Trico Marine enters commitment letter with 11 ⅞% senior noteholders, plans to amend covenants

By Jennifer Lanning Drey

Portland, Ore., June 17 - Trico Marine Services, Inc. entered into a commitment letter with some of the holders of Trico Shipping's 11 7/8% senior secured notes due 2014 under which the holders have agreed to purchase up to an additional $50 million of notes, according to an 8-K filed Thursday with the Securities and Exchange Commission.

The commitment letter requires Trico Marine to pay a commitment fee equal to 2% of the total commitment and a closing fee, also equal to 2% of the total commitment, plus other expenses.

The commitment expires if the additional notes are not issued on or before 5 p.m. ET on July 7.

The additional notes would accrue interest at a rate of 15%.

Interest on the notes would be payable semiannually in cash on May 1 and Nov. 1.

The additional notes would mature on Nov. 1, 2014.

Consent solicitation

The company also said Trico Shipping is preparing to solicit consents from holders of its 11 7/8% senior secured notes due 2014 to modify covenants, defaults, remedies, definitions and related provisions contained in the indenture.

Trico Marine said under the amendments being sought, events of default would exclude a bankruptcy by the company, Trico Holdco, LLC and/or Trico Marine Cayman, LP from constituting a default during the forbearance period.

Additionally, various provisions of the shipping indenture will be amended to permit the issuance of up to $65 million principal amount of additional notes.

The current $50 million secured credit facility basket will be increased to $65 million, reduced by the principal amount of the notes repurchased by Trico Shipping, provided that such note repurchases do not reduce the debt that may be incurred under the basket below $50 million.

Flexibility will be added to permit the issuance of up to $15 million of cash collateralized letters of credit.

Additionally, during the forbearance period:

• The stated interest rate on the notes will be increased by 2%, provided no additional notes will be paid additional interest unless expressly provided in the terms thereof;

• Trico Shipping, the subsidiary guarantors and Trico Supply AS will be subject to a monthly minimum liquidity covenant. Trico Supply AS will be subject to an EBITDA covenant;

• The existing grace period for late interest payments on the notes will be reduced from 30 days to 5 days. The existing grace period for general covenant defaults will be reduced from 60 days to 30 days;

• The event of default relating to cross acceleration of other indebtedness will be modified to reduce the threshold from $20 million to $5 million and to modify it to be triggered upon a payment default or other default entitling the holders of other indebtedness to accelerate their debt;

• The carve-out to the restricted payment basket allowing for the payment to the company, as a dividend or distribution, of receivables from Tebma Shipyard Ltd. will be removed; and

• Trico Shipping, Trico Supply AS and the restricted subsidiaries will not be permitted to make more than $5 million in restricted payments to the parent entities and will not be permitted to make any payments if there is an event of default.

Support agreement

In connection with the proposed consent solicitation, Trico Marine, Trico Shipping AS, subsidiaries of Trico Shipping that guarantee its 11 7/8% senior secured notes due 2014 and certain holders of a majority of the outstanding principal amount of the 11 7/8% senior secured notes have entered into a support agreement.

Under the agreement, each consenting holder agrees to use commercially reasonable efforts to cause its consent to be tendered to the trustee under the shipping indenture.

Each consenting holder also agrees not to pursue any right or remedy against the company nor to initiate any litigation with respect to the Shipping notes.

If the proposed amendments fail to become operative by July 1, the company, Trico Shipping and the guarantors jointly agree to pay a forbearance fee of $5 per $1,000 principal amount of shipping notes held or beneficially owned by the consenting holders by July 31.

If the supplemental indenture containing the proposed amendments becomes operative and the consenting holders receive the consent payment or become entitled to receive the consent payment, those consenting holders will not be entitled to receive the forbearance fee under the agreement.

Grace period expires

As previously reported, Trico Marine did not make the interest payment due May 15 on its 8 1/8% secured convertible debentures due 2013.

On June 17 the 30-day grace period permitted under the indenture for the notes expired, triggering an event of default.

As a result, the trustee for the 8 1/8% notes or 25% of the holders of the notes may elect to accelerate the notes making them immediately due and payable.

The trustee may also exercise rights with respect to the collateral securing the notes.

However, the trustee is prevented from exercising those rights until the repayment in full of the company's obligations under its second amended and restated credit agreement.

Additional forbearance agreement

The failure to make the interest payment on the 8 1/8% notes will also trigger an event of default under the Trico Shipping working capital facility.

Trico Shipping has entered into a forbearance agreement with the lenders of the Trico Shipping working capital facility under which the lenders have agreed not to accelerate the outstanding indebtedness or exercise their rights to collateral as long as the 8 1/8% notes have not been accelerated.

The agreement will remain in effect until June 21 or July 14, if the company receives a satisfactory forbearance agreement from the holders of the 8 1/8% notes.

Trico Marine is also negotiating with the lenders under the Trico Shipping working capital facility to obtain another forbearance and amendment to the facility on substantially the same terms as the support agreement and amendments related to the 11 7/8% senior secured notes due 2014.

Until such a forbearance is executed, if the 8 1/8% notes are accelerated, then the lenders under the Trico Shipping working capital facility have the ability to accelerate the outstanding debt.

If the Trico Shipping working capital facility is accelerated, it would result in an event of default, the company said.

Trico is a marine services company based in The Woodlands, Texas.

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