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SUBSEQUENT EVENT | 6 Months Ended
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Jun. 30, 2018
SUBSEQUENT EVENT [Abstract] |
SUBSEQUENT EVENT | NOTE 14 - SUBSEQUENT EVENT On August 8, 2018, Artesian Wastewater and CoBank, ACB, or CoBank, entered into a Master Loan Agreement, or the MLA, and two supplements to the MLA (each a "Supplement"), in which Cobank will loan Artesian Wastewater up to a total principal amount of $12 million. Artesian Wastewater's obligation to repay the loans under each Supplement is evidenced by a promissory note. Artesian Wastewater's obligations under the MLA, each Supplement and each promissory note is secured by a: (1) statutory first priority lien on all equity which Artesian Wastewater may now own or hereafter acquire in CoBank; (2) a first priority lien on all real and other personal property of Artesian Wastewater, whether now existing or hereafter acquired; and (3) all proceeds thereof. In addition, Artesian Wastewater's obligations are guaranteed by Artesian Resources Corporation. Closing on the debt financing was approved by the Delaware Public Service Commission on June 5, 2018. Each Supplement sets forth the principal amount, the purpose, the interest rate, the repayment terms and any other terms and conditions applicable to the particular loan. The first Supplement allows loans in an aggregate principal amount not to exceed $7.5 million to provide long-term financing for approximately 60% of the cost to construct a wastewater disposal facility including a pipeline between the wastewater disposal facility site and the properties of Allen Harim Foods, LLC pursuant to the Process Wastewater Services Agreement dated January 27, 2017, between Artesian Wastewater and Allen Harim Foods, LLC. The second Supplement allows loans in an aggregate principal amount not to exceed $4.5 million to provide long-term financing for the expansion and upgrade of the Stonewater Wastewater Treatment Facility. Each Supplement has the same interest rate and payment terms. Artesian Wastewater agrees to pay interest on the unpaid principal balance of the loans at 5.12% per annum. Interest shall be calculated and paid quarterly in arrears on the thirtieth (30th) day of each of March, June, September and December. Artesian Wastewater agrees to repay each loan in eighty consecutive quarterly installments, each due on the thirtieth (30th) day of each March, June, September, and December, with the first installment due on March 30, 2019, and the last installment due on December 30,2038. The amount of each installment shall be the same principal amount that would be required to be repaid if the loan was scheduled to be repaid in level installments of principal and interest and such schedule was calculated utilizing 5.12% as the rate accruing on the loan; provided, however, that the last installment of each loan shall be in an amount equal to the then unpaid principal balance of the loan. Pursuant to the MLA, Artesian Wastewater agrees to pay to CoBank a broken funding surcharge and agrees to (A) give CoBank not less than three (3) business days' prior notice in the event it desires to repay any loan balance bearing interest at a fixed rate prior to the last day of the fixed rate period; and (B) pay to CoBank a broken funding surcharge in the amount set forth below in the event Artesian Wastewater: (1) repays any fixed rate balance prior to the last day of its fixed rate period (whether such payment is made voluntarily, as a result of an acceleration, or otherwise); (2) converts any fixed rate balance to another fixed rate or to a variable rate prior to the last day of the fixed rate period applicable to such balance; or (3) fails to borrow any fixed rate balance on the date scheduled therefor. The surcharge shall be in an amount equal to the greater of (i) the sum of the present value of: (A) any funding losses imputed by CoBank to have been incurred as a result of such payment, conversion or failure; plus (B) a per annum yield of 1/2 of 1% of the amount repaid, converted or not borrowed for the period such amount was scheduled to have been outstanding at such fixed rate, or (ii) $300.00. The MLA contains customary default provisions where the loans will become immediately due and payable, referred to as "Events of Default," and two financial covenants applicable to Artesian Wastewater; a debt coverage ratio of not less than 1.25 to 1.00 must be maintained commencing with the fiscal year beginning on January 1, 2019 and ending December 31, 2019, and the ratio of total debt to capitalization ratio cannot be greater than 65%. The loans shall be redeemed at a price equal to the sum of (i) the aggregate principal amount to be redeemed, and (ii) the interest accrued thereon through the date of redemption. The foregoing summary is qualified in its entirety by reference to the text of the MLA and each Supplement and the Guarantee of Payment, copies of which are filed as Exhibit 4.2 and Exhibit 4.3, respectively, hereto and are incorporated by reference.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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