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Long-Term Debt | 12 Months Ended
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Dec. 31, 2017
Debt Disclosure [Abstract] |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following (in thousands):
| December 31,
| 2017 |  | 2016
Former term loan (was scheduled to mature June 2018) | $ | — |  |  | $ | 192,258 |
Term Loan (matures June 2020) | 97,500 |  |  | — |
2022 Notes (mature May 2022) | 125,000 |  |  | 125,000 |
2032 Notes (mature March 2032) | 60,115 |  |  | 60,115 |
MARAD Debt (matures February 2027) | 77,000 |  |  | 83,222 |
Nordea Q5000 Loan (matures April 2020) | 160,714 |  |  | 196,429 |
Unamortized debt discounts | (14,406 | ) |  | (19,094 | )
Unamortized debt issuance costs | (10,296 | ) |  | (11,963 | )
Total debt | 495,627 |  |  | 625,967 |
Less current maturities | (109,861 | ) |  | (67,571 | )
Long-term debt | $ | 385,766 |  |  | $ | 558,396 |
Credit Agreement On June 30, 2017, we entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with a group of lenders led by Bank of America, N.A. (“Bank of America”). The amended and restated credit facility is comprised of a $100 million term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) of up to $150 million (the “Revolving Loans”). The Revolving Credit Facility permits us to obtain letters of credit up to a sublimit of $25 million. Pursuant to the Credit Agreement, subject to existing lender participation and/or the participation of new lenders, and subject to standard conditions precedent, we may request aggregate commitments up to $100 million with respect to an increase in the Revolving Credit Facility, additional term loans, or a combination thereof. The $100 million proceeds from the Term Loan as well as cash on hand were used to repay the approximately $180 million term loan then outstanding under the credit facility prior to its June 2017 amendment and restatement. As of December 31, 2017, we had no borrowings under the Revolving Credit Facility and our available borrowing capacity under that facility, based on the applicable leverage ratio covenant, totaled $81.6 million, net of $3.0 million of letters of credit issued under that facility. The Term Loan and the Revolving Loans (together, the “Loans”), at our election, bear interest either in relation to Bank of America’s base rate or to a LIBOR rate. The Term Loan or portions thereof bearing interest at the base rate will bear interest at a per annum rate equal to the base rate plus 3.25%. The Term Loan or portions thereof bearing interest at a LIBOR rate will bear interest per annum at the LIBOR rate selected by us plus a margin of 4.25%. The Revolving 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 1.75% to 3.25%. The Revolving Loans or portions thereof bearing interest at a LIBOR rate will bear interest per annum at the LIBOR rate selected by us plus a margin ranging from 2.75% to 4.25%. A letter of credit fee is payable by us equal to its applicable margin for LIBOR rate Loans times the daily amount available to be drawn under the applicable letter of credit. Margins on the Revolving Loans will vary in relation to the Consolidated Total Leverage Ratio (as defined below) provided for in the Credit Agreement. We also pay a fixed commitment fee of 0.50% per annum on the unused portion of our Revolving Credit Facility. The Term Loan principal is required to be repaid in quarterly installments totaling 5% in the first loan year, 10% in the second loan year and 15% in the third loan year, with a balloon payment at maturity. 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 Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount of the Revolving Credit Facility. The Loans mature on June 30, 2020. The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, which we consider customary for this type of transaction. The covenants include certain restrictions on our and our subsidiaries’ ability to grant liens, incur indebtedness, make investments, merge or consolidate, sell or transfer assets, pay dividends and make capital expenditures. In addition, the Credit Agreement obligates us to meet minimum financial ratio requirements of EBITDA to interest charges (“Consolidated Interest Coverage Ratio”) and funded debt to EBITDA (“Consolidated Total Leverage Ratio”), and provided that if there are no Loans outstanding, the funded debt ratio requirement permits us to offset a certain amount of cash against the funded debt used in the calculation (“Consolidated Net Leverage Ratio”). After the initial Term Loan is repaid in full, if there are any Loans outstanding including unreimbursed draws under letters of credit issued under the Revolving Credit Facility, we are also required to ensure that the ratio of our total secured indebtedness to EBITDA (“Consolidated Secured Leverage Ratio”) does not exceed the maximum permitted ratio. The Credit Agreement also obligates us to maintain certain cash levels depending on the type of indebtedness outstanding. These financial covenant requirements are detailed as follows:
