Long-Term Debt

3 Months Ended

Mar. 31, 2012

Long-Term Debt [Abstract]

LONG-TERM DEBT

(3) LONG-TERM DEBT

Our long-term debt at March 31, 2012 and December 31, 2011 consisted of the following:

	March 31, 2012			December 31, 2011
	(In thousands)
Senior Notes Due 2022	$	300,000		$	—
Senior Notes Due 2014		79,742			160,000
Facility Agreement		40,000			141,667
Secured Reducing Revolving Loan Facility		7,028			6,000
		426,770			307,667
Less: Current maturities of long-term debt		(79,663	)		(1,667	)
Debt discount, net		(79	)		(170	)
Total	$	347,028		$	305,830

The following is a summary of scheduled debt maturities by year:

Year	Debt Maturity
	(In thousands)
2012	$	79,663
2013		7,028
2014		40,000
2015		—
2016		—
Thereafter		300,000
Total	$	426,691

Senior Notes – Due 2022

On March 12, 2012, we issued $300.0 million aggregate principal amount of 6.375% senior notes (“Senior Notes”) due 2022. The Senior Notes pay interest semi-annually on March 15 and September 15, commencing September 15, 2012. Prior to March 15, 2017, we may redeem some or all of the Senior Notes for cash at a redemption price equal to 100% of their principal amount plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. The make-whole premium is based on U.S. treasuries plus 50 basis points. On and after March 15, 2017, we may redeem some or all of the Senior Notes at the redemption prices (expressed as percentages of principal amount) equal to 103.188% for the twelve-month period beginning March 15, 2017, 102.125% for the twelve-month period beginning March 15, 2018, 101.063% for the twelve-month period beginning March 15, 2019 and 100.000% beginning March 15, 2020, plus accrued and unpaid interest to the redemption date. In conjunction with the Senior Note offering, we incurred $7.5 million in debt issuance cost which is included in our balance sheet under Deferred costs and other assets and will be amortized into interest cost over the life of the Senior Notes.

Facility Agreement

On December 17, 2009, one of our wholly-owned subsidiaries (the “Borrower”) entered into a $200.0 million facility agreement (as amended, the “Facility Agreement”) with The Royal Bank of Scotland plc (“RBS”). The Facility Agreement was to mature on December 31, 2012, with amounts borrowed repayable in quarterly installments of $8.3 million and a final installment of $108.3 million, but, on January 26, 2012, we entered into a financing agreement with RBS to amend the Facility Agreement primarily to extend the maturity to July 1, 2014 and to adjust principal payments. Under the amended agreement, we are not required to make principal payments until maturity. Loans under the Facility Agreement bear interest at the three month LIBOR rate, plus a margin of 2.5% per annum. The Facility Agreement is secured by certain vessels and all of the shares of common stock of the Borrower have been pledged to the agent, on behalf of the lender, as security for the Facility Agreement. In the first quarter of 2012, we incurred $1.4 million of cost associated with the amendment. This cost was capitalized in our balance sheet under Deferred costs and other assets and was to be amortized into interest expense over the life of the Facility Agreement. The repayment in March 2012 of $100.0 million of the $140.0 million then outstanding under the Facility Agreement increased the amount amortized to expense.

We used a portion of the net proceeds of the new Senior Notes to repay $100.0 million of the indebtedness outstanding related to the Facility Agreement. At March 31, 2012, we were in compliance with all covenants, and had $40.0 million borrowed under the facility. At March 31, 2012, the fair value of borrowings under this facility is considered to be book value as the interest is at market rates.

Senior Notes – Due 2014

On July 21, 2004, we issued $160.0 million aggregate principal amount of 7.75% senior notes (the “Old Notes”) due July 2014. The Old Notes pay interest semi-annually on January 15 and July 15 and are currently callable at a redemption price of 101.292% of the principal amount and may be called on July 15, 2012, and thereafter at 100% of the principal amount, respectively, plus, in each case, accrued interest.

On February 27, 2012, we commenced a tender offer to purchase all of our outstanding Old Notes. In conjunction with the tender offer, we solicited consents to eliminate most of the covenants, certain events of default applicable to the Old Notes and certain other provisions contained in the indenture governing the Old Notes. We funded the tender offer with a portion of the proceeds of the new Senior Notes. We used the net proceeds to purchase $80.3 million of the Old Notes. At March 31, 2012, we had $79.7 million outstanding Old Notes.

The consideration for each $1,000 principal amount of Old Notes validly tendered under the terms of the tender offer was $1,015.50, which included a consent payment of $15.00. Holders also received accrued and unpaid interest from the last interest payment on the applicable Old Notes up to, but not including, the applicable settlement date for all of such Notes that we accepted for purchase in the tender offer. The tender offer expired March 12, 2012.

At March 31, 2012, the fair value of the new Senior Notes, based on quoted market prices, was approximately $301.5 million, compared to a carrying amount of $300.0 million. For the same date, the fair value of the Old Notes, based on quoted market prices, was approximately $80.3 million compared to a carrying amount of $79.7 million.

Pursuant to a notice of conditional redemption issued on March 1, 2012, all Old Notes outstanding after the consummation of the tender offer were redeemed on April 2, 2012, at a redemption price of $1,012.92 per $1,000 principal amount of Old Notes, plus accrued and unpaid interest up to, but not including, the redemption date.

Secured Reducing Revolving Loan Facility

We currently have a $175.0 million (of which $153.0 million was available for borrowing at March 31, 2012) Secured Reducing Revolving Loan Facility with a syndicate of financial institutions led by Den Norske Bank, as agent. The facility matures in 2013 and the maximum availability begins to reduce in increments of $15.0 million every six months beginning in December 2011, with a final reduction of $130.0 million in June 2013. Security for the facility is provided by first priority mortgages on certain vessels. The interest rate ranges from LIBOR plus a margin of 0.7% to 0.9% depending on our EBITDA coverage ratio. The Secured Reducing Revolving Loan Facility is subject to financial covenants. At March 31, 2012, we were in compliance with all covenants and had $7.0 million drawn under this facility.