Annual report pursuant to Section 13 and 15(d)

Note 7 - Long-term Debt

v3.19.1
Note 7 - Long-term Debt
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Long-term Debt [Text Block]
7.
LONG-TERM DEBT
 
The Company's long-term debt obligations as of
December 31
were as follows (in thousands):
 
   
2018
   
2017
 
SEACOR Marine Foreign Holdings Syndicated Credit Facility   $
126,750
    $
 
Convertible Senior Notes
   
125,000
     
175,000
 
Falcon Global USA Term Loan Facility    
109,099
     
 
Sea-Cat Crewzer III Term Loan Facility
   
25,989
     
29,078
 
Windcat Workboats Facilities
   
24,850
     
25,202
 
Falcon Global USA Revolver    
15,000
     
 
SEACOR 88/888 Term Loan    
11,000
     
 
BNDES Equipment Construction Finance Notes    
5,284
     
7,234
 
Falcon Global International Term Loan Facility    
     
54,870
 
Sea-Cat Crewzer II Term Loan Facility
   
     
20,871
 
Sea-Cat Crewzer Term Loan Facility
   
     
18,504
 
C-Lift Acquisition Notes
   
     
16,000
 
Cypress CKOR Term Loan
   
     
1,300
 
     
442,972
     
348,059
 
Portion due within one year
   
(16,812
)    
(22,858
)
Debt discount
   
(32,005
)    
(27,373
)
Issue costs
   
(6,301
)    
(5,787
)
    $
387,854
    $
292,041
 
 
The Company's contractual long-term debt maturities for the years ended
December 31
were as follows (in thousands):
 
2019
  $
16,812
 
2020
   
25,489
 
2021
   
51,381
 
2022
   
25,150
 
2023
   
222,900
 
Years subsequent to 2023
   
101,240
 
    $
442,972
 
 
SEACOR Marine Foreign Holdings
.  On
September 26, 2018,
SEACOR Marine Foreign Holdings Inc. (“SMFH”), a wholly-owned subsidiary of SEACOR Marine, entered into a
$130.0
million loan facility with a syndicate of lenders administered by DNB Bank ASA.  SMFH's obligations pursuant to the loan facility are secured by mortgages on
20
vessels owned by the Company's vessel owning subsidiaries as well as an assignment of earnings from those subsidiaries.  The loan matures in
2023
and bears interest at a variable rate based on LIBOR (currently
6.5625%
).  The obligations of SMFH under the loan facility are guaranteed by SEACOR Marine. The proceeds from the syndicated loan facility were used to pay off all obligations under other credit facilities of subsidiaries of the Company (Falcon Global International Term Loan Facility, Sea-Cat Crewzer II Term Loan Facility, Sea-Cat Crewzer Term Loan Facility and C-Lift Acquisition Notes totaling
$101.3
million, consisting of
$99.9
million principal and
$1.4
million accrued interest), resulting in a net increase in term debt of
$30.1
million.  Principal payments of
$3.3
million per quarter under the SMFH facility began in
December 2018.
As a result of this transaction, the Company recognized a loss of
$0.6
million upon the extinguishment of debt. In
October 2018,
the Company entered into an interest rate swap agreement on the notional value at inception of
$65.0
million related to this debt. The loan facility provides for customary events of default and has customary affirmative and negative covenants for transactions of this type that are applicable to SEACOR Marine, SMFH and its subsidiaries.
 
Convertible Senior Notes. 
On
December 1, 2015,
the Company issued
$175.0
million in aggregate principal amount of its Convertible Senior Notes (the “Convertible Senior Notes”), at an interest rate of
3.75%,
due
December 1, 2022,
to investment funds managed and controlled by the Carlyle Group (collectively “Carlyle”). The Convertible Senior Notes are convertible into shares of Common Stock at a conversion rate of
23.26
shares per
$1,000
in principal amount of such notes, subject to certain conditions, or, into Warrants to purchase an equal number of shares of Common Stock at an exercise price of
$0.01
per share in order to facilitate the Company's compliance with the provisions of the Jones Act. The indenture governing the Convertible Senior Notes contains customary events of default with respect to the Convertible Senior Notes.
 
