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Long-Term Debt

12 Months Ended

Dec. 31, 2023

Note 7 — Long-Term Debt

Long-term debt consists of the following (in thousands):


	December 31,
	2023		2022
2023 Notes (matured September 2023)	$	—	$	30,000
2026 Notes (mature February 2026)		40,199		200,000
MARAD Debt (matures February 2027)		32,580		40,913
2029 Notes (mature March 2029)		300,000		—
Gross debt		372,779		270,913
Unamortized debt discount		(1,404)		—
Unamortized debt issuance costs		(9,653)		(6,838)
Total debt		361,722		264,075
Less current maturities ⁽¹⁾		(48,292)		(38,200)
Long-term debt	$	313,430	$	225,875

(1)

Current maturities as of December 31, 2023 included the carrying amount of the 2026 Notes that are subject to conversion and/or redemption in 2024 (see Note 19 for their fair value). Current maturities as of December 31, 2022 included the carrying amount of the 2023 Notes that matured in September 2023. Current maturities as of December 31, 2023 and 2022 both included the current portion of the MARAD Debt.

Credit Agreement

On September 30, 2021 we entered into an asset-based credit agreement with Bank of America, N.A. (“Bank of America”), Wells Fargo Bank, N.A. and Zions Bancorporation and subsequently we entered into amendments to the credit agreement on July 1, 2022, June 23,2023 and November 15, 2023 (collectively, the “Amended ABL Facility”). The Amended ABL Facility provides for a $120 million asset-based revolving credit facility, which matures on September 30, 2026, with a springing maturity 91 days prior to the maturity of any outstanding indebtedness with a principal amount in excess of $50 million. The Amended ABL Facility also permits us to request an increase of the facility by up to $30 million, subject to certain conditions.

Commitments under the Amended ABL Facility are comprised of separate U.S. and U.K. revolving credit facility commitments of $85 million and $35 million, respectively. The Amended ABL Facility provides funding based on a borrowing base calculation that includes eligible U.S. and U.K. customer accounts receivable and cash, and provides for a $20 million sub-limit for the issuance of letters of credit. As of December 31, 2023, we had no borrowings under the Amended ABL Facility, and our available borrowing capacity under that facility, based on the borrowing base, totaled $99.3 million, net of $6.9 million of letters of credit issued under that facility.

We and certain of our U.S. and U.K. subsidiaries are the current borrowers under the Amended ABL Facility, whose obligations under the Amended ABL Facility are guaranteed by those borrowers and certain other U.S. and U.K. subsidiaries, excluding Cal Dive I – Title XI, Inc. (“CDI Title XI”), Helix Offshore Services Limited and certain other enumerated subsidiaries. Other subsidiaries may be added as guarantors of the facility in the future. The Amended ABL Facility is secured by all accounts receivable and designated deposit accounts of the U.S. borrowers and guarantors, and by substantially all of the assets of the U.K. borrowers and guarantors.

U.S. borrowings under the Amended ABL Facility bear interest at the Term SOFR (also known as CME Term SOFR as administered by CME Group, Inc.) rate plus a margin of 1.50% to 2.00% or at a base rate plus a margin of 0.50% to 1.00%. U.K. borrowings under the Amended ABL Facility denominated in U.S. dollars bear interest at the Term SOFR rate with SOFR adjustment of 0.10% and U.K. borrowings denominated in the British pound bear interest at the SONIA daily rate, each plus a margin of 1.50% to 2.00%. We also pay a commitment fee of 0.375% to 0.50% per annum on the unused portion of the facility.

The Amended ABL Facility includes certain limitations on our ability to incur additional indebtedness, grant liens on assets, pay dividends and make distributions on equity interests, dispose of assets, make investments, repay certain indebtedness, engage in mergers, and other matters, in each case subject to certain exceptions. The Amended ABL Facility contains customary default provisions which, if triggered, could result in acceleration of all amounts then outstanding. The Amended ABL Facility requires us to satisfy and maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 if availability is less than the greater of 10% of the borrowing base or $12 million. The Amended ABL Facility also requires us to maintain a pro forma minimum excess availability of $30 million for the 91 days prior to the maturity of each of our outstanding senior notes and for any portion of the Alliance earn-out payment to be made in cash.

