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Long-Term Debt | 9 Months Ended
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Sep. 30, 2014
Long-Term Debt [Abstract] |
Long-Term Debt | Note 6 — Long-Term Debt Scheduled maturities of our long-term debt outstanding as of September 30, 2014 are as follows (in thousands):
|  | Term Loan |  | MARAD Debt |  | 2032 Notes (1) |  | Total |
Less than one year | $ | 18,750 | $ | 5,644 | $ | - | $ | 24,394 |
One to two years |  | 30,000 |  | 5,926 |  | - |  | 35,926 |
Two to three years |  | 30,000 |  | 6,222 |  | - |  | 36,222 |
Three to four years |  | 30,000 |  | 6,532 |  | - |  | 36,532 |
Four to five years |  | 172,500 |  | 6,858 |  | - |  | 179,358 |
Over five years |  | - |  | 63,610 |  | 200,000 |  | 263,610 |
Total debt |  | 281,250 |  | 94,792 |  | 200,000 |  | 576,042 |
Current maturities |  | (18,750) |  | (5,644) |  | - |  | (24,394) |
Long-term debt, less current maturities |  | 262,500 |  | 89,148 |  | 200,000 |  | 551,648 |
Unamortized debt discount (2) |  | - |  | - |  | (22,367) |  | (22,367) |
Long-term debt | $ | 262,500 | $ | 89,148 | $ | 177,633 | $ | 529,281 |
(1) Beginning in March 2018, the holders of our Convertible Senior Notes due 2032 may require us to repurchase these notes or we may at our option elect to repurchase these notes. The notes will mature in March 2032. (2) Our Convertible Senior Notes due 2032 will increase to their face amount through accretion of non-cash interest charges through March 2018. Included below is a summary of certain components of our indebtedness: Credit Agreement In June 2013, we entered into a Credit Agreement (the “Credit Agreement”) with a group of lenders pursuant to which we borrowed $300 million under the Credit Agreement’s term loan (the “Term Loan”) component and may borrow revolving loans (the “Revolving Loans”) and/or obtain letters of credit under a revolving credit facility up to an outstanding amount of $600 milli on (the “Revolving Credit Facility”). Subject to customary conditions, we may request an increase of up to $200 million in aggregate commitments with respect to the Revolving Credit Facility, additional term loans or a combination thereof. The $300 million we borrowed under the Term Loan was in connection with our early redemption of the remaining $275 million Senior Unsecured Notes outstanding in July 2013 (see “Senior Unsecured Notes” below). The Term Loan and the Revolving Loans (together, the “Loans”) will bear interest, at our election, in relation to either the base rate established by Bank of America N.A. or to a LIBOR rate, provided that all Swing Line Loans (as defined in the Credit Agreement) will be base rate loans. The Term Loan currently bears interest at the one-month LIBOR r ate plus 2.25%. In September 2013, we entered into various interest rate swap contracts to fix the one-month LIBOR rate on $148.1 milli on of the Term Loan. The fixed LIBOR rates were between 74 and 75 basis points. The Loans or portions thereof bearing interest at the base rate will bear interest at a per annum rate equal to the base rate plus a margin ranging from 1.00% to 2.00%. The Loans or portions thereof bearing interest at a LIBOR rate will bear interest at the LIBOR rate selected by us plus a margin ranging from 2.00% to 3.00%. A letter of credit fee is payable by us equal to our applicable margin for LIBOR rate Loans multiplied by the daily amount available to be drawn under outstanding letters of credit. Margins on the Loans will vary in relation to the consolidated coverage ratio, as provided by the Credit Agreement. We currently also pay a fixed commitment fee of 0.375% on the unused portion of our Revolving Cre dit Facility. At September 30, 2014, our availability under the Revolving Credit Facility totaled $583.2 million, net of $16.8 million of letters of credit issued. The Term Loan is repayable in scheduled principal installments of 5% in each of the initial two loan years ($15 million per year), and 10% in each of the remaining three loan years ($30 million per year), payable quarterly, with a balloon payment of $180 million at maturity. These installment amounts are subject to adjustment for any prepayments on the Term Loan. We may elect to prepay amounts outstanding under the Term Loan without premium or penalty, but may not reborrow any amounts prepaid. We may prepay amounts outstanding under the Revolving Loans without premium or penalty, and may reborrow any available amounts paid up to the amount of the Revolving Credit Facility. The Loans mature on June 19, 2018. In certain circumstances, we will be required to prepay the Loans. The Credit Agreement and the other documents entered into in connection with the Credit Agreement (together, the “Loan Documents”) include terms and conditions, including covenants, which we consider customary for this type of transaction. The covenants include restrictions on our and our subsidiaries’ ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, pay dividends and incur capital expenditures. In addition, the Credit Agreement obligates us to meet certain financial ratios, including the Consolidated Interest Coverage Ratio and the Consolidated Leverage Ratio (as defined in the Credit