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

Total debt consists of the following at December 31, 2013 and 2012:

		Interest Rate			2013		2012
					(in thousands)
CoBank (term loan)	Fixed		7.37	%	$	-	$	1,876
CoBank Term Loan A	Variable		2.67	%		230,000		230,000
Other debt		Various				-		101
						230,000		231,977
Current maturities						5,750		1,977
Total long-term debt					$	224,250	$	230,000

On September 14, 2012, the Company executed an Amended and Restated Credit Agreement with CoBank and with the participation of 16 additional Farm Credit institutions, for the purpose of refinancing the Company’s existing outstanding debt, funding capital expenditures to upgrade the Company’s wireless network in conjunction with Sprint’s wireless network upgrade project known as Network Vision, and other corporate needs.

The Amended and Restated Credit Agreement provides for three facilities, a Term Loan Facility, a Revolver Facility, and an Incremental Term Loan Facility. The Term Loan Facility had two parts, the Fixed Term Loan Facility and the Term Loan A Facility. The Fixed Term Loan Facility was repaid in August 2013. The Term Loan A Facility requires quarterly principal repayments of $5.75 million beginning on December 31, 2014, with the remaining expected balance of approximately $120.75 million due at maturity on September 30, 2019. The Term Loan A Facility bears interest at 30-day LIBOR, currently 0.17%, plus a spread determined by the Company’s Total Leverage Ratio, currently 2.50%. The spread decreased from 2.75% during the second quarter of 2013 based on improvements in the Company’s leverage ratio at March 31, 2013. The Company may elect to use rates other than the 30-day LIBOR as the base, but does not currently expect to do so.

The Revolver Facility provides for $50 million in immediate 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, or to increase the Revolver Facility, in the aggregate principal amount not to exceed $100 million subject to compliance with certain covenants. No draw has been made or is currently contemplated under either of these facilities. 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 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, 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 3.00 to 1.00 from the closing date through March 31, 2014, then 2.50 to 1.00 from April 1, 2014 through March 31, 2015, 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 2.50 to 1.00 at all times;

a minimum equity to assets ratio, defined as consolidated total assets minus consolidated total liabilities, divided by consolidated total assets, of at least 0.30 to 1.00 from the amendment date through December 31, 2013; then at least 0.325 to 1.00 through December 31, 2014, and at least 0.35 to 1.00 thereafter, measured at each fiscal quarter end;

The Amended and Restated Credit Agreement required the Company to obtain interest rate protection within 90 days of the amendment date for at least 33% of the aggregate principal balance of the Term Loan A then outstanding, for not less than three years after such date. In September 2012, the Company entered into a pay fixed, receive variable interest rate swap (the 2012 swap) agreement covering approximately 76% of the outstanding principal of the Term Loan A balance through its maturity. The 2012 swap fixes the effective rate on this portion of the debt at 1.13% over our margin, currently 2.50%, for an effective fixed rate of 3.63% at December 31, 2013. The Company has applied hedge accounting to this swap agreement. The Company also had an existing pay fixed, receive variable interest rate swap agreement (the 2010 swap). This agreement was executed in 2010 and expired in July 2013. The Company did not elect to apply hedge accounting to the 2010 swap.

During 2012, the Company wrote-off approximately $0.8 million, pre-tax, of existing unamortized transaction costs as a result of replacing certain lenders from the original credit agreement.

As of December 31, 2013, the Company was in compliance with the financial covenants in its credit agreements.

The aggregate maturities of long-term debt for each of the five years subsequent to December 31, 2013 are as follows:

Year	Amount
	(in thousands)
2014	$	5,750
2015		23,000
2016		23,000
2017		23,000
2018		23,000
Later years		132,250
	$	230,000

The Company has no fixed rate debt instruments as of December 31, 2013. The estimated fair value of fixed rate debt instruments as of December 31, 2012 was approximately equal to its carrying value, given the short remaining term to maturity. The estimated fair value of the variable rate debt approximates its carrying value. The fair value of the Company’s interest rate swaps was an asset of $4.3 million and a liability of $1.7 million at December 31, 2013 and December 31, 2012, respectively.

The Company receives patronage credits from CoBank and certain of its affiliated Farm Credit institutions, which are not reflected in the stated rates shown above. Patronage credits are a distribution of profits of CoBank as approved by its Board of Directors. During both the first quarters of 2013 and 2012, the Company received patronage credits on its outstanding CoBank debt balance. The Company accrued $1.4 million in the year ended December 31, 2013, in anticipation of the early 2014 distribution of the credits by CoBank. Patronage credits have historically been paid in a mix of cash and shares of CoBank stock. The 2013 payout mix was 75% cash and 25% shares.