(a) | The minimum required Consolidated Interest Coverage Ratio:
Four Fiscal Quarters Ending | Minimum Consolidated Interest Coverage Ratio
December 31, 2017 and each fiscal quarter thereafter | 2.50 |  | to 1.00
(b) | The maximum permitted Consolidated Total Leverage Ratio or Consolidated Net Leverage Ratio:
Four Fiscal Quarters Ending | Maximum Consolidated Total or Net Leverage Ratio
December 31, 2017 | 5.75 |  | to 1.00
March 31, 2018 | 5.50 |  | to 1.00
June 30, 2018 | 5.25 |  | to 1.00
September 30, 2018 | 5.00 |  | to 1.00
December 31, 2018 through and including March 31, 2019 | 4.50 |  | to 1.00
June 30, 2019 through and including September 30, 2019 | 4.25 |  | to 1.00
December 31, 2019 | 4.00 |  | to 1.00
March 31, 2020 and each fiscal quarter thereafter | 3.50 |  | to 1.00
(c) | The maximum permitted Consolidated Secured Leverage Ratio:
Four Fiscal Quarters Ending | Maximum Consolidated Secured Leverage Ratio
December 31, 2017 through and including June 30, 2018 | 3.00 |  | to 1.00
September 30, 2018 and each fiscal quarter thereafter | 2.50 |  | to 1.00
(d) | The minimum required Unrestricted Cash and Cash Equivalents:
Consolidated Total Leverage Ratio | Minimum Cash (1)
Greater than or equal to 4.00 to 1.00 | $100,000,000.00
Greater than or equal to 3.50 to 1.00 but less than 4.00 to 1.00 | $50,000,000.00
Less than 3.50 to 1.00 | $0.00
(1) | This minimum cash balance is not required to be maintained in any particular bank account or to be segregated from other cash balances in bank accounts that we use in our ordinary course of business. Because the use of this cash is not legally restricted notwithstanding this maintenance covenant, we present it on our balance sheet as cash and cash equivalents. As of December 31, 2017, we were required to, and did, maintain an aggregate cash balance of at least $100 million in compliance with this covenant.
We may from time to time designate one or more of our foreign subsidiaries as subsidiaries which are not generally subject to the covenants in the Credit Agreement (the “Unrestricted Subsidiaries”). The debt and EBITDA of Unrestricted Subsidiaries are not included in the calculations of our financial covenants, except for the debt and EBITDA of Helix Q5000 Holdings, S.a.r.l., a wholly owned subsidiary incorporated in Luxembourg (“Q5000 Holdings”). Our obligations under the Credit Agreement are guaranteed by our domestic subsidiaries (except Cal Dive I - Title XI, Inc.) and Canyon Offshore Limited, a wholly owned Scottish subsidiary. Our obligations under the Credit Agreement and of such guarantors under their guarantee are secured by (i) most of the assets of the parent, (ii) the shares of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and Canyon Offshore Limited, and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and Canyon Offshore Limited. In addition, these obligations are secured by pledges of up to 66% of the shares of certain foreign subsidiaries. In June 2017, we recognized a $0.4 million loss to write off the unamortized debt issuance costs related to certain lenders exiting from the term loan then outstanding under our credit facility prior to its June 2017 amendment and restatement. The loss is presented as “Loss on early extinguishment of long-term debt” in the accompanying consolidated statements of operations. In connection with decreases in lenders’ commitments under our revolving credit facility, in June 2017 and February 2016 we recorded interest charges of $1.6 million and $2.5 million, respectively, to accelerate the amortization of a pro-rata portion of debt issuance costs related to the lenders whose commitments were reduced. Convertible Senior Notes Due 2022 On November 1, 2016, we completed a public offering and sale of our Convertible Senior Notes due 2022 (the “2022 Notes”) in the aggregate principal amount of $125 million. The net proceeds from the issuance of the 2022 Notes were $121.7 million, after deducting the underwriter’s discounts and commissions and offering expenses. We used net proceeds from the issuance of the 2022 Notes as well as cash on hand to repurchase and retire $125 million in principal of the 2032 Notes (see “Convertible Senior Notes Due 2032” below) in separate, privately negotiated transactions. The 2022 Notes bear interest at a rate of 4.25% per annum, and are payable semi-annually in arrears on November 1 and May 1 of each year, beginning on May 1, 2017. The 2022 Notes mature on May 1, 2022 unless earlier converted, redeemed or repurchased. During certain periods and subject to certain conditions (as described in the Indenture governing the 2022 Notes) the 2022 Notes are convertible by the holders into shares of our common stock at an initial conversion rate of 71.9748 