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Long-Term Debt | 12 Months Ended
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Dec. 31, 2011
Long-Term Debt [Abstract] |
Long-Term Debt | Note 9 — Long-Term Debt Senior Unsecured Notes On December 21, 2007, we issued $550 million of 9.5% Senior Unsecured Notes due January 2016 ("Senior Unsecured Notes"). The Senior Unsecured Notes are fully and unconditionally guaranteed by substantially all of our existing restricted domestic subsidiaries, except Cal Dive I-Title XI, Inc. In addition, any future guarantor of our or any of our restricted subsidiaries' indebtedness is also required to guarantee the Senior Unsecured Notes. Our foreign subsidiaries are not guarantors of the Senior Unsecured Notes. We used the proceeds from the Senior Unsecured Notes to repay outstanding indebtedness under our Senior Credit Facilities (see below). The Senior Unsecured Notes are junior in right of payment to all our existing and future secured indebtedness and obligations and rank equally in right of payment with all existing and future senior unsecured indebtedness of the Company. The Senior Unsecured Notes rank senior in right of payment to any of our future subordinated indebtedness and are fully and unconditionally guaranteed by the guarantors described above on a senior basis. The Senior Unsecured Notes mature on January 15, 2016. Interest on the Senior Unsecured Notes accrues at the fixed rate of 9.5% per annum and is payable semiannually in arrears on each January 15 and July 15, and commenced on July 15, 2008. Interest is computed on the basis of a 360-day year comprising twelve 30-day months. Included in the Senior Unsecured Notes indenture are terms, conditions and covenants that are customary for this type of offering. The covenants include limitations on our and our subsidiaries' ability to incur additional indebtedness, pay dividends, repurchase our common stock, and sell or transfer assets. As of December 31, 2011, we were in compliance with these covenants. Prior to the stated maturity, after January 15, 2012, we may redeem all or a portion of the Senior Unsecured Notes, on not less than 30 days' nor more than 60 days' prior notice, at the redemption prices (expressed as percentages of the principal amount) set forth below, plus accrued and unpaid interest, if any, thereon, to the applicable redemption date.
Year |  | Redemption Price
2012 |  | 104.750%
2013 |  | 102.375%
2014 and thereafter |  | 100.000%
In the event a change of control (as defined) of the Company occurs, each holder of the Senior Unsecured Notes will have the right to require us to purchase all or any part of such holder's Senior Unsecured Notes. In such event, we are required to offer to purchase all of the Senior Unsecured Notes at a purchase price in cash in an amount equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In 2011, we purchased a portion of our Senior Unsecured Notes that resulted in the early extinguishment of an aggregate $75.0 million of those notes. In these transactions we paid an aggregate amount of $77.4 million, including the $75.0 million in principal and $2.4 million in premium for the repurchased Senior Unsecured Notes. The premium is reflected as a component of "other income (expense)" in the accompanying consolidated statements of operations. We also paid the accrued interest on these Senior Unsecured Notes totaling $0.8 million and we recorded a $0.9 million charge to interest expense to accelerate a pro rata portion of the deferred financing costs associated with the original issuance of the Senior Unsecured Notes. Credit Agreement In July 2006, we entered into a credit agreement (the "Credit Agreement") under which we borrowed $835 million in a term loan (the "Term Loan") and were initially able to borrow up to $300 million (the "Revolving Loans") under a revolving credit facility (the "Revolving Credit Facility"). The proceeds from the Term Loan were used to fund the cash portion of the acquisition of Remington Oil and Gas Corporation. At December 31, 2011, the total borrowing capacity under the Revolving Credit Facility totaled $600 million. The full amount of the Revolving Credit Facility may be used for issuances of letters of credit. At December 31, 2011 we had no amounts drawn on the Revolving Credit Facility and our availability under the Facility totaled $558.6 million, net of $41.4 million of unsecured letters of credit issued. The Term Loan bears interest either at the one-, three- or six-month LIBOR at our current election plus a 2.00% margin (as amended in February 2010, the margin was increased up to 2.50% depending on current leverage ratios, as defined). Our average interest rate on the Term Loan for the years December 31, 2011 and 2010 was approximately 3.8% and 2.9%, respectively (including the effects of our interest rate swaps). The Revolving Loans bear interest based on one-, three- or six-month LIBOR rates or on Base Rates at our current election plus an applicable margin as discussed below. Margins on the Revolving Loans will fluctuate in relation to the consolidated leverage ratio as provided in the Credit Agreement. The average interest rate on the Revolving Loans was approximately 3.4% through the date of their repayment in the second quarter of 2009. We had no amounts outstanding under the revolver at any time during the year ended December 31, 2010. We have amended the Credit Agreement three times over the past three years with the most recent amendment being effective in June 2011. These amendments among other things:
