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Debt and Financing Arrangements | 9 Months Ended
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Sep. 30, 2014
Debt and Financing Arrangements | NOTE 4 – DEBT AND FINANCING ARRANGEMENTS Long-Term Debt – On October 15, 2014, Northern Utilities completed a private placement of $50 million aggregate principal amount of 4.42% Senior Unsecured Notes due October 15, 2044 to institutional investors and repaid $42.3 million of short-term debt from the proceeds. The remainder of the proceeds will be used for general corporate purposes. As a result of this subsequent event, the Company reclassified $42.3 million of short-term debt to long-term debt on its Consolidated Balance Sheet as of September 30, 2014. Details on long-term debt at September 30, 2014, September 30, 2013 and December 31, 2013 are shown below ($ millions):
|  | September 30, |  |  | December 31, |
|  | 2014 |  |  | 2013 |  |  | 2013 |
Unitil Corporation Senior Notes: |  |  |  |  |  |  |  |  |  |  |  |
6.33% Notes, Due May 1, 2022 |  | $ | 20.0 |  |  | $ | 20.0 |  |  | $ | 20.0 |
Unitil Energy Systems, Inc.: |  |  |  |  |  |  |  |  |  |  |  |
First Mortgage Bonds: |  |  |  |  |  |  |  |  |  |  |  |
5.24% Series, Due March 2, 2020 |  |  | 15.0 |  |  |  | 15.0 |  |  |  | 15.0 |
8.49% Series, Due October 14, 2024 |  |  | 15.0 |  |  |  | 15.0 |  |  |  | 15.0 |
6.96% Series, Due September 1, 2028 |  |  | 20.0 |  |  |  | 20.0 |  |  |  | 20.0 |
8.00% Series, Due May 1, 2031 |  |  | 15.0 |  |  |  | 15.0 |  |  |  | 15.0 |
6.32% Series, Due September 15, 2036 |  |  | 15.0 |  |  |  | 15.0 |  |  |  | 15.0 |
Fitchburg Gas and Electric Light Company: |  |  |  |  |  |  |  |  |  |  |  |
Long-Term Notes: |  |  |  |  |  |  |  |  |  |  |  |
6.75% Notes, Due November 30, 2023 |  |  | 19.0 |  |  |  | 19.0 |  |  |  | 19.0 |
7.37% Notes, Due January 15, 2029 |  |  | 12.0 |  |  |  | 12.0 |  |  |  | 12.0 |
7.98% Notes, Due June 1, 2031 |  |  | 14.0 |  |  |  | 14.0 |  |  |  | 14.0 |
6.79% Notes, Due October 15, 2025 |  |  | 10.0 |  |  |  | 10.0 |  |  |  | 10.0 |
5.90% Notes, Due December 15, 2030 |  |  | 15.0 |  |  |  | 15.0 |  |  |  | 15.0 |
Northern Utilities, Inc.: |  |  |  |  |  |  |  |  |  |  |  |
Senior Notes: |  |  |  |  |  |  |  |  |  |  |  |
6.95% Senior Notes, Due December 3, 2018 |  |  | 30.0 |  |  |  | 30.0 |  |  |  | 30.0 |
5.29% Senior Notes, Due March 2, 2020 |  |  | 25.0 |  |  |  | 25.0 |  |  |  | 25.0 |
7.72% Senior Notes, Due December 3, 2038 |  |  | 50.0 |  |  |  | 50.0 |  |  |  | 50.0 |
Granite State Gas Transmission, Inc.: |  |  |  |  |  |  |  |  |  |  |  |
Senior Notes: |  |  |  |  |  |  |  |  |  |  |  |
7.15% Senior Notes, Due December 15, 2018 |  |  | 10.0 |  |  |  | 10.0 |  |  |  | 10.0 |
Unitil Realty Corp.: |  |  |  |  |  |  |  |  |  |  |  |
Senior Secured Notes: |  |  |  |  |  |  |  |  |  |  |  |
8.00% Notes, Due Through August 1, 2017 |  |  | 1.9 |  |  |  | 2.5 |  |  |  | 2.3 |
Total Long-Term Debt |  |  | 286.9 |  |  |  | 287.5 |  |  |  | 287.3 |
Short-Term Debt Reclassifed to Long-Term Debt |  |  | 42.3 |  |  |  | — |  |  |  | — |
Total Long-Term Debt After Reclassification |  |  | 329.2 |  |  |  | 287.5 |  |  |  | 287.3 |
Less: Current Portion |  |  | 2.5 |  |  |  | 0.6 |  |  |  | 2.5 |
Total Long-Term Debt, Less Current Portion |  | $ | 326.7 |  |  | $ | 286.9 |  |  | $ | 284.8 |
Fair Value of Long-Term Debt – Currently, the Company believes that there is no active market in the Company’s debt securities, which have all been sold through private placements. If there were an active market for the Company’s debt securities, the fair value of the Company’s long-term debt would be estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the Company’s long-term debt is estimated using Level 2 inputs (valuations based on quoted prices available in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are directly observable, and inputs derived principally from market data.) In estimating the fair value of the Company’s long-term debt, the assumed market yield reflects the Moody’s Baa Utility Bond Average Yield. Costs, including prepayment costs, associated with the early settlement of long-term debt are not taken into consideration in determining fair value.
