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Long-Term Debt | 9 Months Ended
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Sep. 30, 2020
Debt Disclosure [Abstract] |
Long-term Debt | Long-Term Debt Scheduled maturities of our long-term debt outstanding as of September 30, 2020 are as follows (in thousands):
| Term Loan (1) |  | 2022 Notes |  | 2023 Notes |  | 2026 Notes |  | MARAD Debt |  | Nordea Q5000 Loan |  | Total
Less than one year | $ | 3,500 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 7,560 |  |  | $ | 62,500 |  |  | $ | 73,560 |
One to two years | 27,125 |  |  | 35,000 |  |  | — |  |  | — |  |  | 7,937 |  |  | — |  |  | 70,062 |
Two to three years | — |  |  | — |  |  | 30,000 |  |  | — |  |  | 8,333 |  |  | — |  |  | 38,333 |
Three to four years | — |  |  | — |  |  | — |  |  | — |  |  | 8,749 |  |  | — |  |  | 8,749 |
Four to five years | — |  |  | — |  |  | — |  |  | — |  |  | 9,186 |  |  | — |  |  | 9,186 |
Over five years | — |  |  | — |  |  | — |  |  | 200,000 |  |  | 14,645 |  |  | — |  |  | 214,645 |
Gross debt | 30,625 |  |  | 35,000 |  |  | 30,000 |  |  | 200,000 |  |  | 56,410 |  |  | 62,500 |  |  | 414,535 |
Unamortized debt discounts (2) | — |  |  | (1,560) |  |  | (2,869) |  |  | (43,133) |  |  | — |  |  | — |  |  | (47,562) |
Unamortized debt issuance costs (3) | (239) |  |  | (235) |  |  | (462) |  |  | (5,761) |  |  | (3,171) |  |  | (159) |  |  | (10,027) |
Total debt | 30,386 |  |  | 33,205 |  |  | 26,669 |  |  | 151,106 |  |  | 53,239 |  |  | 62,341 |  |  | 356,946 |
Less: current maturities | (3,500) |  |  | — |  |  | — |  |  | — |  |  | (7,560) |  |  | (62,341) |  |  | (73,401) |
Long-term debt | $ | 26,886 |  |  | $ | 33,205 |  |  | $ | 26,669 |  |  | $ | 151,106 |  |  | $ | 45,679 |  |  | $ | — |  |  | $ | 283,545 |
(1) Term Loan pursuant to the Credit Agreement (as defined below) matures in December 2021. (2) Convertible Senior Notes due 2022, 2023 and 2026 will increase to their face amounts through accretion of their debt discounts to interest expense through May 2022, September 2023 and February 2026, respectively. (3) Debt issuance costs are amortized to interest expense over the term of the applicable debt agreement. Below is a summary of certain components of our indebtedness: Credit Agreement We have a credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America, N.A. (“Bank of America”). The Credit Agreement is comprised of a Term Loan with a remaining balance of $30.6 million as of September 30, 2020 and a Revolving Credit Facility with a maximum availability of $175 million that matures on December 31, 2021. 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 of up to $100 million with respect to an increase in the Revolving Credit Facility. As of September 30, 2020, we had no borrowings under the Revolving Credit Facility, and our available borrowing capacity under that facility, based on the leverage ratios, totaled $144.7 million, net of $3.4 million of letters of credit issued under that facility. Borrowings under the Credit Agreement bear interest, at our election, at either Bank of America’s base rate, the LIBOR or a comparable successor rate, or a combination thereof. The Term Loan bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin of 2.25%. The Term Loan bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin of 3.25%. The interest rate on the Term Loan was 3.40% as of September 30, 2020. Borrowings under the Revolving Credit Facility bearing interest at the base rate will bear interest at a per annum rate equal to Bank of America’s base rate plus a margin ranging from 1.50% to 2.50%. Borrowings under the Revolving Credit Facility bearing interest at a LIBOR rate will bear interest per annum at the LIBOR or a comparable successor rate selected by us plus a margin ranging from 2.50% to 3.50%. A letter of credit fee is payable by us equal to the applicable margin for LIBOR rate loans multiplied by the daily amount available to be drawn under the applicable letter of credit. Margins on borrowings under the Revolving Credit Facility will vary in relation to the Consolidated Total Leverage Ratio (as defined below) as provided for in the Credit Agreement. We also pay a fixed commitment fee of 0.50% per annum on the unused portion of the Revolving Credit Facility. The Term Loan principal is required to be repaid in quarterly installments of 2.5% of its aggregate principal amount, with a balloon payment at maturity. Installments are subject to adjustment for any prepayments. We may prepay indebtedness outstanding under the Term Loan without premium or penalty, but may not reborrow any amounts prepaid. We may prepay indebtedness outstanding under the Revolving Credit Facility without premium or penalty, and may reborrow any amounts prepaid up to the amount available under the Revolving Credit Facility. Our obligations under the Credit Agreement, and those of our subsidiary guarantors under their guarantee, are secured by (i) most of the assets of the parent company, (ii) the shares of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Helix Robotics Solutions Limited and (iii) most of the assets of our domestic subsidiaries (other than Cal Dive I - Title XI, Inc.) and of Helix Robotics Solutions Limited. In addition, these obligations are secured by pledges of up to 66% of the shares of certain foreign subsidiaries (restricted subsidiaries). The Credit Agreement and the other documents entered into in connection with the Credit Agreement include terms and conditions, including covenants, that we consider customary for this type of transaction. The covenants include certain restrictions on our and certain of 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 ratio requirements of EBITDA to interest charges (Consolidated Interest Coverage Ratio), funded debt to EBITDA (Consolidated Total Leverage Ratio) and secured funded debt to EBITDA (Consolidated Secured Leverage Ratio). We may designate one or more of our new foreign subsidiaries as subsidiaries not generally subject to the covenants in the Credit Agreement (the “Unrestricted Subsidiaries”). The Unrestricted Subsidiaries are not pledged as collateral under the Credit Agreement, and the debt and EBITDA of the Unrestricted Subsidiaries, with the exception of Helix Q5000 Holdings, S.