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Note 7 - Long-term Debt

12 Months Ended

Sep. 30, 2023

7.	LONG-TERM DEBT

On June 28, 2023, Midstream amended and restated its $14 million and $8 million Term Notes initially entered into on June 12, 2019 and November 1, 2021, respectively. The amendments revised each of the original Term Note's interest rate from LIBOR plus 115 basis points to Daily Simple SOFR plus 126.448 basis points, effective July 1, 2023. All other terms and requirements of the Term Notes were retained. In conjunction with the amendment of the Term Notes, Midstream also amended the corresponding interest rate swaps associated with the Term Notes. The amendments provided for the floating rates on the interest rate swaps to continue to match the rate of the associated notes as well as retain the overall fixed interest rates of 3.24% and 2.443%, respectively.

On March 24, 2023, Roanoke Gas amended and restated the $10 million Term Note originally entered into on September 24, 2021. The amendment revised the original Term Note's interest rate from LIBOR plus 100 basis points to Term SOFR plus 100 basis points. All other terms and requirements of the original Term Note were retained. The effective date of the Amended Term Note was April 1, 2023. In addition, on April 3, 2023, the interest rate swap was amended to align with the Amended Term Note and retained the fixed interest rate of 2.49%. In connection with the Revolving Note as referenced in Note 6 and Amended Term Note, Roanoke Gas also amended and restated the Loan Agreement dated September 24, 2021. The amendment provides for borrowing limits on the Revolving Note and amends certain financial conditions required of Roanoke Gas and Resources. All other terms and requirements of the original Loan Agreement were retained.

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 June 30, 2022, Midstream entered into the Fourth Amendment to Credit Agreement and related Promissory Notes. The Fourth Amendment modified the original Credit Agreement and prior amendments by replacing the 30-day LIBOR plus 1.35% interest on the Promissory Notes with Term SOFR plus 1.50%. On July 28, 2023, Midstream entered into the Fifth Amendment to Credit Agreement and related Promissory Notes. The Fifth Amendment revised the interest rate from Term SOFR plus 1.50% to Term SOFR plus 2.00% and extended the maturity date of the Promissory Notes to December 31, 2024. All other terms and requirements remain unchanged.

Long-term debt consisted of the following:

	*September 30*
	*2023*					*2022*
	*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		$	106,195	$	30,500,000		$	115,849
Unsecured term notes payable at 3.58%, due October 2, 2027		8,000,000			19,264		8,000,000			24,080
Unsecured term notes payable at 4.41%, due March 28, 2031		10,000,000			23,495		10,000,000			26,627
Unsecured term notes payable at 3.60%, due December 6, 2029		10,000,000			22,017		10,000,000			25,539
Unsecured term note payable at 30-day SOFR plus 1.20%, due August 20, 2026 (swap rate at 2.00%)		15,000,000			—		15,000,000			—
Unsecured term note payable at TERM SOFR plus 1.00%, due October 1, 2028 (swap rate at 2.49%)		10,000,000			33,666		10,000,000			28,674
Midstream:
Unsecured term notes payable at TERM SOFR plus 2.00%, due December 31, 2024		23,000,000			23,386		21,896,200			18,553
Unsecured term note payable at Daily Simple SOFR plus 1.26448%, due June 12, 2026 (swap rate at 3.24%)		14,000,000			6,621		14,000,000			9,029
Unsecured term note payable at 30-day LIBOR plus 1.20%, due June 1, 2024 with monthly principal installments of $41,667 that began July 1, 2022 (swap rate at 3.14%)		9,375,000			1,571		9,875,000			3,929
Unsecured term note payable at Daily Simple SOFR plus 1.26448%, due January 1, 2028 with quarterly principal installments of $400,000 that began April 1, 2023 (swap rate at 2.443%)		7,200,000			19,057		8,000,000			23,631
Total long-term debt	$	137,075,000		$	255,272	$	137,271,200		$	275,911
Less: current maturities of long-term debt		(10,975,000	)		—		(1,300,000	)		—
Total long-term debt, net current maturities	$	126,100,000		$	255,272	$	135,971,200		$	275,911

Debt issuance costs are amortized over the life of the related debt. As of September 30, 2023 and 2022, the Company also had an unamortized loss on the early retirement of debt of $1,256,059 and $1,370,246, respectively, which has been deferred as a regulatory asset and is being amortized over a 20-year period.

All of the 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 provide for priority indebtedness to not exceed 15% of consolidated total assets. The $15 million and $10 million notes, as well as the line-of-credit, have an interest coverage ratio requirement of not less than 1.5 to 1, 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 September 30, 2023 and 2022.

The aggregate annual maturities of long-term debt for the next five years ending after September 30, 2023 are as follows:

Year Ending September 30	*Maturities*
2024	$	10,975,000
2025		24,600,000
2026		30,600,000
2027		1,600,000
2028		8,800,000
Thereafter		60,500,000
Total	$	137,075,000