Agreement). We have designated five of our foreign subsidiaries, and may designate any newly established foreign subsidiaries, as subsidiaries that are not generally subject to the covenants in the Credit Agreement (the “Unrestricted Subsidiaries”), provided we meet certain liquidity requirements, in which case EBITDA of the Unrestricted Subsidiaries is not included in the calculations with respect to our financial covenants. Our obligations under the Credit Agreement are guaranteed by our wholly-owned domestic subsidiaries (except Cal Dive I – Title XI, Inc.) and Canyon Offshore Limited. Our obligations under the Credit Agreement, and of the guarantors under their guaranty, are secured by most of our assets and assets of the guarantors and Canyon Offshore Limited, plus pledges of up to two-thirds of the shares of certain foreign subsidiaries. Convertible Senior Notes Due 2032 In March 2012, we completed a public offering and sale of $200.0 million in aggregate principal amount of 3.25% Convertible Senior Notes due 2032 (the “2032 Notes”). The net proceeds from the issuance of the 2032 Notes were $195.0 million after deducting the underwriter’s discounts and commissions and offering expenses. We used the net proceeds to repurchase and retire $142.2 million of aggregate principal amount of our 3.25% Convertible Senior Notes due 2025 in separate, privately negotiated transactions (see Note 7 to our 201 3 Form 10-K f or additional information). The remaining net proceeds were used for general corporate purposes, including the repayment of other indebtedness. The 2032 Notes bear interest at a rate of 3.25% per annum, and are payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2012. The 2032 Notes will mature on March 15, 2032 unless earlier converted, redeemed or repurchased. The 2032 Notes are convertible in certain circumstances and during certain periods at an initial conversion rate of 39.9752 shares of common stock per $1,000 principal amount (which represents an initial conversion price of approximately $25.02 per share of common stock), subject to adjustment in certain cir cumstances as set forth in the I ndenture governing the 2032 Notes. Prior to March 20, 2018, the 2032 Notes are not redeemable. On or after March 20, 2018, we, at our option, may redeem some or all of the 2032 Notes in cash, at any time upon at least 30 days’ notice, at a price equal to 100% of the principal amount plus accrued and unpaid interest (including contingent interest, if any) up to but excluding the redemption date. In addition, the h olders of the 2032 Notes may require us to purchase in cash some or all of their 2032 Notes at a repurchase price equal to 100% of the principal amount of the 2032 Notes, plus accrued and unpaid interest (including contingent interest, if any) up to but excluding the applicable repurchase date, on March 15, 2018, March 15, 2022 and March 15, 2027, or, subject to specified exceptions, at any time prior to the 2032 Notes’ maturity following a fundamental change (as defined in the I ndenture governing the 2032 Notes). In connection with the issuance of the 2032 Notes, we recorded a discount of $35.4 million as required under existing accounting rules. To arrive at this discount amount, we estimated the fair value of the liability component of the 2032 Notes as of the date of their issuance (March 12, 2012) using an income approach. To determine this estimated fair value, we used borrowing rates of similar market transactions involving comparable liabilities at the time of issuance and an expected life of 6.0 years. In selecting the expected life, we selected the earliest date upon which the holder s could require us to repurchase all or a portion of the 2032 Notes (March 15, 2018). The effective interest rate for the 2032 Notes is 6.9% after considering the effect of the accretion of the related debt discount that represented the equity component of the 2032 Notes at their inception. MARAD Debt This U.S. government guaranteed financing (the “MARAD Debt”) is pursuant to Title XI of the Merchant Marine Act of 1936 administered by the Maritime Administration, and was used to finance the construction of the Q4000. The MARAD Debt is payable in equal semi-annual installments beginning in August 2002 and matures in February 2027. The MARAD Debt is collateralized by the Q4000, is guaranteed 50% by us, and initially bore interest at a floating rate that 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. Nordea Credit Agreement In September 2014, our wholly-owned subsidiary, Helix Q5000 Holdings S.à r.l. (“Q5000 Holdings”), entered into a Credit Agreement (the “Nordea Credit Agreement”) with a syndicated bank lending group for a term loan (the “Nordea Term Loan”) in an amount of up to $250 million. The Nordea Term Loan will be funded at or near the time of the delivery of the Q5000, which is currently estimated in early 2015. The parent company of Q5000 Holdings, Helix Vessel Finance S.