The Amended ABL Facility also (i) limits the amount of permitted debt for the deferred purchase price of property not to exceed $50 million, and (ii) provides for potential ESG-related pricing adjustments based on specific metrics and performance targets determined by us and Bank of America, as agent with respect to the Amended ABL Facility.

2026 Notes

The 2026 Notes bear interest at a coupon interest rate of 6.75% per annum 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 by us (see below). The 2026 Notes are convertible by their holders at any time beginning November 17, 2025 at an initial conversion rate of 143.3795 shares of our common stock per $1,000 principal amount, which initially represented 28,675,900 shares at an initial conversion price of approximately $6.97 per share of common stock. Upon conversion, we have the right to satisfy our conversion obligation by delivering cash, shares of our common stock or any combination thereof. In order to reduce the potential dilution of the 2026 Notes to shareholders’ equity, we entered into capped call transactions (the “2026 Capped Calls”) in August 2020 concurrent with the 2026 Notes offering (Note 9). The 2026 Capped Calls effectively increase the conversion price of the 2026 Notes to approximately $8.42 per share. However, the 2026 Capped Calls are separate transactions from the 2026 Notes and do not change the holders’ rights under the 2026 Notes, and holders of the 2026 Notes do not have any rights with respect to the 2026 Capped Calls.

The effective interest rate for the 2026 Notes is 7.6%. For the years ended December 31, 2023, 2022 and 2021, total interest expense related to the 2026 Notes was $14.6 million, $14.8 million and $14.7 million, respectively, with coupon interest expense of $13.3 million, $13.5 million and $13.5 million, respectively, and the amortization of debt issuance costs of $1.3 million, $1.3 million and $1.2 million, respectively.

Prior to November 17, 2025, holders of the 2026 Notes may convert their notes if the closing price of our common stock exceeds 130% of the conversion price for at least 20 days in the period of 30 consecutive trading days ending on the last trading day of the preceding fiscal quarter (share price condition) or if the trading price of the 2026 Notes is equal to or less than 97% of the conversion value of the notes during the five consecutive business days immediately after any ten consecutive trading day period (trading price condition). The 2026 Notes have been convertible since October 1, 2023 and will continue to be convertible through March 31, 2024 as a result of the share price condition being met. Holders of the 2026 Notes may also convert their notes if we make certain distributions on shares of our common stock or engage in certain corporate transactions, in which case the holders may be entitled to an increase in the conversion rate, depending on the price of our common shares and the time remaining to maturity, of up to 64.5207 shares of our common stock per $1,000 principal amount.

Prior to August 15, 2023, the 2026 Notes were not redeemable. Beginning August 15, 2023, we may, at our option, redeem all or any portion of the 2026 Notes if the price of our common stock has been at least 130% of the conversion price for at least 20 trading days during any 30 consecutive trading day period preceding the date we provide a notice of redemption and the trading day immediately preceding such date (redemption price condition). Any redemption would be payable in cash equal to 100% of the principal amount plus accrued and unpaid interest and a “make-whole premium” calculated as the present value of all remaining scheduled interest payments. The 2026 Notes were redeemable as of December 31, 2023 based on the redemption price condition being met and on January 16, 2024 we issued a notice for the redemption of remaining 2026 Notes (see below). Holders of the 2026 Notes may convert any of their notes if we call the notes for redemption. Holders of the 2026 Notes may also require us to repurchase the notes following a “fundamental change,” which includes a change of control or a termination of trading of our common stock (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, the entire principal amount of and any accrued interest on the notes may be declared 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 interest will become immediately due and payable.

In December 2023, we entered into privately negotiated agreements with certain holders of our 2026 Notes to repurchase $159.8 million aggregate principal amount of the 2026 Notes (the “2026 Notes Repurchases”) for 1.5 million shares of our common stock and aggregate cash payments of $229.7 million, plus accrued and unpaid cash interest of $3.8 million. We recognized pre-tax inducement charges of $37.4 million for the 2026 Notes Repurchases, representing the total settlement value in excess of the total conversion value of the 2026 Notes Repurchases when the final negotiated offers were accepted. These charges are reflected in “Loss on extinguishment of long-term debt” in the accompanying consolidated statements of operations. The conversion value paid in excess of the carrying amount of the 2026 Notes Repurchases is reflected in “Common stock” in the shareholders’ equity section of the accompanying consolidated balance sheet. Concurrently with the 2026 Notes Repurchases, we entered into agreements with the 2026 Capped Calls counterparties to terminate a proportionate amount of the 2026 Capped Calls and received $15.6 million in cash proceeds for the termination (Note 9).

