Bank Debt

12 Months Ended

Dec. 31, 2019

AWR has access to a credit facility in order to provide funds to its subsidiaries, GSWC and ASUS, in support of their operations. In March 2019, AWR amended this credit facility to increase its borrowing capacity from $150.0 million to $200.0 million. In October 2019, AWR further amended the credit facility to temporarily increase its borrowing capacity to $225.0 million, effective until June 30, 2020, upon which the borrowing capacity reverts to $200.0 million. In February 2020, AWR received a binding commitment from its lender for the option to revise the temporary increase of the credit facility to $260.0 million through the end of 2020. AWR will be able to exercise this commitment and have immediate access to the additional funds when needed. On December 31, 2020, the borrowing capacity will revert to $200.0 million. At December 31, 2019, there was $205.0 million outstanding under the credit facility. Amounts due are generally priced off a spread to LIBOR. The aggregate effective amount that may be outstanding under letters of credit is $25.0 million. AWR has obtained letters of credit, primarily for GSWC, in the aggregate amount of $940,000, with fees of 0.65% including: (i) letters of credit in an aggregate amount of $340,000 as security for GSWC’s business automobile insurance policy; (ii) a letter of credit, in an amount of $585,000 as security for the purchase of power; and (iii) a $15,000 irrevocable letter of credit pursuant to a franchise agreement with the City of Rancho Cordova. Letters of credit outstanding reduce the amount that may be borrowed under the revolving credit facility. AWR is not required to maintain any compensating balances.

Loans may be obtained under this credit facility at the option of AWR and bear interest at rates based on credit ratings and Euro rate margins. In December 2019, Standard and Poor’s Global Ratings (“S&P”) affirmed an A+ credit rating with a stable outlook on both AWR and GSWC. S&P’s debt ratings range from AAA (highest possible) to D (obligation is in default). In May 2019, Moody's Investors Service ("Moody's") affirmed its A2 rating with a revised outlook from positive to stable for GSWC.

At times, AWR borrows under this facility and provides loans to its subsidiaries in support of their operations, on terms that are similar to that of the credit facility. AWR’s borrowing activities (excluding letters of credit) for the years ended December 31, 2019 and 2018 were as follows:



	December 31,
(in thousands, except percent)	2019			2018
Balance Outstanding at December 31,	$	205,000		$	95,500
Interest Rate at December 31,	2.44		%	3.19		%
Average Amount Outstanding	$	167,392		$	69,559
Weighted Average Annual Interest Rate	2.88		%	2.66		%
Maximum Amount Outstanding	$	205,500		$	95,500

All of the letters of credit are issued pursuant to the revolving credit facility. The revolving credit facility contains restrictions on prepayments, disposition of property, mergers, liens and negative pledges, indebtedness and guaranty obligations, transactions with affiliates, minimum interest coverage requirements, a maximum debt to capitalization ratio and a minimum debt rating. Pursuant to the credit agreement, AWR must maintain a minimum interest coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to 1.00 and a minimum Moody’s Investor Service or S&P debt

rating of Baa3 or BBB-, respectively. As of December 31, 2019, 2018 and 2017, AWR was in compliance with these requirements. As of December 31, 2019, AWR had an interest coverage ratio of 6.89 times interest expense, a debt ratio of 0.45 to 1.00 and a debt rating of A+ by S&P.