SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1999
Commission File Number: 0-28732
HVIDE MARINE INCORPORATED
State of Incorporation: Florida I.R.S. Employer I.D. 65-0524593
2200 Eller Drive
P.O. Box 13038
Ft. Lauderdale, Florida 33316
(954) 524-4200
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
There were 12,940,251 and 2,547,064 shares of Class A Common Stock, per value
$0.001 per share, and Class B Common Stock, par value $0.001 per share,
respectively, outstanding at May 1, 1999.
<PAGE>
HVIDE MARINE INCORPORATED
Quarter ended March 31, 1999
Index
Page
Part I. Financial Information
Item 1. Financial Statements................................................1
Condensed Consolidated Balance Sheets at
December 31, 1998 and March 31, 1999 (Unaudited)......................... 2
Condensed Consolidated Statements of Operations for the
three months ended March 31, 1998 and 1999 (Unaudited)................... 4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1998 and 1999 (Unaudited)................... 5
Notes to Condensed Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................19
Part II. Other Information
Item 3. Defaults Upon Senior Securities.....................................28
Item 6. Exhibits and Reports on Form 8-K....................................28
Signature....................................................................28
As used in this Report, the term "Parent" means Hvide Marine Incorporated, and
the term "Company" means the Parent and/or one or more of its subsidiaries.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
-------------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................................... $ 9,177 $ 11,215
Accounts receivable:
Trade, net of allowance for doubtful accounts of $2,169
and $2,164, respectively.................................................. 67,961 62,579
Insurance claims and other.................................................. 11,915 11,514
Inventory, spare parts and supplies........................................... 17,455 17,668
Prepaid expenses.............................................................. 4,342 3,395
Deferred costs, net........................................................... 10,482 9,741
------------- -------------
Total current assets................................................... 121,332 116,112
Property:
Construction in progress...................................................... 39,455 44,970
Vessels and improvements...................................................... 889,903 903,586
Less accumulated depreciation............................................. (91,309) (105,396)
Furniture and equipment....................................................... 17,297 17,818
Less accumulated depreciation............................................. (3,540) (4,133)
-------------- --------------
Net property........................................................... 851,806 856,845
Other assets:
Deferred costs, net........................................................... 20,978 19,689
Investment in affiliates...................................................... 23,421 22,622
Goodwill, net................................................................. 86,955 86,151
Other ........................................................................ 4,333 5,964
------------- -------------
Total other assets..................................................... 135,687 134,426
------------- -------------
Total assets........................................................ $ 1,108,825 $ 1,107,383
============= =============
</TABLE>
See accompanying notes.
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except share amounts)
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
-------------- -----------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS= EQUITY Current liabilities:
Accounts payable............................................................. $ 25,822 $ 13,841
Current maturities of long-term debt......................................... 9,011 30,904
Current obligations under capital leases..................................... 2,991 2,965
Debt subject to acceleration................................................. 252,954 248,176
Accrued interest............................................................. 9,864 4,298
Other........................................................................ 25,716 24,594
------------- -----------
Total current liabilities................................................ 326,358 324,778
Long-term liabilities:
Long-term debt............................................................... 33,564 45,417
Obligations under capital leases................................................ 36,983 36,647
Senior Notes................................................................. 300,000 300,000
Deferred income taxes........................................................ 32,721 26,184
Other........................................................................ 5,551 4,656
------------- -----------
Total long-term liabilities.............................................. 408,819 412,904
------------- -----------
Total liabilities..................................................... 735,177 737,682
Company obligated manditorily redeemable preferred securities of a
subsidiary trust holding solely debentures issued by the Company............. 115,000 115,000
Minority partners= equity in subsidiaries....................................... 10,613 15,471
Commitments and contingencies
Stockholders= equity:
Preferred Stock, $1.00 par value, authorized 10,000,000 shares,
issued and outstanding, none............................................. -- --
Class A Common Stock--$.001 par value, authorized 100,000,000
shares, issued and outstanding, 12,872,629 and 12,940,251................ 13 13
Class B Common Stock--$.001 par value, authorized 5,000,000
shares, issued and outstanding, 2,547,064................................ 2 2
Additional paid-in capital................................................... 196,822 197,085
Retained earnings............................................................ 51,198 42,130
------------- -----------
Total stockholders= equity............................................... 248,035 239,230
------------- -----------
Total minority partners= equity in subsidiaries and
stockholders= equity.................................................. 258,648 254,701
------------- -----------
Total.............................................................. $ 1,108,825 $ 1,107,383
============= ============
</TABLE>
See accompanying notes.
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
(Unaudited)
<S> <C> <C>
Revenues............................................................................ $ 86,485 $ 82,213
Operating Expenses:
Crew payroll and benefits........................................................ 19,087 22,449
Charter hire..................................................................... 3,629 3,561
Repairs and maintenance.......................................................... 6,645 9,380
Insurance........................................................................ 2,890 3,269
Consumables...................................................................... 6,729 8,189
Other............................................................................ 6,243 6,678
----------- -----------
Total operating expenses....................................................... 45,223 53,526
Selling, general and administrative
expenses......................................................................... 9,074 10,714
Depreciation and amortization....................................................... 11,625 15,759
----------- -----------
Income from operations........................................................... 20,563 2,214
Interest, net....................................................................... 7,292 14,000
Other income (expense):
Minority interest and equity in earnings of subsidiaries......................... (1,747) (3,044)
Other............................................................................ 63 181
---------- -----------
Total other expense............................................................ (1,684) (2,863)
---------- -----------
Income (loss) before provision for (benefit from)
income taxes and extraordinary item............................................... 11,587 (14,649)
Provision for (benefit from) income taxes........................................... 4,403 (5,581)
----------- ------------
Income (loss) before extraordinary item............................................. 7,184 (9,068)
Loss on early extinguishment of debt, net of applicable income taxes of $413........ 734 --
----------- -----------
Net income (loss).............................................................. $ 6,450 $ (9,068)
=========== ===========
Earnings (loss) per common share:
Income (loss) before extraordinary item......................................... $ 0.47 $ (0.59)
Loss on early extinguishment of debt............................................ (0.05) --
---------- -----------
Net income (loss) per common share............................................. $ 0.42 $ (0.59)
=========== ===========
Earnings (loss) per common share-assuming dilution:
Income (loss) before extraordinary item.......................................... $ 0.43 $ (0.59)
Loss on early extinguishment of debt............................................. (0.04) --
---------- -----------
Net income (loss) per common share-assuming dilution............................. $ 0.39 $ (0.59)
=========== ===========
Weighted average common shares outstanding.......................................... 15,290 15,424
=========== ==========
Weighted average common and common equivalent shares
outstanding-assuming dilution.................................................... 19,520 15,444
=========== ==========
</TABLE>
See accompanying notes.
<PAGE>
Hvide Marine Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
(Unaudited)
<S> <C> <C>
Operating Activities:
Net income (loss)................................................................... $ 6,450 $ (9,068)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Loss on early extinguishment of debt, net....................................... 734 --
Depreciation and amortization................................................... 11,625 15,759
Amortization of drydocking costs................................................ 2,205 3,125
Amortization of financing costs................................................. 245 401
Provision for bad debts......................................................... 257 300
Provision for deferred taxes.................................................... 3,403 (5,581)
Minority partners= equity in earnings of subsidiaries, net...................... 27 146
Undistributed losses (income) of affiliates, net................................ (149) 1,029
Other non-cash items............................................................ 42 46
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable............................................................... (18,656) 5,483
Current and other assets.......................................................... (6,108) (3,004)
Accounts payable and other liabilities............................................ 3,738 (17,449)
--------- ----------
Net cash provided by operating activities...................................... 3,813 (8,813)
Investing Activities:
Purchase of property................................................................ (25,078) (12,653)
Capital contribution to affiliates.................................................. (37) (165)
Acquisitions and completed vessel construction...................................... (303,935) (5,102)
--------- ---------
Net cash used in investing activities.......................................... (329,050) (17,920)
Financing Activities:
Proceeds of short-term borrowings................................................... -- 5,000
Proceeds of long-term debt.......................................................... 311,700 45,479
Proceeds from issuance of senior notes, net of offering costs....................... 292,500 --
Repayments of short-term borrowings................................................. -- (5,000)
Repayments of long-term debt........................................................ (278,462) (16,240)
Payment of debt and other financing costs........................................... (150) (50)
Payment of obligations under capital leases......................................... (396) (631)
Proceeds from issuance of common stock.............................................. 201 213
--------- ---------
Net cash provided by financing activities...................................... 325,393 28,771
--------- ---------
Increase in cash and cash equivalents................................................ 156 2,038
Cash and cash equivalents at beginning of period..................................... 14,952 9,177
--------- ---------
Cash and cash equivalents at end of period........................................... $ 15,108 $ 11,215
========= =========
Supplemental Cash Flow Disclosure:
Interest paid..................................................................... $ (4,643) $ (19,237)
========= =========
</TABLE>
See accompanying notes.
<PAGE>
HVIDE MARINE INCORPORATED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
(Unaudited)
1. Basis of Presentation
The interim consolidated financial statements in this Report are
unaudited. In accordance with the rules and regulations of the Securities and
Exchange Commission (the "Commission"), certain information and footnote
disclosures have been condensed or omitted; therefore, such financial statements
should be read in conjunction with the consolidated financial statements in the
Parent's Annual Report on Form 10-K for the year ended December 31, 1998 (the
"1998 Form 10-K"). The interim consolidated financial statements in this Report
reflect all adjustments and accruals that, in the opinion of management, are
necessary for a fair presentation of the results of the interim periods
presented; all such adjustments were of a normal recurring nature. The results
of operations for the three-month interim period ended March 31, 1999 are not
necessarily indicative of the results of operations for the fiscal year ending
December 31, 1999.
2. Senior Notes and Other Debt
The Company had $300.0 million of 8.375% senior notes (the "Senior
Notes") outstanding at March 31, 1999. Interest on the Senior Notes is payable
semi-annually in arrears on February 15 and August 15, and they mature on
February 15, 2008. The Senior Notes are guaranteed by certain of the Company's
subsidiaries (see Note 7).
Other long-term debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
--------------- --------------
<S> <C> <C>
Lines of Credit................................................... $ 135,000 $ 157,008
Term Loan......................................................... 117,954 112,596
Title XI Debt..................................................... 36,701 35,438
Notes Payable..................................................... 5,874 19,455
------------- --------------
295,529 324,497
Less: Current maturities......................................... 261,965 279,080
--------------- --------------
$ 33,564 $ 45,417
=============== ==============
</TABLE>
Current maturities of long-term debt include $252.9 million at December
31, 1998 and $269.6 million at March 31, 1999 of borrowings under the Company's
Amended and Restated Revolving Credit and Term Loan Agreement with a group of
banks (such Agreement, as amended, the "Credit Facility"). At March 31, 1999,
the Company's outstanding indebtedness under the revolving credit portion of the
Credit Facility was approximately $157.0 million and approximately $112.6
million was outstanding under the term loan portion of the Credit Facility.
Interest rates on borrowings under the Credit Facility ranged from 6.9% to 7.6%
at March 31, 1999.
<PAGE>
The Company entered into Amendment No. 2 to the Credit Facility
("Amendment No. 2") as of March 31, 1999. Amendment No. 2 permitted the Company
to borrow certain additional funds under the revolving credit portion of the
Credit Facility. In addition, it provided for (1) increased commitment fees and
the payment of certain other fees; (2) an increase in the rate of interest on
borrowings to the "Base Rate" plus 3% per annum; and (3) the establishment of
cash concentration accounts for the Company. The Company also entered into an
Amendment and Interim Waiver of the Credit Facility ("Amendment No. 3"), in
which the Company's bank lenders agreed to waive, until May 17, 1999, the
Company's noncompliance, as of March 31, 1999, with certain covenants in the
Credit Facility. Amendment No. 3 also provided for an increase in the rate of
interest on borrowings to the "Base Rate" plus 5% per annum and for certain cash
management arrangements and procedures; in addition, it requires the Company to
obtain the consent of the bank lenders for the disposition of any assets
securing borrowings under the Credit Facility. The bank lenders have advised the
Company of terms on which they propose to extend this waiver to June 30, 1999.
The Company intends to enter into negotiations with the bank lenders regarding
these terms and to enter into a definitive agreement providing for such an
extension. However, no assurance can presently be given that the Company and the
bank lenders will reach agreement concerning such an extension or as to the
terms of such an extension. The Company has made, in a timely manner, all
payments required under the Credit Facility and remains in compliance with its
payment obligations thereunder.
At March 31, 1999, the Company had approximately $35.4 million of Title
XI debt that is collateralized by first preferred mortgages on certain vessels
and bears interest at rates ranging from 5.4% to 10.1%. The debt is due in
semi-annual principal and interest payments through June 1, 2021. Under the
terms of the Title XI debt, the Company is required to maintain a minimum level
of working capital, as defined, and comply with certain other financial
covenants.
The Company has outstanding notes payable that bear interest at rates
ranging from 7.92% to 10% and mature at various dates through November 2011. The
notes payable are collateralized by certain vessels.
At March 31, 1999, the Company also had letters of credit outstanding
in the amount of approximately $3.3 million which expire on various dates
through December 2002. These letters of credit are not secured by any
collateral.
3. Redeemable Preferred Securities
At March 31, 1999, Hvide Capital Trust, a wholly owned consolidated
subsidiary of the Company (the "Trust"), had outstanding 2,300,000 6 1/2% Trust
Convertible Preferred Securities (the "Preferred Securities") with a principal
amount of $115.0 million and 71,134 6 1/2% Trust Convertible Common Securities
with a principal amount of $3.6 million. The proceeds of the issuance of these
securities in June 1997 were invested by the Trust in $118.6 aggregate principal
amount of the Company's 6 1/2% Convertible Subordinated Debentures due June 15,
2012 (the "Debentures"). The Debentures represent the sole assets of the Trust.
<PAGE>
4. Income Taxes
For the three months ended March 31, 1998 and 1999, the provision
(benefit from) for income taxes was computed using an estimated annual effective
tax rate of 38%, adjusted principally for depreciation on vessels built with
capital construction funds.
5. Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share before extraordinary item (in thousands, except per share
amounts):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
<S> <C> <C>
Numerator:
Income (loss) before extraordinary item...................................... $ 7,184 $ (9,068)
----------- -----------
Numerator for basic earnings per shareCincome
available to common shareholders........................................... 7,184 (9,068)
Effect of dilutive securities:
Payments on convertible preferred securities................................. 1,159 -- (1)
----------- -----------
Numerator for diluted earnings per shareCincome
available to common shareholders after assumed
conversion................................................................... $ 8,343 $ (9,068)
=========== ===========
Denominator:
Denominator for basic earnings per shareCweighted
average shares............................................................. 15,290 15,424
Effect of dilutive securities:
Convertible preferred securities............................................. 4,035 --(1)
Deferred compensation........................................................ -- 20
Stock options................................................................ 195 --(2)
----------- -----------
Dilutive potential common shares................................................ 4,230 20
Denominator for diluted earnings per shareCadjusted.............................
----------- -----------
weighted average shares and assumed conversions.............................. 19,520 15,444
=========== ===========
Earnings per share before extraordinary item.................................... $ 0.47 $ (0.59)
=========== ===========
Earnings per share before extraordinary
itemCassuming dilution....................................................... $ 0.43 $ (0.59)
=========== ===========
</TABLE>
(1) Excludes the assumed conversion of the Preferred Securities as the effect is
anti-dilutive for the period.
(2) Excludes the assumed exercise of stock options as the effect is
anti-dilutive for the period.
6. Segment and Geographic Data
The Company organizes its business principally into three segments. The
Company does not have significant intersegment transactions.
<PAGE>
Revenues by segment and geographic area consist only of services
provided to external customers, as reported in the Statement of Operations.
Income from operations by geographic area represents net revenues less
applicable costs and expenses related to those revenues. Unallocated expenses
are primarily comprised of general and administrative expenses of a corporate
nature. Identifiable assets represent those assets used in the operations of
each segment or geographic area and unallocated assets include corporate assets
and intercompany eliminations.