à r.l., has guaranteed the Nordea Term Loan. The loan will be secured by the Q5000 and its charter earnings as well as by a pledge of the shares of Q5000 Holdings. This indebtedness is nonrecourse to Helix. The Nordea Term Loan will bear interest at a LIBOR rate plus a margin of 2.5%, with an undrawn fee of 0.875%. The Nordea Term Loan matures five years after funding and is repayable in scheduled principal installments of $8.9 million, payable quarterly, with a balloon payment of $80.4 million at maturity. I nstallment amounts are subject to adjustment for any prepayments on this debt. Q5000 Holdings may ele ct to prepay amounts outstanding under the Nordea Term Loan without premium or penalty, but may not reborrow any amounts prepaid. In certain circumstances, Q5000 Holdings will be required to prepay the loan. The Nordea Credit Agreement and the other related loan documents include terms and conditions, including covenants, that are consider ed customary for this type of transaction. The covenants include restrictions on Q5000 Holding s’s ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, and pay dividends. In addition, the Nordea Credit Agreement obligates Q5000 Holdings to meet minimum financial requirements, including liquidity, consolidated debt service coverage and collateral maintenance. Former Credit Facility Similar to our current Credit Agreement, our former credit facility contained both term loan and revolving loan components. This indebtedness was scheduled to mature on July 1, 2015. In February 2013, w e repaid $318.4 million of borrowings outstanding under this former credit facility with the proceeds from the sale of ERT. We fully repaid the remaining indebtedness outstanding under this credit facility in June 2013. In connection with the repayments of this debt, we recorded charges totaling $3.5 million to accelerate a pro rata portion of the deferred financing costs associated with our former term loan debt. This charge is reflected as a component of “Loss on early extinguishment of long-term debt” in the accompanying condensed consolidated statement of operations for the nine-month period ended September 30, 2013. Senior Unsecured Notes In December 2007, we issued $550 million of 9.5% Senior Unsecured Notes due 2016 (the “Senior Unsecured Notes”). We had $275 million of the Senior Unsecured Notes outstanding at the beginning of 2013. W e fully redeemed these n otes in July 2013 (see Note 7 to our 2013 Form 10-K). Our results of operations for the three- and nine-month periods ended September 30, 2013 included a loss on early extinguishment of debt totaling $8.6 million in connection with the redemption of these notes. Other In accordance with our Credit Agreement, the 2032 Notes, the MARAD Debt agreements, and the Nordea Credit Agreement, we are required to comply with certain covenants, including certain financial ratios such as a consolidated interest coverage ratio and consolidated leverage ratio, as well as the maintenance of minimum net worth, working capital and debt-to-equity requirements. As of September 30, 2014, we were in compliance with these covenants. Unamortized deferred financing costs are included in “Other assets, net” in the accompanying condensed consolidated balance sheets and are amortized over the life of the respective debt agreements. The following table reflects the components of our deferred financing costs (in thousands):
|  | September 30, 2014 |  | December 31, 2013 |
|  | Gross Carrying Amount |  | Accumulated Amortization |  | Net |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net |
Term Loan (matures June 2018) (1) | $ | 3,638 | $ | (909) | $ | 2,729 | $ | 3,638 | $ | (364) | $ | 3,274 |
Revolving Credit Facility (matures June 2018) (1) |  | 13,275 |  | (3,319) |  | 9,956 |  | 13,275 |  | (1,327) |  | 11,948 |
2032 Notes (mature March 2032) |  | 3,759 |  | (1,609) |  | 2,150 |  | 3,759 |  | (1,148) |  | 2,611 |
MARAD Debt (matures February 2027) |  | 12,200 |  | (6,101) |  | 6,099 |  | 12,200 |  | (5,736) |  | 6,464 |
Nordea Term Loan |  | 3,143 |  | - |  | 3,143 |  | - |  | - |  | - |
Total deferred financing costs | $ | 36,015 | $ | (11,938) | $ | 24,077 | $ | 32,872 | $ | (8,575) | $ | 24,297 |
(1) Relates to amounts allocated to the existing Term Loan and Revolving Credit Facility, which became effective in June 2013. The following table details the components of our net interest expense (in thousands):
|  | Three Months Ended |  | Nine Months Ended |
|  | September 30, |  | September 30, |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 (1) |
Interest expense | $ | 8,952 | $ | 9,416 | $ | 24,474 | $ | 35,971 |
Interest income |  | (2,741) |  | (271) |  | (4,113) |  | (903) |
Capitalized interest |  | (2,355) |  | (2,560) |  | (7,505) |  | (6,816) |
Net interest expense | $ | 3,856 | $ | 6,585 | $ | 12,856 | $ | 28,252 |
(1) Interest expense amount includes $2.8 million for the three-month period ended March 31, 2013 that was allocated to ERT and is included in discontinued operations. Following the sale of ERT in February 2013, w e ceased allocating interest expense to ERT, which then constituted a discontinued operation.

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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 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: 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 3: 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 + Details
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