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $13.89 per share of common stock), subject to adjustment in certain circumstances as set forth in the Indenture governing the 2022 Notes. We have the right and the intention to settle any such future conversions in cash. Prior to November 1, 2019, the 2022 Notes are not redeemable. On or after November 1, 2019, we may redeem all or any portion of the 2022 Notes, at our option, subject to certain conditions, at a redemption price payable in cash equal to 100% of the principal amount to be redeemed, plus accrued and unpaid interest, and a “make-whole premium” with a value equal to the present value of the remaining scheduled interest payments of the 2022 Notes to be redeemed through May 1, 2022. Holders of the 2022 Notes may require us to repurchase the notes following a “fundamental change,” as defined in the indenture governing the 2022 Notes. The Indenture governing the 2022 Notes contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the trustee under the Indenture or the holders of not less than 25% in aggregate principal amount then outstanding under the 2022 Notes may declare the entire principal amount of all the notes, and the interest accrued on such notes, if any, to be immediately due and payable. In the case of certain events of bankruptcy, insolvency or reorganization relating to us or a principal subsidiary, the principal amount of the 2022 Notes together with any accrued and unpaid interest thereon will automatically be and become immediately due and payable. The 2022 Notes are accounted for by separating the net proceeds between long-term debt and shareholders’ equity. In connection with the issuance of the 2022 Notes, we recorded a debt discount of $16.9 million ($11.0 million net of tax) as a result of separating the equity component. To arrive at the debt value, we estimated the fair value of the liability component of the 2022 Notes as of October 26, 2016 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 pricing and an expected life of 5.5 years. The effective interest rate for the 2022 Notes is 7.3% after considering the effect of the accretion of the related debt discount that represented the equity component of the 2022 Notes at their inception. The remaining unamortized amount of the debt discount of the 2022 Notes was $13.9 million and $16.5 million at December 31, 2017 and 2016, respectively. Convertible Senior Notes Due 2032 In March 2012, we completed a public offering and sale of our Convertible Senior Notes due 2032 (the “2032 Notes”) in the aggregate principal amount of $200 million, $60 million of which are currently outstanding. 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 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 our 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 circumstances as set forth in the Indenture governing the 2032 Notes. We have the right and the intention to settle any such future conversions in cash. 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 holders 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 indenture governing the 2032 Notes. We elected to repurchase $7.3 million, $7.6 million and $125 million, respectively, in aggregate principal amount of the 2032 Notes in June, July and November of 2016, respectively. For the year ended December 31, 2016, we recognized a net loss of $3.5 million related to the repurchase of the 2032 Notes, which is presented as “Loss on early extinguishment of long-term debt” in the accompanying consolidated statements of operations. On February 14, 2018, pursuant to the terms of the Indenture governing the 2032 Notes, we notified the holders that they have the option to require us to purchase their outstanding 2032 Notes on March 15, 2018. The 2032 Notes are accounted for by separating the net proceeds between long-term debt and shareholders’ equity. In connection with the issuance of the 2032 Notes, we recorded a debt discount of $35.4 million and a separate equity component of $22.5 million. To arrive at the debt value, we estimated the fair value of the liability component of the 2032 Notes as of 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 pricing and an expected life of 6 years. In selecting the expected life, we selected the earliest date the holders 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. The remaining unamortized amount of the debt discount of the 2032 Notes was $0.5 million and $2.6 million at December 31, 2017 and 2016, respectively. MARAD Debt This U.S. government guaranteed financing (the “MARAD Debt”), pursuant to Title XI of the Merchant Marine Act of 1936 administered by the Maritime Administration, was used to finance the construction of the Q4000. The MARAD Debt is collateralized by the Q4000 and is guaranteed 50% by us. The MARAD Debt is payable in equal semi-annual installments, matures in February 2027 and bears interest at a rate of 4.93%. Nordea Credit Agreement In September 2014, Q5000 Holdings entered into a credit agreement (the “Nordea Credit Agreement”) with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) in an amount of up to $250 million. The Nordea Q5000 Loan was funded in the amount of $250 million in April 2015 at the time the Q5000 vessel was delivered to us. The parent company of Q5000 Holdings, Helix Vessel Finance S.