgas has elected to provide select data for the fiscal years ended July 31, 2020 and 2019. The following tables present selected consolidated historical financial and operating data for Ferrellgas Partners and the operating partnership.​

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Our capital expenditures fall generally into three categories:

ITEM 7.       MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

Our management’s discussion and analysis of financial condition and results of operations relates to Ferrellgas Partners and the operating partnership.

Ferrellgas Partners is a holding entity that conducts no operations and has two direct subsidiaries, the operating partnership and Partners Finance Corp. Both Partners Finance Corp. and Ferrellgas Finance Corp. have nominal assets, do not conduct any operations and have no employees other than officers. FerrellgasOur activities are primarily conducted through the operating partnership. Partners Finance Corp. serveshas served as co-issuer and co-obligor for debt securities of Ferrellgas Partners, while Ferrellgas Finance Corp., a subsidiary of the operating partnership, serves as co-issuer and co-obligor for debt securities of the operating partnership. Accordingly, and due to the reduced disclosure format, a discussion of the results of operations, liquidity and capital resources of Ferrellgas Partners Finance Corp. and Ferrellgas Finance Corp. is not presented in this section.

The following is a discussion of our historical financial condition and results of operations and should be read in conjunction with our audited historical consolidated financial statements and accompanying Notesnotes thereto included elsewhere in this Annual Report on Form 10-K.

The discussions set forth in this sectionthe “Results of Operations” and “Liquidity and Capital Resources” sections generally refer to Ferrellgas Partners and its consolidated subsidiaries. However, in these discussions there existsexisted one material difference between Ferrellgas Partners and the operating partnership:

On January 8, 2021, Ferrellgas Partners has outstanding $357.0 million aggregate principal amount of 8.625% unsecured senior notes due June 15, 2020 and, accordingly, has interest expense thatentered into a term loan credit agreement with the operating partnership, does not have. Ferrellgas Partners’ accesspursuant to liquidity is dependent on distributions fromwhich the operating partnership. See the statements of operations in their respective consolidated financial statements.

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Recent Developments

COVID-19

The coronavirus disease 2019 (COVID-19), which has been declared by the World Health Organization as a “Public Health Emergency of International Concern,” continues to spread and severely impact the economy of the United States and other countries around the world. COVID-19 poses the risk that we or our employees, contractors, suppliers, customers and other business partners may be prevented from or limited in conducting business activities for an indefinite period of time. The outbreak of COVID-19 has already resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, manufacturing restrictions, declarations of national emergency and states of emergency, business shutdowns and restrictions on the movement of people throughout the United States and the world. While some of our business operations and support systems are deemed essential in many jurisdictions, we are continuing to assess the impact that COVID-19 may have on our results of operations and financial condition and cannot at this time accurately predict what effects these conditions will have on our operations and sales due to uncertainties relating to the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak and the length of the travel restrictions and business closures imposed by governments in different jurisdictions. Additionally, initiatives we have implemented or may implement to slow and/or reduce the impact of COVID-19, such as using staggered start times for drivers, may increase our operating expenses and reduce the efficiency of our operations. Any of the foregoing events or other unforeseen consequences of public health epidemics may have further adverse impacts on U.S. and global economic conditions, including a general slowdown in the U.S. economy, which could decrease demand for our products and have a material adverse effect on our results of operations and financial condition.

Forbearance Agreement with respectpartnership extended to Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020

We have engaged Moelis & Company LLC as our financial advisor and the law firm of Squire Patton Boggs LLP to assistPartners an unsecured, non-amortizing term loan in our ongoing process to reduce existing debt and address our debt maturities. On June 7, 2020, Ferrellgas Partners and additional Ferrellgas entities entered into a Forbearance Agreement (the “Forbearance Agreement”) with the beneficial owners (or nominees, investment managers, advisors or subadvisors for the beneficial owners, collectively referred to as the “Forbearing Noteholders”) of approximately 77% of the aggregate principal amount of Ferrellgas Partners’ 8.625% unsecured senior notes due June 15, 2020, pursuant to which the Forbearing Noteholders agreed to forbear from exercising any default-related rights$19.9 million. The term loan bore interest at a rate of 20% per annum, and remedies with respect to the Ferrellgas Partners Notes and to direct the trustee thereunder not to take any remedial action. The forbearance period under the Forbearance Agreement expired on August 15, 2020. Following the expiration of the forbearance period, discussions with representatives of the Forbearing Noteholders have continued.