The following schedule presents information about the Company's
operations in its three business segments (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
--------------- ---------------
<S> <C> <C>
Revenues
Offshore energy support....................................... $ 56,376 $ 45,738
Offshore and harbor towing.................................... 9,467 11,354
Marine transportation services................................ 20,642 25,121
--------------- ---------------
Consolidated revenue.............................................. $ 86,485 $ 82,213
=============== ===============
Operating expenses
Offshore energy support....................................... $ 25,543 $ 29,689
Offshore and harbor towing.................................... 4,665 5,766
Marine transportation services................................ 15,015 18,071
--------------- ---------------
Consolidated operating expenses................................... $ 45,223 $ 53,526
=============== ===============
Selling, general and administrative expenses
Offshore energy support....................................... $ 3,074 $ 4,280
Offshore and harbor towing.................................... 1,158 1,401
Marine transportation services................................ 1,408 1,572
General corporate............................................. 3,434 3,461
--------------- ---------------
Consolidated selling, general and administrative expenses......... $ 9,074 $ 10,714
=============== ===============
Depreciation and Amortization
Offshore energy support....................................... $ 8,370 $ 10,891
Offshore and harbor towing.................................... 934 1,085
Marine transportation services................................ 2,214 3,505
General corporate............................................. 107 278
--------------- ---------------
Consolidated depreciation and amortization........................ $ 11,625 $ 15,759
=============== ===============
Income from operations
Offshore energy support....................................... $ 19,389 $ 878
Offshore and harbor towing.................................... 2,710 3,102
Marine transportation services................................ 2,005 1,973
General corporate............................................. (3,541) (3,739)
--------------- ---------------
Consolidated income from operations............................... $ 20,563 $ 2,214
=============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Income (loss) before provision for (benefit from) income taxes
and extraordinary item
Offshore energy support....................................... $ 19,491 $ (165)
Offshore and harbor towing.................................... 2,794 3,118
Marine transportation services................................ 1,995 898
General corporate............................................. (12,693) (18,500)
--------------- ---------------
Consolidated income (loss) before provision for (benefit from)
income taxes and extraordinary item........................... $ 11,587 $ (14,649)
=============== ===============
December 31, March 31,
1998 1999
--------------- ---------------
Identifiable assets
Offshore energy support....................................... $ 653,687 $ 667,251
Offshore and harbor towing.................................... 116,381 121,986
Marine transportation services................................ 333,138 331,326
Unallocated................................................... 5,619 (23,180)
--------------- ---------------
$ 1,108,825 $ 1,107,383
=============== ===============
Capital expenditures
Offshore energy support....................................... $ 304,387 $ 17,661
Offshore and harbor towing.................................... 27,525 86
Marine transportation services................................ 23,240 197
Unallocated................................................... 50,057 1,776
--------------- ---------------
$ 405,209 $ 19,720
=============== ===============
</TABLE>
The Company is engaged in providing marine support and transportation
services in the United States and foreign locations. The Company's foreign
operations are primarily conducted in the Arabian Gulf, West Africa, Southeast
Asia and Mexico. These operations are subject to risks inherent in operating in
such locations.
The following table presents selected financial information pertaining
to the Company's geographic operations (in thousands):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1998 1999
------------- -------------
<S> <C> <C>
Revenues
Domestic............................................... $ 56,500 $ 51,145
Foreign................................................ 29,985 31,068
------------- -------------
Consolidated revenues.................................... $ 86,485 $ 82,213
============= =============
Income from operations
Domestic............................................... $ 18,110 $ 5,335
Foreign................................................ 5,994 618
Unallocated expenses................................... (3,541) (3,739)
------------- -------------
Consolidated income from operations...................... $ 20,563 $ 2,214
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
------------- -------------
<S> <C> <C>
Identifiable assets
Domestic............................................... $ 590,473 $ 790,181
Foreign................................................ 512,733 340,382
Unallocated............................................ 5,619 (23,180)
------------- -------------
Consolidated identifiable assets......................... $ 1,108,825 $ 1,107,383
============= =============
</TABLE>
7. Supplemental Condensed Consolidating Financial Information
The Senior Notes referred to in Note 2 are fully and unconditionally
guaranteed on a joint and several basis by substantially all of the Company's
consolidated subsidiaries. A substantial portion of the Company's cash flows are
generated by its subsidiaries. As a result, the funds necessary to meet the
Company's obligations are provided in substantial part by distributions or
advances from its subsidiaries. Under certain circumstances, contractual or
legal restrictions, as well as the financial and operating requirements of the
Company's subsidiaries, could limit the Company's ability to obtain cash from
its subsidiaries for the purpose of meeting its obligations, including the
payments of principal and interest on the Senior Notes.
The following is summarized condensed consolidating financial
information for the Company, segregating the Parent, the combined wholly owned
guarantor subsidiaries, the combined foreign subsidiary guarantors, the combined
mostly owned guarantors, the combined non-guarantor subsidiaries and
eliminations. Two of the guarantor subsidiaries, Seabulk America Partnership,
Ltd. and Seabulk Transmarine Partnership, Ltd. are 81.59%-owned and 67.33%-owned
by the Company, and have been presented separately from the wholly owned
guarantors. The foreign guarantor subsidiaries are also presented separately
from the wholly owned guarantors. Separate financial statements of the wholly
owned guarantor subsidiaries are not presented because management believes that
these financial statements would not be material to holders of Senior Notes.
Separate audited financial statements of the non-wholly owned guarantor
subsidiaries for the year ended December 31, 1998 have been filed with the
Commission.
<PAGE>
<PAGE>
Condensed Consolidating Balance Sheet (in thousands)
<TABLE>
<CAPTION>
December 31, 1998
Wholly Owned Foreign Mostly Owned
Guarantor Guarantor Guarantor Non-guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents.... $ 1,401 $ 2,118 $ 3,460 $ 31 $ 2,167 $ -- $ 9,177
Accounts receivable:
Trade, net................. 5,337 26,769 33,954 -- 2,573 (672) 67,961
Insurance claims and other. 4,874 3,698 3,282 (33) 94 -- 11,915
Inventory, spare parts and
supplies .................. 2,707 3,093 9,726 1,320 886 (277) 17,455
Prepaid expenses............. 1,373 1,463 1,050 63 393 -- 4,342
Deferred costs, net.......... 3,881 4,255 1,865 241 414 (174) 10,482
------------ ---------- ----------- ------------- ------------- ------------- ------------
Total current assets....... 19,573 41,396 53,337 1,622 6,527 (1,123) 121,332
Property, net.................. 113,688 285,974 366,885 37,319 50,785 (2,845) 851,806
Other assets:
Deferred costs, net.......... 11,761 3,556 1,639 160 3,974 (112) 20,978
Due from affiliates.......... 167,216 (2,443) (128,038) (30,681) (5,629) -- 425
Investments in affiliates.... 695,479 582,135 -- 3,143 40,840 (1,298,176) 23,421
Goodwill, net................ 114 24,505 62,257 -- 79 -- 86,955
Other........................ 1,526 362 2,006 -- 118,571(1) (118,557) 3,908
------------ ---------- ----------- ------------- ------------- ------------ ------------
Total other assets......... 876,096 608,115 (62,136) (27,378) 157,835 (1,416,845) 135,687
------------ ---------- ----------- ------------- ------------- ------------ ------------
Total.................... $ 1,009,357 $ 935,485 $ 358,086 $ 11,563 $ 215,147 $ (1,420,813) $ 1,108,825
============ ========== =========== ============= ============= ============ ============
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable............. $ 6,190 $ 9,635 $ 9,525 $ 19 $ 453 $ -- $ 25,822
Current maturities of long-term
debt....................... 8,152 859 -- -- -- -- 9,011
Current obligations under capital
leases..................... 630 2,361 -- -- -- -- 2,991
Debt subject to acceleration 252,954 __ __ __ __ __ 252,954
Other ....................... 14,854 6,521 9,712 3,844 1,371 (722) 35,580
------------ ---------- ----------- ------------- ------------- ------------ ------------
Total current liabilities.. 282,780 19,376 19,237 3,863 1,824 (722) 326,358
Long-term liabilities:
Long-term debt............... 436,355 15,766 -- -- -- (118,557) 333,564
Obligations under capital leases 14,186 22,797 -- -- -- -- 36,983
Deferred income taxes........ 25,649 7,072 -- -- -- -- 32,721
Other long term obligations.. 2,352 1,200 1,885 114 -- -- 5,551
------------ ---------- ----------- ------------- ------------- ------------- ------------
Total long-term liabilities 478,542 46,835 1,885 114 -- (118,557) 408,819
------------ ---------- ----------- ------------- ------------- ------------- ------------
Total liabilities.............. 761,322 66,211 21,122 3,977 1,824 (119,279) 735,177
Company-obligated mandatorily
redeemable preferred securities
issued by a subsidiary trust
holding solely debentures issued
by the Company............... -- -- -- -- 115,000 -- 115,000
Minority partners' equity in sub-
sidiaries.................... -- -- -- -- -- 10,613 10,613
Stockholders' equity 248,035 869,274 336,964 7,586 98,323 (1,312,147) 248,035
------------ ---------- ----------- ------------- ------------- ------------ ------------
$ 1,009,357 $ 935,485 $ 358,086 $ 11,563 $ 215,147 $ (1,420,813) $ 1,108,825
============ ========== =========== ============= ============= ============ ============
</TABLE>
(1) Primarily represents receivable for debentures of the Company held by the
Trust.
<PAGE>
Condensed Consolidating Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
March 31, 1999
Wholly Owned Foreign Mostly Owned
Guarantor Guarantor Guarantor Non-guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C> <C> <C>
Assets
Current assets
Cash and cash equivalents.... $ 381 $ 3,311 $ 6,611 $ 48 $ 864 $ -- $ 11,215
Accounts receivable
Trade, net................. 2,532 27,161 32,846 -- 232 (192) 62,579
Insurance claims and other. 5,335 2,223 3,943 (13) 26 -- 11,514
Inventory, spare parts and
supplies .................. 2,747 3,496 10,455 1,320 -- (350) 17,668
Prepaid expenses............. 556 1,058 1,573 35 173 -- 3,395
Deferred costs, net.......... 2,969 4,612 2,094 240 -- (174) 9,741
------------ ------------ -------------- ---------- ------------- ------------ ------------
Total current assets....... 14,520 41,861 57,522 1,630 1,295 (716) 116,112
Property, net.................. 108,312 293,873 387,678 36,905 32,849 (2,772) 856,845
Other assets:
Deferred costs, net.......... 10,001 4,474 1,782 100 3,444 (112) 19,689
Due from affiliates.......... 160,818 4,137 (132,444) (31,756) 1,267 -- 2,022
Investments in affiliates.... 703,260 612,642 -- 3,340 26,150 (1,322,770) 22,622
Goodwill, net................ 112 24,330 61,709 -- -- -- 86,151
Other........................ 1,476 86 2,366 -- 118,571(1) (118,557) 3,942
------------ ------------ -------------- ---------- ------------- ------------ ------------
Total other assets......... 875,667 645,669 (66,587) (28,316) 149,432 (1,441,439) 134,426
------------ ------------ ------------- ----------- ------------- ------------ ------------
Total.................... $ 998,499 $ 981,403 $ 378,613 $ 10,219 $ 183,576 $ (1,444,927) $ 1,107,383
============ ============ ============== ========== ============= ============ ============
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable $ 1,718 $ 4,796 $ 7,015 $ -- $ 312 $ -- $ 13,841
Current maturities of
long-term debt............. 227,263 1,817 -- -- -- -- 279,080
Current obligations under
capital leases............. 538 2,426 -- -- -- -- 2,964
Other ....................... 9,035 5,880 10,508 1,842 1,870 (242) 28,893
------------ ------------ -------------- ---------- ------------- ------------ ------------
Total current liabilities.. 288,554 14,919 17,523 1,842 2,182 (242) 324,778
Long-term liabilities:
Long-term debt............... 435,092 28,882 -- -- -- (118,557) 345,417
Obligations under capital
leases...................... 14,076 22,571 -- -- -- -- 36,647
Deferred income taxes........ 19,112 7,072 -- -- -- -- 26,184
Other ....................... 2,470 1,208 856 122 -- -- 4,656
------------ ------------ -------------- ---------- ------------- ------------- ------------
Total long-term liabilities 470,750 59,733 856 122 -- (118,557) 412,904
------------ ------------ -------------- ---------- ------------- ------------ ------------
Total liabilities.......... 759,304 74,652 18,379 1,964 2,182 (118,799) 737,682
Company-obligated mandatorily
redeemable preferred securities
issued by a subsidiary trust
holding solely debentures issued
by the Company................ -- -- -- -- 115,000 -- 115,000
Minority partners' equity in sub-
sidiaries.................... -- -- -- -- -- 15,471 15,471
Stockholders' equity 239,195 906,751 360,234 8,255 66,394 (1,341,599) 239,230
------------ ------------ -------------- ---------- ------------- ------------ ------------
Total...................... $ 998,499 $ 981,403 $ 378,613 $ 10,219 $ 183,576 $ (1,444,927) $ 1,107,383
============ ============ ============== ========== ============= ============ ============
</TABLE>
(1) Primarily represents receivable for debentures of the Company held by the
Trust.
<PAGE>
Condensed Consolidating Statement of Operations
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
Wholly Foreign Mostly Non-
Owned Guarantor Owned gurantor
Guarantor Sub- Guarantor Sub- Consolidated
Parent Subsidiaries sidiaries Subsidiaries sidiaries Eliminations Total
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues .............................. $ 13,369 $ 53,465 $ 43,434 $ 2,424 $ 693 $ (26,900) $ 86,485
Operating expenses:
Crew payroll and benefits ........... 4,258 8,089 5,916 679 145 -- 19,087
Charter hire and bond
guarantee fee ..................... 960 14,689 -- -- 54 (12,074) 3,629
Repairs and maintenance ............. 1,941 2,619 1,924 134 27 -- 6,645
Insurance ........................... 486 1,447 839 109 9 -- 2,890
Consumables ......................... 733 2,553 3,367 64 55 (43) 6,729
Other ............................... 493 2,941 2,688 108 20 (7) 6,243
-------- -------- -------- -------- -------- -------- --------
Total operating expenses .......... 8,871 32,338 14,734 1,094 310 (12,124) 45,223
Selling, general and
administrative expenses ............. 4,306 2,416 3,182 447 51 (1,328) 9,074
Depreciation and amortization ......... 1,620 3,531 6,075 357 42 -- 11,625
-------- -------- -------- -------- -------- -------- --------
Income from operations ................ (1,428) 15,180 19,443 526 290 (13,448) 20,563
Net interest .......................... 8,702 9 (1) 443 (1,861) -- 7,292
Other income (expense):
Minority interest and
equity earnings
of subsidiaries ................... 21,704 36,047 -- 34 (1,869) (57,663) (1,747)
Other ............................... 13 52 (13,444) -- -- 13,442 63
-------- -------- -------- -------- -------- -------- --------
Total other income
(expense) ....................... 21,717 36,099 (13,444) 34 (1,869) (44,221) (1,684)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
provision for
(benefit from)
income taxes and
extraordinary item .................. 11,587 51,270 6,000 117 282 (57,669) 11,587
Provision for income taxes ............ 4,403 -- -- -- -- -- 4,403
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary item .................. 7,184 51,270 6,000 117 282 (57,669) 7,184
Loss on early extinguishment
item ................................ 734 -- -- -- -- -- 734
-------- -------- -------- -------- -------- -------- --------
Net income (loss) ..................... $ 6,450 $ 51,270 $ 6,000 $ 117 $ 282 $(57,669) $ 6,450
======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
Condensed Consolidating Statement of Operations
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999
Wholly Owned Foreign Mostly Owned
Guarantor Guarantor Guarantor Non-guarantor Consolidated
Parent Subsidiaries Subsidiaries Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues....................... $ 13,138 $ 47,158 $ 38,154 $ 2,618 $ 1,538 $ (20,393) $ 82,213
Operating expenses:
Crew payroll and benefits.... 4,635 8,392 8,766 664 -- (8) 22,449
Charter hire and bond guarantee
fee........................ 471 16,504 (231) -- 450 (13,633) 3,561
Repairs and maintenance ..... 1,280 3,224 4,814 77 -- (15) 9,380
Insurance.................... 419 1,575 1,189 77 9 -- 3,269
Consumables.................. 1,005 2,854 4,422 44 -- (136) 8,189
Other........................ 929 4,500 1,598 87 -- (436) 6,678
----------- ----------- ------------- ----------- ------------- ------------- ------------
Total operating expenses... 8,739 37,049 20,558 949 459 (14,228) 53,526
Selling, general and administrative
expenses..................... 3,950 3,453 3,597 200 994 (1,480) 10,714
Depreciation and amortization.. 2,605 4,822 7,873 414 45 -- 15,759
----------- ----------- ------------- ----------- ------------- ------------ ------------
Income from operations......... (2,156) 1,834 6,126 1,055 40 (4,685) 2,214
Net interest................... 15,279 -- 3 583 (1,865) -- 14,000
Other income (expense):
Minority interest and equity
earnings of subsidiaries... 1,676 706 (1,371) 196 (1,526) (2,725) (3,044)
Other........................ 1,110 34 (5,632) -- (16) 4,685 181
----------- ----------- ------------ ----------- ------------- ------------ ------------
Total other income
(expense)................ 2,786 740 (7,003) 196 (1,542) 1,960 (2,863)
----------- ----------- ------------ ----------- ------------- ------------ ------------
Income (loss) before benefit from
income taxes ................ (14,649) 2,574 (880) 668 363 (2,725) (14,649)
Benefit from income taxes...... (5,581) -- -- -- -- -- (5,581)
---------- ----------- ------------- ----------- ------------- ------------ -----------
Net income (loss).............. $ (9,068) $ 2,574 $ (880) $ 668 $ 363 $ (2,725) $ (9,068)
========== =========== ============ =========== ============= ============ ===========
</TABLE>
<PAGE>
Condensed Consolidating Statement of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
Wholly Foreign Mostly
Owned Guarantor Owned
Guarantor Sub- Guarantor Non-guarantor Consolidated
Parent Subsidiaries sidiaries Subsidiaries Subsidiaries Eliminations Total
<S> <C> <C> <C> <C> <C> <C> <C>
Operating activities:
Net income ......................... $ 6,450 $ 51,270 $ 6,000 $ 117 $ 282 $(57,669) $ 6,450
Adjustments to reconcile
net income to net cash
provided by
operating activities:
Loss on early extinguishment
of debt, net ...................... 734 -- -- -- -- -- 734
Depreciation and
amortization of
property ......................... 1,619 3,120 5,311 357 43 -- 10,450
Amortization of
drydocking costs ................. 855 512 778 60 -- -- 2,205
