Bank Debt

AWR has access to a $100.0 million syndicated credit facility which expires in May 2018. AWR may, under the terms of the facility, elect to increase the aggregate commitment by up to an additional $50.0 million. The aggregate effective amount that may be outstanding under letters of credit is $25.0 million. AWR has obtained letters of credit, primarily for GSWC, in the aggregate amount of $10.4 million, with fees of 0.65% including: (i) a $5.8 million letter of credit representing a percentage of the outstanding American Recovery and Reinvestment Act (“ARRA”) funds received by GSWC for reimbursement of capital costs related to the installation of meters in GSWC’s Arden-Cordova water system; (ii) letters of credit in an aggregate amount of $340,000 as security for GSWC’s business automobile insurance policy; (iii) a letter of credit, in an amount of $585,000 as security for the purchase of power; (iv) a $15,000 irrevocable letter of credit pursuant to a franchise agreement with the City of Rancho Cordova, and (v) an irrevocable letter of credit in the amount of $3.6 million, pursuant to a settlement agreement with Southern California Edison Company to cover GSWC’s commitment to pay the settlement amount. Letters of credit outstanding reduce the amount that may be borrowed under the revolving credit facility. There were no compensating balances required.

Loans can be obtained at the option of AWR and bear interest at rates based on credit ratings and Euro rate margins. In May 2015, Standard & Poor’s Rating Services (“S&P”) affirmed the ‘A+’ credit rating on both American States Water Company and its wholly owned subsidiary, Golden State Water Company. S&P also revised its rating outlook to stable from positive for both companies. S&P debt ratings range from AAA (highest rating possible) to D (obligation is in default). In December 2015, Moody’s Investors Service (“Moody’s”) affirmed its ‘A2’ rating with a stable outlook for GSWC.

At December 31, 2015, there was $28.0 million outstanding under this facility. At times, AWR borrows under this facility and provides loans to its subsidiaries in support of their operations, on terms that are similar to that of the credit facility.

AWR’s short-term borrowing activities (excluding letters of credit) for the last three years were as follows:



	December 31,
(in thousands, except percent)	2015			2014			2013
Balance Outstanding at December 31,	$	28,000		$	—		$	—
Interest Rate at December 31,	1.09		%	0.82		%	0.82		%
Average Amount Outstanding	$	4,112		$	6,181		$	—
Weighted Average Annual Interest Rate	0.92		%	0.81		%	1.02		%
Maximum Amount Outstanding	$	37,000		$	24,000		$	—

All of the letters of credit are issued pursuant to the syndicated revolving credit facility. The syndicated revolving credit facility contains restrictions on prepayments, disposition of property, mergers, liens and negative pledges, indebtedness and guaranty obligations, transactions with affiliates, minimum interest coverage requirements, a maximum debt to capitalization ratio and a minimum debt rating. Pursuant to the credit agreement, AWR must maintain a minimum interest coverage ratio of 3.25 times interest expense, a maximum total funded debt ratio of 0.65 to 1.00 and a minimum Moody’s Investor Service or S&P debt rating of Baa3 or BBB-, respectively. As of December 31, 2015, 2014 and 2013, AWR was in compliance with these requirements. As of December 31, 2015, AWR had an interest coverage ratio of 7.68 times interest expense, a debt ratio of 0.44 to 1.00 and a debt rating of A+ by S&P.