($ millions) |  | September 30, |  |  | December 31, |
|  | 2014 |  |  | 2013 |  |  | 2013 |
Estimated Fair Value of Long-Term Debt |  | $ | 378.2 |  |  | $ | 326.7 |  |  | $ | 327.3 |
Credit Arrangements On October 4, 2013, the Company entered into an Amended and Restated Credit Agreement (the “Credit Facility”) with a syndicate of lenders which amended and restated in its entirety the Company’s prior credit agreement, dated as of November 26, 2008, as amended. The Credit Facility extends to October 4, 2018 and provides for a new borrowing limit of $120 million which includes a $25 million sublimit for the issuance of standby letters of credit. The Credit Facility provides Unitil with the ability to elect that borrowings under the Credit Facility bear interest under several options, including at a daily fluctuating rate of interest per annum equal to one-month London Interbank Offered Rate plus 1.375%. Provided there is no event of default under the Credit Facility, the Company may on a one-time basis request an increase in the aggregate commitments under the Credit Facility by an aggregate additional amount of up to $30 million. The following table details the borrowing limits, amounts outstanding and amounts available under the revolving Credit Facility as of September 30, 2014, September 30, 2013 and December 31, 2013:
|  | Revolving Credit Facility ($ millions) |
|  | September 30, |  |  | December 31, |
|  | 2014 |  |  | 2013 |  |  | 2013 |
Limit |  | $ | 120.0 |  |  | $ | 60.0 |  |  | $ | 120.0 |
Outstanding |  | $ | 43.7 |  |  | $ | 43.6 |  |  | $ | 60.2 |
Available |  | $ | 76.3 |  |  | $ | 16.4 |  |  | $ | 59.8 |
The Credit Facility contains customary terms and conditions for credit facilities of this type, including affirmative and negative covenants. There are restrictions on, among other things, Unitil’s and its subsidiaries’ ability to permit liens or incur indebtedness, and restrictions on Unitil’s ability to merge or consolidate with another entity or change its line of business. The affirmative and negative covenants under the Credit Facility shall apply to Unitil until the Credit Facility terminates and all amounts borrowed under the Credit Facility are paid in full (or with respect to letters of credit, they are cash collateralized). The only financial covenant in the Credit Facility provides that Unitil’s Funded Debt to Capitalization (as each term is defined in the Credit Facility) cannot exceed 65% tested on a quarterly basis. At September 30, 2014, the Company was in compliance with the covenants contained in the Credit Facility in effect on that date. In April 2014, Unitil Service Corp. entered into an arrangement for the financing of the construction and installation of a customer information system, including software and equipment. The financing arrangement is structured as a capital lease obligation with maximum availability of $15 million. As of September 30, 2014, Unitil Service Corp. has received funding under this financing arrangement in the amount of $6.0 million, which was used to fund project costs. Northern Utilities enters into asset management agreements under which Northern Utilities releases certain natural gas pipeline and storage assets, resells the natural gas storage inventory to an asset manager and subsequently repurchases the inventory over the course of the natural gas heating season at the same price at which it sold the natural gas inventory to the asset manager. There was $13.6 million, $11.8 million and $12.5 million of natural gas storage inventory at September 30, 2014, September 30, 2013 and December 31, 2013, respectively, related to these asset management agreements. The amount of natural gas inventory released in September 2014 and payable in October 2014 is $0.2 million and is recorded in Accounts Payable at September 30, 2014. The were no amounts of natural gas inventory released in September 2013 and payable in October 2013 that were recorded in Accounts Payable at September 30, 2013. The amount of natural gas inventory released in December 2013 and payable in January 2014 was $2.7 million and was recorded in Accounts Payable at December 31, 2013. Guarantees The Company provides limited guarantees on certain energy and natural gas storage management contracts entered into by the distribution utilities. The Company’s policy is to limit the duration of these guarantees. As of September 30, 2014, there were approximately $29.7 million of guarantees outstanding and the longest term guarantee extends through April 2015. The Company also guarantees the payment of principal, interest and other amounts payable on the notes issued by Unitil Realty and Granite State. As of September 30, 2014, the principal amount outstanding for the 8% Unitil Realty notes was $1.9 million. On December 15, 2008, the Company entered into a guarantee for the payment of principal, interest and other amounts payable on the $10.0 million Granite State notes due 2018. As of September 30, 2014, the principal amount outstanding for the 7.15% Granite State notes was $10.0 million.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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