NOTE 7: LONG-TERM DEBT

Long-Term Debt at December 31, consisted of the following:



(in thousands)			2018			2017
4.09%	CTWS	Term Loan Note and Supplement A, Due 2027	$	11,235		$	12,358
4.15%	CTWS	CoBank Term Note Payable, Due 2037	14,386			14,881
Total CTWS			25,621			27,239
Var.	Connecticut Water	2004 Series Variable Rate, Due 2029	12,500			12,500
Var.	Connecticut Water	2004 Series A, Due 2028	5,000			5,000
Var.	Connecticut Water	2004 Series B, Due 2028	4,550			4,550
5.00%	Connecticut Water	2011 A Series, Due 2021	22,717			22,920
3.16%	Connecticut Water	CoBank Note Payable, Due 2020	8,000			8,000
4.72%	Connecticut Water	CoBank Note Payable, Due 2022	14,795			14,795
4.29%	Connecticut Water	CoBank Note Payable, Due 2028	17,020			17,020
3.51%	Connecticut Water	CoBank Note Payable, Due 2032	14,795			14,795
4.75%	Connecticut Water	CoBank Note Payable, Due 2033	14,550			14,550
4.36%	Connecticut Water	CoBank Note Payable, Due May 2036	30,000			30,000
4.04%	Connecticut Water	CoBank Note Payable, Due July 2036	19,930			19,930
3.53%	Connecticut Water	NY Life Senior Note, Due September 2037	35,000			35,000
Total The Connecticut Water Company			198,857			199,060
4.75%	HVWC	2011 Farmington Bank Loan, Due 2034	4,300			4,464
3.05%	Avon Water	Mortgage Note Payable, Due 2033	3,134			3,302
8.95%	Maine Water	1994 Series G, Due 2024	5,400			6,300
2.68%	Maine Water	1999 Series J, Due 2019	85			170
0.00%	Maine Water	2001 Series K, Due 2031	533			574
2.58%	Maine Water	2002 Series L, Due 2022	53			60
1.53%	Maine Water	2003 Series M, Due 2023	271			321
1.73%	Maine Water	2004 Series N, Due 2024	311			341
0.00%	Maine Water	2004 Series O, Due 2034	107			113
1.76%	Maine Water	2006 Series P, Due 2026	331			361
1.57%	Maine Water	2009 Series R, Due 2029	197			207
0.00%	Maine Water	2009 Series S, Due 2029	493			538
0.00%	Maine Water	2009 Series T, Due 2029	1,383			1,509
0.00%	Maine Water	2012 Series U, Due 2042	142			148
1.00%	Maine Water	2013 Series V, Due 2033	1,285			1,310
4.24%	Maine Water	CoBank Note Payable, Due 2024	4,500			4,500
4.18%	Maine Water	CoBank Note Payable, Due 2026	5,000			5,000
5.51%	Maine Water	CoBank Note Payable, Due 2043	8,000			—
7.72%	Maine Water	Series L, Due 2018	—			2,250
2.40%	Maine Water	Series N, Due 2022	826			1,026
1.86%	Maine Water	Series O, Due 2025	710			750
2.23%	Maine Water	Series P, Due 2028	1,233			1,264
0.01%	Maine Water	Series Q, Due 2035	1,584			1,678
1.00%	Maine Water	Series R, Due 2025	1,767			2,009
Various	Maine Water	Various Capital Leases	—			2
Total The Maine Water Company			34,211			30,431
Add: Acquisition Fair Value Adjustment			(189		)	(51		)
Less: Current Portion			(4,059		)	(6,173		)
Less: Unamortized Debt Issuance Expense			(4,364		)	(4,905		)
Total Long-Term Debt			$	257,511		$	253,367

The Company’s required principal payments for the years 2019 through 2023 are as follows:



(in thousands)
2019	$	4,059
2020	$	12,086
2021	$	26,227
2022	$	19,125
2023	$	4,318

There are no mandatory sinking fund payments required on Connecticut Water’s outstanding bonds. However, certain fixed rate Unsecured Water Facilities Revenue Refinancing Bonds provide for an estate redemption right whereby the estate of deceased bondholders or surviving joint owners may submit bonds to the trustee for redemption at par, subject to a $25,000 per individual holder and a 3% annual aggregate limitation.

