Long-Term Debt

9 Months Ended

Jun. 30, 2011

Long-Term Debt

Long-Term Debt

5. LONG-TERM DEBT

A summary of long-term debt is as follows (in thousands):

	June 30, 2011		September 30, 2010
2007 credit facility, bearing interest (market adjustable) at approximately 1.1% per annum at September 30, 2010	$	—	$	180,000
2008 credit facility, bearing interest (market adjustable) at approximately 1.8% per annum at September 30, 2010	$	—	$	50,000
2011 credit facility, bearing interest (market adjustable) at approximately 2.8% per annum at June 30, 2011	$	400,000	$	—
	$	400,000	$	230,000

During May 2011, we entered into a $750 million secured reducing revolving credit agreement with Nordea Bank Finland plc, New York Branch, as Administrative Agent and several lenders (the "2011 Credit Agreement"). The 2011 Credit Agreement includes provisions for incremental commitments up to $350 million, bringing the total commitment to $1.1 billion, if exercised. The maturity of the 2011 Credit Agreement is May 2016, subject to acceleration upon certain specified events of default, including but not limited to: delinquent payments, bankruptcy filings, breaches of representation or covenants, material adverse judgments, guarantees or security documents not being in full effect, non-compliance with the Employee Retirement Income Security Act of 1974, defaults under other agreements, and a change of control. The 2011 Credit Agreement contains limitations on our ability to incur liens; merge, consolidate or sell substantially all assets; pay cash dividends; incur additional indebtedness; make advances, investments or loans; and transact with affiliates. The 2011 Credit Agreement is secured primarily by first preferred mortgages on six of our active drilling units (the Atwood Aurora, the Atwood Beacon, the Atwood Eagle, the Atwood Falcon, the Atwood Hunter, and the Atwood Osprey).

Loans under this facility will bear interest of the Eurodollar Rate plus a margin of 2.50%.The credit agreement supports the issuance, when required, of standby letters of credit. Under the 2011 Credit Agreement, we will pay a commitment fee of 1.0% per annum on the unused portion of the underlying commitment. As of June 30, 2011, we have $350 million of funds available to borrow under this credit facility, with standby letters of credit issued in the aggregate amount of $2.2 million.

The 2011 Credit Agreement contains various financial covenants that impose a maximum leverage ratio of 4.0 to 1.0, a debt to capitalization ratio of 0.5 to 1.0, a minimum interest expense coverage ratio of 3.0 to 1.0 and a minimum collateral maintenance of 150% of the aggregate amount outstanding under the debt facility. We were in compliance with all financial covenants under the 2011 Credit Agreement at June 30, 2011, at execution and at all times subsequent to the execution of this credit agreement in May through June 30, 2011. No additional funds have been borrowed under our credit agreement subsequent to June 30, 2011 to the date of this report.

Prior to the execution of the 2011 Credit Agreement, we had a 5-year $300 million credit facility executed in October 2007 (as amended from time to time, the "2007 Credit Agreement") and a 5-year $280 million credit facility executed in November 2008 (as amended from time to time, the "2008 Credit Agreement"). Both the 2008 Credit Agreement and the 2007 Credit Agreement were retired during May 2011 with funding from the 2011 Credit Agreement. We were in compliance with all financial covenants under the 2007 Credit Agreement and 2008 Credit Agreement during the period until execution of the 2011 Credit Agreement.