Long-Term Debt

Our outstanding long-term debt is shown below:



	September 30,			December 31,
(in thousands)	2013			2012
FPU secured first mortgage bonds ^(A):
9.57% bond, due May 1, 2018	$	—		$	5,444
10.03% bond, due May 1, 2018	—			2,994
9.08% bond, due June 1, 2022	7,966			7,962
Uncollateralized senior notes:
7.83% note, due January 1, 2015	4,000			4,000
6.64% note, due October 31, 2017	13,636			13,636
5.50% note, due October 12, 2020	16,000			16,000
5.93% note, due October 31, 2023	30,000			30,000
5.68% note, due June 30, 2026	29,000			29,000
6.43% note, due May 2, 2028	7,000			—
Convertible debentures:
8.25% due March 1, 2014	854			942
Promissory note	80			125
Capital lease obligation	7,042			—
Total long-term debt	115,578			110,103
Less: current maturities	(8,234		)	(8,196		)
Total long-term debt, net of current maturities	$	107,344		$	101,907


^(A)	FPU secured first mortgage bonds are guaranteed by Chesapeake.

In June 2010, we entered into an agreement with Metropolitan Life Insurance Company and New England Life Insurance Company to issue up to $36.0 million of Chesapeake’s unsecured senior notes. In June 2011, we issued $29.0 million of 5.68 percent unsecured senior notes to permanently finance the redemption of two series of FPU first mortgage bonds in 2010. On May 2, 2013, we issued an additional $7.0 million of 6.43 percent unsecured senior notes under the same agreement. These notes have similar covenants and default provisions as the senior notes issued in June 2011. We used these proceeds to redeem the 9.57 percent and 10.03 percent series of FPU’s first mortgage bonds in May 2013, prior to their respective maturities. The difference between the carrying value of those bonds and the amount paid at redemption totaling $93,000 was deferred as a regulatory asset. We are amortizing this difference over the remaining terms of these bonds as adjustments to interest expense, as allowed by the Florida PSC.

On September 5, 2013, we entered into a Note Purchase Agreement (the "Note Agreement") with PAR U Hartford Life & Annuity Comfort Trust, The Prudential Insurance Company of America, The Gibraltar Life Insurance Co., Ltd., The Penn Mutual Life Insurance Company, Thrivent Financial for Lutherans, United of Omaha Life Insurance Company, and Companion Life Insurance Company (collectively, the "Note Holders"). Under the terms of the Note Agreement, we will issue $70.0 million in aggregate of unsecured Senior Notes to the Note Holders. Series A of the unsecured Senior Notes ("Series A Notes"), with an aggregate principal amount of $20.0 million, will be issued on December 16, 2013 at a rate of 3.73 percent. Series B of the unsecured Senior Notes ("Series B Notes" and collectively with Series A Notes, the "Notes"), with an aggregate principal amount of $50.0 million, will be issued on May 15, 2014, at a rate of 3.88 percent. The proceeds received from the issuances of the Notes will be used to reduce our short-term borrowings under our lines of credit and to fund capital expenditures.

Series A Notes require annual principal payments of $2.0 million commencing on December 16, 2019. The entire outstanding principal balance of the Series A Notes is due and payable on December 16, 2028. Semiannual payments for Series A Notes are due on June 16 and December 16 of each year, commencing on June 16, 2014. All accrued but unpaid interest due under the Series A Notes is payable on December 16, 2028. Series B Notes require annual principal payments of $5.0 million commencing on May 15, 2020. The entire outstanding principal balance of the Series B Notes is due and payable on May 15, 2029. Semiannual payments for Series B Notes are due on May 15 and November 15 of each year, commencing on November 15, 2014. All accrued but unpaid interest due under the Series B Notes is payable on May 15, 2029.

The Notes may be accelerated if the aggregate net book value of our regulated business assets is less than 50 percent of our consolidated total assets. The Notes may also be accelerated upon the occurrence of a default as provided in the Note Agreement. The Note Agreement sets forth certain business and financial covenants to which the Company is subject, including covenants that limit or restrict the Company and its subsidiaries to incur indebtedness and to incur certain liens and encumbrances on any of its property.