Attached files
| file | filename |
|---|---|
| EX-10.2 - DEMAND LINE OF CREDIT AGREEMENT - ARTESIAN RESOURCES CORP | exhibit10-2.htm |
| EX-10.1 - REVOLVING CREDIT AGREEMENT - ARTESIAN RESOURCES CORP | exhibit10-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): January 19, 2010
ARTESIAN RESOURCES
CORPORATION
(Exact
name of registrant as specified in its charter)
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Delaware
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000-18516
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51-0002090
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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664
Churchmans Road, Newark, Delaware
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19702
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code:
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302-453-6900
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Not
Applicable
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(Former
name or former address, if changed since last report.)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written communications
pursuant to Rule 425 under the Securities Act
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
Item
1.01 Entry Into a Material Definitive Agreement
Revolving Credit Agreement
with CoBank, ACB:
On
January 19, 2010, Artesian Water Company, Inc. (“Artesian Water” or the
“Company”) entered into a Revolving Credit Agreement (the “CoBank Agreement”)
with CoBank, ACB (“CoBank”). The CoBank Agreement provides that
CoBank will make loans to the Company from time to time, not to exceed $20
million, expiring on January 18, 2011 (the “Maturity Date”). The
CoBank Agreement allows for the financing of operations of Artesian Water and up
to $10 million for the operations of Artesian Water Maryland,
Inc. Interest rates on the CoBank Agreement are based on one of the
following interest rate options.
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(1)
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At
a rate per annum equal to the rate of interest established by CoBank on
the first business day of each
week.
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(2)
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At
a fixed rate per annum to be quoted by CoBank in its sole discretion in
each instance.
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(3)
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At
a fixed rate per annum equal to the London Interbank Offering Rate
(“LIBOR”) plus 1.50%.
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Subject
to certain limited exceptions, the Company shall select the applicable rate
option each time a loan is requested. Interest payments are due
monthly and the principal amount outstanding can be repaid at any time, subject
to a prepayment surcharge if paid prior to the Maturity Date.
The
Company’s obligations are secured by a first priority lien on all equity of
CoBank currently owned or acquired in the future by the Company and any proceeds
thereof. The CoBank Agreement contains certain covenants, including
but not limited to, covenants committing the Company to purchase equity in
CoBank as required by CoBank from time to time, restricting the Company’s
ability to incur additional indebtedness, make certain investments, and pay
dividends or other distributions above a specified threshold and requiring the
Company to have an EBITDA to total interest expense ratio of not greater than
2.5 to 1 at the end of each fiscal year. The CoBank Agreement
contains customary events of default, including, but not limited to, the
occurrence of payment default, a covenant default, a failure to pay when due any
other indebtedness of the Company and an event of default under certain other
indebtedness of the Company. In the event of a default by the
Company, the interest rate will be increased to the specified default rate,
CoBank may stop making additional credit available, and require the Company to
repay its entire debt immediately.
The above
summary of the CoBank Agreement is qualified in its entirety by the complete
copy of the CoBank Agreement, which is attached hereto as Exhibit 10.1 and is
hereby incorporated by reference. All readers are encouraged to read
the entire text of the CoBank Agreement.
Demand Line of Credit
Agreement with Citizens Bank of Pennsylvania:
On
January 19, 2010, Artesian Resources Corporation and each of its subsidiaries
(“Artesian Resources” or the “Company”) entered into a Demand Line of Credit
Agreement (the “Citizens Agreement”) with Citizens Bank of Pennsylvania
(“Citizens”). The Citizens Agreement provides for a $40 million
Demand Line of Credit (or “Line of Credit”) which may be used by the Company for
short-term working capital needs, investments in facilities or equipment or
letters of credit only. The Citizens Agreement provides that Citizens
will make loans to the Company from time to time, not to exceed $40 million,
expiring on the earlier of January 18, 2011 or any date on which Citizens
demands payment. The Citizens Agreement is a demand loan facility and
therefore Citizens may demand payment under the Citizens Agreement for any
outstanding amounts at any time. In the event that Citizens makes a
demand for payment, Citizens may increase the interest rate to the specified
default rate, stop making additional credit available and require the Company to
repay the entire principal balance and any accrued interest
immediately. Interest rates on the Citizens Agreement are based on
LIBOR. Interest payments are due monthly and the principal amount
outstanding can be repaid at anytime.
The
Company is required to maintain its primary operating account with Citizens and
the Company’s obligations are secured by a lien on all of the property of the
Company or its affiliates in the possession of Citizens or any of its
affiliates, including but not limited to any deposit, trust or agency account or
any other bank account with Citizens or any of its affiliates. The
Citizens Agreement also contains certain customary operating
covenants.
The above
summary of the Citizens Agreement is qualified in its entirety by the complete
copy of the Citizens Agreement, which is attached hereto as Exhibit 10.2 and is
hereby incorporated by reference All readers are encouraged to read
the entire text of the Citizens Agreement.
Due to
the execution of the CoBank Agreement and the Citizens Agreement, the previously
existing lines of credit held by Artesian Water, Artesian Utility Development,
Inc. and Artesian Wastewater Management, Inc. will no longer be
utilized.
Item
2.03 Creation of a Direct Financial Obligation or an Obligation Under an
Off-Balance Sheet Arrangement of a Registrant.
The
disclosure set forth in Item 1.01 above is hereby incorporated by
reference.
Item
9.01 Financial Statements and Exhibits
(d)
Exhibits.
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10.1
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Revolving
Credit Agreement dated January 19, 2010 between Artesian Water Company,
Inc. and CoBank, ACB.
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10.2
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Demand
Line of Credit Agreement dated January 19, 2010 between Artesian Resources
Corporation and each of its subsidiaries and Citizens Bank of
Pennsylvania.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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ARTESIAN
RESOURCES CORPORATION
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Date: January
25, 2010
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By: /s/
David B. Spacht
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David
B. Spacht
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Chief
Financial Officer
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