Note 5. Long-Term Debt and Revolving Lines of Credit

Total debt consists of the following at December 31, 2011 and 2010:

		Interest Rate
				2011		2010
				(in thousands)
CoBank (term loan)	Fixed	7.37%	$	4,524	$	6,984
CoBank Term Loan A	Variable	3.30%		175,565		187,428
Other debt		Various		486		700
				180,575		195,112
Current maturities				21,913		14,823
Total long-term debt			$	158,662	$	180,289

The Company receives patronage credits from CoBank, which are not reflected in the stated rates shown above. Patronage credits are a distribution of profits of CoBank, which is a cooperative required to distribute its profits to its members. During both the first quarters of 2011 and 2010, the Company received patronage credits of approximately 100 basis points on its outstanding CoBank debt balance. The Company accrued 100 basis points in the year ended December 31, 2011, in anticipation of the early 2012 distribution of the credits by CoBank. Patronage credits are typically paid 65% in cash, with the balance paid in shares of CoBank stock.

On July 30, 2010, the Company executed a syndicated Credit Agreement for the purpose of refinancing the Company's existing outstanding debt, funding the purchase price of the JetBroadBand acquisition, funding planned capital expenditures to upgrade the acquired cable networks, and other corporate needs.

As of December 31, 2011, the Company's indebtedness totaled $180.6 million, with an annualized overall weighted average interest rate of approximately 3.62%. The balance included $4.5 million fixed at 7.37% (the Fixed Term Loan Facility, described further below), and $175.6 million of the Term Loan A Facility at a variable rate (3.30% as of December 31, 2011) that resets monthly based on one month LIBOR plus a base rate of 3.00% currently. These loans are more fully described below.

The Credit Agreement provided for three facilities, a Term Loan Facility, a Revolver Facility, and an Incremental Term Loan Facility. The Term Loan Facility totaled $198 million and was fully drawn for the purposes described above. The Term Loan Facility has two parts, the Fixed Term Loan Facility of initially approximately $8 million in aggregate principal amount, and the Term Loan A Facility of initially $189.8 million in aggregate principal amount. The Fixed Term Loan Facility is required to be repaid in monthly installments of approximately $200 thousand of principal, plus interest at 7.37%, through August 2013. The Term Loan A Facility required quarterly principal repayments of $2.4 million that began on December 31, 2010 and continued through September 30, 2011, increasing to $4.7 million quarterly thereafter through September 30, 2015, with the remaining expected balance of approximately $104 million due December 31, 2015. The Term Loan A Facility is expected to bear interest at a base rate based upon one month LIBOR plus a spread determined by the Company's Total Leverage Ratio, initially 3.50%; the Company may elect to use other rates as the base, but does not currently expect to do so. During April 2011, the Company negotiated a reduction in the spread from 3.50% to 3.00%.

The Revolver Facility provides for $50 million in availability for future capital expenditures and general corporate needs. In addition, the Credit Agreement permits the Company to enter into one or more Incremental Term Loan Facilities in the aggregate principal amount not to exceed $100 million subject to compliance with certain covenants. No draw has been made under either of these facilities. The Company anticipates using these facilities during 2012 due to its capital spending plans. When and if a draw is made, the maturity date and interest rate options would be substantially identical to the Term Loan A Facility. Repayment provisions would be agreed to at the time of each draw under the Incremental Term Loan Facility.

The Credit Agreement required the Company to enter into a hedge agreement to manage its exposure to interest rate movements. The Company entered into a pay fixed, receive variable swap on $63 million notional principal for three years, with the notional amount declining pro rata as the principal amount of the Term Loan A is repaid. The Company receives one month LIBOR and pays a fixed rate of 1.00% in addition to the 3.00% spread on the Term Loan A Facility.

The Credit Agreement contains affirmative and negative covenants customary to secured credit facilities, including covenants restricting the ability of the Company and its subsidiaries, subject to negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, and change the nature of the Company's and its subsidiaries' businesses.

Indebtedness outstanding under any of the facilities may be accelerated by an Event of Default, as defined in the Credit Agreement.

The Facilities are secured by a pledge by the Company of its stock in its subsidiaries, a guarantee by the Company's subsidiaries other than Shenandoah Telephone Company or Shentel Converged Services, Inc., and a security interest in all of the assets of the guarantors.

The Company is subject to certain financial covenants to be measured on a trailing twelve month basis each calendar quarter unless otherwise specified. These covenants include:

a limitation on the Company's total leverage ratio, defined as indebtedness divided by earnings before interest, taxes, depreciation and amortization, or EBITDA, of less than or equal to 2.50 to 1.00 from March 31, 2011, to December 31, 2012, and 2.00 to 1.00 thereafter;

a minimum debt service coverage ratio, defined as EBITDA divided by the sum of all scheduled principal payments on the Term Loans and regularly scheduled principal payments on other indebtedness plus cash interest expense, greater than 2.25 to 1.00 from the closing date through December 31, 2012, then 2.50 to 1.00 thereafter;

a minimum equity to assets ratio, defined as consolidated total assets minus consolidated total liabilities, divided by consolidated total assets, of at least 0.35 to 1.00 at all times, measured at each fiscal quarter end;

a minimum fixed charge coverage ratio, defined as EBITDA divided by fixed charges (defined as cash interest expense plus scheduled principal payments to be made on indebtedness plus capital expenditures other than capital expenditures acquired pursuant to a capital lease through the reinvestment of net proceeds of permitted asset dispositions or the sale of Shentel Converged Services, Inc. plus cash income taxes plus cash dividends and distributions), greater than 0.80 to 1.00 from the closing date through December 31, 2012, then 0.90 to 1.00 through December 31, 2013, and 1.00 to 1.00 thereafter; and,

the Company must maintain a minimum liquidity balance, defined as availability under the Revolver Facility plus unrestricted cash and cash equivalents other than cash and cash equivalents held in the name of an Excluded Subsidiary, of greater than $15 million at all times.

As of December 31, 2011, the Company was in compliance with the covenants in its credit agreements. On January 31, 2012, the Company amended the Credit Agreement to remove the fixed charge coverage ratio for all future periods.

The aggregate maturities of long-term debt for each of the five years subsequent to December 31, 2011 are as follows:

Year	Amount
	(in thousands)
2012	$	21,913
2013		20,857
2014		18,980
2015		118,625
2016		-
Later years		200
	$	180,575

The estimated fair value of fixed rate debt instruments as of December 31, 2011 and 2010 was approximately equal to its carrying value at each date, given the rates on the outstanding debt and the relatively short term to maturity. The estimated fair value of the variable rate debt is assumed to approximate its carrying value. The fair value of the Company's derivative was a liability of $452 thousand and $41 thousand at December 31, 2011 and 2010, respectively.