Amortization of
intangible assets ................ 2 411 762 -- -- -- 1,175
Amortization of discount
on long-term
debt and financing costs ......... 245 -- -- -- -- -- 245
Provision for bad debts ............ 39 188 30 -- -- -- 257
Provision for deferred taxes ....... 3,403 -- -- -- -- -- 3,403
Minority partners' equity
in earnings of
subsidiaries, net ................ -- -- -- -- -- 27 27
Undistributed (earnings) losses
of affiliates, net .............. (21,704) (36,047) -- (34) -- 57,636 (149)
Other non-cash items ............... 42 -- -- -- -- -- 42
Changes in operating
assets and lia-
bilities, net of effect
of acquisitions:
Accounts receivable ................ (1,499) 883 (16,978) 73 (688) (467) (18,656)
Other assets ....................... 3,597 (8,330) 983 (485) (1,873) -- (6,108)
Accounts payable and
other liabilities ................ 21,240 (6,464) (13,641) (82) 2,154 531 3,738
-------- -------- -------- -------- -------- -------- --------
Net cash provided by operating
activities ......................... 15,023 5,543 (16,755) 6 (62) 58 3,813
Investing activities:
Purchase of property ............... (5,745) (13,204) (3,074) -- (5,799) 2,744 (25,078)
Capital contribution to
affiliates ....................... (23,108) -- -- -- (4,522) 27,593 (37)
Acquisitions ....................... (303,843) (92) -- -- -- -- (303,935)
-------- -------- -------- -------- -------- -------- --------
Net cash used in investing
activities ......................... (332,696) (13,296) (3,074) -- (10,321) 30,337 (329,050)
Financing activities:
Proceeds from long-term debt ....... 311,700 -- -- -- -- -- 311,700
Proceeds from issuance of senior
notes, net of offering costs ..... 292,500 -- -- -- -- -- 292,500
Proceeds from issuance of common
stock, net ....................... 201 -- -- -- -- -- 201
Principal payments of
long-term debt ................... (278,417) (45) -- -- -- -- (278,462)
Payment of financing costs ......... (150) -- -- -- -- -- (150)
Payment of obligations under capital
leases ........................... (95) (301) -- -- -- -- (396)
Capital contributions from parent/
partners ......................... -- 179 19,940 -- 10,276 (30,395) --
-------- -------- -------- -------- -------- -------- --------
Net cash provided by financing
activities ....................... 325,739 (167) 19,940 -- 10,276 (30,395) 325,393
Increase (decrease) in cash and cash
equivalents ...................... 8,066 (7,920) 111 6 (107) -- 156
Cash and cash equivalents at beginning
of period ........................ 2,510 8,238 4,104 17 83 -- 14,952
-------- -------- -------- -------- -------- -------- --------
Cash and cash equivalents at end of
period ........................... $ 10,576 $ 318 $ 4,215 $ 23 $ (24) $ -- $ 15,108
======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
Condensed Consolidating Statement of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999
Wholly Foreign Mostly Non-
Owned Guarantor Owned guarantor
Guarantor Sub- Guarantor Sub- Consolidated
Parent Subsidiaries sidiaries Subsidiaries sidiaries Eliminations Total
<S> <C> <C> <C> <C> <C> <C> <C>
Operating activities:
Net income (loss) ............................ $ (9,068) $ 2,574 $ (880) $ 668 $ 363 $ (2,725) $ (9,068)
Adjustments to reconcile
net income (loss) to net
cash provided by
operating activities:
Depreciation and amortization of
property ................................... 2,602 4,696 7,188 414 45 -- 14,945
Amortization of drydocking costs ............. 810 1,195 1,060 60 -- -- 3,125
Amortization of intangible assets ............ 4 262 548 -- -- -- 814
Amortization of financing costs .............. 336 -- -- -- 65 -- 401
Provision for bad debts ...................... 9 291 -- -- -- -- 300
Provision for deferred taxes ................. (5,581) -- -- -- -- -- (5,581)
Minority partners' equity in
losses of subsidiaries,
net ........................................ -- -- -- -- -- 146 146
Undistributed (earnings)
losses of affiliates,
net ........................................ (1,677) 308 -- (196) (343) 2,937 1,029
Other non-cash items ......................... 46 -- -- -- -- -- 46
Changes in operating
assets and liabilities:
Accounts receivable .......................... 2,335 2,169 1,353 (20) 126 (480) 5,483
Other assets ................................. 8,791 (7,565) (3,676) 1,103 (1,730) 73 (3,004)
Accounts payable and
other liabilities .......................... (11,125) (3,080) (2,902) (2,012) 1,190 480 (17,449)
Net cash provided by
(used in) operat-
ing activities .............................. (12,518) 850 2,691 17 (284) 431 (8,813)
Investing activities:
Purchase of property ......................... 2,774 3,607 (13,385) -- (10,224) 4,575 (12,653)
Capital contribution
to affiliates .............................. (6,135) (13,578) 2,317 -- (7,968) 25,199 (165)
Acquisitions and completed
construction ............................... -- (4,502) 816 -- (1,416) -- (5,102)
-------- -------- -------- -------- -------- -------- --------
Net cash used in
investing activities ......................... (3,361) (14,473) (10,252) -- (19,608) 29,774 (17,920)
Financing activities:
Proceeds from long-term debt ................. 31,008 14,471 -- -- -- -- 45,479
Proceeds from issuance
of common stock, net ....................... 213 -- -- -- -- -- 213
Principal payments of
long-term debt ............................. (16,113) (127) -- -- -- -- (16,240)
Payment of financing costs ................... (50) -- -- -- -- -- (50)
Payment of obligations
under capital leases ....................... (199) (432) -- -- -- -- (631)
Capital contributions
from parent/partners ....................... -- 904 10,712 -- 18,589 (30,205) --
-------- -------- -------- -------- -------- -------- --------
Net cash provided by
(used in)financing
activities ................................. 14,859 14,816 10,712 -- 18,589 (30,205) 28,771
Increase (decrease) in
cash and cash
equivalents ................................ (1,020) 1,193 3,151 17 (1,303) -- 2,038
Cash and cash equivalents
at beginning of period ..................... 1,401 2,118 3,460 31 2,167 -- 9,177
-------- -------- -------- -------- -------- -------- --------
Cash and cash equivalents
at end of period ........................... $ 381 $ 3,311 $ 6,611 $ 48 $ 864 $ -- $ 11,215
======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
Item 2. Management=s Discussion and Analysis of Financial Condition and Results
of Operations
The following Management's Discussion and Analysis of Financial
Condition and Results of Operations ("MD&A") should be read in conjunction with
(1) the condensed consolidated financial statements and the related notes
thereto included elsewhere in this Report and (2) the 1998 Form 10-K, including
the consolidated financial statements and notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included therein.
The MD&A contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact, included in the MD&A are forward-looking
statements. Although the Company believes that the expectations and beliefs
reflected in such forward-looking statements are reasonable, it can give no
assurance that they will prove correct. For information regarding the risks and
uncertainties that could cause such forward-looking statements to prove
incorrect, see "Projections and Other Forward-Looking Information" in Item 1 of
the 1998 Form 10-K.
<PAGE>
Area of Operations Overview
The financial information presented below represents historical results
by major area of operations.
<TABLE>
<CAPTION>
Three Months
Ended March 31,
1998 1999
----------- -----------
<S> <C> <C>
Revenues:
Marine support services:
Offshore energy support......................................................... $ 56,376 $ 45,738
Offshore and harbor towing...................................................... 9,467 11,354
----------- -----------
65,843 57,092
Marine transportation services..................................................... 20,642 25,121
----------- -----------
Total revenues................................................................ $ 86,485 $ 82,213
---------- ----------
Operating expenses:
Marine support services:
Offshore energy support......................................................... $ 25,543 $ 29,689
Offshore and harbor towing...................................................... 4,665 5,766
----------- -----------
30,208 35,455
Marine transportation services..................................................... 15,015 18,071
----------- -----------
Total operating expenses...................................................... $ 45,223 $ 53,526
---------- ----------
Direct overhead expenses:
Marine support services:
Offshore energy support......................................................... $ 3,074 $ 4,280
Offshore and harbor towing...................................................... 1,158 1,401
----------- -----------
4,232 5,681
Marine transportation services..................................................... 1,270 1,434
----------- -----------
Total direct overhead expenses................................................ 5,502 7,115
----------- -----------
Fleet EBITDA (1):
Marine support services:
Offshore energy support......................................................... $ 27,759 $ 11,769
Offshore and harbor towing...................................................... 3,644 4,187
----------- -----------
$ 31,403 $ 15,956
Marine transportation services..................................................... 4,357 5,616
----------- -----------
Total fleet EBITDA(1)........................................................... 35,760 21,574
Corporate overhead expenses........................................................ 3,572 3,599
----------- -----------
EBITDA (1)......................................................................... 32,188 17,973
Depreciation and amortization expenses............................................. 11,625 15,759
----------- -----------
Income from operations............................................................. $ 20,563 $ 2,214
=========== ===========
</TABLE>
- -------------------
(1) EBITDA (net income from continuing operations before interest expense,
income tax expense, depreciation expense, amortization expense, minority
interest and other non-operating income) is frequently used by securities
analysts and is presented here to provide additional information about the
Company's operations. Fleet EBITDA is EBITDA before corporate overhead
expenses. EBITDA and fleet EBITDA are not recognized by generally accepted
accounting principles, should not be considered as alternatives to net
income as indicators of the Company's operating performance, or as
alternatives to cash flows from operations as a measure of liquidity, and
do not represent funds available for management's use. Further, the
Company's EBITDA may not be comparable to similarly named measures reported
by other companies.
<PAGE>
Revenue Overview
Marine Support Services
Revenue derived from vessels providing marine support services is
attributable to the Company=s offshore energy support fleet and its offshore and
harbor towing operations.
Offshore Energy Support. Revenue derived from the Company=s offshore
energy support services is primarily a function of the size of the Company=s
fleet, vessel day rates or charter rates, and fleet utilization. Rates and
utilization are primarily a function of offshore drilling, production, and
construction activities, which are in turn heavily dependent upon the price of
crude oil. Further, in many areas where the Company conducts offshore energy
support operations (particularly the U.S. Gulf of Mexico), contracts for the
utilization of offshore service vessels commonly include termination provisions
with three- to five-day notice requirements and no termination penalty. As a
result, companies engaged in offshore energy support operations (including the
Company) are particularly sensitive to changes in market demand.
The following table sets forth average day rates achieved by the
offshore supply boats and crew boats owned or operated by the Company in the
U.S. Gulf of Mexico and their average utilization for the periods indicated.
<TABLE>
<CAPTION>
1998 1999
------------------------------------------ ---------
Q1 Q2 Q3 Q4 Q1
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of supply boats at end of period(1)......... 28 29 27 24 21
Average supply boat day rates(2)................... $ 8,475 $ 8,211 $ 6,505 $ 5,191 $ 4,530
Average supply boat utilization(3)................. 86% 80% 55% 72% 70%
Number of crew boats at end of period(4)........... 39 39 38 37 33
Average crew boat day rates(2)(4).................. $ 2,419 $ 2,502 $ 2,375 $ 2,383 $ 2,097
Average crew boat utilization(3)(4)................ 89% 91% 77% 83% 69%
</TABLE>
(1) The decline in the number of supply boats in the third and fourth quarters
of 1998 and first quarter of 1999 primarily reflects bareboat chartering
and the redeployment of boats to other global regions in response to
declines in utilization and day rates in the U.S. Gulf of Mexico.
(2) Average day rates are calculated based on vessels operating domestically by
dividing total vessel revenue by the total number of days of vessel
utilization.
(3) Utilization is based on vessels operating domestically and determined on
the basis of a 365-day year. Vessels are considered utilized when they are
generating charter revenue.
(4) Excludes utility boats. The decline in the number of crew boats in the
third and fourth quarters of 1998 and first quarter of 1999 primarily
reflects the redeployment of boats to other global regions in response to
declines in utilization and day rates in the U.S. Gulf of Mexico.
As indicated in the above table, average supply boat day rates began to
decline in the second quarter of 1998 and continued to decline for the balance
of the year and in 1999. Supply boat utilization declined sharply in the second
and third quarters of 1998, improving in the fourth quarter due to the
redeployment of idle vessels from the U.S. Gulf of Mexico to international
markets. At May 10, 1999, supply boat day rates averaged approximately $4,000
per day. The current low level of supply boat day rates is expected to continue
until energy exploration and production activities return to higher levels,
which in turn is dependent upon a sustained improvement in energy prices.
<PAGE>
At May 10, 1999, crew boat day rates averaged approximately $1,950 per
day. As is the case with supply boat rates, no substantial improvement in crew
boat rates is anticipated until energy exploration and production activities
return to higher levels.
The following table shows rate and utilization information for foreign
operations:
<TABLE>
<CAPTION>
1998 1999
----------------------------------------- ---------
Q1 Q2 Q3 Q4 Q1
-------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Number of anchor handling tug/supply boats......... 66 67 66 69 67
Average anchor/handling tug/supply
boat day rates(1)................................ $ 5,505 $ 6,008 $ 5,914 $ 5,727 $ 4,817
Average anchor handling tug/supply boat
utilization(1)(2)................................ 75% 77% 77% 77% 61%
Number of crew/utility boats....................... 32 33 31 36 38
Average crew/utility boat day rates(2)............. $ 1,549 $ 1,544 $ 1,588 $ 1,616 $ 1,543
Average crew/utility boat utilization(3)........... 75% 76% 72% 67% 65%
</TABLE>
- --------------------
(1) Includes anchor handling tug boats.
(2) Average day rates are calculated based on vessels operating internationally
by dividing total vessel revenue by the total number of days of vessel
utilization.
(3) Utilization is based on vessels operating internationally and determined on
the basis of a 365-day year. Vessels are considered utilized when they are
generating charter revenue.
As indicated in the above table, foreign anchor handling tugs/supply
boats experienced stable utilization rates during 1998, but moderate declines in
day rates during the second half of the year. Foreign crew/utility boats
experienced a slight increase in day rates over the full year, with declines in
utilization rates during the second half. In general, both types of operations
remained steady in 1998 as compared to declines in the comparable U.S. markets.
However, foreign rates continued to decline in the first quarter of 1999. At May
10, 1999, day rates averaged approximately $5,400 per day for foreign anchor
handling tugs/supply boats and approximately $1,500 for foreign crew/utility
boats.
Offshore and Harbor Towing. Revenue derived from the Company=s tug
operations is primarily a function of the number of tugs available to provide
services, the rates charged for their services, and the volume of vessel traffic
requiring docking and other ship-assist services. Vessel traffic, in turn, is
largely a function of the general trade activity in the region served by the
port.
Marine Transportation Services
Generally, demand for industrial petrochemical transportation services
coincides with overall economic activity.
Revenue from the Company's towboats and fuel barges has been derived
primarily from contracts of affreightment with FPL and Steuart Petroleum Co.
that require the Company to transport fuel as needed by those two customers,
with the FPL contract having a guaranteed minimum utilization. The principal
contract with FPL expired in September 1998. The Company has since entered into
a new contract, expiring in September 2002, to provide similar services to FPL
at similar rates. However, the extent of the services to be provided under the
new contract is expected to be substantially less than under the prior contract.
<PAGE>
Overview of Operating Expenses and Capital Expenditures
The Company's operating expenses are primarily a function of fleet size
and utilization. The most significant expense categories are crew payroll and
benefits, charter hire, maintenance and repairs, fuel, and insurance. For
general information concerning these categories of operating expenses as well as
capital expenditures, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Area of Operations Overview -- Overview
of Operating Expenses and Capital Expenditures" in the 1998 Form 10-K.
Beginning in the first quarter of 1999, the Company implemented a plan
to reduce operating and overhead expenses as well as capital expenditures (see
"Liquidity and Capital Resources" below). These expense reductions are not fully
reflected in the comparisons below since (1) such reductions were implemented
during or subsequent to the 1999 first quarter and (2) expenses in the 1999
quarter increased over those of the 1998 quarter, reflecting the substantial
increase in the size of the Company.
Results of Operations
Three months ended March 31, 1999 compared with the three months ended March
31, 1998
Revenue. Revenue decreased 5.0% to $82.2 million for the three months
ended March 31, 1999 from $86.5 million for the three months ended March 31,
1998, primarily due to lower revenue from the Company's offshore energy support
operations.
Revenue from offshore energy operations fell 19.0% for the three months
ended March 31, 1999 compared to the 1998 period, primarily due to lower
utilization and day rates for supply boats and crew boats resulting from the
decline in offshore exploration and production activity. During the 1999 period,
domestic day rates for supply boats owned, operated, or managed by the Company
declined 47% from the 1998 period, while domestic day rates for crew boats
owned, operated, or managed by the Company fell 13% from the 1998 period.
Internationally, day rates for anchor handling tugs/supply boats fell 16% to
$4,817 from $5,727, while day rates for crew/utility boats declined 5% from
$1,616 to $1,543.
Offshore and harbor towing revenue increased 20% to $11.4 million for
the three months ended March 31, 1999 from $9.5 million for the three months
ended March 31, 1998, primarily due to the acquisition of seven harbor towing
vessels in March 1998.
Marine transportation revenue increased 22% to $25.1 million for the
three months ended March 31, 1999 from $20.6 million for the three months ended
March 31, 1998, primarily due to additional revenues earned by OSTC for
marketing vessels owned by third parties and the acquisition of two product
carriers in March 1998.