à r.l. (“Q5000 Holdings”), a wholly owned Luxembourg subsidiary of Helix Vessel Finance S.à r.l., are not included in the calculations of our financial covenants except to the extent of any cash actually distributed by such subsidiary to Helix. Convertible Senior Notes Due 2022 (“2022 Notes”) 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, 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. We have the right and the intention to settle the principal amount of any such future conversions in cash. Prior to November 1, 2019, the 2022 Notes were not redeemable. Beginning November 1, 2019, if certain conditions are met, we may redeem all or any portion of the 2022 Notes 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” (as defined in the indenture governing the 2022 Notes). 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 subsidiary, the principal amount of the 2022 Notes together with any accrued and unpaid interest thereon will become immediately due and payable. The 2022 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which is presented as long-term debt, net of the unamortized debt discount and debt issuance costs. On August 14, 2020, we repurchased $90 million in aggregate principal amount of the 2022 Notes for $89.1 million. We applied $81.7 million of the repurchase price to the acquisition of the debt component of the 2022 Notes and recognized a gain of $3.3 million. The remaining unamortized debt discount of the 2022 Notes was $1.6 million at September 30, 2020 and $8.0 million at December 31, 2019. We applied the remaining $7.4 million of the repurchase price to the re-acquisition of the equity component. The remaining equity component of the 2022 Notes was $9.5 million ($5.3 million net of tax) at September 30, 2020 and $16.9 million ($11.0 million net of tax) at December 31, 2019. The effective interest rate for the 2022 Notes is 7.3% after considering the effect of the accretion of the related debt discount over the term of the 2022 Notes. For the three- and nine-month periods ended September 30, 2020, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $1.3 million and $5.6 million, respectively. For the three- and nine-month periods ended September 30, 2019, interest expense (including amortization of the debt discount) related to the 2022 Notes totaled $2.1 million and $6.2 million, respectively. Convertible Senior Notes Due 2023 (“2023 Notes”) The 2023 Notes bear interest at a rate of 4.125% per annum and are payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2018. The 2023 Notes mature on September 15, 2023 unless earlier converted, redeemed or repurchased. During certain periods and subject to certain conditions, the 2023 Notes are convertible by the holders into shares of our common stock at an initial conversion rate of 105.6133 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $9.47 per share of common stock), subject to adjustment in certain circumstances. We have the right and the intention to settle the principal amount of any such future conversions in cash. Prior to March 15, 2021, the 2023 Notes are not redeemable. On or after March 15, 2021, if certain conditions are met, we may redeem all or any portion of the 2023 Notes 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” (as defined in the indenture governing the 2023 Notes). Holders of the 2023 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2023 Notes). The indenture governing the 2023 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 2023 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 significant subsidiary, the principal amount of the 2023 Notes together with any accrued and unpaid interest thereon will become immediately due and payable. The 2023 Notes were initially separated between the equity component recognized in shareholders’ equity and the debt component, which is presented as long-term debt, net of the unamortized debt discount and debt issuance costs. On August 14, 2020, we repurchased $95 million in aggregate principal amount of the 2023 Notes for $94.1 million. We applied $78.2 million of the repurchase price to the re-acquisition of the debt component of the 2023 Notes and recognized a gain of $5.9 million. The remaining unamortized debt discount of the 2023 Notes was $2.9 million at September 30, 2020 and $14.5 million at December 31, 2019. We applied the remaining $15.9 million of the repurchase price to the re-acquisition of the equity component. The remaining equity component of the 2023 Notes was $4.2 million ($3.6 million net of tax) at September 30, 2020 and $20.1 million ($15.9 million net of tax) at December 31, 2019. The effective interest rate for the 2023 Notes is 7.8% after considering the effect of the accretion of the related debt discount over the term of the 2023 Notes. For the three- and nine-month periods ended September 