· | Increase the Revolving Credit Facility to $600 million (capacity was $435 million prior to closing of the June 2011 amendment);
· | provided for the repayment of $109.4 million of the outstanding principal portion of the Term Loan together with accrued interest thereon and related costs;
· | extend the maturity date of the Term Loan from July 1, 2013 to a maturity date that is the earlier of (A) July 1, 2016, or (B), if our currently outstanding Senior Unsecured Notes due in 2016 are not fully re-financed or repaid by July 1, 2015, July 1, 2015;
· | extend the maturity date of the Revolving Credit Facility from November 30, 2012 to a maturity date that is the earlier of (A) January 1, 2016, or (B), if our currently outstanding Senior Unsecured Notes due in 2016 are not fully re-financed or repaid by July 1, 2015, July 1, 2015;
· | relax limitations on our right to dispose of certain Contracting Services assets comprising collateral under the Credit Agreement;
· | permit us to repurchase or redeem all or part of our Convertible Senior Notes or Senior Unsecured Notes assuming certain conditions are met pro forma for any such transaction, including maintaining minimum levels of liquidity (defined as cash on hand and availability under our Revolving Credit Facility) of (A) $400 million with respect to the Convertible Senior Notes, and (B) $500 million with respect to the Senior Unsecured Notes; and
· | increase the amount of restricted payments in the form of stock repurchases or redemptions that we are permitted to repurchase or redeem up to $50 million
· | amend the consolidated leverage ratio (the ratio is now 4.00 to 1.00).
· | add a Senior Credit Facility leverage ratio, which is now 2.00 to 1.00
· | increase the margin on Revolving Loans by 0.50% should the consolidated leverage ratio equal or exceed 4.50 to 1.00 and increases the margin on the Term Loan by 0.25% if consolidated leverage ratio is less than 4.50 to 1.00 and 0.50% if the consolidated leverage ratio is equal to or greater than 4.50 to 1.00.
· | permit the disposition of certain oil and gas properties without a limit as to value, provided that we use 60% of the proceeds from such sales to make certain mandatory prepayments of the Term Loan (40% of the proceeds can be reinvested into collateral);
· | relax limitations on our right to dispose of the Caesar vessel, by permitting the disposition of the Caesar provided that we use 60% of the proceeds from such sale to make certain mandatory prepayments of the Term Loan and permit us to contribute the Caesar to a joint venture or similar arrangement (40% of the proceeds can be reinvested into collateral); and
· | increase the maximum amount of all investments permitted in subsidiaries that are neither loan parties nor whose equity interests are pledged from $100 million to $200 million.
We may elect to prepay amounts outstanding under the Term Loan without prepayment penalty, but may not reborrow any amounts prepaid. We may prepay amounts outstanding under the Revolving Loans without prepayment penalty, and may reborrow amounts prepaid prior to maturity. In addition, upon the occurrence of certain dispositions or the issuance or incurrence of certain types of indebtedness, we may be required to prepay a portion of the Term Loan equal to the amount of proceeds received from such occurrences. Such prepayments will be applied first to the Term Loan, and any remaining excess will then be applied to the Revolving Loans. The Credit Agreement and the other documents (together, the "Loan Documents") include terms, conditions and covenants that we consider customary for this type of transaction. The covenants include restrictions on the Company's and our subsidiaries' ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets and pay dividends. The Credit Agreement also places certain annual and aggregate limits on expenditures for acquisitions, investments in joint ventures and capital expenditures. The Credit Agreement requires us to meet certain minimum financial ratios for interest coverage, consolidated leverage, senior secured debt leverage and, until we achieve investment grade ratings from Standard & Poor's and Moody's, collateral coverage. If we or any of our subsidiaries do not pay any amounts owed to the lenders under the Credit Agreement when due, breach any other covenant to the lenders or fail to pay other debt above a stated threshold, in each case, subject to applicable cure periods, the lenders have the right to stop making advances to us and to declare the outstanding loans immediately due. The Credit Agreement includes other events of default that are customary for this type of transaction. As of December 31, 2011, we were in compliance with all debt covenants and restrictions. The loans and our other obligations to the lenders under the Credit Agreement are guaranteed by all of our