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Note 4 - Indebtedness

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Debt Disclosure [Text Block]

(4) INDEBTEDNESS

The following table summarizes debt outstanding based on stated maturities:

		December 31,				December 31,
(In thousands)		2020				2019
Secured notes:
8.00% Secured notes due August 2022		$	147,049			$	224,793
Troms Offshore borrowings:
NOK denominated notes due May 2024			5,954				10,260
NOK denominated notes due January 2026			14,559				20,788
USD denominated notes due January 2027			14,744				20,273
USD denominated notes due April 2027			15,669				21,545
			197,975				297,659
Debt premium and discount, net			(5,244	)			(8,725	)
Less: Current portion of long-term debt			(27,797	)			(9,890	)
Total long-term debt		$	164,934			$	279,044

We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Secured Notes

Upon our emergence from Chapter 11 bankruptcy on July 31, 2017 and pursuant to the terms of the plan of reorganization, we entered into an indenture (the Indenture) by and among our wholly-owned subsidiaries named as guarantors therein (the Guarantors), and Wilmington Trust, National Association, as trustee and collateral agent (the Trustee), and issued $350.0 million aggregate principal amount of our 8.00% Senior Secured Notes due 2022 (the Secured Notes).

We amended the Indenture pursuant to the Third Supplemental Indenture dated November 22, 2019 to allow for additional flexibility in our financial covenants, the ability to incur indebtedness, grant liens and make restricted payments. Additional revisions were made to enhance operational flexibility and streamline compliance provisions. We further amended the Indenture pursuant to the Fourth Supplemental Indenture dated November 19, 2020 to allow for additional flexibility in our financial covenants.

The Secured Notes will mature on August 1, 2022. Interest on the Secured Notes accrues at a rate of 8.00% per annum and is payable quarterly in arrears on February 1, May 1, August 1, and November 1 of each year in cash. The Secured Notes are secured by substantially all of our assets and our Guarantors.

As of December 31, 2020, the fair value (Level 2) of the Secured Notes was $141.4 million.

The Secured Notes have a trailing twelve month interest coverage requirement. Compliance with this covenant has been waived from April 1, 2021 through December 31, 2021. Minimum liquidity requirements and other covenants are set forth in the Indenture and are in effect from July 31, 2017. The Indenture also contains certain customary events of default and has a make-whole provision.

Until terminated under the circumstances described in this paragraph, the Secured Notes and the guarantees by the Guarantors are secured by the Collateral pursuant to the terms of the Indenture and the related security documents. The Trustee’s liens upon the Collateral and the right of the holders of the Secured Notes to the benefits and proceeds of the Trustee’s liens on the Collateral will terminate and be discharged in certain circumstances described in the Indenture, including: (i) upon satisfaction and discharge of the Indenture in accordance with the terms thereof; or (ii) as to any Collateral that is sold, transferred or otherwise disposed of by us or the Guarantors in a transaction or other circumstance that complies with the terms of the Indenture, at the time of such sale, transfer or other disposition.

Secured Notes Tender Offer

We are obligated to offer to repurchase the Secured Notes at par in amounts that generally approximate 65% of asset sale proceeds as defined in the Indenture.

In February and December of 2018, we commenced offers to repurchase up to $24.7 million and $25.4 million, respectively, of the Secured Notes. In March 2018 and January 2019, we repurchased $0.04 million and $0.1 million, respectively, of the Secured Notes in accordance with these tender offer obligations.

The $2.1 million and $5.8 million restricted cash on the balance sheet at December 31, 2020 and 2019, represent proceeds from asset sales since the date of the last tender offer and is restricted as of that date by the terms of the Indenture. Upon completion of the November 2020 tender offer described below, the restriction on the non-tendered amount of restricted cash as of December 31, 2019 was released. The restricted cash at December 31, 2020 remains restricted until the next tender offer is complete.

