DEBT

12 Months Ended

Dec. 31, 2021

DEBT [Abstract]

DEBT

NOTE 8

DEBT

At December 31, 2021, 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, 2021, there was $31.3 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%. It is expected that the LIBOR rate will no longer be published for most currencies as of December 31, 2021, however, publication for USD currency should continue through June 30, 2023.  As a result, it is possible that, in the future, the LIBOR rate may become unavailable or may no longer be deemed an appropriate reference rate upon which to determine the interest rate on LIBOR Rate Loans.  In light of this eventuality, Citizens currently has initiatives underway to identify new or alternative reference rates to be used in place of the LIBOR rate.  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 22, 2022 or any date on which Citizens demands payment.  The Company expects to renew this line of credit.

At December 31, 2021, 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, 2021, there was $2.0 million of available funds under this line of credit.  The interest rate for borrowings under this line allows the Company to select either LIBOR plus 1.50% or a weekly variable rate established by CoBank; the Company has historically used the weekly variable interest rate.  The term of this line of credit expires on July 30, 2022. Artesian Water expects to renew this line of credit.

On July 15, 2021, Artesian Water entered into a Financing Agreement, or the Financing Agreement, with the Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health, a public agency of the state of Delaware, or the Department.  Under the Financing Agreement, the Department agreed to advance to Artesian Water up to approximately $2.5 million, or the Loan, to finance all or a portion of the cost to acquire the Town of Frankford water system and to replace water transmission mains and renew services and hydrants in the Town of Frankford, collectively, the Project.  In accordance with the Financing Agreement, Artesian Water will from time to time request funds under the Loan as it incurs costs in connection with the Project.  Artesian Water requested an initial draw of approximately $1.5 million for the acquisition of the Town of Frankford water system.  Upon receipt of the initial draw, an amount equal to approximately $1.5 million was forgiven by the Department and is no longer considered outstanding or unpaid principal under the Financing Agreement.  The Company shall pay to the Department, on the principal amount drawn down and outstanding from the date drawn, interest at a rate of 1.0% per annum and an administrative fee at the rate of 1.0% per annum.

On April 28, 2020, Artesian Water entered into three financing agreements, or the Financing Agreements, with the Delaware Drinking Water State Revolving Fund, acting by and through the Delaware Department of Health & Social Services, Division of Public Health, a public agency of the state of Delaware, or the Department.  Under the Financing Agreements, the Department agreed to advance to Artesian Water up to approximately $1.7 million, $1.0 million and $1.3 million, collectively, the Loans, to finance all or a portion of the costs to replace specific water transmission mains in service areas located in New Castle County, Delaware, collectively, the Projects. The Company shall pay to the Department, on the principal amount drawn down and outstanding from the date drawn, interest at a rate of 0.6% per annum and an administrative fee at the rate of 0.6% per annum.  As of December 31, 2021, the full amount that will be borrowed under the Loans is approximately $2.6 million.

CoBank may make an annual patronage refund. The $20 million line of credit, the First Mortgage Bonds and the promissory note are with CoBank.  The patronage refunds earned by Artesian in 2021 and 2020 were $1.2 million and $1.0 million, respectively. In 2021, CoBank issued a one-time additional all-cash patronage distribution of $226,000, or 0.165%, of the average line of credit and loan volume outstanding in the prior year, which was in addition to the standard 0.80% patronage rate. In 2020, CoBank issued a one-time additional all-cash patronage distribution of $107,000, or 0.10%, of the average line of credit and loan volume outstanding in the prior year, which was in addition to the standard 0.80% patronage rate.

The weighted average interest rate on the lines of credit discussed above paid by the Company was 1.40% for the year ended December 31, 2021. These lines of credit, as well as the long-term debt obligations shown below, require us to abide by certain financial covenants and ratios.  As of December 31, 2021, we were in compliance with these  financial covenants.

Long-term debt consists of:

	December 31,
In thousands	2021		2020
First mortgage bonds
Series R, 5.96%, due December 31, 2028	$	25,000	$	25,000
Series S, 4.45%, due December 31, 2033		7,200		7,800
Series T, 4.24%, due December 20, 2036		40,000		40,000
Series U, 4.71%, due January 31, 2038		25,000		25,000
Series V, 4.42%, due October 31, 2049		30,000		30,000
		127,200		127,800
State revolving fund loans
4.48%, due August 1, 2021		—		318
3.57%, due September 1, 2023		200		294
3.64%, due May 1, 2025		513		648
3.41%, due February 1, 2031		1,735		1,887
3.40%, due July 1, 2032		1,729		1,864
1.187%, due November 1, 2041		2,585		—
		6,762		5,011
Notes Payable
Promissory Note, 5.12%, due December 30, 2028		10,888		11,279
Sub-total		144,850		144,090
Less: current maturities (principal amount)		1,591		1,757
Total long-term debt	$	143,259	$	142,333

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

In thousands	2022		2023		2024		2025		2026		Thereafter
First Mortgage bonds	$	600	$	600	$	600	$	600	$	600	$	124,200
State revolving fund loans		580		668		584		523		458		3,949
Promissory note		411		433		454		480		505		8,605
Total payments	$	1,591	$	1,701	$	1,638	$	1,603	$	1,563	$	136,754

Substantially all of Artesian Water's utility plant is pledged as security for our First Mortgage Bonds.  As of December 31, 2021, no other water utility plant has been pledged as security for loans.  Two parcels of land in Artesian Wastewater are pledged as security for the promissory note.