Operating Expenses. Operating expenses increased 18.4% to $53.5 million
for the three months ended March 31, 1999 from $45.2 million for the three
months ended March 31, 1998, primarily due to increases in crew payroll and
benefits, maintenance and repair, and supplies and consumables resulting largely
from acquisitions completed in 1998. As a percentage of revenue, operating
expenses increased to 65% for the three months ended March 31, 1999 from 52% for
three months ended March 31, 1998 due to the increase in fleet size and the
decline in revenues from lower day rates in the offshore energy segment.
<PAGE>
Overhead Expenses. Overhead expenses increased 17.6% to $10.7 million
for the three months ended March 31, 1999 from $9.1 million for the three months
ended March 31, 1998, primarily due to increased staffing requirements due to
acquisitions completed in 1998. As a percentage of revenue, overhead expenses
increased to 13% for the three months ended March 31, 1999 from 10% for the
three months ended March 31, 1998 due to the decline in revenues and increase in
staffing costs.
Depreciation and Amortization Expense. Depreciation and amortization
expense increased 36% to $15.8 million for the three months ended March 31, 1999
compared with $11.6 million for the three months ended March 31, 1998 as a
result of an increase in fleet size due to 1998 acquisitions and vessel
construction.
Income from Operations. Income from operations decreased 89% to $2.2
million, or 3% of revenue, for the three months ended March 31, 1999 from $20.6
million, or 24% of revenue, for the three months ended March 31, 1998 as a
result of the factors noted above.
Net Interest Expense. Net interest expense increased 92% to $14.0
million, or 17% of revenue, for the three months ended March 31, 1999 from $7.3
million, or 8% of revenue, for the three months ended March 31, 1998, primarily
as a result of debt incurred in connection with acquisitions.
Other Income (Expense). Other expense increased to $2.9 million for the
three months ended March 31, 1999 from $1.7 million for the three months ended
March 31, 1998, primarily due to equity losses in non-consolidated affiliates.
Net Income. The Company had a net loss of $9.1 million for the three
months ended March 31, 1999 compared to net income of $6.5 million for the three
months ended March 31, 1998 primarily as a result of the factors noted above.
Liquidity and Capital Resources
During the first quarter of 1999, the Company used $8.8 million of cash
from operations, primarily reflecting the net loss for the quarter. Cash used in
investing activities was approximately $17.9 million, primarily reflecting the
construction of and capital improvements to vessels. Cash provided by financing
activities was approximately $28.8 million, consisting of borrowings under the
Credit Facility, offset in part by principal payments on debt and capital lease
obligations.
The Company's outstanding indebtedness under the Credit Facility was
$269.6 million at March 31, 1999.
As reported in the 1998 Form 10-K and elsewhere in this Report, the
Company's offshore energy support business has been and continues to be
adversely affected by low average day rates and utilization rates in the United
States. Further, although 1998 rates in foreign markets remained steady or
declined slightly as compared to those in the U.S. markets, foreign rates
declined in the first quarter of 1999. As a result of these declines, the
Company was not in compliance, as of March 31, 1999, with certain covenants
contained in the Credit Facility. In Amendment No. 3 to the Credit Facility, the
Company's bank lenders agreed to waive such noncompliance until May 17, 1999.
The bank lenders have advised the Company of terms on which they propose to
extend this waiver to June 30, 1999. The
<PAGE>
Company intends to enter into negotiations with the bank lenders regarding these
terms and to enter into a definitive agreement providing for such an extension.
However, no assurance can presently be given that the Company and the bank
lenders will reach agreement concerning such an extension or as to the terms of
such an extension. The Company has made, in a timely manner, all payments
required under the Credit Facility and remains in compliance with its payment
obligations thereunder.
The Company is continuing to implement a plan to improve liquidity,
which contemplates the following principal actions:
o Asset Dispositions. The Company has agreed to sell certain vessels for
estimated gross cash proceeds of $21.4 million. Although the completion of
these transactions is subject to various conditions (including, one case
involving the sale of a vessel for estimated gross cash proceeds of $15.6
million, the negotiation and execution of definitive agreements), the
Company anticipates that all of these sales will be completed by the end of
the 1999 second quarter. Under the terms of the Credit Facility, all or a
substantial portion of the net cash proceeds of these sales will be used to
permanently reduce borrowings under the Credit Facility.
The Company has also identified certain other assets that it intends to
sell and is considering the sale of additional assets in order to raise
significant amounts of cash.
o New and Amended Financing Arrangements. As noted above, the Company is
seeking to obtain longer-term waivers of the covenants contained in the
Credit Facility. In addition, the Company is seeking alternative means of
financing.
o Reductions in Capital Expenditures. The Company is curtailing or deferring
certain capital expenditures. In particular, the Company is deferring
certain scheduled drydockings of vessels, consistent with safety and
operational considerations. The Company has also taken certain actions, and
is considering other actions, to cancel the construction and/or to dispose
of vessels currently under construction. Such actions could result in
claims against the Company for the costs of construction and, possibly,
other amounts; however, the Company has not yet determined whether or the
extent to which it may be subject to such claims. The estimated furture
cost of completing vessels currently under construction was $32.4 million
at May 10, 1999; such amount does not reflect the actions being taken by
the Company to cancel construction and/or dispose of vessels currently
under construction or any claims that may result from those actions.
o Reductions in Operating and Overhead Expenses. The Company has reduced
operating and overhead expenses throughout its operations, and additional
reductions are expected to be implemented in the future. These reductions
have been effected through salary reductions, a freeze on the hiring of
additional employees, and headcount reductions through selected layoffs at
certain locations, as well as through attrition. Reductions in operating
expenses are also expected to be achieved by reducing crew costs and
deferring other expenses, consistent with safety and operational
considerations. These reductions are estimated to generate annual savings
of $11.7 million.
o Improvements in Working Capital Management. The Company plans to improve
its working capital position by, among other things, strengthening its
efforts to collect receivables.
There can be no assurance as to whether or the extent to which the
Company will be able to achieve any or all of the above objectives or as to the
terms on which any or all of the above objectives might be achieved. The
achievement of many of the above objectives is subject to factors beyond the
Company's control, including general economic conditions and conditions in the
industries the Company
<PAGE>
serves. Further, the achievement of certain of the above objectives will require
the agreement or cooperation of third parties.
Impact of the "Year 2000 Issue"
The "Year 2000 Issue" is the result of the use by certain computer
software of a two-digit dating convention rather than a four-digit dating
convention (i.e., "00" rather than "2000"), causing a computer or similar
technology to recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or in other errors that could cause
disruptions of normal business activities.
The Company has implemented a program designed to assess the likely
impact of the Year 2000 Issue on the Company and to develop and implement
measures designed to minimize its impact. The program covers not only the
Company's computer equipment and software systems, but also other systems
containing so-called "embedded" technology, such as alarm systems, elevators and
fax machines.
The Company's Year 2000 program has focused on the two major components
of the Company's operations - land-based systems and vessel-based systems - with
separate teams for computer operations/information systems, facilities
management, and vessel operations. Each team is implementing the program in the
following four phases:
o Assessment, including taking physical inventories of all computer-based
equipment and software, as well as digital and analog control systems;
establishing testing procedures for checking Year 2000 readiness; and
carrying out those testing procedures. This phase has been completed for
both land-based and vessel-based systems, except to the extent that the
Company is seeking to determine, based on communications with third-party
suppliers and customers, whether and to what extent the Company may face
disruptions in supplies or services (such as ports and utilities) provided
by suppliers or cessation of operations by customers. The Company estimates
that such determination has been made with respect to approximately 90% of
such third-party suppliers and customers and that such determination should
be completed by the end of May 1999.
o Remediation of all land-based and vessel-based issues identified in the
assessment phase. Except as discussed above with respect to third parties,
land-based remediation activities have been completed and vessel-based
remediation efforts have been approximately 70% completed and are expected
to be completed during the first half of 1999. Based on the information
obtained to date from third-party suppliers and customers, the Company does
not anticipate any material obstacles to completing any remaining
remediation activities during the third quarter of 1999.
o Compliance certification, including re-testing to assure that remediation
efforts have been successful compliance certification is expected to be
completed shortly after the completion of remediation efforts in the 1999
third quarter.
o Maintenance, including ongoing testing and remediation. This phase is
expected to commence at the end of the first half of 1999 and is expected
to continue until early 2000.
<PAGE>
The Company expects each of the above phases to be completed or
substantially completed by the times indicated above. However, the Company
cannot predict whether or to what extent the completion of these phases may be
delayed for various reasons. In particular, as indicated above, the Company
continues to contact third-party suppliers and customers with regard to the Year
2000 Issue. As indicated above, based on the information obtained to date from
third-party suppliers and customers, the Company does not anticipate any
material obstacles to completing any remaining land-based and vessel-based
remediation activities during the third quarter of 1999. However, it is not
possible to predict whether or to what extent the information obtained from
suppliers and customers may require additional assessment, remediation and/or
other activities. Further, the completion of the Company's Year 2000 program
could be adversely affected by the unavailability of replacement components and
equipment.
The Company estimates that its total cost for new systems and equipment
and related services will approximate $6.5 million, of which approximately $5.6
million had been expended through 1998. However, these amounts include the costs
of new systems and equipment that, while "Year 2000 compliant," were not
acquired in connection with or as a result of the Year 2000 Issue. Further,
these amounts do not include the Company's internal costs in connection with the
Year 2000 Issue (consisting primarily of payroll costs for employees working on
the Company's Year 2000 program), as the Company does not separately track such
costs. Consequently, it is not possible to determine the precise amount expended
by the Company directly in connection with the Year 2000 Issue. These
expenditures are not expected to affect other expenditures by the Company
relating to information technology and systems.
The Company faces numerous potential risks in connection with the Year
2000 Issue. For the Company's land-based systems, these risks include the
possible loss of network integrity; failures with regard to accounting, finance
and other functions; potential damage to equipment; and possible loss of
communications. In addition, systems containing embedded technology could result
in the loss of building management control systems (including elevators, air
conditioning and generators); failure of fire and emergency and safety systems;
potential damage to equipment; and loss of power. In its vessel-based
operations, the Year 2000 Issue could result in vessel delays or stoppages;
damage to vessels and other equipment; risk of injury to crew members and
others; failure of navigation and/or communications equipment; and cargo
handling failures. It is not possible to determine whether or to what extent any
or all of these risks are likely to occur or the costs involved in any such
occurrence. However, such costs could be material.
The Company has developed a number of contingency plans to address the
Year 2000 Issue. Some of these plans will be implemented regardless of the
Company's expectations as to the likely impact of the Year 2000 Issue, while
others will be implemented only if the Company believes that it is likely to be
seriously affected by the Year 2000 Issue. These contingency plans include
maintaining backup systems with pre-2000 dates (including backups of all
critical systems); advance testing of critical systems; printing paper copies of
all critical data; establishing emergency response teams; and manually
overriding all mechanical systems. In addition, the Company may suspend cargo
operations; instruct vessels at sea to be in open sea, well away from shore or
shallows; instruct vessels in port to remain alongside or at anchor; insure that
all ships are fully provisioned with stores and fuel; and restrict crew changes.
In addition, as 2000 approaches, the Company will conduct safety drills, cargo
handling drills, and backup vessel handling drills.
<PAGE>
The above discussion of the Year 2000 Issue is a "Year 2000 Readiness
Disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act. However, such Act does not protect the Company against
proceedings under the federal securities laws, including enforcement proceedings
by the Commission arising out of material misstatements in and omissions from
the above discussion.
Euro Conversion Issues
On January 1, 1999, certain member nations of the European Economic and
Monetary Union ("EMU") adopted a common currency, the "Euro." For a three-year
transition period, both the Euro and individual participants' currencies will
remain in circulation; after January 1, 2002, the Euro will be the sole legal
tender for EMU countries. The adoption of the Euro affects numerous financial
systems and business applications.
While the Company does business in many countries around the world,
substantially all of such business is U.S. dollar-denominated. Thus, while the
Company is reviewing the impact of the introduction of the Euro on various
aspects of its business (including information systems, currency exchange rate
risk, taxation, contracts, competitive position and pricing), such introduction
is not expected to have a material impact on the Company.
<PAGE>
PART II. OTHER INFORMATION
Item 3. Defaults Upon Senior Securities.
As of March 31, 1999, the Company was not in compliance with certain
covenants contained in the Credit Facility. The Company has entered into an
Amendment and Interim Waiver, dated as of March 31, 1999, in which its bank
lenders have agreed to waive such noncompliance until May 17, 1999. For
additional information, see Note 2 to the financial statements in this Report;
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources"; and Amendment No. 3, which is
filed as an exhibit to this Report and incorporated by reference herein.
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
10.1 - Amendment No. 2, dated as of March 31, 1999, of Amended and
Restated Revolving Credit and Term Loan Agreement, dated
as of February 12, 1998.
10.2 - Amendment No. 3 and Interim Waiver, dated as of March 31,
1999, of Amended and Restated Revolving Credit and Term
Loan Agreement, dated as of February 12, 1999.
10.3 - Hvide Marine Incorporated Key Employee Stock Compensation Plan.
27 - Financial Data Schedule
b. Reports on Form 8-K.
Not applicable.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HVIDE MARINE INCORPORATED
/s/ JOHN J. KRUMENACKER
John J. Krumenacker
Controller and Chief Accounting Officer
Date: May 17, 1999
AMENDMENT NO. 2
This AMENDMENT NO. 2 (this "Amendment"), dated as of March 31, 1999, is
by and among HVIDE MARINE INCORPORATED (the "Borrower"), the Guarantors listed
on the signature pages hereto (the "Guarantors"), CITIBANK, N.A., as
Administrative Agent (the "Administrative Agent"), BANKBOSTON, N.A., as
Documentation Agent (the "Documentation Agent" and together with the
Administrative Agent, the "Agents"), and the lending institutions party to the
Credit Agreement referred to below (collectively, the "Banks").
WHEREAS, the Borrower, certain of the Guarantors, the Banks and the
Agents are parties to that certain Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of February 12, 1998 (as amended, the "Credit
Agreement"), pursuant to which the Agents and the Banks, upon certain terms and
conditions, have agreed to make loans and otherwise extend credit to the
Borrower;
WHEREAS, the Borrower has informed the Banks that it is unable to meet
the conditions set forth in Section 15 of the Credit Agreement, and has
requested the Banks to fund a Revolving Credit Loan on March 31, 1999,
notwithstanding such inability;
WHEREAS, the Banks and the Agents have agreed, subject to the
satisfaction of the conditions precedent set forth herein, to amend the Credit
Agreement as set forth herein, and upon the effectiveness of such amendment, to
fund a Revolving Credit Loan on March 31, 1999, solely for the purposes and on
the conditions set forth herein; and
WHEREAS, capitalized terms which are used herein without definition and
which are defined in the Credit Agreement shall have the same meanings herein as
in the Credit Agreement.
NOW, THEREFORE, the Borrower, the Guarantors, the Banks and the Agents
hereby agree as follows:
1. Amendments to the Credit Agreement. Subject to the satisfaction of
the conditions precedent set forth in 4 hereof, the Credit Agreement is hereby
amended as follows:
1.1 Definitions.
(a) Section 1.1. of the Credit Agreement is hereby amended by deleting
the definitions of Applicable Margin, and Interest Payment Date set forth
therein in their entirety and substituting in lieu thereof, respectively, the
following new definitions:
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a
"Rate Adjustment Period"), the Applicable Margin shall be the applicable
percentage set forth below with respect to the Leverage Ratio, determined
on a Pro Forma Basis as of the end of the fiscal quarter of the Borrower
immediately preceding the date of the Compliance Certificate relating to
such Adjustment Date:
<PAGE>
<TABLE>
<CAPTION>
- ------------- ------------------------------------------ ------------- ----------------- --------------------
Base Eurodollar Commitment
Level Leverage Ratio Rate Loans Rate Loans Fee
- ------------- ------------------------------------------ ------------- ----------------- --------------------
<S> <C> <C> <C> <C>
- ------------- ------------------------------------------ ------------- ----------------- --------------------
I Greater than 3.00 to 1.00 3.00% 3.50% 0.50%
- ------------- ------------------------------------------ ------------- ----------------- --------------------
- ------------- ------------------------------------------ ------------- ----------------- --------------------
II Less than or equal to 3.00 to 1.00 1.75% 2.75% 0.50%
- ------------- ------------------------------------------ ------------- ----------------- --------------------
- ------------- ------------------------------------------ ------------- ----------------- --------------------
</TABLE>
Notwithstanding the foregoing, (i) until the delivery of the Compliance
Certificate for the fiscal quarter of the Borrower ending on or about March
31, 1999, the Applicable Margin shall be the percentage corresponding to
Level I in the table above, (ii) if the Borrower fails to deliver any
Compliance Certificate pursuant to 11.4(d) hereof, then for the period
commencing on the date such Compliance Certificate was due through the date
immediately preceding the Adjustment Date that occurs immediately following
the date on which such Compliance Certificate is delivered, the Applicable
Margin shall be that percentage corresponding to Level I in the table
above, and (iii) subject to the provisions of the preceding clause (ii),
for purposes of calculating the commitment fee payable pursuant to 2.2,
the commitment fee on the Restricted Amount (defined below) shall be equal
to 0.25%. As used herein, the Restricted Amount at any time shall mean
the amount equal to $175,000,000 minus the Available Commitment at such
time.
