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“(3) any action to (A) create, incur or assume any indebtedness for borrowed money
or guarantee any such indebtedness of 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.”
Pennichuck Corporation Line of Credit. Pennichuck requests the City’s approval to renew and
extend its existing Line of Credit which will expire on June 30, 2022, with a new two-year Line
of Credit, at the current limit of $4 million. This line of credit facility will continue to be used for
working capital purposes only. In conjunction with this, and in conformity with the approved
modified rate methodology for Pennichuck Water Works, Inc. (PWW) under NHPUC docket
DW 16-806 and DW 19-084, and the approved modified rate methodology for Pennichuck East
Utility, Inc. (PEU) under NHPUC docket DW 17-128 and DW 20-156, fixed asset line of credit
(FALOC) borrowings will be facilitated at those subsidiary companies, which will be repaid
annually in their entirety with term loans and/or annual bond issuances. This extension of the
current W/C Line of Credit will extend this facility to a new maturity date of June 30, 2024.
Terms of the Line of Credit Borrowings. The replacement Line of Credit facility will include
the following terms:
* Term: The proposed Line of Credit will expire as of June 30, 2024 and is
reviewable annually for renewal and extension by the Bank.
* Interest Rate: Loans under the Line of Credit will bear interest at an annual rate
equal to the | Month Term SOFR plus 1.75%.
* Renewal Fee: The Line of Credit will charge a renewal fee of $4,000.
¢ Financial Covenants: The financial covenants that the Company must meet are
consistent with those under the Integrated Capital Finance Plan covenants at
PWW, as outlined as covenants 3 through 7 on the attached term sheet.
Additionally, the Company’s PWW subsidiary must maintain a S&P bond rating
of at least BBB+ (currently PWW is rated as an A+ stable credit by S&P), and an
annual “‘out of debt” requirement is included, which requires the Company to
fully pay off any Line of Credit balance for at least 30 consecutive days during
each fiscal year.
* Subordination: Consistent with the current line of credit, the Company’s
obligations to the City under its existing Senior Unsecured Note.
* Security: As currently exists, the Line of Credit will be secured by: the pledge of
stock of the subsidiary companies of Pennichuck Corporation (as is already in
place with the current expiring Line of Credit), as well as a pledge of the accounts
receivable and inventory of those subsidiaries, and additionally, the assignment of
the rights under the Money Pool Agreement and Cost Sharing Agreement, as
approved by the NHPUC for the regulated utilities of the Company.
* Dividends: The Line of Credit will restrict payment of dividends to the City (the
Company’s sole shareholder) only to those required to allow the City to meet its
obligations under the general obligation bonds issued to acquire the Company,
plus $500,000 in any year.
