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Long-Term Debt | 12 Months Ended
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Dec. 31, 2019
Debt Disclosure [Abstract] |
Long-term Debt | Long-Term Debt Long-term debt as of December 31 was as follows:
Description | Rate |  | Maturity |  | 2019 |  | 2018
SJW Group: |  |  |  |  |  |  |
Senior notes | 3.05% - 4.35% |  | 2021 - 2039 |  | $ | 560,000 |  |  | 50,000 |
SJWC: |  |  |  |  |  |  |
Senior notes | 4.29% - 9.45% |  | 2020 - 2049 |  | 330,000 |  |  | 250,000 |
California Pollution Control Financing Authority Revenue Bonds | 4.75%, 5.10% |  | 2040, 2046 |  | 120,000 |  |  | 120,000 |
Total SJWC |  |  |  |  | 450,000 |  |  | 370,000 |
CTWS bank term loans | 4.09%, 4.15% |  | 2027, 2037 |  | 23,935 |  |  | — |
Connecticut Water: |  |  |  |  |  |  |
Connecticut Innovations Revenue Bonds, variable rate |  |  | 2028 - 2029 |  | 22,050 |  |  | — |
Connecticut Innovations Revenue Bonds, fixed rate | 5.00% |  | 2021 |  | 22,506 |  |  | — |
Senior note | 3.53% |  | 2037 |  | 35,000 |  |  | — |
Bank term loans | 3.16% - 4.75% |  | 2020 - 2036 |  | 119,090 |  |  | — |
Total Connecticut Water |  |  |  |  | 198,646 |  |  | — |
SJWTX, Inc. senior note | 6.27% |  | 2036 |  | 15,000 |  |  | 15,000 |
Maine Water: |  |  |  |  |  |  |
State revolving fund loans | 0.00% - 2.58% |  | 2022 - 2048 |  | 16,032 |  |  | — |
Other First Mortgage Bonds | 8.95% |  | 2024 |  | 4,500 |  |  | — |
Bank term loans | 4.18% - 5.51% |  | 2024 - 2043 |  | 17,500 |  |  | — |
Total Maine Water |  |  |  |  | 38,032 |  |  | — |
HVWC bank term loan | 4.75% |  | 2034 |  | 4,164 |  |  | — |
Avon Water mortgage loan | 3.05% |  | 2033 |  | 2,809 |  |  | — |
Total debt |  |  |  |  | 1,292,586 |  |  | 435,000 |
Unamortized debt premium, net (a) |  |  |  |  | 25,020 |  |  | — |
Less: |  |  |  |  |  |  |
Unamortized debt issuance costs |  |  |  |  | 11,737 |  |  | 3,576 |
Current portion |  |  |  |  | 22,272 |  |  | — |
Total long-term debt, less current portion |  |  |  |  | $ | 1,283,597 |  |  | 431,424 |
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(a) | Consists of fair value adjustments recognized through purchase accounting for the completed merger with CTWS on October 9, 2019.
