XML 47 R14.htm IDEA: XBRL DOCUMENT

LONG-TERM DEBT

3 Months Ended

Dec. 31, 2012

5. LONG-TERM DEBT

A summary of Barnwell’s long-term debt is as follows:


	December 31,				September 30,
	2012				2012

Canadian revolving credit facility		$	12,502,000			$	12,000,000
Real estate loan		5,035,000				5,164,000

		17,537,000				17,164,000
Less: current portion		(6,285,000		)		(5,764,000		)

Total long-term debt		$	11,252,000			$	11,400,000

Canadian revolving credit facility

Barnwell has a credit facility at Royal Bank of Canada, a Canadian bank, for $20,000,000 Canadian dollars, or US$20,102,000 at the December 31, 2012 exchange rate. Unused credit available under this facility was US$7,600,000 and the interest rate on the facility was 2.71% at December 31, 2012.

Under the financing agreement with Royal Bank of Canada, the facility is reviewed annually, with the next review planned for April 2013. Subject to that review, the facility may be renewed for one year with no required debt repayments or converted to a two-year term loan by the bank. If the facility is converted to a two-year term loan, Barnwell has agreed to the following repayment schedule of the then outstanding loan balance: first year of the term period – 20% (5% per quarter), and in the second year of the term period – 80% (5% per quarter for the first three quarters and 65% in the final quarter). Based on the terms of this agreement, if Royal Bank of Canada were to convert the facility to a two-year term loan upon its next review in April 2013, Barnwell would be obligated to make quarterly principal and interest repayments beginning in July 2013. As such, two quarterly repayments of 5% each would be due within one year of December 31, 2012 and accordingly, we have included $1,250,000, representing 10% of the outstanding loan balance at December 31, 2012, in the current portion of long-term debt.

Real estate loan

Barnwell, together with its real estate joint venture, Kaupulehu 2007, has a non-revolving real estate loan with a Hawaii bank. Principal and interest are paid monthly and are determined based on a loan amortization schedule. The monthly payment will change as a result of an annual change in the interest rate, the sale of a house or the sale of a residential parcel. The interest rate adjusts each April for the remaining term of the loan to the lender’s then prevailing interest rate for similarly priced commercial mortgage loans or a floating rate equal to the lender’s base rate. The interest rate at December 31, 2012 was 3.57%. Any unpaid principal balance and accrued interest will be due and payable on April 1, 2018.

The loan is collateralized by, among other things, a first mortgage on Kaupulehu 2007’s lots together with all improvements thereon. Kaupulehu 2007 will be required to make a principal payment upon the sale of a house or a residential parcel in the amount of the net sales proceeds of the house or residential parcel; the loan agreement defines net sales proceeds as the gross sales proceeds for the house or residential parcel, less reasonable commissions and normal closing costs.

The loan agreement contains provisions requiring us to maintain compliance with certain covenants including a consolidated debt service coverage ratio and a consolidated total liabilities to tangible net worth ratio. As of December 31, 2012, we were in compliance with the loan covenants.

The home collateralizing the loan is currently available for sale; therefore, the entire balance outstanding at December 31, 2012 under the term loan has been classified as a current liability.