30, 2020, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $1.3 million and $5.6 million, respectively. For the three- and nine-month periods ended September 30, 2019, interest expense (including amortization of the debt discount) related to the 2023 Notes totaled $2.1 million and $6.3 million, respectively. Convertible Senior Notes Due 2026 (“2026 Notes”) On August 14, 2020, we issued $200 million in aggregate principal amount of the 2026 Notes. The net proceeds from the issuance of the 2026 Notes were approximately $192.5 million, after deducting the underwriting discounts and commissions and estimated offering expenses. As discussed further in Note 9, we used approximately $10.5 million of the net proceeds to enter into privately negotiated capped call transactions in connection with the issuance of the 2026 Notes. We used approximately $183.2 million, consisting of the remainder of the net proceeds, together with cash on hand, to repurchase $90 million in aggregate principal amount of the 2022 Notes and $95 million in aggregate principal amount of the 2023 Notes (see “Convertible Senior Notes Due 2022” and “Convertible Senior Notes Due 2023” above) in privately negotiated transactions. The 2026 Notes bear interest at a rate of 6.75% per annum and are payable semi-annually in arrears on February 15 and August 15 of each year, beginning on February 15, 2021. The 2026 Notes mature on February 15, 2026 unless earlier converted, redeemed or repurchased. During certain periods and subject to certain conditions, the 2026 Notes are convertible by the holders into shares of our common stock at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount (which represents an initial conversion price of approximately $6.97 per share of common stock), subject to adjustment in certain circumstances. We have the right and the intention to settle the principal amount of any such future conversions in cash. Prior to August 15, 2023, the 2026 Notes are not redeemable. On or after August 15, 2023, if certain conditions are met, we may redeem all or any portion of the 2026 Notes 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” (as defined in the indenture governing the 2026 Notes). Holders of the 2026 Notes may require us to repurchase the notes following a “fundamental change” (as defined in the indenture governing the 2026 Notes). The indenture governing the 2026 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 2026 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 significant subsidiary, the principal amount of the 2026 Notes together with any accrued and unpaid interest thereon will become immediately due and payable. The 2026 Notes are separated between the equity component of $43.8 million ($34.6 million net of tax) recognized in shareholders’ equity and the debt component which is presented as long-term debt, net of the unamortized debt discount and debt issuance costs. The effective interest rate for the 2026 Notes is 12.4% after considering the effect of the accretion of the related debt discount over the term of the 2026 Notes. For each of the three- and nine-month periods ended September 30, 2020, interest expense (including amortization of the debt discount) related to the 2026 Notes was $2.4 million. The remaining unamortized debt discount of the 2026 Notes was $43.1 million at September 30, 2020. 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 was delivered to us. Helix Vessel Finance S.à r.l., Q5000 Holdings's parent, which is a direct wholly owned Luxembourg subsidiary of Helix, 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. We amended the Nordea Credit Agreement on March 11, 2020. Prior to the amendment, the Nordea Q5000 Loan incurred interest at a LIBOR rate plus a margin of 2.5% and was repayable in scheduled quarterly principal installments of $8.9 million with a balloon payment of $80.4 million on April 30, 2020. The amendment increases the margin to 2.75%, maintains the existing quarterly amortization requirements, and extends the final maturity to January 31, 2021 with a balloon payment on that date of $53.6 million. The remaining principal balance and unamortized debt issuance costs related to the Nordea Q5000 Loan are classified as current in the accompanying condensed consolidated balance sheets. We may elect to prepay indebtedness 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. 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 the Credit Agreement, the 2022 Notes, the 2023 Notes, the 2026 Notes, the MARAD Debt agreements and the Nordea Credit Agreement, we are required to comply with certain covenants, including with respect to the Credit Agreement, certain financial ratios such as a consolidated interest coverage ratio, a consolidated total leverage ratio and a consolidated secured leverage ratio, as well as the maintenance of minimum cash balance, net worth, working capital and debt-to-equity requirements. As of September 30, 2020, we were in compliance with these covenants. The following table details the components of our net interest expense (in thousands):
| Three Months Ended September 30, |  |  |  | Nine Months Ended September 30, |  |
| 2020 |  | 2019 |  | 2020 |  | 2019
Interest expense | $ | 8,007 |  |  | $ | 7,694 |  |  | $ | 22,580 |  |  | $ | 23,635 |
Interest income | (409) |  |  | (652) |  |  | (991) |  |  | (2,085) |
Capitalized interest | — |  |  | (5,141) |  |  | (1,182) |  |  | (15,346) |
Net interest expense | $ | 7,598 |  |  | $ | 1,901 |  |  | $ | 20,407 |  |  | $ | 6,204 |

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