Upon completion of the Spin-off, the Company bifurcated the embedded conversion option liability of
$27.3
million from the Convertible Senior Notes and recorded an additional debt discount (see Notes
9
and
10
). The adjusted unamortized debt discount and issue costs are being amortized as additional non-cash interest expense over the remaining maturity of the debt for an overall effective interest rate of
7.95%
and the changes in the fair value of the bifurcated derivative are recorded as derivative income or loss.
 
On
May 2, 2018,
the Company and Carlyle entered into the Exchange pursuant to which Carlyle exchanged
$50
million in principal amount of the Convertible Senior Notes for Warrants to purchase
1,886,792
shares of Common Stock (to facilitate compliance with the provisions of the Jones Act) at an exercise price of
$0.01
per share, subject to adjustments (the “Carlyle Warrants”), representing an implied exchange rate of approximately
37.73
shares per
$1,000
in principal amount of the Convertible Senior Notes (equivalent to an exchange price of
$26.50
per share). The Carlyle Warrants have a
25
-year term, which commenced
May 2, 2018.
The Company and Carlyle also amended the
$125.0
million in principal amount of Convertible Senior Notes that remained outstanding following the Exchange to (i) increase the interest rate from
3.75%
per annum to
4.25%
per annum and (ii) extend the maturity date of the Convertible Senior Notes by
12
months to
December 1, 2023. 
Interest on the Convertible Senior Notes is payable semi-annually on
June 15
and
December 15
of each year.  
 
Falcon Global USA.
 On
February 8, 2018,
a wholly-owned subsidiary of SEACOR Marine and MOI formed and capitalized a joint venture named Falcon Global Holdings LLC.  In connection therewith and MOI’s plan of reorganization, which was confirmed on
January 18, 2018,
MOI emerged from its Chapter
11
bankruptcy case. In accordance with the terms of a Joint Venture Contribution and Formation Agreement, the Company and MOI contributed certain liftboat vessels and other related assets to FGH and its designated subsidiaries and FGH and its designated subsidiaries assumed certain operating liabilities and indebtedness associated with the liftboat vessels and related assets. On
February 8, 2018,
Falcon Global USA LLC (“FGUSA”), a wholly-owned subsidiary of FGH, paid
$15.0
million of MOI’s debtor-in-possession obligations and entered into a
$131.1
million credit agreement comprised of a
$116.1
million term loan (the “FGUSA Term Loan”) and a
$15.0
million revolving loan facility (the “FGUSA Revolving Loan Facility”) bearing interest at a variable rate (currently
7.0625%
), maturing in
2024
and secured by
15
vessels owned by wholly-owned subsidiaries of FGUSA (collectively, the “FGUSA Credit Facility”). The full amount of the FGUSA Term Loan and other amounts paid by affiliates of MOI satisfied in full the amounts outstanding under MOI’s pre-petition credit facilities. The FGUSA Credit Facility, apart from a guarantee of certain interest payments and participation fees for
two
years after the closing of the transactions, is non-recourse to SEACOR Marine and its subsidiaries other than FGUSA. The Company performed a fair market valuation of the debt reflecting a debt discount of
$10.0
million, which will be amortized over the life of the FGUSA Credit Facility. Scheduled principal payments begin in
2020.
During the year ending
December 31, 2018,
the Company borrowed
$15.0
million under the FGUSA Revolving Loan Facility for working capital purposes and made principal payments of
$7.0
million under the term loan facility after sale of
two
collateralized vessels.  The Company consolidates FGH as the Company holds 
72%
of the equity interest in FGH and is entitled to appoint a majority of the board of managers of FGH.
 
Sea-Cat Crewzer III Term Loan Facility.
On
April 
21,
2016,
Sea-Cat Crewzer III LLC ("Sea-Cat Crewzer III") entered into a
€27.6
million term loan facility (payable in US dollars) secured by the Company's vessels and fully guaranteed by SEACOR Marine. Borrowings under the facility bear interest at a Commercial Interest Reference Rate, currently
2.76%.
During the years ended
December 
31,
2017
and
2016,
Sea-Cat Crewzer III drew
$7.1
million and
$22.8
million, respectively, under the facility and incurred issue costs of
$2.7
million in
2016
related to this facility. During the years ended
December 
31,
2018
and
2017,
Sea-Cat Crewzer III made scheduled payments of
$3.1
million and
$0.6
million, respectively, related to this facility.
 
