All Bonds Test - Additionally, Pennichuck Water cannot create, issue, incur, assume
or guarantee any new funded debt, if the total outstanding funded debt (“Total Funded
Debt”) will exceed the sum of MARA {as defined in Note | of these consolidated
financial statements) and 85% of its Net Capital Properties (“MARA and Capital
Properties”), and unless net revenues or EBITDA (earnings before interest, taxes,
depreciation and amortization) shall equal or exceed for at least 12 consecutive months
out of the 15 months preceding the issuance of the new funded debt by 1.1 times the
maximum amount for which Pennichuck Water will be obligated to pay in any future
year (“Max Amount Due”), as a result of the new funded debt being incurred. Thereby,
the ratio of Total Funded Debt to MARA and Capital Properties must be equal to or
less than 1.0; as of December 31, 2018, this coverage ratio was 0.4. Also, the ratio of
EBITDA to the Max Amount Due must be equal to or greater than 1.1; as of
December 31, 2018 this ratio was 1.6.
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 NH Public Utilities Commission, 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, 2018, the Rate
Covenant coverage ratio was 1.48.
Note 12 — Accumulated Other Comprehensive Income
The following table presents changes in accumulated other comprehensive income by
component for the years ended December 31, 2018 and 2017:
Interest Rate Contract
(in thousands) 2018 2017
Beginning balance $ 305 $ 258
Other comprehensive income (loss) before reclassifications 32 l
Amounts reclassified from accumulated other
comprehensive income 35 46
Net current period other comprehensive income 67 47
Ending balance $ 372, $ 305
36
