Discount on Series 2010A; 144A Bond Issuance

3 Months Ended

Mar. 31, 2012

Discount on Series 2010A; 144A Bond Issuance

Discount on Series 2010A; 144A Bond Issuance

14. DISCOUNT ON SERIES 2010A; 144A BOND ISSUANCE

Pursuant to a December 31, 2009 dated Bond Purchase agreement between Citizens Capital Corp. ESOP Trust (“ESOP Trust”) and the Company, as Bond Issuer, the Company sold to the ESOP Trust, a $30,000,000 issue of its 7%; $1,000 par value; Series 2010A; convertible; callable; 144A; First Mortgage Bonds due 2020 (the “Series 2010A Bonds”).

To facilitate the secondary re-marketing of said Series 2010A Bonds on a best-efforts basis by the ESOP Trust, to Qualified Institutional Buyer’s (QIBs) and/or certain accredited investors, the Company sold said Series 2010A bonds at a price of $18,863,700, representing a fourteen percent (14%) rate of return and discount on the $30,000,000 principal; par value of the seven percent (7%); Series 2010A Bonds in the amount of $11,136,300, or $628.79 per each $1,000 par value amount of said Series 2010A Bonds.

Interest on the Series 2010A Bonds is calculated utilizing the “effective interest rate” accounting method and is payable semi-annually for a period of ten (10) years and full amortization of the $11,136,300 bond discount is amortized for twenty (20) semi-annual periods. Scheduled semi-annual interest payments for the period, plus, the amortized portion of the bond discount is charged by the Company to interest expense for each annual period ended December 31 while the Series 2010A Bonds remain outstanding, in whole or part.

If said Series 2010A Bonds are not successfully re-marketed by the ESOP Trust to Qualified Institutional Buyer’s (QIBs) and/or certain accredited investors, in whole or in part, the debt balance remaining, if any, related to the Series 2010A Bonds issuance and the liability thereof shall be extinguished.

For the periods ended December 31, 2009 and December 31, 2010, annual interest payable and amortized bond discount for the Series 2010A Bonds was $0 and $0 respectively. For the period ended March 31, 2012, annual interest payable and amortized bond discount for the Series 2010A Bonds was $0 and $0 respectively.

Date	Annual Interest Payment @ 7% x Face Value (3.5% Semi-Annual Rate)		Semi- Annual Interest Expense @ 14% Rate of Return x Previous Year Book Value (7% Semi- Annual Rate)		Amortization of Bond Discount		Balance in Bond Discount Account		Face Value Balance in the Bonds Payable Account		Book Value of Bonds

Jan 1, 2011							$	11,136,300	$	30,000,000	$	18,863,700

Jun 15, 2011	$	1,050,000		1,320,459		270,459		10,865,841	$	30,000,000		19,134,159
Dec 15, 2011	$	1,050,000		1,339,391		289,391		10,576,450	$	30,000,000		19,423,550

Jun 15, 2012	$	1,050,000		1,359,649		309,649		10,266,801	$	30,000,000		19,733,199
Dec 15, 2012	$	1,050,000		1,381,324		331,324		9,935,477	$	30,000,000		20,064,523

Jun 15, 2013	$	1,050,000		1,404,517		354,517		9,580,960	$	30,000,000		20,419,040
Dec 15, 2013	$	1,050,000		1,429,333		379,333		9,201,627	$	30,000,000		20,798,373

Jun 15, 2014	$	1,050,000		1,455,886		405,886		8,795,741	$	30,000,000		21,204,259
Dec 15, 2014	$	1,050,000		1,484,298		434,298		8,361,443	$	30,000,000		21,638,557

Jun 15, 2015	$	1,050,000		1,514,699		464,699		7,896,744	$	30,000,000		22,103,256
Dec 15, 2015	$	1,050,000		1,547,228		497,228		7,399,516	$	30,000,000		22,600,484

Jun 15, 2016	$	1,050,000		1,582,034		532,034		6,867,482	$	30,000,000		23,132,518
Dec 15, 2016	$	1,050,000		1,619,276		569,276		6,298,206	$	30,000,000		23,701,794

Jun 15, 2017	$	1,050,000		1,659,126		609,126		5,689,080	$	30,000,000		24,310,920
Dec 15, 2017	$	1,050,000		1,701,764		651,764		5,037,316	$	30,000,000		24,962,684

Jun 15, 2018	$	1,050,000		1,747,388		697,388		4,339,928	$	30,000,000		25,660,072
Dec 15, 2018	$	1,050,000		1,796,205		746,205		3,593,723	$	30,000,000		26,406,277

Jun 15, 2019	$	1,050,000		1,848,439		798,439		2,795,284	$	30,000,000		27,204,716
Dec 15, 2019	$	1,050,000		1,904,330		854,330		1,940,954	$	30,000,000		28,059,046

Jun 15, 2020	$	1,050,000		1,964,133		914,133		1,026,821	$	30,000,000		28,973,179
Dec 15, 2020	$	1,050,000		2,028,123		978,123		48,698	$	30,000,000		29,951,302

Jun 15, 2021	$	1,050,000		1,098,698		48,698		0	$	30,000,000	$	30,000,000

CITIZENS CAPITAL CORP 10-Q