Windcat Workboats Facilities.
On
May 
24,
2016,
Windcat Workboats entered into a
€25.0
million revolving credit facility secured by
38
of the Company's crew transfer vessel fleet. Borrowings under the facility bear interest at variable rates based on EURIBOR plus a margin ranging from
3.00%
to
3.30%
per annum plus mandatory lender costs and mature in
2021.
A quarterly commitment fee is payable based on the unfunded portion of the commitment amount at rates ranging from
1.20%
to
1.32%
per annum. During the year ended
December 
31,
2016,
Windcat Workboats drew
$23.5
million (
€21.0
million ) under the facility to repay all of its then outstanding debt totaling
$22.9
million and incurred issuance costs of
$0.6
million related to this facility.
 
During the year ended
December 31, 2018,
the Company converted
€6.0
million denominated debt to pound sterling denominated debt, paying off approximately
$7.5
million in euro denominated debt and borrowing approximately
$8.5
million in pound sterling denominated debt, resulting in a net increase in USD borrowings of
$1.0
million to be used for future capital commitments.
 
SEACOR
88/888.
On
July 5, 2018,
a wholly-owned subsidiary of SEACOR Marine entered into a new term loan of
$11.0
million and used the funds to acquire
two
vessels that were previously managed (but
not
owned) by the Company.  The term loan matures in
2023,
bears interest at a variable rate (currently
5.9375%
) and is secured by the
two
vessels. SEACOR Marine provided a limited guaranty of such loan under which claims recoverable from SEACOR Marine shall
not
exceed the lesser of (
x
)
$5.5
million and (y)
50%
of the obligations outstanding at the time a claim is made thereunder. In
October 2018,
the Company entered into an interest rate swap agreement on the notional value at inception of
$5.5
million related to this loan. 
 
BNDES Equipment Construction Finance Notes.
The Company financed the construction of
two
offshore support vessels in Brazil with Banco Nacional de Desenvolvimento Economico e Social ("BNDES"), a Brazilian government-owned entity. The notes are secured by a
first
mortgage on these vessels and guaranteed by SEACOR Holdings. The notes bear interest at
4.00%
per annum, require monthly principal and interest payments, and mature in
July
through
October 2021.
During the years ended
December 
31,
2018,
2017
and
2016,
the Company made scheduled payments of
$2.0
million,
$2.0
million and
$2.0
million, respectively.
 
Falcon Global International Term Loan Facility.
On
August 
3,
2015,
Falcon Global International entered into a term loan facility to finance the construction of
two
foreign-flag liftboats. The facility consisted of
two
tranches: (i) a
$62.5
million facility to fund the construction costs of the liftboats ("Tranche A") and (ii) a
$18.0
million facility for certain project costs ("Tranche B").  The facility was secured by the liftboats and is repayable over a
five
-year period that began after the completion of the construction of the liftboats and matures
June 
30,
2022.
On
November 3, 2017,
Falcon Global International executed an amendment to its term loan facility, at a cost of
$0.2
million, that required Falcon Global to maintain a debt service coverage ratio and a minimum cash balance on hand in excess of defined thresholds. In addition, the amendment required SEACOR Marine, as guarantor, to maintain a debt to capital ratio below a defined threshold and a minimum cash balance on hand in excess of a defined threshold.
 
In
March 2017,
the Company's partner declined to participate in a capital call from Falcon Global International and, as a consequence, the Company obtained
100%
voting control of Falcon Global International in accordance with the terms of the operating agreement. The Company consolidated into its financial statements Falcon Global International's then outstanding debt under this facility of
$58.3
million, net of issue costs of
$1.0
million, effective
March 
31,
2017
(see Note
4
). During
April 2017,
the Tranche B facility was canceled prior to any funding. During the
nine
months ended
December 
31,
2017,
Falcon Global made scheduled payments of
$4.4
million under Tranche A.
 
During the year ended
December 31, 2018,
Falcon Global International made scheduled payments of
$3.0
million. The remaining principal balance of
$51.9
million was paid off with the proceeds of SEACOR Marine Foreign Holdings Syndicated Facility on
September 28, 2018.
 