We completed a successful voluntary tender offer for our Secured Notes in November 2019 that resulted in the repurchase of notes with a face value of $125.0 million plus a premium of 8.5% for total repurchase price of $135.6 million. We accounted for this tender as a modification of debt and deferred the premium and other costs of $11.4 million which will be expensed under the interest method over the remaining term.

During August and September 2020, we repurchased $27.7 million of the Secured Notes in open market transactions.

We completed a successful voluntary tender offer for our Secured Notes in November 2020 that resulted in the repurchase of notes with a face value of $50.0 million, which included the release of all restricted cash described above, for a total repurchase price of $50.3 million. We accounted for this tender as a modification of debt and deferred the premium and other costs of $0.6 million which will be expensed under the interest method over the remaining term.

Troms Offshore Debt

Between 2012 and 2014 our indirect wholly owned subsidiary, Troms Offshore, entered into two Norwegian kroner (NOK) denominated 12 year borrowing agreements aggregating 504.4 million NOK maturing in May 2024 and January 2026. In addition, in 2015 Troms Offshore entered into to two U.S. dollar denominated 12 year borrowing agreements aggregating $60.8 million and maturing in early 2027. Each loan requires semi-annual principal and interest payments and bears interest at fixed rates ranging from 4.56% to 6.13%.

Amounts outstanding on each of these borrowing agreements are indicated on the table below including the U.S. dollar equivalents for the NOK denominated borrowing agreements.

		December 31,				December 31,
(In thousands)		2020				2019
Notes due May 2024
NOK denominated			51,120				89,460
U.S. dollar equivalent		$	5,954			$	10,260
Fair value in U.S. dollar equivalent (Level 2)			5,954				10,259
Notes due January 2026
NOK denominated			125,000				181,250
U.S. dollar equivalent		$	14,559			$	20,788
Fair value in U.S. dollar equivalent (Level 2)			14,789				20,792
Notes due January 2027
Amount outstanding		$	14,744			$	20,273
Fair value of debt outstanding (Level 2)			15,040				20,278
Notes due April 2027
Amount outstanding		$	15,669			$	21,545
Fair value of debt outstanding (Level 2)			15,775				21,546

When we emerged from Chapter 11 bankruptcy in 2017 the Troms Offshore credit agreement was amended and restated to (i) reduce by 50% the required principal payments due through March 31, 2019, (ii) modestly increase the interest rates on amounts outstanding through April 2023, and (iii) provide for security and additional guarantees, including (a) mortgages on six vessels and related assignments of earnings and insurances, (b) share pledges by Troms Offshore and certain subsidiaries of Troms Offshore, and (c) guarantees by certain subsidiaries of Troms Offshore.

An amendment and restatement was executed in December 2020 whereby the financial covenants were conformed to match the November 2020 amendments to the covenants governing the Senior Notes, as described above, and included an obligation to prepay (1) the amounts deferred in the 2017 amendment and restatement and (2) an additional amount representing a percentage of Senior Notes prepayments that will not exceed $45 million including the prepayment of the amounts deferred in the 2017 amendment and restatement. The prepayment associated with this amendment made in December 2020 totaled $12.5 million. Additional prepayment obligations of $22.8 million are due in the first half of 2021 and are reflected in current portion of long-term debt on our consolidated balance sheet.

GulfMark Term Loan Facility

Upon consummation of the business combination, we repaid the $100.0 million outstanding balance of GulfMark’s Term Loan Facility plus accrued interest and an early extinguishment penalty which resulted in the recognition of a loss on early extinguishment of debt of $8.1 million for the year ended December 31, 2018.

Debt Costs

We capitalize a portion of our interest costs incurred on borrowed funds used to construct vessels. Interest and debt costs incurred, net of interest capitalized are as follows:

		Year Ended December 31,
(In thousands)		2020				2019				2018
Interest and debt costs incurred, net of interest capitalized		$	24,156			$	29,068			$	30,439
Interest costs capitalized			—				—				521
Total interest and debt costs		$	24,156			$	29,068			$	30,960