DEBT

12 Months Ended

Dec. 31, 2011

NOTE 6

DEBT

At December 31, 2011, Artesian Resources had a $40 million line of credit with Citizens Bank, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2011, there was $28.3 million of available funds under this line of credit. The interest rate for borrowings under this line is the London Interbank Offered Rate, or LIBOR, plus 1.00%. This is a demand line of credit and therefore the financial institution may demand payment for any outstanding amounts at any time. The term of this line of credit expires on the earlier of May 31, 2012 or any date on which Citizens demands payment.

At December 31, 2011, Artesian Water had a $20 million line of credit with CoBank, ACB, or CoBank, that allows for the financing of operations for Artesian Water, with up to $10 million of this line available for the operations of Artesian Water Maryland. As of December 31, 2011, there were no borrowings under this line of credit. The interest rate for borrowings under this line is LIBOR plus 1.50%. The term of this line of credit expires on January 16, 2013.

On July 20, 2011, the Company completed the sale of 804,290 shares of its Class A Stock. The net proceeds (after deducting underwriting discounts and commissions and offering expenses) of approximately $14.1 million were used to fund a paid-in capital contribution in the same amount to Artesian Water. Artesian Water used the paid-in capital contribution to repay short-term borrowings (including borrowings incurred under our line of credit with Citizens that is available to all of our subsidiaries) incurred primarily to finance expenses associated with its construction program, including investment in utility plant and equipment, and to fund capital expenditures and other general corporate purposes.

On August 15, 2011, the Company completed the sale of an additional 84,000 shares of its Class A Stock, in accordance with the option granted to the underwriters to cover over-allotments associated with our July 2011 stock offering. The net proceeds of approximately $1.5 million were used to fund a paid-in capital contribution in the same amount to Artesian Water as noted above.

Pursuant to the Termination Agreement between Artesian Resources and Darin A. Lockwood signed on August 6, 2010, Artesian Resources purchased the 75-acre parcel of land, previously purchased by Darin A. Lockwood on July 1, 2008, for the operation of the wastewater facility known as the Northern Sussex Regional Water Recharge Complex, or NSRWRC. The Company purchased the land (with a carrying value of $5.2 million) and all engineering and design work (with a carrying value of $2.7 million) by paying off the $7.9 million remaining balance of the NSRWRC’s construction loan with a financial institution secured by the 75-acre parcel that was previously guaranteed by the Company. There is no other security pledged for the 75-acre parcel of land.

Table of Contents

Long-term debt consists of:

	December 31,
In thousands	2011		2010
First mortgage bonds

Series O, 8.17%, due December 29, 2020	$	20,000	$	20,000
Series P, 6.58%, due January 31, 2018		25,000		25,000
Series Q, 4.75%, due December 1, 2043		15,400		15,400
Series R, 5.96%, due December 31, 2028		25,000		25,000
Series S, 6.73%, due December 31, 2033		13,200		13,800
		98,600		99,200

State revolving fund loans

4.48%, due August 1, 2021		2,624		2,827
3.57%, due September 1, 2023		1,010		1,076
3.64%, due May 1, 2025		1,667		1,761
3.41%, due February 1, 2031		2,993		581
3.40%, due July 1, 2032		783		---
		9,077		6,245

Notes Payable
Promissory Note, variable interest, due August 1, 2012		580		1,161
		580		1,161


Sub-total		108,257		106,606

Less: current maturities (principal amount)		1,718		1,545

Total long-term debt	$	106,539	$	105,061

Payments of principal amounts due during the next five years and thereafter:

In thousands	2012		2013		2014		2015		2016		Thereafter
First Mortgage bonds	$	600	$	600	$	600	$	600	$	600	$	95,600
State revolving fund loans		538		535		556		578		601		6,269
Notes Payable		580		---		---		---		---		---
Total payments	$	1,718	$	1,135	$	1,156	$	1,178	$	1,201	$	101,869

Table of Contents

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References+ Details