Mr. Steven A. Bolton
Corporation Counsel
June 28, 2018
Page Two
that the corporate structure would encourage business-smart decisions and rely upon well-
established governance principles of corporate law, pursuant to Pennichuck’s Articles of
Incorporation and its by-laws.
Shareholder Approval of Borrowings Required. Under Article IX of Pennichuck’s Articles of
Incorporation, the City, acting in its capacity as Pennichuck’s sole shareholder, must approve:
“(3) any action to (A) create, incur or assume any indebtedness for borrowed
money or guaraniee any such indebtedness cf any person, (B) issue or sell
any debt securities or warrants or other rights to acquire any debt securities
of the [Pennichuck] Corporation or any of its Subsidiaries, or (C) guarantee
any debt securities of any person.”
Proposed Borrowings. Pennichuck requests the City’s approval for one loan from the SRF
Program to PEU and one loan from the Trust Fund to PWW. The specifics of these loans are
described below:
(1) under the proposal, PEU would enter into a new long-term loan from the SRF
Program in the principal amount of $4,240,000 to finance the cost of the Locke Lake
New Groundwater Source Project; and
(2) under the proposal, PWW would enter into a new long-term loan from the Trust Fund
in the principal amount of $3,375,000 to finance the cost of the Pennichuck Core Water
Main Replacement Project.
The Lenders. The funds for these loans will be provided by the State of New Hampshire
Drinking Water Revolving Loan Fund Program and the New Hampshire Drinking Water and
Groundwater Trust Fund. The SRF Program and the Trust Fund are administered by the New
Hampshire Department of Environmental Services (“NHDES”). The SRF Program and the Trust
Fund provide public and private water systems the opportunity to borrow funds on favorable terms
at interest rates that are below commercial loan rates. Pennichuck has received confirmation from
the NHDES that funding is available for each of these loans and projects from these two respective
funding sources.
Terms of the Borrowings. Both of these loans will have the same favorable terms, which will
be reflected in separate written Loan Agreements and Promissory Notes issued by PEU and
PWW, as required by the SRF Program and the Trust Fund. Amounts advanced pursuant to the
loans during the construction period will accrue interest at a rate of 1% per annum, and the total
accrued interest will be due upon substantial completion of the project. The terms of the SRF
and Trust Fund loans will require repayment of the loan principal plus interest over a 30-year
period, commencing six months after the project is substantially complete. The current interest
