NOTE 6

DEBT

At December 31, 2016, Artesian Resources had a $40 million line of credit with Citizens Bank of Pennsylvania, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2016, there was $36.4 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 26, 2017 or any date on which Citizens demands payment.

At December 31, 2016, 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 $10.0 million of this line available for the operations of Artesian Water Maryland. As of December 31, 2016, there was $16.5 million of available funds under this line of credit. The interest rate for borrowings under this line is LIBOR plus 1.50%. CoBank may make an annual patronage refund, which has been equal to 1.00% of the average loan volume outstanding by Artesian during each of the years ended December 31, 2016, December 31, 2015 and December 31, 2014. The patronage refunds, associated with all debt at CoBank, earned by Artesian for the years ended December 31, 2016, December 31, 2015 and December 31, 2014 were $702,000, $689,000 and $682,000, respectively. The term of this line of credit expires on July 20, 2017.

The weighted average interest rate on the lines of credit above paid by the Company was 1.67% for the year ended December 31, 2016. These lines of credit, as well as both the long-term debt and the state revolving fund loans shown below, require us to abide by certain financial covenants and ratios. As of December 31, 2016, we were in compliance with these covenants.

Long-term debt consists of:

	December 31,
In thousands	2016		2015
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		10,200		10,800
		95,600		96,200

State revolving fund loans

4.48%, due August 1, 2021		1,456		1,711
3.57%, due September 1, 2023		640		719
3.64%, due May 1, 2025		1,142		1,255
3.41%, due February 1, 2031		2,448		2,576
3.40%, due July 1, 2032		2,361		2,475
		8,047		8,736

Sub-total		103,647		104,936

Less: current maturities (principal amount)		1,316		1,289

Total long-term debt	$	102,331	$	103,647

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

In thousands	2017		2018		2019		2020		2021		Thereafter
First Mortgage bonds	$	600	$	25,600	$	600	$	20,600	$	600	$	47,600
State revolving fund loans		716		742		771		801		832		4,185
Total payments	$	1,316	$	26,342	$	1,371	$	21,401	$	1,432	$	51,785

The table above is not reflective of the purchase of the $40 million principal amount First Mortgage Bond, Series T, or the Bond, due December 20, 2036, which was completed in January 2017. The proceeds from the sale of the Bond were used to prepay indebtedness of the Company under two existing First Mortgage Bonds listed above: Series O and related prepayment costs and Series Q.