On January 10, 2017, Maine Water executed and delivered to CoBank, ACB (“CoBank”) a new Promissory Note and Single Advance Term Loan Supplement, dated January 10, 2017 (the “Third Promissory Note”). On the terms and subject to the conditions set forth in the Third Promissory Note issued pursuant to the Agreement, CoBank agreed to make an unsecured loan (the “Loan”) to Maine Water in the principal amount of $5,000,000 at 4.18%, due December 30, 2026. The proceeds of the Loan are being used to finance new capital expenditures and refinance existing debt owed to the Company, incurred in connection with general water system improvements.

On August 28, 2017, the Company executed and delivered to CoBank a new Promissory Note and Supplement (2017 Single Advance Term Loan) (the “2017 Promissory Note”). On the terms and subject to the conditions set forth in the 2017 Promissory Note issued pursuant to the Company’s Master Loan Agreement, CoBank agreed to make a term loan (the “Loan”) to the Company in the principal amount of $15,000,000. Under the 2017 Promissory Note, the Company will pay interest on the Loan at a fixed rate of 4.15% per year through August 20, 2037, the maturity date of the Loan.

On September 28, 2017, Connecticut Water completed the issuance of $35,000,000 aggregate principal amount of its 3.53% unsecured Senior Notes due September 25, 2037 (the “Senior Notes”). The Senior Notes were issued pursuant to the Note Purchase Agreement dated as of September 28, 2017 (the “Purchase Agreement”) between and among Connecticut Water, NYL Investors, LLC (“NY Life”), as agent, and the Purchasers listed in the Purchaser Schedule attached to the Purchase Agreement, in a private placement financing exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. The proceeds of the sale of the Senior Notes were used by Connecticut Water to repay loans from the Company the proceeds of which were used for capital expenditure projects by Connecticut Water. The Senior Notes bear interest at the rate of 3.53% per annum, payable semi-annually on March 27 and September 27 of each year commencing on March 27, 2018. The principal amount of the Senior Notes, if not previously paid, shall be due on September 25, 2037. The Senior Notes are callable in whole or in part, subject to a make-whole amount.

On December 13, 2018, Maine Water executed and delivered to CoBank a new Promissory Note and Single Advance Term Loan Supplement, dated October 30, 2018 (the “Fourth Promissory Note”). On the terms and subject to the conditions set forth in the Fourth Promissory Note issued pursuant to the Agreement, CoBank agreed to make an unsecured loan (the “Loan”) to Maine Water in the principal amount of $8,000,000 at 5.51%, due December 30, 2043. The proceeds of the above described Loan from CoBank were used to refinance existing debt and to finance certain capital expenditures.

During the year ending December 31, 2018, the Company paid the following amounts related to Long-Term Debt: approximately $495,000 related to CTWS’s 2017 CoBank issuance; $1,123,000 related to CTWS’s Term Loan Note issued as part of the 2012 acquisition of Maine Water; approximately $1,970,000 in sinking funds related to Maine Water’s outstanding bonds; an additional $2,250,000 related to a CoBank loan to Maine Water that matured in 2018; approximately $164,000 related to HVWC’s mortgage loan; and $168,000 related to Avon Water’s mortgage loan.

Financial Covenants – The Company is required to comply with certain covenants in connection with various long term loan agreements. The most restrictive of these covenants is to maintain a consolidated debt to capitalization ratio of not more than 60%. Additionally, Maine Water has restrictions on cash dividends paid based on restricted net assets. The Company was in compliance with all covenants at December 31, 2018.