Sea-Cat Crewzer II Term Loan Facility.
On
April 
28,
2017,
the Company acquired a
100%
controlling interest in Sea-Cat Crewzer II through the acquisition of its partners'
50%
ownership interest (see Notes
2
and
4
). Sea-Cat Crewzer II had a term loan facility that matured in
2019
which was secured by a
first
preferred mortgage on its vessels. On
December 19, 2017,
Sea-Cat Crewzer II executed an amendment, at a cost of
$0.1
million, that replaced SEACOR Holdings with SEACOR Marine as guarantor and required SEACOR Marine to maintain a debt to capital ratio below a defined threshold and a minimum cash balance on hand in excess of a defined threshold. The facility called for quarterly payments of principal and interest with a balloon payment of
$17.3
million due at maturity. The interest rate was fixed at
1.52%,
inclusive of an interest rate swap, plus a margin ranging from
2.10%
to
2.75%
subject to the level of funded debt (overall rate of
5.64%
as of
December 
31,
2017
). In the year ended
December 31, 2017,
the Company made scheduled payments of
$1.2
million.
 
During the year ended
December 31, 2018,
Sea-Cat Crewzer II made scheduled payments of
$1.8
million.  The remaining principal balance of
$19.1
million was paid off by the SEACOR Marine Foreign Holdings Syndicated Facility on
September 28, 2018.
 
Sea-Cat Crewzer Term Loan Facility.
On
April 
28,
2017,
the Company acquired a
100%
controlling interest in Sea-Cat Crewzer through the acquisition of its partners'
50%
ownership interest (see Notes
2
and
4
). Sea-Cat Crewzer had a term loan facility that matures in
2019
which was secured by a
first
preferred mortgage on its vessels. On
December 19, 2017,
Sea-Cat Crewzer executed an amendment, at a cost of
$0.1
million, that replaced SEACOR Holdings with SEACOR Marine as guarantor and required SEACOR Marine to maintain a debt to capital ratio below a defined threshold and a minimum cash balance on hand in excess of a defined threshold. The facility called for quarterly payments of principal and interest with a balloon payment of
$15.3
million due at maturity. The interest rate was fixed at
1.52%,
inclusive of an interest rate swap, plus a margin ranging from
2.10%
to
2.75%
subject to the level of funded debt (overall rate of
5.64%
as of
December 
31,
2017
). In the year ended
December 31, 2017,
the Company made scheduled payments of
$1.1
million.
 
During the year ended
December 31, 2018,
Sea-Cat Crewzer made scheduled payments of
$1.6
million.  The remaining principal balance of
$16.9
million was paid off by the SEACOR Marine Foreign Holdings Syndicated Facility on
September 28, 2018.
 
C-Lift Acquisition Notes.
The Company assumed these notes following the purchase of its partner's
50%
interest in C-Lift. The notes were secured by a
first
mortgage on
two
liftboats. On
December 13, 2017,
C-Lift executed an amendment, at a cost of
$0.1
million, that replaced SEACOR Holdings with SEACOR Marine as guarantor and required SEACOR Marine to maintain a debt to capital ratio below a defined threshold and a minimum cash balance on hand in excess of a defined threshold. The notes bore interest at variable rates based on LIBOR plus a fixed margin and resets quarterly. The notes matured in
December 2019.
During the years ended
December 
31,
2017
and
2016,
the Company made scheduled payments of
$1.5
million and
$1.7
million, respectively.
 
During the year ended
December 31, 2018,
C-Lift made scheduled payments of
$4.0
million.  The remaining principal balance of
$12.0
million was paid off by the SEACOR Marine Foreign Holdings Syndicated Facility on
September 28, 2018
 
Cypress CKOR Term Loan.
On
December 
12,
2016,
the Company obtained a
100%
controlling interest in Cypress CKOR, an owner of
one
offshore support vessel, for
one
dollar and the assumption of
$3.1
million in debt (see Note
2
). During the years ended
December 
31,
2017
and
2016,
the Company made scheduled payments of
$1.2
million and
$0.6
million, respectively. In the year ended
December 31, 2018,
the note was paid in full with payments of
$1.3
million.
 
Letters of Credit.
As of
December 
31,
2018,
the Company had outstanding letters of credit totaling
$2.8
million for
one
lease obligation and labor and performance guarantees.