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Note 9 - Long-term Debt

6 Months Ended

Mar. 31, 2022

9.	Long-Term Debt

On November 1, 2021 Midstream entered into an unsecured promissory note in the principal amount of $8 million with an interest rate based on 30-day LIBOR plus 115 basis points maturing January 1, 2028. Related to this note, Midstream also entered into an interest rate swap agreement that effectively converts the variable rate note into a fixed rate instrument with an effective annual interest rate of 2.443%. The loan will convert into an installment loan with principal pay-down beginning in fiscal 2023. In addition, this note reduces the borrowing capacity defined by the Third Amendment to Credit Agreement and related Promissory Notes. The total borrowing capacity declined from $41 million to $33 million effective with the new promissory note. All other terms of the Third Amendment to Credit Agreement remain unchanged. On March 31, 2022, Midstream applied $10 million from a cash infusion received from Resources to pay down a corresponding amount on the non-revolving credit facility which in turn reduced the total borrowing capacity from $33 million to $23 million.

On September 24, 2021, Roanoke Gas entered into a Loan Agreement ("Agreement") and an unsecured Delayed Draw Promissory Note in the principal amount of $10 million ("Promissory Note"). Under the provisions of the Agreement, Roanoke Gas received the first advance of $5 million on April 1, 2022 with the remaining $5 million to be received on or about October 1, 2022. The Promissory Note has an interest rate of 30-day LIBOR plus 100 basis points and a maturity date of October 1, 2028. The proceeds from this Promissory Note will be used to finance Roanoke Gas' infrastructure enhancement and replacement projects. Also, on September 24, 2021, Roanoke Gas entered into an interest rate swap agreement for $10 million corresponding to the term and draw provisions of the Agreement, which effectively converts the variable rate Promissory Note to a fixed instrument with an effective annual interest rate of 2.49%.

On August 20, 2021, Roanoke Gas entered into an unsecured Delayed Draw Term Note in the principal amount of $15 million ("Term Note") with an interest rate of 1.20% above 30-day SOFR Average per annum maturing on August 20, 2026. In connection with the Term Note, Roanoke Gas also entered into the Sixth Amendment to its Credit Agreement ("Amendment"), which amends the original Credit Agreement with the corresponding bank dated March 31, 2016 and all subsequent amendments. The Amendment aligns the termination date and the maximum principal amount available under the Term Note and retains all other terms and requirements of prior credit agreements. The proceeds from this Term Note will be used to finance Roanoke Gas' infrastructure enhancement and replacement projects, as well as to refinance a portion of its existing debt. Also, on August 20, 2021, Roanoke Gas entered into an interest rate swap agreement for $15 million corresponding to the duration of the Term Note, which effectively converts the variable rate note to a fixed rate instrument with an effective annual interest rate of 2.00%. The Term Note funded in full on October 1, 2021.

Long-term debt consists of the following:

	March 31, 2022					September 30, 2021
	Principal			Unamortized Debt Issuance Costs		Principal			Unamortized Debt Issuance Costs
Roanoke Gas:
Unsecured senior notes payable, at 4.26%, due September 18, 2034	$	30,500,000		$	120,676	$	30,500,000		$	125,502
Unsecured term note payable, at 30-day LIBOR plus 0.90%, due November 1, 2021		—			—		7,000,000			278
Unsecured term notes payable, at 3.58%, due October 2, 2027		8,000,000			26,488		8,000,000			28,896
Unsecured term notes payable, at 4.41%, due March 28, 2031		10,000,000			28,193		10,000,000			29,760
Unsecured term notes payable, at 3.60%, due December 6, 2029		10,000,000			27,301		10,000,000			29,062
Unsecured term note payable, at 30-day SOFR plus 1.20%, due August 20, 2026		15,000,000			—		—			—
Unsecured delayed draw note payable		—			31,064		—			21,545
Midstream:
Unsecured term notes payable, at 30-day LIBOR plus 1.35%, due December 29, 2022		19,330,200			8,942		33,610,200			14,904
Unsecured term note payable, at 30-day LIBOR plus 1.15%, due June 12, 2026		14,000,000			10,233		14,000,000			11,437
Unsecured term note payable, at 30-day LIBOR plus 1.20%, due June 1, 2024		10,000,000			5,107		10,000,000			6,286
Unsecured term note payable, at 30-day LIBOR plus 1.15%, due January 1, 2028		8,000,000			25,918		—			—
Total notes payable, current and non-current		124,830,200			283,922		123,110,200			267,670
Line-of-credit, at 30-day LIBOR plus 1.00%, due March 31, 2023		—			—		17,628,897			—
Total long-term debt		124,830,200			283,922		140,739,097			267,670
Less: current maturities of long-term debt		(19,705,200	)		—		(7,000,000	)		—
Total long-term debt, net current maturities	$	105,125,000		$	283,922	$	133,739,097		$	267,670

All debt agreements set forth certain representations, warranties and covenants to which the Company is subject, including financial covenants that limit consolidated long-term indebtedness to not more than 65% of total capitalization. All of the debt agreements, except for the line-of-credit, provide for priority indebtedness to not exceed 15% of consolidated total assets. The $15 million note and the line-of-credit have an interest coverage ratio requirement of 1.5 which excludes the effect of a non cash impairment on the LLC investments up to the total investment as of December 31, 2021 as revised by the Seventh Amendment to the Credit Agreement. The Company was in compliance with all debt covenants as of March 31, 2022 and September 30, 2021.