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LONG-TERM DEBT | 3 Months Ended
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Dec. 31, 2014
LONG-TERM DEBT |
LONG-TERM DEBT | 7.LONG-TERM DEBT A summary of Barnwell’s long-term debt is as follows:
|  | December 31, |  | September 30, |
|  | 2014 |  | 2014 |
Canadian revolving credit facility |  |  | $ | 7,000,000 |  |  |  | $ | 7,000,000 |  |
Real estate loan |  |  |  | 3,697,000 |  |  |  |  | 4,099,000 |  |
|  |  |  | 10,697,000 |  |  |  |  | 11,099,000 |  |
Less: current portion |  |  |  | (5,697,000 | ) |  |  |  | (4,449,000 | ) |
Total long-term debt |  |  | $ | 5,000,000 |  |  |  | $ | 6,650,000 |  |
Canadian revolving credit facility At December 31, 2014, Barnwell’s credit facility at Royal Bank of Canada was $11,800,000 Canadian dollars, or US$10,172,000 at the December 31, 2014 exchange rate. At December 31, 2014, borrowings under this facility were US$7,000,000 and the interest rate on the facility was 2.66%. Under the financing agreement with Royal Bank of Canada, the facility is reviewed annually with the next review planned for April 2015. Subject to that review, the facility may be renewed for one year at the current borrowing capacity or at an adjusted borrowing capacity, based on the bank’s assessment of the value of Barnwell’s oil and natural gas properties, or it may be converted to a two-year term loan by the bank. If the facility is renewed at an adjusted borrowing capacity below our outstanding borrowings, we would be required to repay the difference upon renewal. 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). Pursuant to discussions between Barnwell and Royal Bank of Canada subsequent to December 31, 2014, the Company projects that upon the April 2015 renewal of the credit facility the borrowing capacity will be reduced from $11,800,000 Canadian dollars to $6,500,000 Canadian dollars. This reduction in the borrowing capacity is largely due to significant declines in the bank’s forecast of oil and natural gas prices. Accordingly, the Company estimates that the required repayment upon the April 2015 renewal will be approximately $2,000,000, which is included in the current portion of long-term debt at December 31, 2014. Real estate loan Barnwell, together with its real estate joint venture, Kaupulehu 2007, has a non-revolving real estate loan with a Hawaii bank. In January 2015, the loan was amended from monthly principal and interest payments to monthly interest-only payments effective February 1, 2015. All other terms of the loan remained unchanged. The principal balance and any accrued interest will be due and payable on April 1, 2018. 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, 2014 was 3.41%. 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 the house or the 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. As a result of the sale of one of the residential parcels in October 2014, Kaupulehu 2007 repaid $266,000 of the real estate loan, as required from the net proceeds of the sale, in addition to the scheduled monthly payments. 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. The home collateralizing the loan is currently available for sale; therefore, the entire balance outstanding at December 31, 2014 under the term loan has been classified as a current liability.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 + Details
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