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Financial covenants

The indenture governing the outstanding notes of Ferrellgas Partners and the agreements governing the operating partnership’s indebtedness contain various covenants that limit our ability to, among other things, make restricted payments and incur additional indebtedness. Our general partner believes that the most restrictive of these covenants are the restricted payments covenants in the indenture governing the outstanding notes of Ferrellgas Partners and the indentures governing the outstanding notes of the operating partnership, which are discussed below.

Ferrellgas Partners, L.P., the master limited partnership

The indenture governing the outstanding notes of Ferrellgas Partners due June 15, 2020 contains a covenant that restricts the ability of Ferrellgas Partners to make certain restricted payments, including distributions on its common units. Ferrellgas Partners continues to comply with the restrictive covenants with respect to the $357.0 million aggregate principal amount of its unsecured senior notes due June 15, 2020 as Ferrellgas Partners continues to negotiate with the Forbearing Noteholders. Under this covenant, subject to the limited exception described below, Ferrellgas Partners may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indenture generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable,

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certain other specified events. As of July 31, 2020, Ferrellgas Partners’ consolidated fixed charge coverage ratio was 1.40x.

If the consolidated fixed charge coverage ratio is below 1.75x, Ferrellgas Partners may make restricted payments of up to $50.0 million in total over a sixteen quarter period. As a result of distributions paid to common unitholders in September 2017, December 2017, March 2018, June 2018 and September 2018, while this ratio was less than 1.75x, Ferrellgas Partners has used substantially all of its capacity under the limited exception and therefore is currently restricted by this covenant from making future restricted payments, including distributions to common unitholders. Accordingly, no distributions have been or will be paid to common unitholders for the three months ended July 31, 2020, and the general partner expects that this covenant will continue to prohibit Ferrellgas Partners from making common unit distributions unless and until the outstanding notes of Ferrellgas Partners due 2020 are restructured, refinanced or otherwise satisfied. While there can be no assurance of success, as part of our debt and interest expense reduction strategy, we are presently considering potential solutions to address the recent maturity of the outstanding notes of Ferrellgas Partners due 2020. The potential solutions include, among others, restructuring, refinancing or a transaction to exchange new notes for some or all of these notes. See “Recent Developments – Forbearance Agreement with respect to Ferrellgas Partners’ 8.625% Unsecured Senior Notes due June 15, 2020” above.

Ferrellgas, L.P., the operating partnership

Similar to the indenture governing the outstanding notes of Ferrellgas Partners, the indentures governing the outstanding notes of the operating partnership contain covenants that restrict the ability of the operating partnership to make certain restricted payments, including distributions to Ferrellgas Partners.  Under these covenants in the indentures governing the operating partnership’s notes, subject to the limited exceptions described below, the operating partnership may not make a restricted payment unless its consolidated fixed charge coverage ratio (defined in the indentures generally to mean the ratio of trailing four quarters consolidated EBITDA to consolidated interest expense, both as adjusted for certain, specified items) is at least 1.75x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events. As of July 31, 2020, the operating partnership’s consolidated fixed charge coverage ratio was 1.70x.

Under the covenants in the indentures governing the operating partnership’s unsecured notes, if the consolidated fixed charge coverage ratio is below 1.75x, the operating partnership may still make restricted payments in limited amounts determined under the indentures governing the operating partnership’s unsecured notes. The distributions made by the operating partnership on June 15, 2019 and December 15, 2019 for payment of interest on Ferrellgas Partners’ unsecured senior notes due June 2020 were made from capacity under this limited exceptionthe term loan was added to the ratio requirement under the indentures governing the operating partnership’s unsecured notes.