"Interest Payment Date. As to each Loan, (i) March 31, 1999 with
respect to interest accrued on such date and (ii) the last day of each
calendar month ending thereafter with respect to interest accrued during
such calendar month, including, without limitation, the calendar month
which includes the Drawdown Date of such Loan."
(b) The definition of "Interest Period" set forth in Section 1.1 of the
Credit Agreement is hereby amended by deleting the text "1, 2, 3, or 6 months"
from the seventh line of such definition and substituting in lieu thereof the
text "1, 2 or 3 months".
(c) Section 1.1 of the Credit Agreement is hereby amended by adding
the following new definitions thereto in the correct alphabetical location:
Agency Account Agreement. An agreement, in form and substance
satisfactory to the Agents, entered into between an Agent and a depository
institution at which the Borrower and/or any of its Subsidiaries maintains a
depository account.
Concentration Account. An account maintained by the Borrower and its
Subsidiaries with an Agent and designated as a Concentration Account hereunder,
or such other account as shall be so designated in writing by an Agent.
1.2 Commitment Fee. Section 2.2 of the Credit Agreement is hereby
amended by (i) deleting the word quarter occurring in the fifth, ninth, and
eleventh lines of such Section (including both such occurrences in such eleventh
line) and substituting in lieu thereof the word month and (ii) deleting the word
quarterly occurring in the tenth line of such Section and substituting in lieu
thereof the word monthly.
1.3 Letter of Credit Fees. Section 5.6 of the Credit Agreement is
hereby amended by deleting the word quarter occurring in the second, seventh,
eighth and twelfth lines of such Section and substituting in lieu thereof the
word month.
1.4 Funds For Payments. Section 8.1.1 of the Credit Agreement is
hereby amended by adding the following sentence at the end of said Section
8.1.1: The Borrower hereby expressly authorizes the Administrative Agent to
charge any account(s) of the Borrower with the Administrative Agent or to
advance Revolving Credit Loans hereunder to effect any payments due hereunder or
under the other Loan Documents.
1.5 Bank Accounts. The Credit Agreement is hereby further amended by
adding the following new Sections 10.22, 11.16 and 12.13 thereto in the correct
numerical locations:
"10.22 Bank Accounts. Schedule 10.22 hereto sets forth the account
numbers and location of all bank accounts of the Borrower and each of its
Subsidiaries, as such Schedule may be updated from time to time pursuant to
12.13.
"11.16 Bank Accounts. On or prior to April 15, 1999, the Borrower will,
and will cause each of its Subsidiaries to, (i) direct all domestic and
international depository institutions in which the Borrower or any of its
Subsidiaries maintains any deposit accounts to cause all funds in excess of
the amount for such account set forth on Schedule 10.22 held in each such
account to be transferred no less frequently than weekly to, and only to,
the Concentration Account, (ii) cause all proceeds of accounts receivable
of the Borrower and its Subsidiaries (subject to the interest of third
party creditors in proceeds of accounts receivable securing other
third-party Indebtedness permitted under the Credit Agreement) to be
deposited only into the Concentration Account or depository accounts with
financial institutions which have entered into Agency Account Agreements,
and (iii) except for amounts in any account which are less than the amount
for such account set forth on Schedule 10.22, at all times ensure that, not
less frequently than the end of each week during which the Borrower or any
of its Subsidiaries receives any cash or cash equivalents or any other
proceeds of Collateral, all such amounts shall have been deposited in the
Concentration Account.
"12.13 Bank Accounts. The Borrower will not, and will not permit any of
its Subsidiaries to, (i) establish any bank accounts other than those listed on
Schedule 10.22 without an Agent's prior written consent, (ii) violate directly
or indirectly any Agency Account Agreement with respect to such account, or
(iii) deposit into any of the payroll accounts listed on Schedule 10.22 any
amounts in excess of amounts necessary to pay current payroll obligations from
such accounts. Upon the written consent of an Agent to the establishment of an
additional bank account pursuant to clause (i) of this 12.13, Schedule 10.22
hereto will be amended to reflect the addition of such bank account."
1.6 Trust Securities. Section 12.8(a) of the Credit Agreement is hereby
amended by inserting the following new text at the end of such Section: "The
Borrower shall not, and shall not permit any of its Subsidiaries to, make any
payments of principal or interest on the Trust Securities."
1.7 Expenses. Section 19.1 of the Credit Agreement is hereby amended
by inserting the text ", additional special counsel to the Agents" immediately
after the words "Special Counsel" in the tenth line of such Section.
1.8 Schedules. The Credit Agreement is hereby amended by adding
Schedule 10.22 hereto as a Schedule to the Credit Agreement.
2. Conditions to Loans; Reservation of Rights. The Borrower has
informed the Agent and the Banks that, it is unable to meet the conditions to
borrowing set forth in Section 15.1 of the Credit Agreement and has requested
the Banks and the Agents to waive such conditions with respect to the requested
borrowing referred to herein. Since the Borrower cannot meet such conditions,
the Banks have no obligation to make any Loans to the Borrower and the Issuing
Bank has no obligation to issue any Letters of Credit for the account of the
Borrower. The Banks may, in their sole and absolute discretion, from time to
time continue to make Loans to the Borrower and the Issuing Bank may, in its
sole and absolute discretion, continue to issue Letters of Credit for the
account of the Borrower, notwithstanding such inability, but the making of such
Loans and the issuance of such Letters of Credit shall be done on a
discretionary basis, and the decision as to whether to make any Loan, or issue,
extend or renew any Letter of Credit at the time the Borrower may request a Loan
or Letter of Credit will be at the sole and absolute discretion of the Banks and
the Issuing Bank, and will not in any manner constitute a waiver of the
conditions of Section 15 of the Credit Agreement or of any Default or Event of
Default now existing or hereafter arising or otherwise prejudice in any manner
the Banks or the Administrative Agents rights to take any and all actions
permitted under the Credit Agreement or any of the other Loan Documents as a
result of Defaults or Events of Default now existing or hereafter arising under
the Credit Agreement, and that any Loans made or Letters of Credit issued,
renewed or extended shall constitute Obligations under the Credit Agreement.
The Borrower has requested that a Revolving Credit Loan in the amount
of $9,107,788 be made on March 31, 1999. The Banks have agreed, subject to the
terms and conditions set forth herein and in reliance upon the acknowledgments
and agreements of the Borrower contained herein, to make a Revolving Credit Loan
to the Borrower in the amount of $9,107,788 on March 31, 1999; provided that the
Borrower hereby agrees, and hereby irrevocably instructs the Administrative
Agent that, the proceeds of such Revolving Credit Loan be applied by the
Administrative Agent to the payment of principal and interest required to be
made on the Loans and related fees and expenses as provided in the Borrowers
Loan Request on March 31, 1999. The Banks agree to waive, solely with respect to
the aforementioned Revolving Credit Loan to be made on March 31, 1999, the
conditions precedent to the making of such Revolving Credit Loan set forth in
Section 15.1 of the Credit Agreement.
3. Agreement of the Borrower; Acknowledgement of Banks.
(a) The Borrower and the Banks acknowledge and agree that,
notwithstanding any other provision of the Credit Agreement, the aggregate
Revolving Credit Loans outstanding plus the Maximum Drawing Amount of all
Letters of Credit shall not exceed $160,405,058 at any time until the Borrower
is in compliance with the borrowing conditions contained in Section 15 of the
Credit Agreement.
(b) The Borrower hereby agrees that no Eurodollar Rate Loans will be
requested by or provided to the Borrower until the Borrower receives notice from
the Administrative Agent that Eurodollar Rate Loans will be made to the
Borrower. In addition, any and all Eurodollar Rate Loans outstanding on March
31, 1999 shall automatically on such date be converted into Base Rate Loans.
(c) The Borrower agrees to cooperate with the Banks and the Agent and
to take all actions necessary or advisable to promptly implement the bank
account agreements and Agency Account Agreements provided for in this Amendment,
to perfect the Agents rights in all Collateral and to more fully carry out the
transactions contemplated by the Loan Documents.
4. Representations and Warranties. The Borrower and each of the
Guarantors represent and warrant to the Banks and the Agents as follows:
(a) Representations and Warranties in Credit Agreement. The
representations and warranties of the Borrower and each of the Guarantors
contained in the Credit Agreement, as amended hereby, and the Loan Request (a)
were true and correct in all material respects when made, and (b) except to the
extent such representations and warranties by their terms are made solely as of
a prior date, continue to be true and correct in all material respects on the
date hereof, except to the extent referred to in Section 2 hereof.
(b) Authority, Etc. The execution and delivery by the Borrower and each
of the Guarantors of this Amendment and the performance by the Borrower and each
of the Guarantors of all of their agreements and obligations under this
Amendment and the Credit Agreement as amended hereby (i) are within the
corporate or limited partnership, as the case may be, authority of the Borrower
and each of the Guarantors, (ii) have been duly authorized by all necessary
corporate or limited partnership proceedings or actions, as the case may be, by
the Borrower and each of the Guarantors, (iii) do not conflict with or result in
any breach or contravention of any provision of law, statute, rule or regulation
to which the Borrower or any of the Guarantors is subject or any judgment,
order, writ, injunction, license or permit applicable to the Borrower or any of
the Guarantors, and (iv) do not conflict with any provision of the corporate
charter, by-laws or partnership agreement of, or any agreement or other
instrument binding upon, the Borrower or any of the Guarantors.
(c) Enforceability of Obligations. This Amendment, and the Credit
Agreement as amended hereby, and the other Loan Documents constitute the legal,
valid and binding obligations of the Borrower and each of the Guarantors
enforceable against each such Person in accordance with their respective terms.
5. Affirmation of Borrower and the Guarantors.
(a) The Borrower hereby affirms its absolute and unconditional promise
to pay to each Bank and the Agents the Obligations under the Notes and the
Credit Agreement as amended hereby, at the times and in the amounts provided for
therein, and acknowledges and agrees that there are no claims, liabilities, or
actions against any of the Banks or the Agents relating to the transactions
contemplated by the Loan Documents or defenses or offsets to the Obligations;
the Borrower hereby expressly releasing any such present or future claims,
liabilities, actions, defenses or offsets.
(b) Each of the Guarantors hereby acknowledges that it has read and is
aware of the provisions of this Amendment. Each of the Guarantors hereby
reaffirms its absolute and unconditional guaranty of the Borrower's payment and
performance of the Obligations under the Credit Agreement as amended hereby, and
acknowledges and agrees that there are no claims, liabilities or actions against
any of the Banks or the Agents relating to the transactions contemplated by the
Loan Documents or defenses or offsets to the Obligations (except as a result by
payment of the Borrower); each of the Guarantors hereby expressly releasing any
such present or future claims, liabilities, actions, defenses or offsets.
6. Conditions to Effectiveness. This Amendment shall be effective as of
the date hereof upon the satisfaction of the following conditions precedent, on
or before March 31, 1999 (each of the following to be in form and substance
satisfactory to the Agents):
(i) receipt by the Agents of an original counterpart signature (or a
faxed copy thereof with originals to follow) to this Amendment, duly executed
and delivered by the Borrower, each of the Guarantors, the Banks and the Agents;
and
(ii) payment by the Borrower of the legal, appraisal, and out-of-pocket
fees and expenses of the Agents incurred in connection with the preparation and
negotiation of this Amendment, and the Agents collateral appraisal of the
Borrower and its Subsidiaries, in each case, to the extent that invoices for the
same have been presented to the Borrower.
7. Agreement of the Banks. Each of the Banks hereby ratifies the
engagement by the Agents and the Agents Special Counsel of Arthur Andersen LLP
(Andersen) under the Engagement Letter dated August 28, 1998 in connection
with the evaluation of certain financial matters involving the Borrower and the
agreement by the Administrative Agent, as Agent for the Banks, to indemnify and
hold harmless Andersen against any claims, liabilities, costs, and expenses
brought against, paid or incurred by Andersen in any way arising out of or
relating to Andersens services in connection with such engagement, in an
aggregate amount of up to $1,000,000, and agrees that any claims, actions,
suits, losses, damages, costs, and expenses incurred by the Administrative Agent
in connection therewith shall be subject to 18.7 of the Credit Agreement.
8. Miscellaneous Provisions. (a) Except as otherwise expressly
provided by this Amendment, all of the terms, conditions and provisions of the
Credit Agreement shall remain the same. It is declared and agreed by each of the
parties hereto that the Credit Agreement, as amended hereby, shall continue in
full force and effect, and that this Amendment and the Credit Agreement shall be
read and construed as one instrument.
(b) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED ACCORDING TO,
THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW).
(c) This Amendment may be executed in any number of counterparts, but
all such counterparts shall together constitute but one instrument. In making
proof of this Amendment it shall not be necessary to produce or account for more
than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.
(d) Headings or captions used in this Amendment are for convenience of
reference only and shall not define or limit the provisions hereof.
(e) The Borrower hereby agrees to pay to the Agents, on demand by the
Agents, all reasonable out-of-pocket costs and expenses incurred or sustained by
the Agents in connection with the preparation of this Amendment (including
reasonable legal fees and expenses of the Agents Special Counsel and additional
special counsel to the Agents).
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
HVIDE MARINE INCORPORATED
By:
Title:
CITIBANK, N.A., individually and as Administrative Agent
By:
Title:
BANKBOSTON, N.A., individually and as Documentation Agent
By:
Title:
BNY FINANCIAL CORPORATION
By:
Title:
HIBERNIA NATIONAL BANK
By:
Title:
<PAGE>
AMSOUTH BANK
By:
Title:
BANK ONE, LOUISIANA, N.A.
(AS SUCCESSOR TO FIRST NATIONAL BANK OF COMMERCE)
By:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
Title:
ABN AMRO BANK, N.V.
By:
Title:
By:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By:
Title:
<PAGE>
CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH
By:
Title:
By:
Title:
FIRST UNION NATIONAL BANK
By:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
Title:
SOUTHTRUST BANK, NATIONAL ASSOCIATION
By:
Title:
SUNTRUST BANK, SOUTH FLORIDA, N.A.
By:
Title:
<PAGE>
UNION PLANTERS BANK OF FLORIDA
By:
Title:
<PAGE>
Each of the undersigned Guarantors hereby consents to the above
Amendment and confirms its unconditional guaranty of the Obligations under the
Credit Agreement, as amended hereby.
HVIDE MARINE TOWING, INC.
HVIDE MARINE TOWING SERVICES, INC.
HVIDE MARINE TRANSPORT,
INCORPORATED
SEABULK CONDOR, INC.
SEABULK CORMORANT, INC.
SEABULK CARDINAL, INC.
SEABULK COOT II, INC.
SEABULK CYGNET I, INC.
SEABULK EAGLE II, INC.
SEABULK FALCON II, INC.
SEABULK GANNET I, INC.
SEABULK GANNET II, INC.
SEABULK HARRIER, INC.
SEABULK HAWAII, INC.
SEABULK KESTREL, INC.
SEABULK LARK, INC.
SEABULK MALLARD, INC.
SEABULK OCEAN SYSTEMS CORPORATION
SEABULK OFFSHORE GLOBAL
HOLDINGS, INC.
SEABULK OFFSHORE HOLDINGS, INC.
SEABULK OFFSHORE
INTERNATIONAL, INC.
SEABULK OFFSHORE, LTD.
By its general partner Seabulk Tankers, Ltd.
By its general partner Hvide Marine Transport,
Incorporated
SEABULK OFFSHORE OPERATORS, INC.
SEABULK OREGON, INC.
SEABULK OSPREY, INC.
SEABULK PENGUIN I, INC.
SEABULK PENGUIN II, INC.
SEABULK RAVEN, INC.
<PAGE>
SEABULK ROOSTER, INC.
SEABULK SABINE, INC.
SEABULK SNIPE, INC.
SEABULK SWAN, INC.
SEABULK TANKERS, LTD.
By its general partner Hvide Marine
Transport, Incorporated
SEABULK TOUCAN, INC.
SEABULK TRANSMARINE PARTNERSHIP, LTD.
By its general partner Seabulk Tankers, Ltd.
By its general partner Hvide Marine
Transport, Incorporated
SEABULK VERITAS, INC.
HMI OPERATORS, INC.
HVIDE MARINE INTERNATIONAL, INC.
LONE STAR MARINE SERVICES, INC.
OFFSHORE MARINE MANAGEMENT
INTERNATIONAL, INC.
SEABULK ALBANY, INC.
SEABULK ALKATAR, INC.
SEABULK ARABIAN, INC.
SEABULK ARZANAH, INC.
SEABULK ARCTIC EXPRESS, INC.
SEABULK ARIES II, INC.
SEABULK BARRACUDA, INC.
SEABULK BATON ROUGE, INC.
SEABULK BECKY, INC.
SEABULK BRAVO, INC.
SEABULK BUL HANIN, INC.
SEABULK CAPRICORN, INC.
SEABULK CAROL, INC.
SEABULK CAROLYN, INC.
SEABULK CHAMP, INC.
SEABULK CHRISTOPHER, INC.
SEABULK CLAIBORNE, INC.
SEABULK CLIPPER, INC.
SEABULK COMMAND, INC.
SEABULK CONSTRUCTOR, INC.
SEABULK COOT I, INC.
<PAGE>
SEABULK CYGNET II, INC.
SEABULK DANAH, INC.
