| Item 1.01 |
Entry into a Material Definitive Agreement. |
On April 8, 2022, Oceaneering International, Inc., as borrower (the “Company”), entered into a new secured revolving credit facility with a group of commercial banks, as lenders, and Wells Fargo Bank, National Association, as administrative agent (the “Credit Agreement”). The Credit Agreement establishes a $215,000,000 secured revolving credit facility that matures on April 8, 2026, and it includes a $100,000,000 sublimit for the issuance of letters of credit. The Company’s obligations under the Credit Agreement are guaranteed by its subsidiaries Grayloc Products, L.L.C., Marine Production Systems, Ltd. and Oceaneering Canada Limited (collectively, the “Guarantors”). Obligations under the Credit Agreement are secured by first priority liens on certain of the Company’s assets and those of the Guarantors, including, among other things, intellectual property, inventory, accounts receivable, equipment and equity interests in subsidiaries.
The Company may borrow under the Credit Agreement at either (1) a base rate, determined as the greatest of (A) the prime rate of Wells Fargo Bank, National Association, (B) the federal funds effective rate plus 1⁄2 of 1% and (C) Adjusted Term SOFR (as defined in the Credit Agreement) for a one-month tenor plus 1%, in each case plus the applicable margin, which varies from 1.25% to 2.25% depending on the Company’s Consolidated Net Leverage Ratio (as defined in the Credit Agreement), or (2) Adjusted Term SOFR plus the applicable margin, which varies from 2.25% to 3.25% depending on the Company’s Consolidated Net Leverage Ratio. The Company will also pay a facility fee based on the amount of the underlying commitment that is being utilized, which fee varies from 0.300% to 0.375%, with the higher rate owed when the Company uses the facility less.
The Credit Agreement includes financial covenants that are tested on a quarterly basis, based on the rolling four-quarter period that ends on the last day of each fiscal quarter. The maximum permitted Consolidated Net Leverage Ratio is initially 4.00 to 1.00 and decreases to 3.25 to 1.00 during the term of the facility. The minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) is 3.00 to 1.00 throughout the term of the facility.
In addition, the Credit Agreement contains various covenants that limit the ability of the Company and its subsidiaries to, among other things: (i) incur or assume indebtedness, (ii) grant or assume liens; (iii) make investments and acquisitions; (iv) merge or make certain other fundamental changes; (v) sell or transfer assets; and (vi) repurchase equity, make dividends and certain other restricted payments.
The Credit Agreement contains customary events of default for a secured revolving credit facility. If an event of default relating to bankruptcy or other insolvency events occurs, all indebtedness under the Credit Agreement will immediately become due and payable. If any other event of default exists under the Credit Agreement, the lenders may terminate their commitments to lend the Company money, accelerate the maturity of the indebtedness outstanding under the Credit Agreement and exercise other rights and remedies. In addition, if any event of default exists under the Credit Agreement, the lenders may commence foreclosure or other actions against the collateral.
This description of the Credit Agreement is a summary only and is qualified in its entirety by the full and complete terms of the Credit Agreement, which is attached as Exhibit 10.1 hereto.
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