NOTE 6

DEBT

At December 31, 2012, 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, 2012, there was $29.3 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%. 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 30, 2013 or any date on which Citizens demands payment. In 2011, the Company completed the sale of approximately 888,000 shares of its Class A Non-Voting Common Stock and used the net proceeds of approximately $15.6 million (after deducting underwriting discounts and commissions and offering expenses) to fund a paid-in capital contribution in the same amount to Artesian Water. Artesian Water used the paid-in capital contribution to repay short-term borrowings (including borrowings incurred under our line of credit with Citizens that is available to all of our subsidiaries).

At December 31, 2012, 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, 2012, there were no borrowings under this line of credit. The interest rate for borrowings under this line is LIBOR plus 1.50%. The term of this line of credit expires on January 14, 2014.

These lines of credit, as well as both the long-term debt and the state revolving fund loans shown below, require us to abide by certain financial covenants and ratios. As of December 31, 2012, we were in compliance with these covenants.

Long-term debt consists of:

	December 31,
In thousands	2012		2011
First mortgage bonds

Series O, 8.17%, due December 29, 2020	$	20,000	$	20,000
Series P, 6.58%, due January 31, 2018		25,000		25,000
Series Q, 4.75%, due December 1, 2043		15,400		15,400
Series R, 5.96%, due December 31, 2028		25,000		25,000
Series S, 6.73%, due December 31, 2033		12,600		13,200
		98,000		98,600

State revolving fund loans

4.48%, due August 1, 2021		2,410		2,624
3.57%, due September 1, 2023		940		1,010
3.64%, due May 1, 2025		1,570		1,667
3.41%, due February 1, 2031		2,936		2,993
3.40%, due July 1, 2032		1,512		783
		9,368		9,077

Notes Payable
Promissory Note, variable interest, due August 1, 2012		---		580
		---		580


Sub-total		107,368		108,257

Less: current maturities (principal amount)		1,111		1,718

Total long-term debt	$	106,257	$	106,539

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

In thousands	2013		2014		2015		2016		2017		Thereafter
First Mortgage bonds	$	600	$	600	$	600	$	600	$	600	$	95,000
State revolving fund loans		511		587		611		635		660		6,364
Total payments	$	1,111	$	1,187	$	1,211	$	1,235	$	1,260	$	101,364