(5)

INDEBTEDNESS

Revolving Credit and Term Loan Agreement

In June 2013, the company amended and extended its existing credit facility. The amended credit agreement matures in June 2018 (the “Maturity Date”) and provides for a $900 million, five-year credit facility (“credit facility”) consisting of a (i) $600 million revolving credit facility (the “revolver”) and a (ii) $300 million term loan facility (“term loan”).

Borrowings under the credit facility are unsecured and bear interest at the company’s option at (i) the greater of prime or the federal funds rate plus 0.25 to 1.00%, or (ii) Eurodollar rates, plus margins ranging from 1.25 to 2.00% based on the company’s consolidated funded debt to capitalization ratio. Commitment fees on the unused portion of the facilities range from 0.15 to 0.30% based on the company’s funded debt to total capitalization ratio. The credit facility requires that the company maintain a ratio of consolidated debt to consolidated total capitalization that does not exceed 55%, and maintain a consolidated interest coverage ratio (essentially consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, for the four prior fiscal quarters to consolidated interest charges, including capitalized interest, for such period) of not less than 3.0 to 1.0. All other terms, including the financial and negative covenants, are customary for facilities of its type and consistent with the prior agreement in all material respects.

The company had $300 million in term loan borrowings outstanding at March 31, 2014 (whose fair value approximates the carrying value because the borrowings bear interest at variable rates), and has the entire $600.0 million available under the revolver to fund future liquidity needs at March 31, 2014. The company had $125 million of term loan borrowings and $110 million of revolver borrowings outstanding at March 31, 2013. These estimated fair values are based on Level 2 inputs.

Senior Debt Notes

The determination of fair value includes an estimated credit spread between our long term debt and treasuries with similar matching expirations. The credit spread is determined based on comparable publicly traded companies in the oilfield service segment with similar credit ratings. These estimated fair values are based on Level 2 inputs.

September 2013 Senior Notes

On September 30, 2013, the company executed a note purchase agreement for $500 million and issued $300 million of senior unsecured notes to a group of institutional investors. The company issued the remaining $200 million of senior unsecured notes on November 15, 2013. A summary of these outstanding notes at March 31, 2014, is as follows:

The multiple series of notes totaling $500 million were issued with maturities ranging from approximately seven to 12 years. The notes may be retired before their respective scheduled maturity dates subject only to a customary make-whole provision. The terms of the notes require that the company maintain a ratio of consolidated debt to consolidated total capitalization that does not exceed 55% and maintain a ratio of consolidated EBITDA to consolidated interest charges, including capitalized interest, of not less than 3.0 to 1.0.

August 2011 Senior Notes

On August 15, 2011, the company issued $165 million of senior unsecured notes to a group of institutional investors. A summary of these outstanding notes at March 31, is as follows:


(In thousands, except weighted average data)		2014		2013
Aggregate debt outstanding	$	165,000		165,000
Weighted average remaining life in years		6.6		7.6
Weighted average coupon rate on notes outstanding		4.42	%	4.42	%
Fair value of debt outstanding		168,653		179,802

The multiple series of notes were originally issued with maturities ranging from approximately eight to 10 years. The notes may be retired before their respective scheduled maturity dates subject only to a customary make-whole provision. The terms of the notes require that the company maintain a ratio of consolidated debt to consolidated total capitalization that does not exceed 55%.

September 2010 Senior Notes

In fiscal 2011, the company completed the sale of $425 million of senior unsecured notes. A summary of the aggregate amount of these outstanding notes at March 31, is as follows:


(In thousands, except weighted average data)		2014		2013
Aggregate debt outstanding	$	425,000		425,000
Weighted average remaining life in years		5.6		6.6
Weighted average coupon rate on notes outstanding		4.25	%	4.25	%
Fair value of debt outstanding		436,254		458,520

The multiple series of these notes were originally issued with maturities ranging from five to 12 years. The notes may be retired before their respective scheduled maturity dates subject only to a customary make-whole provision. The terms of the notes require that the company maintain a ratio of consolidated debt to consolidated total capitalization that does not exceed 55%.

Included in accumulated other comprehensive income at March 31, 2014 and 2013, is an after-tax loss of $2.4 million ($3.7 million pre-tax), and $2.9 million ($4.4 million pre-tax), respectively, relating to the purchase of interest rate hedges, which are cash flow hedges, in July 2010 in connection with the September 2010 senior notes offering. The interest rate hedges settled in August 2010 concurrent with the pricing of the senior unsecured notes. The hedges met the effectiveness criteria and their acquisition costs are being amortized to interest expense over the term of the individual notes matching the term of the hedges to interest expense.

July 2003 Senior Notes

In July 2003, the company completed the sale of $300 million of senior unsecured notes. A summary of the aggregate amount of these outstanding notes at March 31, is as follows:


(In thousands, except weighted average data)		2014		2013
Aggregate debt outstanding	$	35,000		175,000
Weighted average remaining life in years		1.3		0.7
Weighted average coupon rate on notes outstanding		4.61	%	4.47	%
Fair value of debt outstanding		36,018		178,227

The multiple series of notes were originally issued with maturities ranging from seven to 12 years. These notes can be retired in whole or in part prior to maturity for a redemption price equal to the principal amount of the notes redeemed plus a customary make-whole premium. The terms of the notes require that the company maintain a ratio of consolidated debt to consolidated total capitalization that does not exceed 55%.

