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Note 9 - Debt
 6 Months Ended
Jun. 30, 2023
Notes to Financial Statements  
Debt Disclosure [Text Block]

(9)

DEBT

 

The following is a summary of all debt outstanding:

 

(In Thousands)

        
  

June 30, 2023

  

December 31, 2022

 

Senior secured bonds:

        

8.50% Senior Secured Notes due November 2026 (A) (B)

 $175,000  $175,000 

Supplier Facility Agreements

  12,204   — 

Senior Secured Term Loan

  —   — 

10.375% Senior Unsecured Notes due July 2028

  —   — 
  $187,204  $175,000 

Debt discount and issuance costs

  (5,190)  (5,964)

Less: Current portion of long-term debt

  (2,441)  — 

Total long-term debt

 $179,573  $169,036 

 

 

(A)

As of June 30, 2023 and  December 31, 2022, the fair value (Level 2) of the Senior Secured Notes was $181.4 million and $177.3 million, respectively.

 

(B)

The $1.2 million restricted cash on the condensed consolidated balance sheet at June 30, 2023, represents the pro rata amount due for our next semiannual interest payment obligation on the 8.50% Senior Secured Notes.

 

Supplier Facility Agreements

 

We entered into Facility Agreements to finance a portion of the construction and delivery of three new vessels. The vessels were delivered to us in the second quarter of 2023 in exchange for approximately $12.2 million in financing. Each of the Facility Agreements bear interest at rates ranging from 2.7% to 6.0% and are payable in ten equal principal semi-annual installments, with the first Facility Agreement installment commencing in the fourth quarter of 2023. The Facility Agreements are secured by the vessels, guaranteed by Tidewater as parent guarantor and contain no financial covenants.

 

Senior Secured Term Loan

 

On June 30, 2023, Tidewater entered into a Credit Agreement, by and among Tidewater, as parent guarantor, TDW International Vessels Unrestricted, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“TDW International”), as borrower, certain other unrestricted subsidiaries of Tidewater, as other security parties, the lenders party thereto, DNB Bank ASA, New York Branch (“DNB Bank”), as facility agent and DNB Markets, Inc. (“DNB Markets”), as bookrunner and mandated lead arranger (the “Credit Agreement”), pursuant to which the lenders agreed to make available to borrower a senior secured term loan in the aggregate principal amount of $325.0 million (the “Senior Secured Term Loan”) to partially finance the purchase price of the Solstad Acquisition (See “Note (15) Solstad Vessel Acquisition”). The balance on the Senior Secured Term Loan was zero as of June 30, 2023. On July 5, 2023, the Term Loan was fully drawn in a single advance of $325.0 million yielding net proceeds of approximately $318.3 million, which were used to fund a portion of the purchase price for the Solstad Acquisition.

 

The Senior Secured Term Loan is composed of a $100.0 million Tranche A loan and a $225.0 million Tranche B loan, each maturing on July 5, 2026. The Tranche A loan is required to be repaid by $50.0 million within one year, with the remaining $50.0 million due at maturity. The Tranche B loan amortizes over the three-year term of the Senior Secured Term Loan. The Tranche A loan bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 5% initially, increasing to 8% over the term of the Term Loan. The Tranche B loan bears interest at SOFR plus 3.75%. The Tranche A loan and the Tranche B loan may each be prepaid at any time without premium or penalty. The security for the Senior Secured Term Loan includes mortgages over the Solstad Vessels and associated assignments of insurances and assignments of earnings in respect of such vessels, a pledge of 100% of the equity interests in TDW International, a pledge of 66% of the equity interests in TDW International Unrestricted, Inc., an indirect wholly owned subsidiary of the Company, and negative pledges over certain vessels indirectly owned by TDW International Unrestricted, Inc. The obligations of the borrower are guaranteed by Tidewater, subject to a cap equal to 50% of the purchase price for the Solstad Acquisition.

 

 

The Credit Agreement contains three financial covenants: (i) a minimum free liquidity test (of Guarantor liquidity) equal to the greater of $20.0 million or 10% of net interest-bearing debt, (ii) a minimum equity ratio of 30%, in each case for us and our consolidated subsidiaries and (iii) an interest coverage ratio of not less than 2:1. The Credit Agreement also contain certain equity cure rights with respect to such financial covenants. The Credit Agreement also includes (i) customary vessel management and insurance covenants in the vessel mortgages, (ii) negative covenants, and (iii) certain customary events of default. We are currently in compliance with all of these financial covenants.

 

Senior Unsecured Notes

 

On July 3, 2023, Tidewater completed a previously announced offering of $250 million aggregate principal amount of senior unsecured bonds in the Nordic bond market (the “Senior Unsecured Notes”). The bonds were privately placed, at an issue price of 99%, outside the United States pursuant to Regulation S under the Securities Act of 1933, as amended. We used the net proceeds from the offering of approximately $243.1 million to fund a portion of the purchase price of the Solstad Acquisition.

 

The Senior Unsecured Notes were issued pursuant to the Bond Terms, dated as of June 30, 2023 (the “Bond Terms”), between the Nordic Trustee AS, as Bond Trustee and us. An application will be made for the Senior Unsecured Notes to be listed on the Nordic ABM. The Senior Unsecured Notes are senior unsecured obligations and are not guaranteed by any of our subsidiaries.

 

The Senior Unsecured Notes will mature on July 3, 2028. Interest on the Senior Unsecured Notes will accrue at a rate of 10.375% per annum payable semi-annually in arrears on January 3 and July 3 of each year in cash, beginning January 3, 2024. Prepayment of the Senior Unsecured Notes prior to July 3, 2025 requires the payment of make-whole amounts, and prepayments after that date are subject to prepayment premiums that decline over time.

 

The Senior Unsecured Notes contain two financial covenants: (i) a minimum free liquidity test equal to the greater of $20 million and 10% of net interest-bearing debt, and (ii) a minimum equity ratio of 30%. The Bond Terms also contain certain equity cure rights with respect to such financial covenants. Our ability to make certain distributions after November 16, 2023 to our stockholders is subject to certain limits, including in some circumstances a minimum liquidity test and a maximum net leverage ratio. The Senior Unsecured Notes are also subject to negative covenants as set forth in the Bond Terms. The Bond Terms contain certain customary events of default, including, among other things: (i) default in the payment of any amount when due; (ii) default in the performance or breach of any other covenant in the Bond Terms, which default continues uncured for a period of 20 business days; and (iii) certain voluntary or involuntary events of bankruptcy, insolvency or reorganization. We are currently in compliance with all of these financial covenants.

 

Super Senior Revolver

 

We also have a Super Senior Revolving Credit Facility Agreement maturing on November 16, 2026 that provides $25.0 million for general working capital purposes. No amounts have been drawn on this credit facility.