NOTE 4 – DEBT AND FINANCING ARRANGEMENTS

Long-Term Debt

Details on long-term debt at March 31, 2014, March 31, 2013 and December 31, 2013 are shown below:


($ millions)	March 31,				December 31,
	2014		2013		2013
Unitil Corporation Senior Notes:
6.33% Notes, Due May 1, 2022	$	20.0	$	20.0	$	20.0

Unitil Energy Systems, Inc.:
First Mortgage Bonds:
5.24% Series, Due March 2, 2020		15.0		15.0		15.0
8.49% Series, Due October 14, 2024		15.0		15.0		15.0
6.96% Series, Due September 1, 2028		20.0		20.0		20.0
8.00% Series, Due May 1, 2031		15.0		15.0		15.0
6.32% Series, Due September 15, 2036		15.0		15.0		15.0

Fitchburg Gas and Electric Light Company:
Long-Term Notes:
6.75% Notes, Due November 30, 2023		19.0		19.0		19.0
7.37% Notes, Due January 15, 2029		12.0		12.0		12.0
7.98% Notes, Due June 1, 2031		14.0		14.0		14.0
6.79% Notes, Due October 15, 2025		10.0		10.0		10.0
5.90% Notes, Due December 15, 2030		15.0		15.0		15.0

Northern Utilities Senior Notes:
6.95% Senior Notes, Series A, Due December 3, 2018		30.0		30.0		30.0
5.29% Senior Notes, Due March 2, 2020		25.0		25.0		25.0
7.72% Senior Notes, Series B, Due December 3, 2038		50.0		50.0		50.0

Granite State Senior Notes:
7.15% Senior Notes, Due December 15, 2018		10.0		10.0		10.0

Unitil Realty Corp.:
Senior Secured Notes:
8.00% Notes, Due Through August 1, 2017		2.2		2.7		2.3

Total Long-Term Debt		287.2		287.7		287.3
Less: Current Portion		2.5		0.5		2.5

Total Long-term Debt, Less Current Portion	$	284.7	$	287.2	$	284.8

The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or similar issues, or on the current rates offered to the Company for debt of the same remaining maturities. The fair value of the Company’s long-term debt at March 31, 2014 is estimated to be approximately $332.8 million, before considering any costs, including prepayment costs, to market the Company’s debt. Currently, the Company believes that there is no active market in the Company’s debt securities, which have all been sold through private placements.

Credit Arrangements

On October 4, 2013, the Company entered into an Amended and Restated Credit Agreement with a syndicate of lenders which amended and restated in its entirety the Company’s prior credit agreement, dated as of November 26, 2008, as amended. The Credit Facility extends to October 4, 2018 and provides for a new borrowing limit of $120 million which includes a $25 million sublimit for the issuance of standby letters of credit. The Credit Facility provides Unitil with the ability to elect that borrowings under the Credit Facility bear interest under several options, including at a daily fluctuating rate of interest per annum equal to one-month London Interbank Offered Rate plus 1.375%. Provided there is no event of default under the Credit Facility, the Company may on a one-time basis request an increase in the aggregate commitments under the Credit Facility by an aggregate additional amount of up to $30 million.

The following table details the borrowing limits, amounts outstanding and amounts available under the revolving credit facility as of March 31, 2014, March 31, 2013 and December 31, 2013:


	Revolving Credit Facility (millions)
	March 31,				December 31,
	2014		2013		2013
Limit	$	120.0	$	60.0	$	120.0
Outstanding	$	59.2	$	32.6	$	60.2
Available	$	60.8	$	27.4	$	59.8

The Credit Facility contains customary terms and conditions for credit facilities of this type, including affirmative and negative covenants. There are restrictions on, among other things, Unitil’s and its subsidiaries’ ability to permit liens or incur indebtedness, and restrictions on Unitil’s ability to merge or consolidate with another entity or change its line of business. The affirmative and negative covenants under the Credit Facility shall apply to Unitil until the Credit Facility terminates and all amounts borrowed under the Credit Facility are paid in full (or with respect to letters of credit, they are cash collateralized). The only financial covenant in the Credit Facility provides that Unitil’s Funded Debt to Capitalization (as each term is defined in the Credit Facility) cannot exceed 65% tested on a quarterly basis. At March 31, 2014, the Company was in compliance with the covenants contained in the Credit Facility in effect on that date.

In April 2014, Unitil Service Corp. entered into an arrangement for the financing of the construction and installation of a customer information system, including software and equipment. The financing arrangement is structured as a construction line of credit in the maximum amount of $15 million, available until August 31, 2015, which will convert into a lease when the project is complete. The lease has an initial term of five years. The Company received its first funding under this financing arrangement in April 2014 in the amount of $4.4 million. These funds were used to pay down short-term borrowings.

Northern Utilities enters into asset management agreements under which Northern Utilities releases certain natural gas pipeline and storage assets, resells the natural gas storage inventory to an asset manager and subsequently repurchases the inventory over the course of the natural gas heating season at the same price at which it sold the natural gas inventory to the asset manager. There was $3.2 million, $3.3 million and $12.5 million of natural gas storage inventory at March 31, 2014, March 31, 2013 and December 31, 2013, respectively, related to these asset management agreements. The amount of natural gas inventory released in March 2014 and payable in April 2014 is $2.2 million and is recorded in Accounts Payable at March 31, 2014. The amount of natural gas inventory released in March 2013 and payable in April 2013 was $1.7 million and was recorded in Accounts Payable at March 31, 2013. The amount of natural gas inventory released in December 2013 and payable in January 2014 was $2.7 million and was recorded in Accounts Payable at December 31, 2013.

Guarantees

The Company provides limited guarantees on certain energy and natural gas storage management contracts entered into by the distribution utilities. The Company’s policy is to limit the duration of these guarantees. As of March 31, 2014, there were approximately $31.0 million of guarantees outstanding and the longest term guarantee extends through April 2015.

The Company also guarantees the payment of principal, interest and other amounts payable on the notes issued by Unitil Realty and Granite State. As of March 31, 2014, the principal amount outstanding for the 8% Unitil Realty notes was $2.2 million. On December 15, 2008, the Company entered into a guarantee for the payment of principal, interest and other amounts payable on the $10.0 million Granite State notes due 2018. As of March 31, 2014, the principal amount outstanding for the 7.15% Granite State notes was $10.0 million.