Troms Offshore Debt

In January 2014, Troms Offshore entered into a new 300 million NOK, 12 year unsecured borrowing agreement which matures in January 2026. The loan requires semi-annual principal payments of 12.5 million NOK (plus accrued interest) and bears interest at a fixed rate of 2.31% plus a premium based on Tidewater Inc.’s consolidated funded indebtedness to total capitalization ratio (currently equal to 1.50% for a total all-in rate of 3.81%). As of March 31, 2014, 300.0 million NOK (approximately $50.0 million) is outstanding under this agreement.

In May 2012, Troms Offshore entered into a 204.4 million NOK denominated borrowing agreement which matures in May 2024. The loan requires semi-annual principal payments of 8.5 million NOK (plus accrued interest), bears interest at a fixed rate of 6.38% and is secured by certain guarantees and various types of collateral, including a vessel. As of March 31, 2014, 178.9 million NOK (approximately $29.8 million) is outstanding under this agreement. In January 2014, the loan was amended to, among other things, change the interest rate to a fixed rate equal to 3.88% plus a premium based on Tidewater’s funded indebtedness to capitalization ratio (currently equal to 1.50% for a total all-in rate of 5.38%), change the borrower, change the export creditor guarantor, and to replace the vessel security with a company guarantee.

In May 2012, Troms Offshore entered into a 35.0 million NOK denominated borrowing agreement with a shipyard which matures in May 2015. In June 2013, Troms Offshore entered into a 25.0 million NOK denominated borrowing agreement a Norwegian Bank, which matures in June 2019. These borrowings bear interest based on three month NIBOR plus a credit spread of 2.0% to 3.5%. As of March 31, 2014 60.0 million NOK (approximately $10.0 million) is outstanding under these agreements.

Troms Offshore had 60.0 million NOK, or approximately $10.0 million, outstanding in floating rate debt at March 31, 2014 (whose fair value approximates the carrying value because the borrowings bear interest at variable NIBOR rates plus a margin). Troms Offshore also had 478.9 million NOK, or $79.9 million, of outstanding fixed rate debt at March 31, 2014, which has an estimated fair value of 477.5 million NOK, or $79.6 million. These estimated fair values are based on Level 2 inputs.

In June 2013, Troms Offshore repaid a 188.9 million NOK loan (approximately $32.5 million), plus accrued interest that was secured with various guarantees and collateral, including a vessel.

During the second quarter of fiscal 2014, the company repaid prior to maturity 500 million Norwegian Kroner (NOK) denominated (approximately $82.1 million) public bonds (plus accrued interest) that had been issued by Troms Offshore in April 2013. The repayment of these bonds, at an average price of approximately 105.0% of par value, resulted in the recognition of a loss on early extinguishment of debt of approximately 26 million NOK (approximately $4.1 million).

Summary of Long-Term Debt Outstanding

The following table summarizes debt outstanding at March 31:


(In thousands)		2014	2013
4.44% July 2003 senior notes due fiscal 2014	$	—	140,000
4.61% July 2003 senior notes due fiscal 2016		35,000	35,000
3.28% September 2010 senior notes due fiscal 2016		42,500	42,500
3.90% September 2010 senior notes due fiscal 2018		44,500	44,500
3.95% September 2010 senior notes due fiscal 2018		25,000	25,000
4.12% September 2010 senior notes due fiscal 2019		25,000	25,000
4.17% September 2010 senior notes due fiscal 2019		25,000	25,000
4.33% September 2010 senior notes due fiscal 2020		50,000	50,000
4.51% September 2010 senior notes due fiscal 2021		100,000	100,000
4.56% September 2010 senior notes due fiscal 2021		65,000	65,000
4.61% September 2010 senior notes due fiscal 2023		48,000	48,000
4.06% August 2011 senior notes due fiscal 2019		50,000	50,000
4.54% August 2011 senior notes due fiscal 2022		65,000	65,000
4.64% August 2011 senior notes due fiscal 2022		50,000	50,000
4.26% September 2013 senior notes due fiscal 2021		123,000	—
5.01% September 2013 senior notes due fiscal 2024		250,000	—
5.16% September 2013 senior notes due fiscal 2026		127,000	—
NOK denominated notes due fiscal 2025		29,837	—
NOK denominated notes due fiscal 2026		50,028	—
NOK denominated borrowing agreement due fiscal 2015		5,837	—
NOK denominated borrowing agreement due fiscal 2019		4,168	—
Term Loan		300,000	125,000
Revolving line of credit		—	110,000
	$	1,514,870	1,000,000
Less: Current maturities of long-term debt		9,512	—
Total	$	1,505,358	1,000,000

Debt Costs

The company capitalizes a portion of its interest costs incurred on borrowed funds used to construct vessels. Interest and debt costs incurred, net of interest capitalized, for the years ended March 31, are as follows:


(In thousands)	2014		2013		2012
Interest and debt costs incurred, net of interest capitalized	$	43,814		29,745		22,308
Interest costs capitalized		11,497		10,602		14,743
Total interest and debt costs	$	55,311		40,347		37,051

(In thousands, except weighted average data)

March 31,

2014

Aggregate debt outstanding

Weighted average remaining life in years

Weighted average coupon rate on notes outstanding

Fair value of debt outstanding