In January 2024, we issued a notice for the redemption of the remaining $40.0 million aggregate principal amount of the 2026 Notes to be settled March 20, 2024. The redemption price, which consists of the principal amount and the make-whole premium, plus accrued and unpaid interest, is required to be settled in cash. Holders can convert their 2026 Notes prior to the redemption date, and any conversion thereof will be settled in cash. The ultimate settlement amount of the 2026 Notes will be dependent on various factors, including the number of notes converted and the volume weighted average trading price of our common stock during the measurement period preceding their settlement. In December 2023, $0.2 million aggregate principal amount of the 2026 Notes was tendered for conversion, which is also expected to be cash settled in March 2024. The carrying amount of the remaining 2026 Notes as of December 31, 2023 is reflected in “Current maturities of long-term debt” in the accompanying consolidated balance sheet (see Note 19 for their fair value).

MARAD Debt

In 2005, Helix’s subsidiary CDI-Title XI issued its U.S. Government Guaranteed Ship Financing Bonds, Q4000 Series, to refinance the construction financing originally granted in 2002 of the Q4000 vessel (the “MARAD Debt”). The MARAD Debt is guaranteed by the U.S. government pursuant to Title XI of the Merchant Marine Act of 1936, administered by the Maritime Administration (“MARAD”). The obligation of CDI-Title XI to reimburse MARAD in the event CDI-Title XI fails to repay the MARAD Debt is collateralized by the Q4000 and is guaranteed 50% by us. In addition, we have agreed to bareboat charter the Q4000 from CDI-Title XI for so long as the MARAD Debt remains outstanding. The MARAD Debt is payable in equal semi-annual installments through February 2027 and bears interest at a rate of 4.93%. We believe the agreements relating to the bonds and the terms and conditions of our obligations to MARAD in respect of the MARAD Debt were typical for U.S. government-guaranteed ship financing transactions when they were entered into, including customary restrictions on incurring additional liens on the Q4000 and trading restrictions with respect to the vessel as well as working capital requirements.

2029 Notes

On December 1, 2023, we issued $300 million aggregate principal amount of Senior Notes due 2029 (the “2029 Notes”). The net proceeds from the issuance of the 2029 Notes were approximately $291.1 million, after deducting the purchasers’ discount and debt issuance costs. We used $229.7 million of cash proceeds from the offering (excluding accrued interest), together with 1.5 million shares of our common stock, to fund the repurchase of $159.8 million aggregate principal amount of the 2026 Notes in December 2023. We intend to use the remainder of the net proceeds from this offering for redemption of the remaining 2026 Notes outstanding and for general corporate purposes, which may include repayment of other indebtedness.

The 2029 Notes bear interest at a coupon interest rate of 9.75% per annum payable semi-annually in arrears on March 1 and September 1 of each year, beginning on March 1, 2024. The 2029 Notes mature on March 1, 2029 unless earlier redeemed or repurchased by us.

Prior to March 1, 2026, we may, at our option, redeem the 2029 Notes, in whole or in part, at a price equal to 100% of the aggregate principal amount of the notes to be redeemed, plus a make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date. On or after March 1, 2026, we may, at our option, redeem the 2029 Notes, in whole or in part, at the redemption prices (expressed as percentages of the principal amount of the notes to be redeemed) set forth below, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. Prior to March 1, 2026, following certain equity offerings we may, at our option, on any one or more occasions, redeem up to 40% of the 2029 Notes at a price equal to 109.750% of the aggregate principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, in an amount not exceeding the proceeds of such equity offerings.


		Redemption
Year		Price
2026		104.875%
2027		102.438%
2028 and thereafter		100.000%

Upon the occurrence of a Change of Control Triggering Event, as defined in the indenture governing the 2029 Notes, we may be required to make an offer to repurchase all of the notes then outstanding at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

The indenture governing the 2029 Notes contains customary terms and covenants, including limitations on additional indebtedness, restricted payments, liens, asset sales, transactions with affiliates, mergers and consolidations, designation of unrestricted subsidiaries, and dividend and other restrictions affecting restricted subsidiaries.