Senior notes held by institutional investors are unsecured obligations of SJW Group, SJWC, Connecticut Water, SJWTX, Inc. and Maine Water and require interest-only payments until maturity. To minimize issuance costs, the companies’ debt has primarily been placed privately. The senior note agreements of SJW Group have terms and conditions that restrict SJW Group from issuing additional funded debt if: (1) the funded consolidated debt would exceed 66-2/3% of total capitalization, (2) the minimum net worth of SJW Group becomes less than $175,000 plus 30% of Water Utility Services cumulative net income, since June 30, 2011, and (3) net income available for interest charges for the trailing 12-calendar-month period would be less than 175% of interest charges. As of December 31, 2019, SJW Group was not restricted from issuing future indebtedness as a result of these terms and conditions. On October 8, 2019, SJW Group entered into a note purchase agreement with the purchasers listed in the agreement, pursuant to which SJW Group sold an aggregate principal amount of $310,000 of its 3.05% Senior Notes, Series 2019A, due November 1, 2029, $75,000 of its 3.15% Senior Notes, Series 2019B, due November 1, 2031, and $125,000 of its 3.53% Senior Notes, Series 2019C, due November 1, 2039. The notes are unsecured obligations of the Company. Interest is payable semi-annually in arrears on May 1st and November 1st of each year. The note purchase agreement contains customary representations and warranties. Under the note purchase agreement, SJW Group is required to comply with certain customary affirmative and negative covenants for as long as the notes are outstanding. The notes are also subject to customary events of default, the occurrence of which may result in all of the notes then outstanding becoming immediately due and payable. The closing occurred simultaneously with the signing of the note purchase agreement. The senior note agreements of SJWC generally have terms and conditions that restrict the company from issuing additional funded debt if: (1) the funded debt would exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar-month period would be less than 175% of interest charges. As of December 31, 2019, SJWC was not restricted from issuing future indebtedness as a result of these terms and conditions. On March 28, 2019, SJWC entered into a note purchase agreement with certain affiliates of MetLife, Inc., Brighthouse Financial, Inc. and New York Life Insurance (collectively the “Purchasers”), pursuant to which the company sold an aggregate principal amount of $80,000 of its 4.29% Senior Notes, Series M (“Series M Notes”) to the Purchasers. The Series M Notes are unsecured obligations of SJWC and are due on April 1, 2049. Interest is payable semi-annually in arrears on April 1st and October 1st of each year. The note purchase agreement contains customary affirmative and negative covenants for as long as the Series M Notes are outstanding. The Series M Notes are also subject to customary events of default, the occurrence of which may result in all of the Series M Notes then outstanding becoming immediately due and payable. The closing occurred simultaneously with the signing of the note purchase agreement. SJWC has obligations pursuant to loan agreements with the California Pollution Control Financing Activity (“CPCFA”) totaling $120,000 in aggregate principal amounts of CPCFA revenue bonds outstanding as of December 31, 2019. The loan agreements contain affirmative and negative covenants customary for loan agreements relating to revenue bonds, containing, among other things, certain disclosure obligations, the tax exempt status of the interest on the bonds and limitations, and prohibitions on the transfer of projects funded by the loan proceeds and assignment of the loan agreements. As of December 31, 2019, SJWC was in compliance with all such covenants. CTWS has outstanding term loans with a commercial bank in an aggregate amount of $23,935 as of December 31, 2019. Under the master loan agreement, CTWS is required to comply with certain financial ratio and operational covenants. The most restrictive of these covenants is to maintain a consolidated (CTWS and its subsidiaries) debt to capitalization ratio of not more than 60%. As of December 31, 2019, CTWS was in compliance with all covenants under the master loan agreement. Connecticut Water has outstanding term loans with a commercial bank in an aggregate amount of $119,090 as of December 31, 2019. Under its master loan agreement, Connecticut Water is required to comply with financial and operational covenants substantially identical to those found in CTWS’ master loan agreement. Connecticut Water is required to maintain a debt to capitalization ratio of not more than 60%. As of December 31, 2019, Connecticut Water was in compliance with all covenants under its master loan agreement. Connecticut Water has outstanding $44,556 of tax exempt and taxable Water Facilities Revenue Bonds issued through Connecticut Innovations (formerly the Connecticut Development Authority). The bond indentures and loan agreements contain customary affirmative and negative covenants and require compliance with financial and operational covenants, and also provide for the acceleration of the Revenue Bonds upon the occurrence of stated events of default. As