SEABULK DAYNA, INC.
SEABULK DEBBIE, INC.
SEABULK DEBORA ANN, INC.
SEABULK DEFENDER, INC.
SEABULK DIANA, INC.
SEABULK DISCOVERY, INC.
SEABULK DUKE, INC.
SEABULK EAGLE, INC.
SEABULK EMERALD, INC.
SEABULK ENERGY, INC.
SEABULK EXPLORER, INC.
SEABULK FALCON, INC.
SEABULK FREEDOM, INC.
SEABULK FULMAR, INC.
SEABULK GABRIELLE, INC.
SEABULK GAZELLE, INC.
SEABULK GIANT, INC.
SEABULK GREBE, INC.
SEABULK HABARA, INC.
SEABULK HAMOUR, INC.
SEABULK HATTA, INC.
SEABULK HAWK, INC.
SEABULK HERCULES, INC.
SEABULK HERON, INC.
SEABULK HORIZON, INC.
SEABULK HOUBARE, INC.
SEABULK IBEX, INC.
SEABULK ISABEL, INC.
SEABULK JASPER, INC.
SEABULK JEBEL ALI, INC.
SEABULK KATIE, INC.
SEABULK KING, INC.
SEABULK KNIGHT, INC.
SEABULK LAKE EXPRESS, INC.
SEABULK LARA, INC.
SEABULK LINCOLN, INC.
SEABULK LULU, INC.
SEABULK MAINTAINER, INC.
SEABULK MARLENE, INC.
SEABULK MARTIN I, INC.
<PAGE>
SEABULK MARTIN II, INC.
SEABULK MERLIN, INC.
SEABULK MUBARRAK, INC.
SEABULK NEPTUNE, INC.
SEABULK NIDDY, INC.
SEABULK OCEAN SYSTEMS HOLDINGS CORPORATION
SEABULK OFFSHORE ABU DHABI, INC.
SEABULK OFFSHORE DUBAI, INC.
SEABULK OFFSHORE OPERATORS TRINIDAD LIMITED
SEABULK ORYX, INC.
SEABULK PELICAN, INC.
SEABULK PENNY, INC.
SEABULK PERSISTENCE, INC.
SEABULK PETREL, INC.
SEABULK PLOVER, INC.
SEABULK POWER, INC.
SEABULK PRIDE, INC.
SEABULK PRINCE, INC.
SEABULK PRINCESS, INC.
SEABULK PUFFIN, INC.
SEABULK QUEEN, INC.
SEABULK SALIHU, INC.
SEABULK SAPPHIRE, INC.
SEABULK SARA, INC.
SEABULK SEAHORSE, INC.
SEABULK SENGALI, INC.
SEABULK SERVICE, INC.
SEABULK SHARI, INC.
SEABULK SHINDAGA, INC.
SEABULK SKUA I, INC.
SEABULK ST. TAMMANY, INC.
SEABULK SUHAIL, INC.
SEABULK SWIFT, INC.
SEABULK TAURUS, INC.
SEABULK TENDER, INC.
SEABULK TIMS I, INC.
SEABULK TITAN, INC.
SEABULK TOOTA, INC.
SEABULK TRADER, INC.
SEABULK TRANSMARINE II, INC.
SEABULK TREASURE ISLAND, INC.
<PAGE>
SEABULK UMM SHAIF, INC.
SEABULK VIRGO I, INC.
SEABULK VOYAGER, INC.
SEABULK ZAKUM, INC.
SEABULK OFFSHORE OPERATORS NIGERIA LIMITED
SEABULK RED TERN LIMITED
SEABULK OFFSHORE U.K., LTD.
SEAMARK LTD., INC.
By: __________________________
Name: John H. Blankley
Title: Executive Vice President,
Chief Financial Officer and
Treasurer
OCEAN SPECIALTY TANKERS
CORP.
By: __________________________
Name: James Talmage
Title: Vice President
LIGHTSHIP LIMITED PARTNER
HOLDINGS, LLC
By:
Name: John H. Blankley,
Title: Vice President
SEABULK OFFSHORE, LTD.
By:
Name: Andrew W. Brauninger
Title: Division President
<PAGE>
SUN STATE MARINE SERVICES, INC.
By: __________________________
Name: William R. Ludt
Title: President
AMENDMENT NO. 3 AND INTERIM WAIVER
This AMENDMENT NO. 3 AND INTERIM WAIVER (this "Amendment"), dated as of
March 31, 1999, is by and among HVIDE MARINE INCORPORATED (the "Borrower"), the
Guarantors listed on the signature pages hereto (the "Guarantors"), CITIBANK,
N.A., as Administrative Agent (the "Administrative Agent"), BANKBOSTON, N.A., as
Documentation Agent (the "Documentation Agent" and together with the
Administrative Agent, the "Agents"), and the lending institutions party to the
Credit Agreement referred to below (collectively, the "Banks").
WHEREAS, the Borrower, certain of the Guarantors, the Banks and the
Agents are parties to that certain Amended and Restated Revolving Credit and
Term Loan Agreement, dated as of February 12, 1998 (as amended, the "Credit
Agreement"), pursuant to which the Agents and the Banks, upon certain terms and
conditions, have agreed to make loans and otherwise extend credit to the
Borrower;
WHEREAS, the Borrower has informed the Banks that it may be in default
of the covenants contained in ..13.1, 13.2, 13.3 and 13.5 of the Credit
Agreement as at March 31, 1999 and for the fiscal period then ending (such
defaults are referred to herein, collectively, as the "Specified Defaults");
WHEREAS, the Borrower and the Guarantors have requested that the Banks
and the Agent amend certain of the terms and provisions of the Credit Agreement
and the other Loan Documents and grant to the Borrower an interim waiver of the
Specified Defaults;
WHEREAS, the Banks and the Agents have agreed, subject to the
satisfaction of the conditions precedent set forth herein, to amend the Credit
Agreement and the other Loan Documents as set forth herein, and to grant to the
Borrower an interim waiver of the Specified Defaults; and
WHEREAS, capitalized terms which are used herein without definition and
which are defined in the Credit Agreement shall have the same meanings herein as
in the Credit Agreement.
NOW, THEREFORE, the Borrower, the Guarantors, the Banks and the Agents
hereby agree as follows:
.1. Interim Waiver. Subject to the satisfaction of the conditions
precedent set forth in .8 hereof and in consideration of and reliance upon the
agreements of the Borrower and each of the Guarantors contained herein, each of
the Banks agrees to waive, during the period (the "Waiver Period) from the date
hereof until May 17, 1999, at 5:00 p.m. (New York local time) (the "Waiver
Expiration Date"), any Default or Event of Default caused by the occurrence of
the Specified Defaults. Such waiver shall automatically, and without action,
notice, demand or any other occurrence, expire on and as of the Waiver
Expiration Date. Upon the expiration of the Waiver Period, and from and after
such date, (a) the Banks and the Agents shall retain all of the rights and
remedies relating to the Specified Defaults, and any other Default or Event of
Default under the Credit Agreement, (b) the Specified Defaults shall be
reinstated and shall be in full force and effect for all periods including,
prior to, and after, the Waiver Period, and (c) any obligations of the Banks to
make Revolving Credit Loans and the Iuing Bank to iue, extend or renew
Letters of Credit shall be subject to the terms and conditions set forth in the
Credit Agreement, including, without limitation, the conditions precedent set
forth in .15 thereof.
.2. Other Defaults. The waiver set forth in .1 hereof shall apply
only to the Specified Defaults and no waiver with respect to any other Default
or Event of Default, whether presently existing or hereafter arising, is granted
hereby. Any obligation of the Banks to make Revolving Credit Loans and of the
Iuing Bank to iue, extend or renew Letters of Credit shall, at all times
(including, without limitation, during the Waiver Period), be subject to the
satisfaction of the conditions precedent set forth in the Credit Agreement,
exclusive, during the Waiver Period, of those conditions precedent relating to
the absence of the Specified Defaults. The Banks and the Agents shall, at all
times, retain all of the rights and remedies in respect of any Default or Event
of Default under the Credit Agreement other than, during the Waiver Period, the
Specified Defaults.
.3. Modifications to Credit Agreement During Waiver Period. In order
to induce the Banks to enter into this Amendment and to grant the temporary
waiver set forth in .1 hereof, the Borrower and each of the Guarantors hereby
agree with the Agents and the Banks that during the Waiver Period certain
provisions of the Credit Agreement shall be modified as set forth in this
Section 3.
3.1 Commitment Fee. Notwithstanding anything to the contrary contained
in the Credit Agreement, including, without limitation, .2.2 thereof, and any
defined terms used therein, during the Waiver Period, the Commitment Fee shall
be paid by the Borrower on the last Busine Day of each calendar week.
3.2 Interest on Loans. Notwithstanding anything to the contrary
contained in the Credit Agreement, including, without limitation, .2.5 and
.4.5 thereof, and any defined terms used therein, during the Waiver Period,
(a) each of the Loans shall be a Base Rate Loan and shall bear interest at the
rate per annum equal to the Base Rate plus five percent (5%) per annum and (b)
interest on each of the Loans shall be paid by the Borrower on the last Busine
Day of each calendar week.
3.3 Letter of Credit Fees. Notwithstanding anything to the contrary
contained in the Credit Agreement, including, without limitation, .5.6
thereof, and any defined terms used therein, during the Waiver Period, (a) each
Letter of Credit Fee and each Fronting Fee shall be paid by the Borrower on the
last Busine Day of each calendar week, (b) each Letter of Credit Fee shall be
in an amount equal to five percent (5%) per annum of the average daily Maximum
Drawing Amount of all Letters of Credit outstanding during such week, and (c)
each Fronting Fee shall be in an amount equal to one-eighth of one percent
(0.125%) per annum of the average daily Maximum Drawing Amount of all Letters of
Credit outstanding during such week.
.4. Amendments to the Credit Agreement. Subject to the satisfaction
of the conditions precedent set forth in .8 hereof, the Credit Agreement is
hereby amended as follows (it being understood that the amendments set forth in
this Section 4 shall be effective as of the date hereof, but that, in the event
of any inconsistency between the provisions of Section 3 hereof and the
provisions of the Credit Agreement as amended by this Section 4, the provisions
of Section 3 hereof shall, solely to the extent of such inconsistency, prevail
over the provisions in the Credit Agreement):
.4.1 Definitions.
(a) Applicable Margin. Section 1.1 of the Credit Agreement is hereby
amended by deleting the definition of "Applicable Margin" set forth therein and
substituting in lieu thereof the following new definition:
"Applicable Margin. For each period commencing on an
Adjustment Date through the date immediately preceding the next
Adjustment Date (each a "Rate Adjustment Period"), the Applicable
Margin shall be the applicable percentage set forth below with respect
to the Leverage Ratio, determined on a Pro Forma Basis as of the end of
the fiscal quarter of the Borrower immediately preceding the date of
the Compliance Certificate relating to such Adjustment Date:
<PAGE>
-------------- ------------------------------------------------ -------------
Base
Level Leverage Ratio Rate Loans
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
I Greater than 3.00 to 1.00 3.00%
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
II Le than or equal to 3.00 to 1.00 1.75%
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
-------------- ------------------------------------------------ -------------
Notwithstanding the foregoing, (i) until the delivery of the Compliance
Certificate for the fiscal quarter of the Borrower ending on March 31,
1999, the Applicable Margin shall be the percentage corresponding to
Level I in the table above, and (ii) if the Borrower fails to deliver
any Compliance Certificate pursuant to .11.4(d) hereof, then for the
period commencing on the date such Compliance Certificate was due
through the date immediately preceding the Adjustment Date that occurs
immediately following the date on which such Compliance Certificate is
delivered, the Applicable Margin shall be that percentage corresponding
to Level I in the table above."
(b) Available Commitment. Section 1.1 of the Credit Agreement is hereby
amended by deleting the definition of "Available Commitment" set forth therein
and substituting in lieu thereof the following new definition:
"Available Commitment. $160,355,000, or such higher amount as may be
consented to by both of the Agents and the Required Banks, each such consent to
be in the sole and absolute discretion of such Person."
.4.2 Commitment Fee. Section 2.2 of the Credit Agreement is hereby
amended by deleting the words "the Applicable Margin" occurring in the fourth
line of such Section and substituting in lieu thereof the text "one half of one
percent (0.50%)".
.4.3 Interest on Revolving Credit Loans. The Credit Agreement is
hereby further amended by deleting .2.5 thereto in its entirety and
substituting in lieu thereof the following new .2.5:
2.5. Interest on Revolving Credit Loans. Effective as of April
1, 1999, and except as otherwise provided in .8.9, each Revolving
Credit Loan shall bear interest for the period commencing with the
Drawdown Date thereof and ending on the last day of the Interest Period
with respect thereto at the rate per annum equal to the Base Rate plus
the Applicable Margin. Notwithstanding anything to the contrary
contained herein, including, without limitation, .2.6 hereof, the
Borrower agrees that it shall not be permitted to request that
Revolving Credit Loans bear interest determined by reference to the
Eurodollar Rate.
.4.4 Conversion Options. The Credit Agreement is hereby further
amended by deleting .2.7 thereof in its entirety.
.4.5 Interest on Term Loan. The Credit Agreement is hereby further
amended by deleting .4.5.1. thereto in its entirety and substituting in lieu
thereof the following new .4.5.1.:
4.5.1. Interest on Term Loan. Effective as of April 1, 1999,
and except as otherwise provided in .8.9, the Term Loan shall bear
interest during each Interest Period relating to all or any portion of
the Term Loan at the rate per annum equal to the Base Rate plus the
Applicable Margin. Notwithstanding anything to the contrary contained
herein, the Borrower agrees that it shall not be permitted to request
that all or any portion of the Term Loan bear interest determined by
reference to the Eurodollar Rate.
.4.6 Interest on Term Loan. The Credit Agreement is hereby further
amended by deleting .4.5.2. and .4.5.3. thereto in their entirety.
.4.7 Letter of Credit Fees. Section 5.6 of the Credit Agreement is
hereby amended by deleting the text "the Applicable Margin then applicable to
Eurodollar Rate Loans" occurring in such Section and substituting in lieu
thereof the text "three and one-half percent (3-1/2%) per annum".
.4.8 Computations. Section 8.2 of the Credit Agreement is hereby
amended by deleting the first three sentences of such Section and substituting
in lieu thereof the following text: "All computations of interest on the Loans
and of commitment fees, Letter of Credit Fees, Fronting Fees, and other fees
hereunder shall be based on a 360-day year and paid for the actual number of
days elapsed."
.4.9 Bank Accounts. Section 11.16 of the Credit Agreement is hereby
amended by deleting the date "April 15, 1999" set forth therein and substituting
in lieu thereof the date "May 4, 1999".
.4.10 Retention of Financial Advisor. The Credit Agreement is hereby
further amended by inserting the following new .11.17 therein in the correct
numerical sequence:
11.17. Retention of Financial Advisor. The Borrower and the
Guarantors agree that the Agents and/or their counsel may continue to
retain Arthur Andersen & Co. to, among other things, make visits to,
and discu financial and operational matters with, the Borrower and
its Subsidiaries and to advise the Agents and the Banks as to the
busine, operations and financial condition of the Borrower and its
Subsidiaries. Such consultant shall not be limited in the frequency of
visits to the facilities of the Borrower and its Subsidiaries. The
Borrower shall, and shall cause each of its Subsidiaries to, cooperate
with such consultant and provide such consultant with all information
reasonably requested by such consultant in connection with its
engagement by the Agents and/or their counsel.
.4.11 Cash Management Arrangements. The Credit Agreement is hereby
further amended by inserting the following new .11.18 therein in the correct
numerical sequence:
11.18. Cash Management Arrangements. The Borrower shall, on or
before May 4, 1999, implement and maintain in place cash management
arrangements as shall be in form and substance satisfactory to the
Agents.
.4.12 Turnaround Management Consultant. The Credit Agreement is
hereby further amended by inserting the following new .11.19 therein in the
correct numerical sequence:
11.19. Turnaround Management Consultant. The Borrower shall,
during the week commencing May 2, 1999, begin to interview turnaround
management consultants to aist the Borrower and its Subsidiaries in
their busine operations and financial management. Such turnaround
management consultants invited to be interviewed shall be firms of
recognized national standing and shall include those consultants
suggested by the Agents and others as shall be satisfactory to the
Agents.
.4.13 Veel Operational Matters. The Credit Agreement is hereby
further amended by inserting the following new .11.20 therein in the correct
numerical sequence:
11.20. Veel Operational Matters. The Borrower shall, and
shall cause each of its Subsidiaries to, cooperate fully with the
Agents, their counsel and their representatives, and use their best
efforts to provide such information, documentation and records as any
of them may reasonably request concerning the operation of the
Borrower's and its Subsidiaries' Veels, payables related thereto and
other matters, such that all such information will be presented to the
Agents on or before May 3, 1999, or as promptly thereafter as poible.
.4.14 Reporting Matters. The Credit Agreement is hereby further
amended by inserting the following new .11.21 therein in the correct numerical
sequence:
11.21. Short-Term Cash Forecasting. The Borrower shall, and
shall cause each of its Subsidiaries to, (i) provide to the Agents the
short-term cash forecasting information from time to time developed by
Ernst & Young LLP, (ii) use its best efforts to deliver to each of the
Agents such short-term cash forecasting information in accordance with
the timetable delivered to the Agents on April 16, 1999, and (iii)
deliver to the Agents such supplemental and supporting information
relating to such short-term forecasting as either Agent may reasonably
request. The Borrower will, on or before May 14, 1999, deliver to the
Agents and each of the Banks its finalized 13-week cash forecast.
