Rate Covenant Test - If during any fiscal year, the EBITDA of Pennichuck Water shall not
equal at least 1.1 times all amounts paid or required to be paid during that year
(“Amounts Paid”), then the Company shall undertake reasonable efforts to initiate a rate-
making proceeding with the NHPUC, to rectify this coverage requirement in the
succeeding fiscal years. Thereby, the ratio of EBITDA to Amounts Paid must be equal to
or greater than 1.1; as of December 31, 2021 and 2020, the Rate Covenant coverage ratio
was 2.19 and 3.57, respectively.
Pennichuck East’s loan agreement for its unsecured notes payable to a bank of $12.4 million
and $9.2 million at December 31, 2021 and 2020, respectively, contains a minimum debt
service coverage ratio requirement of 1.10. At December 31, 2021 and 2020, this ratio was
1.47 and 2.07, respectively.
On September 2, 2020, Pennichuck Water issued approximately $73.6 million of taxable
bonds through the New Hampshire Business Finance Authority to: (1) advance refund and
refinance Pennichuck Water’s series 2014A, 2015A, and 2015B bonds; (2) early retire an AULI
bank loan set to mature on March 1, 2021 with a “bullet” maturity due at that date; (3)
complete the replenishment of the Material Operating Expense Revenue Requirement
(MOERR) RSF for Pennichuck Water back to nearly its authorized imprest value; and (4) repay
Pennichuck Water’s Fixed Asset Line of Credit (FALOC) for monies borrowed while awaiting
rate relief from this bonding event and the Pennichuck Water rate case approved by NHPUC
Order No. 26,425. The bond issuance was approved by the Company's Board of Directors and
the Sole Stockholder. This issuance received NHPUC approval in Order No. 26,383 dated July
24, 2020, which authorized up to $75.0 million in bonds.
On October 29, 2021, the NHPUC issued NISI Order No. 26,538, with an effective date of
November 30, 2021, approving Pennichuck East Utility’s request to borrow $2,546,632 from
CoBank, ACB for a 25-year term. This financing was used to fund a “one time” refill and
replenishment of the Company's Material Operating Expense Revenue Requirement
(MOERR) RSF, as well as repay intercompany debt incurred to support the Company as it
awaits final permanent rate relief (set to occur in early 2022), and the reestablishment of its
RSF funds. On November 30, 2021, Pennichuck East Utility closed on this term loan financing
transaction with CoBank, ACB in the amount of $2,546,632 for a term of 25 years at an
interest rate of 4.25%,
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