The Company’s revolving credit loan facility with TD Bank contains a covenant that requires
the Company to maintain a minimum fixed charge coverage ratio of at least 1.0; at December
31, 2015 and 2014, the fixed charge coverage ratio was 1.07 and 1.12, respectively. The
Company is also required to maintain an equity capitalization ratio of not less than 35%; at
December 31, 2015 and 2014, the equity capitalization ratio was 37% and 41%, respectively.
Under this agreement, the Company is also precluded from declaring or paying dividends, or
making any other payment or distribution of its equity without the bank’s prior written
consent, except for: (1) its obligations under Rate Order No. 25,292 as it pertains to the
Company’s specific obligations under the City Bond Fixed Revenue Requirement
(“CBFRR”) which provides for payments of approximately $707,000 per month of the note
payable to the City of Nashua (the “City”), and quarterly dividends to the City for the
remainder of this annual obligation, as defined by the order; and (2) a specific allowance,
under Rate Order No. 25,292, whereby the Company is allowed to make distributions to the
City from current earnings and profits in excess of the CBFRR, to provide funds to allow the
City to reimburse itself for the costs incurred by the City relating to its efforts in pursuing the
eminent domain proceedings from January 2002 through August 2009; provided, however,
that such amount shall not exceed $500,000 in any fiscal year, or $5,000,000 in the
aggregate, of all such distributions. No special dividend was declared or paid in 2015 or
2014.
Our short-term borrowing activity under this revolving credit loan facility for the years ended
December 31, 2015 and 2014 was:
(in thousands) 2015 2014
Established line as of December 31, $ 10,000 $ 10,000
Maximum amount outstanding during period 229 5,446
Average amount outstanding during period 1 2,833
Amount outstanding as of December 31, - -
Weighted average interest rate during period 2.01% 0.10%
Interest rate as of December 31, 1.981% 1.981%
As of December 31, 2015 and 2014, we had a $3.5 million and $3.7 million, respectively,
interest rate swap which qualifies as a derivative. This financial derivative is designated as a
cash flow hedge. This financial instrument is used to mitigate interest rate risk associated
with our outstanding $3.5 million loan which has a floating interest rate based on the three-
month London Interbank Offered Rate (“LIBOR”) plus 1.75% as of December 31, 2015. The
combined effect of the LIBOR-based borrowing formula and the swap produces an “all-in
fixed borrowing cost” equal to 5.95%. The fair value of the financial derivative, as of
December 31, 2015 and 2014, included in our Consolidated Balance Sheets under “Other
Liabilities and Deferred Credits” as “Derivative instrument” was $548,000 and $583,000,
respectively. Changes in the fair value of this derivative were deferred in accumulated other
comprehensive income (loss).
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