.4.15 Veel Appraisals. The Credit Agreement is hereby further
amended by inserting the following new .11.22 therein in the correct numerical
sequence:
11.22. Veel Appraisals. The Borrower shall, and shall cause
each of its Subsidiaries to, aist the Agents in obtaining updated
appraisals on any of the Veels of the Borrower and its Subsidiaries
to the extent not obtained in March, 1999. The costs of procuring such
appraisals shall be paid by the Borrower.
.4.16 Collateral Preservation. The Credit Agreement is hereby further
amended by inserting the following new .11.23 therein in the correct numerical
sequence:
11.23. Collateral Preservation. The Borrower shall, and shall
cause each of its Subsidiaries to, take all such further actions as the
Agents may from time to time reasonably request to preserve, protect,
perfect and ensure the priority of any Collateral of an existing type.
.4.17 Disposition of Aets. Section 12.5.2 of the Credit Agreement
is hereby amended by inserting the following new text at the end of such
Section: "Notwithstanding the foregoing, the Borrower will not, and will not
permit any of its Subsidiaries to, (a) effect any disposition of aets
constituting Collateral without the prior written consent of the Agents or (b)
become a party to any agreement to effect any disposition of aets constituting
Collateral unle such agreement provides that such disposition is contingent
upon the prior written consent of the Agents."
.4.18 Expenses. Section 19.1 of the Credit Agreement is hereby
amended by (i) deleting the word "and" occurring immediately before the numeral
"(vi)" therein and substituting in lieu thereof a semi-colon and (ii) adding the
following new text immediately before the period at the end of such Section:
", and (vii) the fees and expenses of Arthur Andersen & Co., special
financial advisors to the Agents and the Banks. Without prejudice to
the foregoing provisions of this .19.1, the Borrower agrees that each
of (i) Arthur Andersen & Co., (ii) Bingham Dana LLP, and (iii) Weil,
Gotshal & Manges LLP shall be entitled to bill for their fees and
expenses on a weekly basis and the Borrower shall pay each invoice of
each such Person within three (3) Busine Days of the receipt thereof,
unle (and only to the extent that) there is a good faith dispute by
the Borrower as to the accuracy or reasonablene of any such invoice."
.4.19 Aignments. Section 22.1 of the Credit Agreement is hereby
amended by deleting the text of clause (i)(b) of the proviso contained in such
Section and substituting in lieu thereof the following new text: "each of the
Agents shall have given their prior written consent to such aignment, which
consent will not be unreasonably withheld".
.5. Agreement of the Borrower and the Guarantors.
(a) Each of the Borrower and each of the Guarantors agrees to cooperate
with the Banks and the Agents and to take all actions neceary or advisable to
promptly implement the bank account agreements and Agency Account Agreements
provided for in the Credit Agreement, to perfect the Agents' rights in all
Collateral and to more fully carry out the transactions contemplated by the Loan
Documents.
(b) The Borrower, the Guarantor, the Agents and the Banks hereby agree
that this Amendment shall constitute a Loan Document, as defined in the Credit
Agreement, and that any failure of the Borrower or any of the Guarantors to
comply with the provisions of this Amendment shall constitute a Default and an
Event of Default under the Credit Agreement.
(c) In order to clarify but not expand the scope of the security
interest set forth in each of the Security Agreements, each of the Borrower and
the Guarantors agrees that Section 2.1 of each of the Security Agreements is
hereby amended by (i) deleting the word "and" occurring at the end of the first
clause of the proviso set forth in each such Section 2.1 and substituting in
lieu thereof a comma and the text "to the extent such prohibition is enforceable
under applicable law" and (ii) inserting the following new text at the end of
the proviso set forth in each such Section 2.1: ", and (iii) each of the
Companies acknowledges and agrees that, in applying the law of any jurisdiction
that at any time enacts all or substantially all of the uniform provisions of
revised Article 9 of the Uniform Commercial Code approved in 1998 by the
American Law Institute and the National Conference of Commiioners on Uniform
State Laws, the foregoing collateral description covers all aets of each
Company (except as set forth in the proviso to Section 2.1 of each Security
Agreement) and the Agent may file UCC financing statements reflecting the same".
Each of the Borrower and the Guarantors agrees that the Documentation Agent may,
and exprely authorizes the Documentation Agent to, use the power of attorney
granted in Section 13 of each of the Security Agreements to execute financing
statements on behalf of the Borrower and each of the Guarantors to reflect the
foregoing.
.6. Representations and Warranties. The Borrower and each of the
Guarantors represent and warrant to the Banks and the Agents as follows:
(a) Representations and Warranties in Credit Agreement. The
representations and warranties of the Borrower and each of the Guarantors
contained in the Credit Agreement, as amended hereby, (i) were true and correct
in all material respects when made, and (ii) continue to be true and correct in
all material respects on the date hereof, except to the extent such
representations and warranties by their terms are made solely as of a prior
date, and except as to the representations and warranties set forth in .10.11
(with respect to the existence of the Specified Defaults) and .10.22 (with
respect to additional bank accounts that have been disclosed to the Agents);
provided, however, for purposes of clause (ii) of this Section 6(a), neither the
Borrower nor any of the Guarantors shall be deemed to make any representation or
warranty as to the matters set forth in .10.5 of the Credit Agreement.
(b) Authority, Etc. The execution and delivery by the Borrower and each
of the Guarantors of this Amendment and the performance by the Borrower and each
of the Guarantors of all of their agreements and obligations under this
Amendment and the Credit Agreement and the other Loan Documents as amended
hereby (i) are within the corporate or limited partnership, as the case may be,
authority of the Borrower and each of the Guarantors, (ii) have been duly
authorized by all neceary corporate or limited partnership proceedings or
actions, as the case may be, by the Borrower and each of the Guarantors, (iii)
do not conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which the Borrower or any of the
Guarantors is subject or any judgment, order, writ, injunction, license or
permit applicable to the Borrower or any of the Guarantors, and (iv) do not
conflict with any provision of the corporate charter, by-laws or partnership
agreement of, or any agreement or other instrument binding upon, the Borrower or
any of the Guarantors.
(c) Enforceability of Obligations. This Amendment, and the Credit
Agreement as amended hereby, and the other Loan Documents constitute the legal,
valid and binding obligations of the Borrower and each of the Guarantors
enforceable against each such Person in accordance with their respective terms.
(d) Perfection of Security Interest. Each of the Borrower and each of
the Guarantors hereby represents, warrants and affirms the first priority
perfected security interest of the Documentation Agent, for the benefit of the
Banks and the Agent, in substantially all of the Collateral. The Agents and the
Banks acknowledge that such representation, warranty, and affirmation does not
constitute a waiver by the Borrower or any of the Guarantors of any avoidance
power arising under Chapter 5 of the federal Bankruptcy Code.
(e) No Commitment to Make Investments. Each of the Borrower and each of
the Guarantors hereby represents and warrants to the Banks that it is not
contractually committed to make any additional Investment in the equity
interests of Lightship Limited Partner Holdings, LLC or any of its Subsidiaries
during the Waiver Period.
.7. Affirmation and Agreements of Borrower and the Guarantors.
(a) The Borrower hereby affirms its absolute and unconditional promise
to perform and pay to each Bank and the Agents the Obligations under the Notes,
the Credit Agreement as amended hereby, and the other Loan Documents at the
times and in the amounts provided for therein.
(b) Each of the Guarantors hereby acknowledges that it has read and is
aware of the provisions of this Amendment. Each of the Guarantors hereby
reaffirms its absolute and unconditional guaranty of the Borrower's payment and
performance of the Obligations under the Credit Agreement as amended hereby and
the other Loan Documents.
(c) In order to induce the Agents and the Banks to enter into this
Amendment, each of the Borrower and the Guarantors acknowledges and agree that:
(i) neither of them has any claim or cause of action against either of the
Agents or any of the Banks (or any of their respective directors, officers,
employees or agents); (ii) neither of them has any offset right, counterclaim or
defense of any kind against any of their respective obligations, indebtedne or
liabilities to the Agents and the Banks; and (iii) each of the Agents and the
Banks have heretofore properly performed and satisfied in a timely manner all of
their obligations to the Borrower and the Guarantors. The Borrower and the
Guarantors wish to eliminate any poibility that any past conditions, acts,
omiions, events, circumstances or matters would impair or otherwise adversely
affect any of the Agents' or any Bank's rights, interests, contracts, collateral
security or remedies. Therefore, each of the Borrower and the Guarantors
unconditionally releases, waives and forever discharges (A) any and all
liabilities, obligations, duties, promises or indebtedne of any kind of either
of the Agents or any of the Banks to any of the Borrower and the Guarantors,
except the obligations to be performed by the Agent and the Banks as exprely
stated in this Amendment and the other Loan Documents, and (B) all claims,
offsets, causes of action, suits or defenses of any kind whatsoever (if any),
whether arising at law or in equity, whether known or unknown, which the
Borrower or any of the Guarantors might otherwise have against either of the
Agents or any of the Banks or any of their directors, officers, employees or
agents, in either case (A) or (B), on account of any condition, act, omiion,
event, contract, liability, obligation, indebtedne, claim, cause of action,
defense, circumstance or matter of any kind whatsoever presently existing or
hereafter arising. Notwithstanding the foregoing, nothing contained herein shall
constitute a waiver by the Borrower or any of the Guarantors of any avoidance
power arising under Chapter 5 of the federal Bankruptcy Code.
.8. Conditions to Effectivene. This Amendment shall be effective as of
the date hereof upon the satisfaction of the following conditions precedent, on
or before May 3, 1999 (each of the following to be in form and substance
satisfactory to the Agents):
(a) receipt by the Agents of an original counterpart signature (or a
faxed copy thereof with originals to follow) to this Amendment, duly executed
and delivered by the Borrower, each of the Guarantors, the Required Banks and
the Agents;
(b) receipt by the Administrative Agent, for the accounts of the Agents
and the Banks, of a waiver fee, which will be fully earned upon the execution of
this Amendment by the Required Banks, in the amount of $50,000;
(c) payment by the Borrower of the legal, appraisal, and out-of-pocket
fees and expenses of the Agents incurred in connection with the preparation and
negotiation of this Amendment, and the Agents' collateral appraisal of the
Borrower and its Subsidiaries, in each case, to the extent that invoices for the
same have been presented to the Borrower;
(d) the Borrower and the Guarantors shall have taken all other actions
reasonably requested by the Agents to insure for the benefit of the Banks and
the Agents, the first priority perfected security interest of all of the
security interests and other liens granted to the Documentation Agent, in all
existing and after-acquired Collateral, including, without limitation, the
execution and filing of Uniform Commercial Code financing statements, the
notation of the Documentation Agent's name as lienholder on all certificates of
title, the naming of the Documentation Agent as aignee and lo payee on all
insurance policies of the Borrower and the Guarantors; and
(e) receipt by the Agents of (i) evidence of proper corporate and/or
partnership authorization by the Borrower and each of the Guarantors of this
Amendment and (ii) all such other closing documents as reasonably requested by
either of the Agents.
.9. Miscellaneous Provisions. (a) Except as otherwise exprely
provided by this Amendment, all of the terms, conditions and provisions of the
Credit Agreement shall remain the same. It is declared and agreed by each of the
parties hereto that the Credit Agreement, as amended hereby, shall continue in
full force and effect, and that this Amendment and the Credit Agreement shall be
read and construed as one instrument.
(b) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED ACCORDING TO,
THE LAWS OF THE STATE OF NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW).
(c) This Amendment may be executed in any number of counterparts, but
all such counterparts shall together constitute but one instrument. In making
proof of this Amendment it shall not be neceary to produce or account for more
than one counterpart signed by each party hereto by and against which
enforcement hereof is sought.
(d) Headings or captions used in this Amendment are for convenience of
reference only and shall not define or limit the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
HVIDE MARINE INCORPORATED
By:
Title:
CITIBANK, N.A., individually and as
Administrative Agent
By:
Title:
BANKBOSTON, N.A., individually and as
Documentation Agent
By:
Title:
BNY FINANCIAL CORPORATION
By:
Title:
HIBERNIA NATIONAL BANK
By:
Title:
<PAGE>
AMSOUTH BANK
By:
Title:
BANK ONE, LOUISIANA, N.A.
(AS SUCCEOR TO FIRST NATIONAL BANK OF COMMERCE)
By:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
Title:
ABN AMRO BANK, N.V.
By:
Title:
By:
Title:
ARAB BANKING CORPORATION (B.S.C.)
By:
Title:
<PAGE>
CHRISTIANIA BANK OG KREDITKAE, NEW YORK BRANCH
By:
Title:
By:
Title:
FIRST UNION NATIONAL BANK
By:
Title:
CREDIT LYONNAIS NEW YORK BRANCH
By:
Title:
SOUTHTRUST BANK, NATIONAL AOCIATION
By:
Title:
SUNTRUST BANK, SOUTH FLORIDA, N.A.
By:
Title:
<PAGE>
UNION PLANTERS BANK OF FLORIDA
By:
Title:
<PAGE>
Each of the undersigned Guarantors hereby consents to the above
Amendment and confirms its unconditional guaranty of the Obligations under the
Credit Agreement, as amended hereby.
HVIDE MARINE TRANSPORT,
INCORPORATED
SEABULK CONDOR, INC.
SEABULK CORMORANT, INC.
SEABULK CARDINAL, INC.
SEABULK COOT II, INC.
SEABULK CYGNET I, INC.
SEABULK EAGLE II, INC.
SEABULK FALCON II, INC.
SEABULK GANNET I, INC.
SEABULK GANNET II, INC.
SEABULK HARRIER, INC.
SEABULK HAWAII, INC.
SEABULK KESTREL, INC.
SEABULK LARK, INC.
SEABULK MALLARD, INC.
SEABULK OFFSHORE GLOBAL
HOLDINGS, INC.
SEABULK OFFSHORE HOLDINGS, INC.
SEABULK OFFSHORE INTERNATIONAL, INC.
SEABULK OFFSHORE, LTD.
By its general partner Seabulk Tankers, Ltd.
By its general partner Hvide Marine Transport,
Incorporated
SEABULK OFFSHORE OPERATORS, INC.
SEABULK OREGON, INC.
SEABULK OSPREY, INC.
SEABULK PENGUIN I, INC.
SEABULK PENGUIN II, INC.
SEABULK RAVEN, INC.
SEABULK ROOSTER, INC.
SEABULK SABINE, INC.
SEABULK SNIPE, INC.
SEABULK SWAN, INC.
<PAGE>
SEABULK TANKERS, LTD.
By its general partner Hvide Marine
Transport, Incorporated
SEABULK TOUCAN, INC.
SEABULK TRANSMARINE PARTNERSHIP, LTD.
By its general partner Seabulk Tankers, Ltd.
By its general partner Hvide Marine
Transport, Incorporated
SEABULK VERITAS, INC.
HMI OPERATORS, INC.
HVIDE MARINE INTERNATIONAL, INC.
OFFSHORE MARINE MANAGEMENT
INTERNATIONAL, INC.
SEABULK ALBANY, INC.
SEABULK ALKATAR, INC.
SEABULK ARABIAN, INC.
SEABULK ARZANAH, INC.
SEABULK ARCTIC EXPRE, INC.
SEABULK ARIES II, INC.
SEABULK BARRACUDA, INC.
SEABULK BATON ROUGE, INC.
SEABULK BECKY, INC.
SEABULK BETSY, INC.
SEABULK BRAVO, INC.
SEABULK BUL HANIN, INC.
SEABULK CAPRICORN, INC.
SEABULK CAROL, INC.
SEABULK CAROLYN, INC.
SEABULK CHAMP, INC.
SEABULK CHRISTOPHER, INC.
SEABULK CLAIBORNE, INC.
SEABULK CLIPPER, INC.
SEABULK COMMAND, INC.
SEABULK CONSTRUCTOR, INC.
SEABULK COOT I, INC.
SEABULK CYGNET II, INC.
SEABULK DANAH, INC.
SEABULK DAYNA, INC.
SEABULK DEBBIE, INC.
SEABULK DEBORA ANN, INC.
SEABULK DEFENDER, INC.
SEABULK DIANA, INC.
SEABULK DISCOVERY, INC.
SEABULK DUKE, INC.
SEABULK EAGLE, INC.
SEABULK EMERALD, INC.
SEABULK ENERGY, INC.
SEABULK EXPLORER, INC.
SEABULK FALCON, INC.
SEABULK FREEDOM, INC.
SEABULK FULMAR, INC.
SEABULK GABRIELLE, INC.
SEABULK GAZELLE, INC.
SEABULK GIANT, INC.
SEABULK GREBE, INC.
SEABULK HABARA, INC.
SEABULK HAMOUR, INC.
SEABULK HATTA, INC.
SEABULK HAWK, INC.
SEABULK HERCULES, INC.
SEABULK HERON, INC.
SEABULK HORIZON, INC.
SEABULK HOUBARE, INC.
SEABULK IBEX, INC.
SEABULK ISABEL, INC.
SEABULK JASPER, INC.
SEABULK JEBEL ALI, INC.
SEABULK KATIE, INC.
SEABULK KING, INC.
SEABULK KNIGHT, INC.
SEABULK LAKE EXPRE, INC.