U.S. subsidiaries except Cal Dive I-Title XI, Inc., and are secured by a lien on substantially all of our assets and properties and all the assets and properties of our U.S. subsidiaries except Cal Dive I-Title XI, Inc. In addition, we have pledged a portion of the shares of our significant foreign subsidiaries to the lenders as additional security. The Credit Agreement also contains provisions that limit our ability to incur certain types of additional indebtedness. These provisions effectively prohibit us from incurring any additional secured indebtedness or indebtedness guaranteed by the Company. The Credit Agreement does however permit us to incur certain unsecured indebtedness, and also provides for our subsidiaries to incur project financing indebtedness (such as our MARAD loans) secured by the underlying asset, provided that the indebtedness is not guaranteed by us. As the rates for our Term Loan are subject to market influences and will vary over the term of the credit agreement, we entered into various cash flow hedging interest rate swaps to stabilize cash flows relating to a portion of our interest payments for our Term Loan. In January 2010, we entered into $200 million, two-year interest rate swaps to stabilize cash flows relating to a portion of our interest payments on our Term Loan, which extend to January 2012. In August 2011, we entered into additional two-year interest rate swap contracts to assist in stabilizing cash flows related to our interest payment though January 2014 (Note 20). Convertible Senior Notes In March 2005, we issued $300 million of 3.25% Convertible Senior Notes due 2025 ("Convertible Senior Notes") at 100% of the principal amount to certain qualified institutional buyers. The Convertible Senior Notes are convertible into cash and, if applicable, shares of our common stock based on the specified conversion rate, subject to adjustment. As a result of our two for one stock split in December 2005, the initial conversion rate of the Convertible Senior Notes of 15.56 shares of common stock per $1,000 principal amount of the Convertible Senior Notes, which was equivalent to a conversion price of approximately $64.27 per share of common stock, was changed to 31.12 shares of common stock per $1,000 principal amount of the Convertible Senior Notes, which is equivalent to a conversion price of approximately $32.14 per share of common stock. We may redeem the Convertible Senior Notes on or after December 20, 2012. Beginning with the period commencing on December 20, 2012 to June 14, 2013 and for each six-month period thereafter, in addition to the stated interest rate of 3.25% per annum, we will pay contingent interest of 0.25% of the market value of the Convertible Senior Notes if, during specified testing periods, the average trading price of the Convertible Senior Notes exceeds 120% or more of the principal value. In addition, holders of the Convertible Senior Notes may require us to repurchase the notes at 100% of the principal amount on each of December 15, 2012, 2015, and 2020, and upon certain events, including a change of control (as defined) or the termination of trading of our common stock on a listed exchange. The effective interest rate for the Convertible Senior Notes was 6.6% following the adoption of accounting requirements as of January 1, 2009 (Note 2). The Convertible Senior Notes can be converted prior to the stated maturity under the following circumstances:
• |  | during any fiscal quarter if the closing sale price of our common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter exceeds 120% of the conversion price on that 30th trading day (i.e., $38.56 per share);
• |  | upon the occurrence of specified corporate transactions; or
• |  | if we have called the Convertible Senior Notes for redemption and the redemption has not yet occurred.
To the extent we do not have alternative long-term financing secured to cover such conversion notice, the Convertible Senior Notes would be classified as a current liability in the accompanying consolidated balance sheet. As the holders have the option to require us to redeem the Convertible Senior Notes on December 15, 2012, we assessed whether or not this debt was required to be classified as a current liability at December 31, 2011 and concluded this debt still qualified as a long term debt because a) we possess enough borrowing capacity under our Revolving Credit Facility (see "Credit Agreement" above) to settle the notes in full and b) it is our intent to utilize our Revolving Credit Facility borrowings or other alternative financing proceeds to settle our Convertible Senior Notes, if and when the holders exercise their redemption option. In connection with any conversion, we will satisfy our obligation to convert the Convertible Senior Notes by delivering to holders in respect of each $1,000 aggregate principal amount of notes being converted a "settlement amount" consisting of:
• |  | cash equal to the lesser of $1,000 and the conversion value; and
• |  | to the extent the conversion value exceeds $1,000, a number of shares equal to the quotient of (A) the conversion value less $1,000, divided by (B) the last reported sale price of our common stock for such day.