The 2029 Notes are guaranteed on a senior unsecured basis by the subsidiaries that guarantee the Amended ABL Facility, as well as certain future subsidiaries that guarantee certain of our indebtedness, including the Amended ABL Facility. The 2029 Notes are junior in right of payment to all our existing and future secured indebtedness and obligations and rank equally in right of payment with all our existing and future senior unsecured indebtedness. The 2029 Notes rank senior in right of payment to any of our future subordinated indebtedness and are fully and unconditionally guaranteed by the guarantors described above on a senior basis.

Other

In accordance with the Amended ABL Facility, the 2026 Notes, the MARAD Debt and the 2029 Notes, we are required to comply with certain covenants, including minimum liquidity and a springing fixed charge coverage ratio (applicable under certain conditions that are currently not applicable) with respect to the Amended ABL Facility and the maintenance of net worth, working capital and debt-to-equity requirements with respect to the MARAD Debt. As of December 31, 2023, we were in compliance with these covenants.

The 2023 Notes matured on September 15, 2023. Upon maturity of the 2023 Notes, we paid $29.6 million in cash to settle the conversion of $29.2 million aggregate principal amount of the notes, plus accrued and unpaid interest. We recorded the conversion value in excess of such principal amount converted to “Common stock” in the accompanying consolidated balance sheet. Notes representing the remaining $0.8 million aggregate principal amount of the 2023 Notes were redeemed at par, plus accrued and unpaid interest. The 2023 Notes had a coupon interest rate of 4.125% per annum and an effective interest rate of 4.8%. For the years ended December 31, 2023, 2022 and 2021, total interest expense related to the 2023 Notes was $1.0 million, $1.4 million and $1.4 million, respectively, primarily from coupon interest expense.

We fully paid the $35 million remaining principal amount of the 2022 Notes plus accrued interest by delivering cash upon maturity as of May 1, 2022. The effective interest rate for the 2022 Notes was 4.8%. For the years ended December 31, 2022 and 2021, total interest expense related to the 2022 Notes was $0.6 million and $1.7 million, respectively, primarily from coupon interest expense.

We previously had a credit agreement (and the amendments made thereafter, collectively the “Credit Agreement”) with a group of lenders led by Bank of America. The Credit Agreement was comprised of a term loan (the “Term Loan”) and a revolving credit facility (the “Revolving Credit Facility”) with a maximum availability of $175 million and had a maturity date of December 31, 2021. Concurrent with our entering into the ABL Facility on September 30, 2021, the Credit Agreement was terminated, the $28 million remaining balance of the Term Loan was repaid in full and the letters of credit issued under the Revolving Credit Facility were transferred to the ABL Facility. We had no borrowings under the Revolving Credit Facility.

We previously had a credit agreement with a syndicated bank lending group for a term loan (the “Nordea Q5000 Loan”) to finance the construction of the Q5000. The loan was secured by the Q5000 and its charter earnings. In January 2021, we repaid the remaining principal amount of $53.6 million.

Scheduled maturities of our long-term debt outstanding as of December 31, 2023 are as follows (in thousands):


	2026		MARAD		2029
	Notes		Debt		Notes		Total
Less than one year	$	40,199	$	8,749	$	—	$	48,948
One to two years		—		9,186		—		9,186
Two to three years		—		9,644		—		9,644
Three to four years		—		5,001		—		5,001
Four to five years		—		—		—		—
Over five years		—		—		300,000		300,000
Gross debt		40,199		32,580		300,000		372,779
Unamortized debt discount ⁽¹⁾		—		—		(1,404)		(1,404)
Unamortized debt issuance costs ⁽¹⁾		(656)		(1,586)		(7,411)		(9,653)
Total debt		39,543		30,994		291,185		361,722
Less current maturities ⁽²⁾		(39,543)		(8,749)		—		(48,292)
Long-term debt	$	—	$	22,245	$	291,185	$	313,430

(1)	Debt discount and debt issuance costs are amortized to interest expense over the term of the applicable debt agreement.

(2)	Current maturities of the 2026 Notes reflect the carrying amount of the remaining 2026 Notes that are subject to conversion and/or redemption in 2024 (see Note 19 for their fair value).

The following table details the components of our net interest expense (in thousands):


	Year Ended December 31,
	2023		2022		2021
Interest expense	$	21,359	$	20,176	$	23,489
Interest income		(4,021)		(1,226)		(288)
Net interest expense	$	17,338	$	18,950	$	23,201