UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
 
 
                                                                                                                                   CURRENT REPORT

Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 7, 2018


ARTESIAN RESOURCES CORPORATION
(Exact name of registrant as specified in its charter)


Delaware
 
000-18516
 
51-0002090
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)


 
664 Churchmans Road, Newark, Delaware
 
19702
 
 
(Address of principal executive offices)
 
(Zip Code)
 


Registrant's telephone number, including area code:
 
302-453-6900
 

 
Not Applicable
 
 
(Former name or former address, if changed since last report.)
 



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act






Item 1.01 Entry Into a Material Definitive Agreement

On May 7, 2018, Artesian Wastewater Management, Inc. (the "Company"), a subsidiary of Artesian Resources Corporation, entered into an interest rate lock agreement (the "Agreement") with CoBank, ACB ("CoBank").  The Company is seeking to finance a $12 million principal amount First Mortgage Bond (the "Bond").  The Agreement allows for a maturity period of 20 years and a fixed interest rate of 5.12% per annum ("Fixed Rate") for the Bond.  The Agreement is effective through December 28, 2018 (the "Settlement Date").  Pursuant to the Agreement, the Bond will be subject to redemption quarterly, based on mortgage style amortization, beginning March 30, 2019 and payable on the 30 th day of June, September, December and March each year.  In addition, interest on the outstanding principal balance will be payable quarterly on the 30 th day of March, June, September and December each year.  Closing on the debt financing is subject to approval by the Delaware Public Service Commission.

Also pursuant to the Agreement, the Company agrees to pay to CoBank, on demand, a broken funding charge if the Company does not, for any reason whatsoever, borrow the entire $12 million principal amount on or before the Settlement Date.  The broken funding charge shall be in an amount equal to the present value of the sum of all losses and expenses incurred by CoBank in retiring, liquidating, or reallocating any debt, obligation, or cost incurred or allocated by CoBank to fund or hedge the Fixed Rate.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, which is filed as Exhibit 4.1 to this Current Report on Form 8-K.

Forward Looking Statement

The statements in this Current Report on Form 8-K regarding the nature of the Company's First Mortgage Bond financing are forward-looking statements within the meaning of Section 27A of the Securities Act, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements involve risks and uncertainties that could impact our ability to refinance our debt as it comes due, our ability to adjust our debt level, interest rate, maturity schedule and structure, or cause our financing terms to differ materially from those projected, including without limitation, certain factors disclosed under Item 1A, "Risk factors" in our Annual Report on Form 10-K for the year ended December 31, 2017. The forward-looking statements are based on our beliefs as of the date on which the statements were made and we undertake no obligation to update the forward-looking statements except as required by law.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

Item 9.01. Financial Statements and Exhibits.

Exhibit Number
Description
Interest Rate Lock Agreement, dated as of May 7, 2018, by and between Artesian Wastewater Management, Inc. and CoBank, ACB.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

   
ARTESIAN RESOURCES CORPORATION
 
Date: May 10, 2018
 
By:    /s/ David B. Spacht
 
   
David B. Spacht
 
   
Chief Financial Officer
 

May 7, 2018


Mr. David Spacht, CFO
Artesian Wastewater Management, Inc.
664 Churchman's Road
Newark, DE 19702

Dear Mr. Spacht:

The purpose of this letter is to confirm the agreement between CoBANK, ACB ("CoBank") and Artesian Wastewater Management, Inc. (the "Company") regarding the forward setting of a fixed rate for funds in the amount described below. The terms of our agreement are as follows:
1.
Amount to be fixed: $12,000,000 ("Fixed Amount")
2.
Fixed Rate: 5.12% per annum ("Fixed Rate")
3.
Date fixed rate locks: May 7, 2018
4.
Last date the Fixed Rate is available to the Company: December 28, 2018 ("Settlement Date")
5.
Date Fixed Rate matures: December 30, 2038
6.
Fixed amount amortizes: Yes
a.
Amortization maturity date: December 30, 2038
b.
Fixed amount amortizes as follows: quarterly beginning March 30, 2019 with payments due on the 30 th day of each June, September, December and March based on a mortgage style amortization.
7.
Interest is payable quarterly on the 30 th day of each March, June, September and December with the final payment of interest and principal on December 30, 2038.
8.
Broken Funding Charge: The Company agrees to pay to CoBank, on demand, a broken funding charge (the "Broken Funding Charge") in the amount specified below if the Company does not, for any reason whatsoever (including, without limitation, the Company's failure to satisfy applicable conditions precedent or the underlying loan commitment having been suspended or canceled), borrow (or otherwise enter into a separate agreement to fix) the entire Fixed Amount on or before the Settlement Date.  The Broken Funding Charge shall be in an amount (calculated in accordance with methodology established by CoBank) equal to the present value of the sum of: (a) all losses and expenses incurred by CoBank in retiring, liquidating, or reallocating any debt, obligation, or cost incurred or allocated by CoBank to fund or hedge the Fixed Rate.
Please acknowledge our agreement by signing in the space provided below and by returning this confirmation to CoBank prior to 2:00 p.m. Mountain Time on the date the Fixed Rate is to lock.  The individual signing below represents and warrants that he/she is a duly authorized officer of the Company.
              AGREED AND ACCEPTED as of the date of this letter:

CoBANK, ACB   Artesian Wastewater Management, Inc.
By:   /s/Bryan Ervin                                                                                                By:   /s/David B. Spacht
Name: Bryan Ervin   Name: David B. Spacht
Title: Vice President                                                                                              Title: Chief Financial Officer/Treasurer