Board of Aldermen 05-04-2020 Page 5
President Wilshire
Very good; | guess we did, thank you Larry.
Larry Goodhue, CEO & CFO Pennichuck Corporation
And so that being said, what | tried to outline in that communication was the basis for which we applied for
this loan, the rationale for it and the overall terms relative to the loan. It is a formulaic calculation based on
the average monthly payroll and payroll related costs for a Corporation and it is a two and a half times
multiple based on that average monthly cost of operation. It is geared towards maintaining a workforce
through this time of COVID-19 response. And as such, when we put in our application on Tuesday, we did
not know if we even had an opportunity at this financing but we felt that we needed to apply for it. We found
out Thursday morning that we had been approved. One of the requirements under this program is once
you got that approval, you have 10 days in which to receive the funds or the commitment is withdrawn.
And that was the basis for us asking for this expedited meeting with the City. We have asked for similar
treatment at the State Level because that is another requirement in our approval as a regulated utility within
the State.
As a debt only funded organization, and since the Corporation was acquired by the City of Nashua on
January 25, 2012, we are a debt only funded organization. We have layers of debt inclusive of the note
payable to the City of Nashua from Pennichuck Corporation in making sure that the cash funding is there to
service the bonds that were issued to purchase the Corporation in 2012. We also have layers of debt
relative to our capital projects at Pennichuck Water Works, Pennichuck East, Pittsfield Aqueduct.
We have various debt instruments related to those and we have three different lines of credit, two are fixed
assets line of credit — one at Pennichuck Water Works for $10 million dollars per year and one at
Pennichuck East for $3 million dollars per year and those are lines of credit to fund capital during a 12-
month calendar year to then be termed out into long-term debt on an annual basis. And then we have a
working capital line of credit that resides at the parent company level to backstop working capital during any
calendar year and it has a 30 day out requirement. That working capital line of credit is currently under an
extension from its original termination date which was last August. It is actually on its third extension,
working with the bank relative to getting a permanent renewal of that line of credit. It is a $4 million dollar
line of credit and it is the backstop for all working capital needs of the Corporation.
We are currently drawn down on that line to the tune of $3 million dollars, so we only have about $1 million
dollar’s-worth of capacity left on that line. Going into our heavy season, as well as in compliancy with the
Governor’s Emergency Orders that put certain restrictions on us as a Regulated Utility during this
Emergency Order COVID-19 Response, in that set or orders it had suspended our ability to collect
accounts should they go into delinquency during this period of time while the order is in place, and must
arrange for special terms for the payment of those arrearages by customers on the back end of that.
We have seen some decline in the timeliness of payments of our bills and as such we needed to look at
what resources were possibly available to help bridge the gap such that we could remain financially viable
and fully functional on behalf of all our customers while we are able to comply with and work with people in
compliancy with the Governor’s Orders allowing them the latitude for the impact that has occurred to
individuals and businesses within the region. So we applied for this, it is an interesting endeavor in that you
apply on an on-line portal, you have no idea how far down in the queue you are; whether you are going to
receive the money and how fast you have to react. We couldn't wait to see how things just continued to
evolve because then all of a sudden that resource would not be available to us and we do not have the
ability to expand the current line of credit with our existing bank. And, in fact, our current extension expires
on July 31° so we’ve discussion with them about whether another extension is available and/or a renewal.
And so this is a necessary element in the overall financial structure for the Corporation to continue to its job
on behalf of Nashua Citizens as well as other customers that we serve in the communities within the State.