SEABULK LARA, INC.
SEABULK LIBERTY, INC.
SEABULK LINCOLN, INC.
SEABULK LULU, INC.
SEABULK MAINTAINER, INC.
SEABULK MARLENE, INC.
SEABULK MARTIN I, INC.
SEABULK MARTIN II, INC.
SEABULK MASTER, INC.
SEABULK MERLIN, INC.
SEABULK MUBARRAK, INC.
SEABULK NEPTUNE, INC.
SEABULK NIDDY, INC.
SEABULK OFFSHORE ABU DHABI, INC.
SEABULK OFFSHORE DUBAI, INC.
SEABULK OFFSHORE OPERATORS TRINIDAD LIMITED
SEABULK ORYX, INC.
SEABULK PELICAN, INC.
SEABULK PENNY, INC.
SEABULK PERSISTENCE, INC.
SEABULK PETREL, INC.
SEABULK PLOVER, INC.
SEABULK POWER, INC.
SEABULK PRIDE, INC.
SEABULK PRINCE, INC.
SEABULK PRINCE, INC.
SEABULK PUFFIN, INC.
SEABULK QUEEN, INC.
SEABULK SALIHU, INC.
SEABULK SAPPHIRE, INC.
SEABULK SARA, INC.
SEABULK SEAHORSE, INC.
SEABULK SENGALI, INC.
SEABULK SERVICE, INC.
SEABULK SHARI, INC.
SEABULK SHINDAGA, INC.
SEABULK SKUA I, INC.
SEABULK SUHAIL, INC.
SEABULK SWIFT, INC.
SEABULK TAURUS, INC.
SEABULK TENDER, INC.
SEABULK TIMS I, INC.
SEABULK TITAN, INC.
SEABULK TOOTA, INC.
SEABULK TRADER, INC.
SEABULK TRANSMARINE II, INC.
SEABULK TREASURE ISLAND, INC.
SEABULK UMM SHAIF, INC.
SEABULK VIRGO I, INC.
SEABULK VOYAGER, INC.
SEABULK ZAKUM, INC.
By:
Name:
Title:
<PAGE>
SEABULK OFFSHORE OPERATORS NIGERIA LIMITED
By:
Name:
Title:
SEABULK RED TERN LIMITED
By:
Name:
Title:
SEAMARK LTD., INC.
By: __________________________
Name:
Title:
LIGHTSHIP LIMITED PARTNER
HOLDINGS, LLC
By: Hvide Marine Incorporated,
as sole member
By:
Name:
Title:
MARANTA, S.A.
By:
Name:
Title:
<PAGE>
HVIDE MARINE TOWING, INC.
HVIDE MARINE TOWING SERVICES, INC.
SEABULK OCEAN SYSTEMS CORPORATION
LONE STAR MARINE SERVICES, INC.
SEABULK OCEAN SYSTEMS HOLDINGS CORPORATION
SEABULK OFFSHORE U.K., LIMITED
OCEAN SPECIALTY TANKERS
CORP.
SUN STATE MARINE SERVICES, INC.
By: __________________________
Name: Andrew W. Brauninger
Title: as Attorney In Fact
SEABULK ST. TAMMANY, INC.
By:
Name:
Title:
HVIDE MARINE INCORPORATED
KEY EMPLOYEE STOCK COMPENSATION PLAN
1. Purpose
The purposes of the Hvide Marine Incorporated Key Employee Stock
Compensation Plan (the "Plan") are (i) to provide key employees of Hvide
Marine Incorporated or any of its affiliates or subsidiaries (the
"Company") the opportunity to acquire an equity interest in the Company
(ii) to attract and retain well-qualified individuals, and (iii) to align
the interests of management and the stockholders of the Company.
Operationally, the Plan permits Participants to defer receipt of a portion
of the Participant's Annual Incentive Plan payment. A Participant's
interest under the Plan shall be expressed in Stock Units equivalent to
shares of the Company's common stock ("Shares").
2. Term and Plan Year
The Plan shall be effective when adopted by the Board of Directors of the
Company (the "Board"), subject to approval of the shareholders of the
Company within twelve months thereafter. The Plan shall remain in effect
until terminated by the Board. The issuance of Shares under the Plan may be
conditioned upon the effectiveness of a registration statement covering the
Shares. The Plan Year shall be the period January 1 through December 31.
3. Eligibility and Participation
Within 15 days after the Plan becomes effective and thereafter, annually by
December 1, the Compensation Committee of the Board (the "Committee") will
determine those key employees who are eligible to become Participants. An
eligible key employee will become a Participant by submitting a Deferral
Election within 30 days after the Plan becomes effective and thereafter
prior to the first day of the Plan Year. A key employee's eligibility to
submit a Deferral Election does not carry over from year to year; each key
employee must have his or her eligibility to submit a Deferral Election
determined annually by the Committee.
4. Deferral of Annual Incentive
(a) Deferral Elections: Subject to the limits established by the Committee,
each eligible key
- 1 -
<PAGE>
employee may elect to defer the payment of all or part of any Annual
Incentive Plan payment which otherwise would be paid for a Plan Year.
The Deferral Elections (i) must be in writing, and (ii) must designate
the percentage of the Annual Incentive Plan payment to be deferred for
the Plan Year (the "Deferral Percentage"). The Deferral Percentage may
change from Plan Year to Plan Year, but the deferral percentage for a
particular Plan Year may not be changed after the beginning of the Plan
Year to which the election relates. No Deferral Percentage may be for
more than 50% of that year's Annual Incentive Plan payment. Except in
the initial year, each Deferral Election must be made prior to the
first day of the Plan Year for which the Annual Incentive Plan payment
will be paid.
(b) Crediting Deferral Amounts to Accounts: Amounts deferred pursuant to
Section 4(a) shall be credited in Stock Units as of the last day of the
month in which such amount would have been paid in cash to a
bookkeeping reserve account maintained by the Company ("Stock Unit
Account"). The Stock Unit Account shall have two components - a Basic
Account and a Premium Account. The number of Stock Units credited to a
Participant's Basic Account shall equal one hundred percent (100%) of
the deferred cash amount divided by the Fair Market Value (as defined
in Section 10 hereof) of a Share on the last day of the month in which
such deferral amount would have been paid but for the Deferral Election
pursuant to Section 4(a). The number of Stock Units credited to a
Participant's Premium Account shall equal 25% of the deferred cash
amount, divided by the Fair Market Value (as defined in Section 10
hereof) of a Share on the last day of the month in which such deferral
amount would have been paid but for the Deferral Election pursuant to
Section 4(a). Such calculations shall be carried to three decimal
places.
(c) The value of the Stock Units credited to the Participant's Stock Unit
Account shall constitute the Participant's entire benefit under this
Plan.
5. Additions to Deferred Accounts
As of each dividend payment date, with respect to Shares, there shall be
credited to each Participant's Stock Unit Account certain Dividend Units
which will be an additional number of Stock Units equal to (i) the
per-share dividend payable with respect to a Share on such date multiplied
by (ii) the number of Stock Units held in the Stock Unit Account as of the
close of business on the first business day prior to such dividend payment
date and, if the dividend is payable in cash or property other than Shares,
divided by (iii) the Fair Market Value of a Share on such business day. For
purposes of this Section 5, "dividend" shall include all dividends, whether
normal or special, and whether payable in cash, Shares or other property.
The calculation of additional Stock Units shall be carried to three decimal
places.
6. Vesting of Accounts
- 2 -
<PAGE>
(a) Basic Account: All Stock Units credited to a Participant's Basic
Account (and the Dividend Units attributable thereto) pursuant to this
Plan shall be at all times fully vested and nonforfeitable.
(b) Premium Account: All Stock Units credited to a Participant's Premium
Account pursuant to this Plan (and the Dividend Units attributable
thereto) shall become one hundred percent (100 %) vested and
nonforfeitable on the first day of the Plan Year in which will occur
the third anniversary of the date the Stock Units are credited to the
Participant's Premium Account, provided that the Participant is then an
employee of the Company. In the event that the Participant dies,
becomes disabled, retires at the normal retirement age specified in the
Company's qualified retirement plan or terminates employment for any
reason within twenty-four (24) months following a Change of Control,
all unvested Stock Units and Dividend Units will immediately become one
hundred percent (100%) vested and nonforfeitable. Additionally, the
Committee, in its sole discretion, may accelerate a Participant's
vested percent if it determines that such action would be in the best
interest of the Company.
7. Payment of Accounts
(a) Time of Distribution: Payment of the vested Stock Units to a
Participant shall be made not earlier than the first day nor later than
the last day of the first month of the Plan Year in which will occur
the third anniversary of the date the Stock Units in question were
credited to the Participant's Stock Unit Account. Notwithstanding the
preceding sentence, in the event of the death of the Participant before
the Participant's Stock Unit Account has been fully distributed, an
immediate lump sum distribution of the Stock Unit Account shall be made
to the Participant's Beneficiary or Beneficiaries in the proportions
designated by such Participant.
(b) Form of Distribution: The total number of vested whole Stock Units in the
Participant's Stock Unit Account shall be paid to the Participant in an
equal number of whole Shares. The Company shall issue and deliver to the
Participant Share certificates for payment of Stock Units as soon as
practicable following the date on which the Stock Units, or any portion
thereof, become payable.
8. Shares Subject to the Plan
The aggregate number of Shares that may be subject to issuance under the
Plan shall not exceed 65,000, subject to adjustment as provided in Section
9 of this Plan.
- 3 -
<PAGE>
9. Adjustments and Reorganization
In the event of any stock dividend, stock split, combination or exchange of
Shares, merger, consolidation, spin-off, recapitalization or other
distribution (other than normal cash dividends) of Company assets to
stockholders, or any other change affecting Shares or the price of Shares,
such proportionate adjustments, if any, as the Committee in its sole
discretion may deem appropriate to reflect such change shall be made with
respect to the aggregate number of Shares that may be issued under the
Plan, and each Stock Unit or Dividend Unit held in the Stock Unit Accounts.
Any adjustments described in the preceding sentence shall be carried to
three decimal places.
10. Fair Market Value
Fair Market Value of a Share for all purposes under the Plan shall mean,
for any particular date, (i) for any period during which the Share shall be
listed for trading on a national securities exchange or the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"),
the closing price per share of Stock on such exchange or the NASDAQ closing
bid price as of the close of such trading day or (ii) for any period during
which the Share shall not be listed for trading on a national securities
exchange or NASDAQ, the market price per Share as determined by a qualified
appraiser selected by the Board. If Fair Market Value is to be determined
on a day when the markets are not open, Fair Market Value on that day shall
be the Fair Market Value on the most recent preceding day when the markets
were open.
11. Termination or Amendment of Plan
(a) In General: The Board may, at any time by resolution, terminate,
suspend or amend this Plan. If the Plan is terminated by the Board, no
deferrals may be credited after the effective date of such termination,
but previously credited Stock Units and Dividend Units shall remain
outstanding in accordance with the terms and conditions of the Plan.
(b) Written Consents: No amendment may adversely affect the right of any
Participant to have Dividend Units credited to a Stock Unit Account or
to receive any Shares pursuant to the payout of such accounts, unless
such Participant consents in writing to such amendment.
12. Compliance With Laws
- 4 -
<PAGE>
(a) The obligations of the Company to issue any Shares under this Plan
shall be subject to all applicable laws, rules and regulations and the
obtaining of all such approvals by governmental agencies as may be
deemed necessary or appropriate by the Board.
(b) Subject to the provisions of Section 11, the Board may take such
changes in the design and administration of this Plan as may be
necessary or appropriate to comply with the rules and regulations of
any government authority.
13. Miscellaneous
(a) Unfunded Plan: Nothing contained in this Plan and no action taken
pursuant to the provisions hereof shall create or be construed to
create a trust of any kind, or a fiduciary relationship between the
Company and Participant, the Participant's designee or any other
person. The Plan shall be unfunded with respect to the Company's
obligation to pay any amounts due, and a Participant's rights to
receive any payment with respect to any Stock Unit Account shall be not
greater than the rights of an unsecured general creditor of the
Company.
The Company may establish a Rabbi Trust to accumulate Shares to fund
the obligations of the Company pursuant to this Plan. Payment from the
Rabbi Trust of amounts due under the terms of this Plan shall satisfy
the obligation of the Company to make such payment. In no event shall
any Participant be entitled to receive payment of an amount from the
Company that the Participant received from the Rabbi trust.
(b) Assignment; Encumbrances: The right to have amounts credited to a Stock
Unit Account and the right to receive payment with respect to such
Stock Unit Account under this Plan are not assignable or transferable
and shall not be subject to any encumbrances, liens, pledges, or
charges of the Participant or to claims of the Participant's creditors.
Any attempt to assign, transfer, hypothecate or attach any rights with
respect to or derived from any Stock Unit shall be null and void and of
no force and effect whatsoever.
(c) Designation of Beneficiaries: A Participant may designate in writing a
beneficiary or beneficiaries to receive any distribution under the Plan
which is made after the Participant's death; provided, however, that if
at the time any such distribution is due, there is no designation of a
beneficiary in force or if any person (other than a trustee or
trustees) as to whom a beneficiary designation was in force at the time
of such Participant's death shall have died before the payment became
due and the Participant has failed to provide such beneficiary
designation for any person or persons to take in lieu of such deceased
person, the person or persons entitled to receive such distribution (or
part thereof, as the case may be) shall be the participant's executor
or administrator.
- 5 -
<PAGE>
(d) Change of Control: A "Change of Control" shall be deemed to have
occurred if (i) a tender offer shall be made and consummated of the
ownership of 30% or more of the outstanding voting securities of the
Company, (ii) the Company shall be merged or consolidated with another
corporation and as a result of such merger or consolidation less than
70% of the outstanding voting securities of the surviving or resulting
corporation shall be owned in the aggregate by the former shareholders
of the Company, other than affiliates (within the meaning of the
Securities Exchange Act of 1934) of any party to such merger or
consolidation, (iii) the Company shall sell substantially all of its
assets to another corporation which corporation is not wholly owned by
the company, or (iv) a person, within the meaning of Section 3(a)(9) or
of Section 13(d)(3) (as in effect on the date hereof) of the Securities
Exchange Act of 1934, shall acquire 30% or more of the outstanding
voting securities of the Company (whether directly, indirectly,
beneficially or of record). For purposes hereof, ownership of voting
securities shall take into account and shall include ownership as
determined by applying the provisions of Rule 13d-3(d)(1)(i) (as in
effect on the date hereof) pursuant to the Securities and Exchange Act
of 1934.
(e) Administration: The Committee shall administer the Plan, including the
adoption of rules or the preparation of forms to be used in its
operation, and to interpret and apply the provisions hereof as well as
any rules which it may adopt. In addition, the Committee may appoint
other individuals, firms or organizations to act as agent of the
Company carrying out administrative duties under the Plan. Except as
may be provided in a Rabbi Trust, the decisions of the Committee,
including, but not limited to, interpretations and determinations of
amounts due under this Plan, shall be final and binding on all parties.
(f) Tax Withholding. An individual who receives payment from the Plan shall
pay to the Company, or make arrangements satisfactory to the Committee,
regarding the payment of any federal, state or local taxes of any kind
required by law to be withheld with respect to such payment. The
individual shall make such payment or arrangement no later than the
date as of which he is scheduled to receive such payment. The
obligations of the Company under the Plan shall be conditioned on such
payment or arrangement and the Company, to the extent permitted by law,
shall have the right to deduct any such taxes from any distribution of
any kind otherwise due to the individual. Unless otherwise determined
by the Committee, any withholding obligation of the Company on amounts
received under the Plan may be settled with shares of common stock of
the Company that are part of the distribution that gives rise to the
withholding requirement.
(g) Governing Law: The validity, construction and effect of the Plan and
any actions taken or relating to the Plan, shall be determined in
accordance with the laws of the State of Florida without regard to its
conflict of law rules, and applicable federal law.
(h) Rights as a Stockholder: A Participant shall have no rights as a
stockholder with respect to a Stock Unit until the Participant actually
becomes a holder of record of Shares distributed with respect thereto.
- 6 -
<PAGE>
(i) Notices: All notices or other communications made or given pursuant to
this Plan shall be in writing and shall be sufficiently made or given
if hand delivered, or if mailed by certified mail, addressed to the
Participant at the address contained in the records of the Company or
to the Company at its principal office, as applicable.
IN WITNESS WHEREOF, ________________________ has adopted the foregoing
instrument this _________ day of ____, 199_.
- 7 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 11,215
<SECURITIES> 0
<RECEIVABLES> 62,579
<ALLOWANCES> 2,164
<INVENTORY> 17,668
<CURRENT-ASSETS> 116,112
<PP&E> 966,374
<DEPRECIATION> 109,529
<TOTAL-ASSETS> 1,107,383
<CURRENT-LIABILITIES> 324,778
<BONDS> 382,064
115,000
0
<COMMON> 15
<OTHER-SE> 239,215
<TOTAL-LIABILITY-AND-EQUITY> 1,107,383
<SALES> 0
<TOTAL-REVENUES> 82,213
<CGS> 0
<TOTAL-COSTS> 53,526
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 300
<INTEREST-EXPENSE> 14,000
<INCOME-PRETAX> (14,649)
<INCOME-TAX> (5,581)
<INCOME-CONTINUING> (9,068)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,068)
<EPS-PRIMARY> (0.59)
<EPS-DILUTED> (0.59)
</TABLE>
