NOTE 6

DEBT

At December 31, 2015, Artesian Resources had a $40 million line of credit with Citizens Bank of Pennsylvania, or Citizens, which is available to all subsidiaries of Artesian Resources. As of December 31, 2015, there was $36.5 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 27, 2016 or any date on which Citizens demands payment.

At December 31, 2015, 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 $10.0 million of this line available for the operations of Artesian Water Maryland. As of December 31, 2015, there was $13.0 million of available funds under this line of credit. The interest rate for borrowings under this line is LIBOR plus 1.50%. CoBank may make an annual patronage refund, which has been equal to 1.00% of the average loan volume outstanding by Artesian during each of the years ended December 31 2015, December 31, 2014 and December 31, 2013. The patronage refunds, associated with all debt at CoBank, earned by Artesian for the years ended December 31, 2015, December 31, 2014 and December 31, 2013 were $689,000, $682,000 and $629,000, respectively. The term of this line of credit expires on April 12, 2016.

Pursuant to the Order issued on September 30, 2014 by the United States District Court for the Eastern District of Pennsylvania regarding the complaint filed on December 22, 2010 by Artesian Water against Chester Water Authority, or CWA, Artesian Water was required to pay CWA amounts withheld related to CWA rate increases from 2008, 2009, and 2010 totaling approximately $3.1 million and $0.4 million in prejudgment and post judgment interest. Artesian Water financed the $3.1 million and $0.4 million accrued interest payment using the existing lines of credit noted above. The $3.1 million withheld was paid by Artesian Water to CWA in October 2014 and $0.4 million in prejudgment and post judgment interest was paid in January 2015.

The weighted average interest rate on the lines of credit above paid by the Company was 1.38% for the year ended December 31, 2015. 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, 2015, we were in compliance with these covenants.

Long-term debt consists of:

	December 31,
In thousands	2015		2014
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		10,800		11,400
		96,200		96,800

State revolving fund loans

4.48%, due August 1, 2021		1,711		1,954
3.57%, due September 1, 2023		719		796
3.64%, due May 1, 2025		1,255		1,364
3.41%, due February 1, 2031		2,576		2,700
3.40%, due July 1, 2032		2,475		2,585
		8,736		9,399

Sub-total		104,936		106,199

Less: current maturities (principal amount)		1,289		1,245

Total long-term debt	$	103,647	$	104,954

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

In thousands	2016		2017		2018		2019		2020		Thereafter
First Mortgage bonds	$	600	$	600	$	25,600	$	600	$	20,600	$	48,200
State revolving fund loans		689		714		742		771		801		5,019
Total payments	$	1,289	$	1,314	$	26,342	$	1,371	$	21,401	$	53,219