à r.l., also a wholly owned Luxembourg subsidiary, guaranteed the Nordea Q5000 Loan. The loan is secured by the Q5000 and its charter earnings as well as by a pledge of the shares of Q5000 Holdings. This indebtedness is non-recourse to Helix. The Nordea Q5000 Loan bears interest at a LIBOR rate plus a margin of 2.5%. The Nordea Q5000 Loan matures on April 30, 2020 and is repayable in scheduled quarterly principal installments of $8.9 million with a balloon payment of $80.4 million at maturity. Q5000 Holdings may elect to prepay amounts outstanding under the Nordea Q5000 Loan without premium or penalty, but may not reborrow any amounts prepaid. Quarterly principal installments are subject to adjustment for any prepayments on this debt. In June 2015, we entered into various interest rate swap contracts to fix the one-month LIBOR rate on a portion of our borrowings under the Nordea Q5000 Loan (Note 17). The total notional amount of the swaps (initially $187.5 million) decreases in proportion to the reduction in the principal amount outstanding under our Nordea Q5000 Loan. The fixed LIBOR rates are approximately 150 basis points. The Nordea Credit Agreement and related loan documents include terms and conditions, including covenants and prepayment requirements, that we consider customary for this type of transaction. The covenants include restrictions on Q5000 Holdings’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 certain minimum financial requirements, including liquidity, consolidated debt service coverage and collateral maintenance. Other In accordance with our Credit Agreement, the 2022 Notes, 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 various leverage ratios, as well as the maintenance of minimum cash balance, net worth, working capital and debt-to-equity requirements. As of December 31, 2017, we were in compliance with these covenants. Scheduled maturities of long-term debt outstanding as of December 31, 2017 are as follows (in thousands):
| Term Loan (1) |  | 2022 Notes |  | 2032 Notes (2) |  | MARAD Debt |  | Nordea Q5000 Loan |  | Total
Less than one year | $ | 7,500 |  |  | $ | — |  |  | $ | 60,115 |  |  | $ | 6,532 |  |  | $ | 35,714 |  |  | $ | 109,861 |
One to two years | 12,500 |  |  | — |  |  | — |  |  | 6,858 |  |  | 35,714 |  |  | 55,072 |
Two to three years | 77,500 |  |  | — |  |  | — |  |  | 7,200 |  |  | 89,286 |  |  | 173,986 |
Three to four years | — |  |  | — |  |  | — |  |  | 7,560 |  |  | — |  |  | 7,560 |
Four to five years | — |  |  | 125,000 |  |  | — |  |  | 7,937 |  |  | — |  |  | 132,937 |
Over five years | — |  |  | — |  |  | — |  |  | 40,913 |  |  | — |  |  | 40,913 |
Total debt | 97,500 |  |  | 125,000 |  |  | 60,115 |  |  | 77,000 |  |  | 160,714 |  |  | 520,329 |
Current maturities | (7,500 | ) |  | — |  |  | (60,115 | ) |  | (6,532 | ) |  | (35,714 | ) |  | (109,861 | )
Long-term debt, less current maturities | 90,000 |  |  | 125,000 |  |  | — |  |  | 70,468 |  |  | 125,000 |  |  | 410,468 |
Unamortized debt discounts (3) | — |  |  | (13,876 | ) |  | (530 | ) |  | — |  |  | — |  |  | (14,406 | )
Unamortized debt issuance costs (4) | (1,658 | ) |  | (2,295 | ) |  | (46 | ) |  | (4,513 | ) |  | (1,784 | ) |  | (10,296 | )
Long-term debt | $ | 88,342 |  |  | $ | 108,829 |  |  | $ | (576 | ) |  | $ | 65,955 |  |  | $ | 123,216 |  |  | $ | 385,766 |
(1) | Term Loan borrowing pursuant to the Credit Agreement matures in June 2020.
(2) | The holders of our remaining 2032 Notes may require us to repurchase the notes in March 2018. Accordingly, these notes are classified as current liabilities.
(3) | The 2022 Notes will increase to their face amount through accretion of the debt discount through May 2022. The 2032 Notes will increase to their face amount through accretion of the debt discount through March 2018.
(4) | Debt issuance costs are amortized over the term of the applicable debt agreement.
The following table details the components of our net interest expense (in thousands):
| Year Ended December 31,
| 2017 |  | 2016 |  | 2015
Interest expense | $ | 38,274 |  |  | $ | 45,110 |  |  | $ | 40,024 |
Interest income | (2,590 | ) |  | (2,086 | ) |  | (2,068 | )
Capitalized interest | (16,906 | ) |  | (11,785 | ) |  | (11,042 | )
Net interest expense | $ | 18,778 |  |  | $ | 31,239 |  |  | $ | 26,914 |

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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 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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