The indenture governing the operating partnership’s senior secured first lien notes due 2025 contains a similar but, in some respects, different restricted payments covenant.  The covenant in the secured notes indenture provides for the same 1.75x consolidated fixed charge coverage ratio test as the unsecured notes indentures and a limited exception when that ratio is below 1.75x.  In addition, the secured notes indenture also provides that, subject to a separate limited exception, described below, the operating partnership generally may not make a restricted payment unless the operating partnership’s consolidated leverage ratio (defined in the secured notes indenture generally to mean the ratio of consolidated total debt to trailing four quarters consolidated EBITDA, both as adjusted for certain, specified items) is no greater than 5.5x, on a pro forma basis giving effect to the restricted payment and, if applicable, certain other specified events.  The consolidated leverage ratio test applies regardless of whether the operating partnership’s consolidated fixed coverage ratio is at least 1.75x or below 1.75x.  As of July 31, 2020, the operating partnership’s consolidated leverage ratio was substantially in excess of 5.5x.  Additionally, the secured notes indenture provides for restricted payments under its limited exception to the consolidated fixed charge coverage ratio test that is less than the capacity available under the similar exception in the unsecured notes indentures.  However, the secured notes indenture contains a separate exception to both the consolidated fixed charge coverage ratio test and the consolidated leverage ratio test that can be utilized to make certain specified restricted payments in a limited amount when the operating partnership does not meet either the consolidated fixed charge coverage ratio test or the consolidated leverage ratio test. This separate exception under the secured notes indenture currently has capacity for such specified restricted payments that is substantially the same as the capacity under the most restrictive of the operating partnership’s unsecured notes indentures.

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With respect to the operating partnership notes, on or about June 24, 2020, a majority of the holders of the outstanding principal amount of eachthe term loan. The term loan was scheduled to mature on July 1, 2022. During July 2021, Ferrellgas Partners made an optional prepayment of $9.0 million principal amount of the (i) 6.50% unsecured senior notes due 2021 (the “2021 Notes”), (ii) 6.75% unsecured senior notes dueterm loan. On May 16, 2022, (the “2022 Notes”) and (iii) 6.75% unsecured senior notes due 2023 (the “2023 Notes”) issued by Ferrellgas L.P. and Ferrellgas Finance Corp. delivered a notice to Ferrellgas, L.P., pursuant toPartners repaid the termsoperating partnership the full amount of the applicable indentures, removing the existing indenture trustee for such seriesterm loan of notes. In accordance with the terms of the applicable indentures, Ferrellgas, L.P. is in the process of appointing a successor trustee for each series.

As described above, Ferrellgas Partners’ unsecured notes due 2020 matured on June 15, 2020, and$15.3 million, which represented the outstanding principal amount of those notes was due to beand accrued interest. Additionally, Ferrellgas Partners paid on that date, together with accrued interest to the maturity date. Although the operating partnership has some capacity to make distributions under the operating partnership’s unsecured and secured notes indentures, this capacity will not allow the operating partnership to make distributions to Ferrellgas Partners sufficient to pay the principal of and accrued interest on Ferrellgas Partners’ unsecured senior notes due 2020 that was due at the maturity of those notes. Additionally, the restrictions in these indentures currently limit the ability of the operating partnership to make distributions to Ferrellgas Partners to enable it to pay cash distributions to its unitholders.

Debt and interest expense reduction strategy

We continue to pursue a strategy to reduce our debt and interest expense. Opportunities include the generation of additional cash flows through accretive acquisitions, continued restructuring or refinancing of existing indebtedness, selling additional assets, maintaining the suspension of Ferrellgas Partners’ common unit distributions, issuing equity or executing one or more debt exchanges. We expect to maintain our debt and interest expense reduction strategy until our consolidated leverage ratio reaches a level that we deem appropriate$3.9 million for our business. See “Risk Factors –Risks Related to our Business and Industry –There is substantial doubt about our ability to continue as a going concern, which will affect our ability to obtain future financing and may require us to curtail our operations.”