of December 31, 2019, Connecticut Water was in compliance with all covenants of the bond indentures and loan agreements. Connecticut Water has a $35,000 unsecured senior note that has terms and conditions that restrict Connecticut Water from issuing additional debt or paying a dividend to CTWS if such debt or distribution would trigger an event of default. The senior note agreement also requires Connecticut Water to maintain a debt to capitalization ratio of not more than 60%. As of December 31, 2019, Connecticut Water was in compliance with all financial ratio and operational covenants under this agreement. The senior note agreement of SJWTX, Inc. has terms and conditions that restrict SJWTX, Inc. from issuing additional funded debt if: (1) the funded debt would exceed 66-2/3% of total capitalization, and (2) net income available for interest charges for the trailing 12-calendar-month period would be less than 175% of interest charges. In addition, SJW Group is a guarantor of SJWTX, Inc.’s senior note which has terms and conditions that restrict SJW Group from issuing additional funded debt if: (1) the funded consolidated debt would exceed 66-2/3% of total capitalization, and (2) the minimum net worth of SJW Group becomes less than $125,000 plus 30% of Water Utility Services cumulative net income, since December 31, 2005. As of December 31, 2019, SJWTX, Inc. and SJW Group were not restricted from issuing future indebtedness as a result of these terms and conditions. Maine Water has $16,032 of First Mortgage Bonds issued to the Maine Municipal Bond Bank through the State Safe Drinking Water Revolving Loan Fund and $4,500 of First Mortgage Bonds issued to One America. The associated bond indentures and loan agreements contain customary affirmative and negative covenants, including a prohibition on the issuance of indebtedness secured by assets or revenue of Maine Water where the lien is senior to the lien of the bond trustee under the above bonds except as permitted by the bond indentures and related loan and security agreements, a requirement to maintain a debt to capitalization ratio of not more than 65%, required compliance with various financial and operational covenants, and a provision for maturity acceleration upon the occurrence of stated events of default. As of December 31, 2019, Maine Water was in compliance with all covenants in its bond indentures and related loan agreements. On December 19, 2019, Maine Water issued $5,000 of Series S First Mortgage Bonds to the Maine Municipal Bond Bank through the State Safe Drinking Water Revolving Loan Fund. The Series S bonds mature on October 1, 2039 and carry 1% interest. The Series S First Mortgage Bond covenants are the same as all other First Mortgage Bonds. The proceeds of the Series S bond issuance are represented as restricted cash on the Consolidated Balance Sheets at December 31, 2019. The restricted cash will be used for pre-approved projects primarily related to preliminary engineering and design work of a water treatment plant in Maine’s Biddeford and Saco division. Maine Water has outstanding term loans with a commercial bank in an aggregate amount of $17,500 as of December 31, 2019. Under its master loan agreement, Maine Water is required to comply with financial and operational covenants substantially identical to those found in CTWS and Connecticut Water’s master loan agreements. Maine is required to maintain a debt to capitalization ratio of not more than 60%. As of December 31, 2019, Maine Water was in compliance with all covenant under its master loan agreement. On February 3, 2020, the trustee released proceeds of $4,114 from the bond. HVWC has a term loan with a commercial bank due in 2034. The loan bears interest at a rate of 4.75% with monthly payments of principal and interest of $31. The loan is secured by real property owned by HVWC. The loan agreement restricts HVWC’s ability to incur additional debt and requires compliance with a funded debt to capitalization covenant and other operational covenants. As of December 31, 2019, HVWC was in compliance with all covenants of the loan and $4,164 was outstanding. Avon Water has a mortgage loan that is due in 2033. This loan amortizes over 20 years and carries a fixed interest rate of 3.05% with monthly principal and interest payments of $22. The loan agreement (1) generally restricts the ability of Avon Water to incur additional debt or make dividend payments other than in the ordinary course of business, and (2) requires submission of periodic financial reports as part of loan covenants. As of December 31, 2019, Avon Water was in compliance with all covenants of the loan and $2,809 was outstanding. The following is a table of the consolidated company’s schedule of principal payments:
Year |
2020 | $ | 22,343 |
2021 | 76,943 |
2022 | 39,388 |
2023 | 4,583 |
2024 | 49,256 |
Thereafter | 1,100,073 |
The estimated fair value of long-term debt as of December 31, 2019 and 2018 was approximately $1,396,205 and $490,148, respectively, and was determined using a discounted cash flow analysis, based on the current rates for similar financial instruments of the same duration and creditworthiness of the Company. The fair value of long-term debt would be categorized as Level 2 of the fair value hierarchy.

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