LONG-TERM DEBT

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Long-term Debt [Text Block]

NOTE 4 - LONG-TERM DEBT

We have a credit facility with CoBank. Under the credit facility, we entered into MLAs and a series of supplements to the respective MLAs.

NU Telecom and its respective subsidiaries also have entered into security agreements under which substantially all the assets of NU Telecom and its respective subsidiaries have been pledged to CoBank as collateral. In addition, NU Telecom and its respective subsidiaries have guaranteed all the obligations under the credit facility. The mortgage notes are required to be paid in quarterly installments covering principal and interest, beginning in the year of issue and maturing on December 31, 2021.

Secured Credit Facility:

On December 31, 2014, NU Telecom entered into an Amended and Restated MLA with CoBank. The new MLA refinances and replaces the existing credit facility between CoBank and NU Telecom and the subsidiaries of NU Telecom. NU Telecom’s subsidiary HTC was a borrower under the prior credit facility, but NU Telecom is now the sole borrower under the new MLA. There are two loans under the new MLA, which include a $35 million term loan and a $9 million revolver loan. Also, under the new MLA, NU Telecom has the ability to either increase the amount of the commitment under the revolver loan by up to $6 million in a single increase, or add an incremental term loan up to $6 million.

MLA RX0583

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RX0583-T2A - $9,000,000 revolving note with interest payable monthly. Final maturity date of the note is December 31, 2021. We currently have drawn $4,035,045 on this revolving note as of December 31, 2015.

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RX0583-T3A - $35,000,000 term note with interest payable monthly. Final maturity date of the note is December 31, 2021. Twenty-eight quarterly principal payments of $675,000 are due commencing March 31, 2015 through December 31, 2021. A final balloon payment of $16,100,000 is due at maturity of the note on December 31, 2021.

RX0583-T2A and RX0583-T3A initially bear interest at a “LIBOR Margin” rate equal to 3.25 percent over the applicable LIBOR rate. The LIBOR Margin decreases as our “Leverage Ratio” decreases.

Within 180 days after the closing date of December 31, 2014, NU Telecom must enter into interest rate protection agreements in form and substance reasonably satisfactory to CoBank so as to fix or limit interest rates payable by NU Telecom at all times to at least 40% of the outstanding principal balance of Loan RX0583-T3A for an initial average weighted life of at least three years.

Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios and tests include total leverage ratio, debt service coverage ratio, equity to total assets ratio, fixed coverage ratio and maximum annual capital expenditures tests. At December 31, 2015 we were in compliance with all the stipulated financial ratios in our loan agreements.

There are security and loan agreements underlying our current CoBank credit facility that contain restrictions on our distributions to stockholders and investment in, or loans, to others. Also, our credit facility contains restrictions that, among other things, limits or restricts our ability to enter into guarantees and contingent liabilities, incur additional debt, issue stock, transact asset sales, transfers or dispositions, and engage in mergers and acquisitions, without CoBank approval.

Our new loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,100,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” – as defined in the loan documents, is greater than 2.50 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.50 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements.  

Long-term debt is as follows:	2015		2014
Secured seven-year reducing credit facility to CoBank, ACB, in quarterly installments of $675,000 (beginning on March 31, 2015), plus a notional variable rate of interest through December 31, 2021.	$	32,300,000	$	35,000,000
Secured seven-year revolving credit facility of up to $9,000,000 to  CoBank, ACB, plus a notional variable rate of interest through December 31, 2021.		4,035,045		4,644,471
		36,335,045		39,644,471
Less: Amount due within one year		2,700,000		2,700,000
Total Long Term Debt	$	33,635,045	$	36,944,471

Required principal payments are as follows:

2016	$	2,700,000
2017	$	2,700,000
2018	$	2,700,000
2019	$	2,700,000
2020	$	2,700,000

As described in Note 5 – “Interest Rate Swaps” to the Consolidated Financial Statements of this Annual Report on Form 10-K, we have entered into an interest rate swap that effectively fix our interest rates and cover $14.0 million at a weighted average rate of 4.47%, as of December 31, 2015. The remaining debt of $27.3 million ($5.0 million available under the revolving credit facilities and $22.3 million currently outstanding) remains subject to variable interest rates at an effective weighted average interest rate of 3.68%, as of December 31, 2015.