The conversion value means the product of (1) the conversion rate in effect (plus any applicable additional shares resulting from an adjustment to the conversion rate) or, if the Convertible Senior Notes are converted during a registration default, 103% of such conversion rate (and any such additional shares), and (2) the average of the last reported sale prices of our common stock for the trading days during the cash settlement period. At December 31, 2011, the conversion trigger was not met. Our weighted average share price for both 2011 and 2010 was below the conversion price of $32.14 per share. The maximum number of shares of common stock which may be issued upon conversion of the Convertible Senior Notes is 13,303,770. We registered the 13,303,770 shares of common stock that may be issued upon conversion of the Convertible Senior Notes as well as an indeterminate number of shares of common stock issuable upon conversion of the Convertible Senior Notes by means of an antidilution adjustment of the conversion price pursuant to the terms of the Convertible Senior Notes. MARAD Debt At December 31, 2011 and 2010, $110.2 million and $114.8 million, respectively, was outstanding on our long-term financing used for construction of the Q4000 ("MARAD Debt"). This U.S. Government guaranteed financing is pursuant to Title XI of the Merchant Marine Act of 1936 which is administered by the Maritime Administration. The MARAD Debt is payable in equal semi-annual installments which began in August 2002 and matures 25 years from such date. The MARAD Debt is collateralized by the Q4000, with us guaranteeing 50% of the debt, and initially bore interest at a floating rate which approximated AAA Commercial Paper yields plus 20 basis points. As provided for in the MARAD Debt agreements, in September 2005, we fixed the interest rate on the debt through the issuance of a 4.93% fixed-rate note with the same maturity date (February 2027). In accordance with the MARAD Debt agreements, we are required to comply with certain covenants and restrictions, including the maintenance of minimum net worth, working capital and debt-to-equity requirements. At December 31, 2011, we were in compliance with these debt covenants. Other We paid financing costs associated with our debt totaling $9.3 million in 2011 and $2.9 million in 2010. Deferred financing costs of $26.5 million and $25.7 million at December 31, 2011 and 2010, respectively, are included within the caption "Other Assets, Net" in the accompanying consolidated balance sheets and are being amortized over the life of the respective debt agreements. Scheduled maturities of long-term debt as of December 31, 2011 are as follows (in thousands):
|  |  | Helix Term Loan |  |  | Helix Revolving Loans |  |  |  | Senior Unsecured Notes |  |  | Convertible Senior Notes(1) |  |  |  | MARAD Debt |  |  | Total |
Less than one year |  | $ | 3,000 |  | $ | — |  |  | $ | — |  | $ | — |  |  | $ | 4,877 |  | $ | 7,877 |
One to two years |  |  | 3,000 |  |  | — |  |  |  | — |  |  | — |  |  |  | 5,120 |  |  | 8,120 |
Two to three years |  |  | 3,000 |  |  | — |  |  |  | — |  |  | — |  |  |  | 5,376 |  |  | 8,376 |
Three to four years |  |  | 270,750 |  |  | — |  |  |  | — |  |  | — |  |  |  | 5,644 |  |  | 276,394 |
Four to five years |  |  | — |  |  | — |  |  |  | 474,960 |  |  | — |  |  |  | 5,925 |  |  | 480,885 |
Over five years |  |  | — |  |  | — |  |  |  | — |  |  | 300,000 |  |  |  | 83,224 |  |  | 383,224 |
Total debt |  |  | 279,750 |  |  | — |  |  |  | 474,960 |  |  | 300,000 |  |  |  | 110,166 |  |  | 1,164,876 |
Current maturities |  |  | (3,000 | ) |  | — |  |  |  | — |  |  | — |  |  |  | (4,877 | ) |  | (7,877 | )
Long-term debt, less current maturities |  |  | 276,750 |  |  | — |  |  |  | 474,960 |  |  | 300,000 |  |  |  | 105,289 |  |  | 1,156,999 |
Unamortized debt Discount |  |  | — |  |  | — |  |  |  | — |  |  | (9,555 | ) |  |  | — |  |  | (9,555 | )
Long-term debt |  | $ | 276,750 |  | $ | — |  |  | $ | 474,960 |  | $ | 290,445 |  |  | $ | 105,289 |  | $ | 1,147,444 |
(1) | Beginning in December 2012, we may at our option repurchase the notes or the holders may require us to repurchase the notes. The notes will increase to the $300 million face amount through accretion of non-cash interest charges through December 2012.
We had unsecured letters of credit outstanding at December 31, 2011 totaling approximately $41.4 million. These letters of credit primarily guarantee various contract bidding, asset retirement obligations and insurance activities. The following table details our interest expense and capitalized interest for the years ended December 31, 2011, 2010 and 2009 (in thousands):
|  |  | Year Ended December 31, |
|  |  | 2011 |  |  |  | 2010 |  |  |  | 2009 |
Interest expense |  | $ | 99,152 |  |  | $ | 99,184 |  |  | $ | 105,775 |
Interest income |  |  | (2,079 | ) |  |  | (1,407 | ) |  |  | (923 | )
Capitalized interest |  |  | (1,277 | ) |  |  | (12,474 | ) |  |  | (48,119 | )
Interest expense, net |  | $ | 95,796 |  |  | $ | 85,303 |  |  | $ | 56,733 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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