Cal Dive amends credit facility to allow issuance of convertible notes

By Marisa Wong

Madison, Wis., July 12 - Cal Dive International, Inc. entered into a second amendment to its credit agreement with Bank of America, NA as administrative agent, according to an 8-K filing with the Securities and Exchange Commission.

The second amendment, which became effective July 9, modifies the credit agreement to

• Allow the company to issue up to $100 million of senior notes convertible into cash, common stock or a combination of cash and stock, so long as any such notes mature at least six months after expiration of the credit agreement and are not required to be prepaid prior to their maturity.

All of the proceeds from these notes are to be used to prepay outstanding amounts under the credit facility;

• Exclude any convertible senior notes from the definition of consolidated funded indebtedness, which means they will be excluded from the calculation of the company's consolidated leverage ratio;

• Require that the company maintain a threshold of $25 million in liquidity in certain circumstances where cash payments are made on any convertible senior notes as a result of partial or full conversion of the notes into cash;

• Remove the requirement that the company maintain a consolidated fixed charge coverage ratio for the fiscal quarter ended June 30 of not less than 1.25 to 1; and

• Remove the requirement that the company maintain a consolidated leverage ratio for the fiscal quarter ended June 30 of 5.75 to 1.

Following the amendment of its senior secured credit facility, Cal Dive announced on Thursday that it plans to issue $75 million of convertible senior notes due 2017. There will be an $11.25 million over-allotment option.

As stipulated in the updated agreement, proceeds from the new notes will be used to repay borrowings. As of July 12, Cal Dive has $131.8 million outstanding under its term loan. The company said it expects to have $60.3 million outstanding after completing the notes offering.

The facility, originally dated April 26, 2011, was previously amended on Oct. 7, 2011.

Cal Dive is a Houston-based offshore oil and gas company.

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