Termination of Bridger agreement with Jamex Marketing, LLC

In connection with the closing of our acquisition of Bridger in June 2015, Bridger entered into a ten-year transportation and logistics agreement (the “Jamex TLA”) with Jamex Marketing, LLC (“Jamex”) pursuant to which Jamex would be responsible for certain payments to Bridger and also for sourcing crude oil volumes for Bridger’s largest customer at that time. On September 1, 2016, Bridger, Jamex, Ferrellgas Partners, L.P. and certain other affiliated parties entered into a group of agreements that terminated the Jamex TLA, as summarized below.

On September 1, 2016, we entered into a Secured Promissory Note with Jamex (the “Jamex Secured Promissory Note”) pursuant to which Jamex agreed to pay us a principal amount of $49.5 million plus interest, which principal amount was due over time pursuant to an amortization schedule and with a final maturity date of December 17, 2021. Jamex’s obligations under the Jamex Secured Promissory Note were fully guaranteed by certain subsidiaries and affiliates of Jamex, and were partially guaranteed (up to a maximum of $20 million) by James Ballengee, the individual owner of Jamex, and another entity owned by Mr. Ballengee. The Jamex Secured Promissory Note obligations of Jamex and those other fully guaranteeing entities were secured by certain assets owned by those entities, actively traded marketable securities and cash, which were held in a controlled account and were subject to seizure by us in the event of default. The operating partnership also agreed to provide Jamex with a $5.0 million revolving secured working capital facility evidenced by a revolving promissory note (the “Jamex Revolving Promissory Note”).

On June 25, 2018, Ferrellgas and Mr. Ballengee entered into an Omnibus Agreement (the “Omnibus Agreement”) that, among other things, terminated and cancelled the Jamex Secured Promissory Note, the joint guarantee, and the Jamex Revolving Promissory Note. In connection with the termination and cancellation of such agreements, (1) Mr. Ballengee and Jamex paid Ferrellgas $16.3 million towards the remaining balance due under the Jamex Secured Promissory Note and Mr. Ballengee executed a new unsecured promissory note in favor of the operating partnership with an original principal amount of $18.3 million (the “Revised Jamex Promissory Note”), (2) Bacchus, a company controlled by Mr. Ballengee, executed a guaranty agreement to guarantee Mr. Ballengee’s obligations under the Revised Jamex Promissory Note, (3) Ferrellgas agreed to dismiss without prejudice certain indemnification claims against Jamex and any affiliates of Jamexseparate intercompany receivables related to expenses incurred during the Eddystone litigation and to toll the statute of limitations with2021 debt transactions.

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We employ risk management activities that attempt to mitigate price risks related to the purchase, storage, transport and sale of propane generally in the contract and spot markets from major domestic energy companies. We attempt to mitigate these price risks through the use of financial derivative instruments and forward propane purchase and sales contracts. We enter into propane sales commitments with a portion of our customers that provide for a contracted price agreement for a specified period of time. These commitments can expose us to product price risk if not immediately hedged with an offsetting propane purchase commitment.

Our open financial derivative propane purchase commitments are designated as hedges primarily for fiscal 20202023 and 20212024 sales commitments and, as of July 31, 2020,2023, we have experienced net mark-to-market lossesgains of approximately $2.3$1.1 million. Because these financial derivative purchase commitments qualify for hedge accounting treatment, the resulting asset, liability and related mark-to-market gains or losses are recorded on the consolidated balance sheets as “Prepaid expenses and other current assets,” "Other“Other assets, net,"” “Other current liabilities,” "Other liabilities"“Other liabilities” and “Accumulated other comprehensive loss,income,” respectively, until settled. Upon settlement, realized gains or losses on these contracts will be reclassified to “Cost of sales-propane and other gas liquid sales” in the consolidated statements of operations as the underlying inventory is sold. These financial derivative purchase commitment net lossesgains are expected to be offset by increaseddecreased margins on propane sales commitments that qualify for the normal purchase normal sale exception. At July 31, 2020,2023, we estimate 84%93% of currently open financial derivative purchase commitments, the related propane sales commitments and the resulting gross margin will be realized into earnings during the next twelve months.