)

LONG-TERM DEBT

Our long-term debt at March 31, 2016 and December 31, 2015 consisted of the following:

	March 31, 2016			December 31, 2015
	(In thousands)
Senior Notes Due 2022	$	479,000		$	499,000
Multicurrency Facility Agreement		15,000			-
		494,000			499,000
Debt Premium Associated with the Senior Notes		565			607
Debt Issuance Costs Associated with the Senior Notes		(8,475	)		(9,018	)
Total	$	486,090		$	490,589

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

Year	Debt Maturity
	(In thousands)
2016	$	-
2017		-
2018		-
2019		15,000
2020		-
Thereafter		479,000
Total	$	494,000

Senior Notes Due 2022

In March and December 2012, we issued $500.0

million aggregate principal amount of 6.375% senior notes due 2022, or the Senior Notes. The Senior Notes pay interest semi-annually on March 15 and September 15. 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 December 2015, we repurchased in the open market $1.0 million face value of Senior Notes leaving $499.0 million aggregate principal amount of Senior Notes outstanding at December 31, 2015. In the first quarter 2016, we repurchased in the open market $20.0 million face value of Senior Notes leaving $479.0 million outstanding at March 31, 2016. We recorded a gain totaling approximately $10.1 million upon the repurchase of Senior Notes in the first quarter of 2016, which gain is included in other income and expense in our consolidated statements of operations. Depending on market conditions we may, from time to time, repurchase our Senior Notes in the open market or otherwise.

In conjunction with the Senior Notes offering, we incurred a total of $12.7

million in debt issuance costs. In prior periods, debt issuance costs were included in our consolidated balance sheet under deferred costs and other assets. Under the provisions of ASU No. 2015-03, discussed in Note 1, the unamortized balance in debt issuance costs is included in our consolidated balance sheet as a direct deduction from the face amount of the Senior Notes. The change in accounting principle was applied retrospectively, therefore, the December 31, 2015 presentation of deferred costs and other assets and long term debt in our consolidated financial statements have been adjusted to conform to the standard. The effective interest rate on the Senior Notes, adjusted for the premium and debt issuance costs, is 6.71%.

At March 31, 2016, the fair value of the Senior Notes, based on quoted market prices, was approximately $230.2 million compared to a carrying amount of $471.1 million.

Multicurrency Facility Agreement

We are party to a senior secured, revolving multicurrency credit facility, or the Multicurrency Facility Agreement, among GulfMark Offshore, Inc., as guarantor, one of our indirect wholly-owned subsidiaries, as the Borrower, a group of financial institutions as the Lenders and the Royal Bank of Scotland PLC as agent for the Lenders. The Multicurrency Facility Agreement has a scheduled maturity date of September 26, 2019 and, as amended, commits the Lenders to provide revolving loans up to $100.0 million at any one time outstanding, subject to certain terms and conditions, and contains sublimits of $25.0 million for swingline loans and $5.0 million for the issuance of letters of credit. Revolving loans and swingline loans under the Multicurrency Facility Agreement accrue interest at LIBOR, plus an applicable margin which may range from 2.75% to 4.00%. The applicable margin is based on our most recent capitalization ratio. The fee for unused commitments is 1.25% per annum. We are subject to certain financial and other covenants under the Multicurrency Facility Agreement, including covenants and restrictions requiring, among other things:

●

maintenance of a Capitalization Ratio, as defined, not to exceed 60% at the end of each fiscal quarter;

●

maintenance of a minimum Consolidated Interest Coverage Ratio, as defined, for any period of four consecutive fiscal quarters, of 1.5 to 1.0 beginning at the end of our third fiscal quarter of 2017 and increasing periodically thereafter;

●

maintenance of a minimum Collateral to Debt Ratio, as defined, of 3.0 to 1.0 at the end of each fiscal quarter;

●

maintenance of a minimum Collateral to Commitments Ratio, as defined, of 2.0 to 1.0 at the end of each fiscal quarter;

●

maintenance of minimum Consolidated Adjusted EBITDA, as defined, as of the end of each fiscal quarter, of $5.0 million for the fourth quarter of 2015, $10.0 million for the six months ended March 31, 2016, $15.0 million for the nine months ending June 30, 2016 and $20.0 million for the four-quarter period ending September 30, 2016 and thereafter;

●

minimum liquidity (as determined under the Multicurrency Facility Agreement) at the end of each fiscal quarter of $35.0 million;

●

a mandatory prepayment if loans are outstanding and, on a consolidated basis, we have Cash, as defined, at the end of a fiscal quarter in excess of $35.0 million;

●

a prohibition on loans under the Multicurrency Facility Agreement for purposes of funding payments on our platform supply vessel, or PSV, under construction by Simek;

●

restrictions on the amount of cash we may invest for certain capital expenditures, acquisitions, joint ventures, dividends and share repurchases until December 31, 2017;

●

restrictions, subject to exceptions, on certain acquisitions, mergers, consolidations, joint ventures, changes of business, changes of ownership, indebtedness and asset sales; and

●

restrictions, subject to exceptions, on liens on our assets.

In December 2015, we entered into an amendment to the Multicurrency Facility Agreement that, among other changes:

●

removed interest coverage ratio tests for certain periods;

●

increased the permissible capitalization ratio;

●

redefined the Consolidated Adjusted EBITDA calculation to add back certain severance and other costs related to any discontinued operations or vessel redeployment;

●

reduced the threshold in the minimum liquidity covenant from $50.0 million to $35.0 million; and

●

added provisions permitting stacking of vessels if needed.

In return for the amendment, the Lenders required that we agree to certain changes, including:

●

increasing the pricing for any loans;

●

increasing the commitment fee during certain periods;

●

reducing commitments from $200.0 million to $100.0 million;

●

requiring prepayment of loans if quarter end cash on hand exceeds certain thresholds;

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increasing collateral to debt ratio and collateral to commitment ratio requirements;

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providing for additional reporting of financial and other information, including more frequent collateral appraisals;

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limiting unscheduled capital expenditures or investments; and

●

precluding use of borrowings under the Multicurrency Facility Agreement to acquire the Norwegian Arctic class vessel currently under construction.

We have unamortized fees paid to the arrangers, the agent and the security trustee totaling $3.0 million at March 31, 2016, which fees are being amortized into interest cost on a straight-line basis over the life of the Multicurrency Facility Agreement.

The Multicurrency Facility Agreement is secured by 24 vessels of the Borrower. The collateral that secures the loans under the Multicurrency Facility Agreement may also secure all of the Borrower’s obligations under any hedging agreements between the Borrower and any Lender or other hedge counterparty to the Multicurrency Facility Agreement.

We unconditionally guaranteed all existing and future indebtedness and liabilities of the Borrower arising under the Multicurrency Facility Agreement and other related loan documents. Such guarantee may also cover obligations of the Borrower arising under any hedging arrangements. At March 31, 2016, we had $15.0 million borrowed and outstanding under the Multicurrency Facility Agreement and we were in compliance with all the covenants under the Multicurrency Facility Agreement. The unused borrowing capacity under the Multicurrency Facility Agreement at March 31, 2016, after giving effect to standby letters of credit, was $83.6 million.

If we need to supplement our cash flow or results of operations to continue to comply with the financial covenants under our Multicurrency Facility Agreement

, we may stack additional vessels, reduce the onshore and offshore workforce, or adjust the capital structure through open market purchases of debt at fair value or, if necessary, seek amendments to our Multicurrency Facility Agreement

depending on facts and circumstances at the time. There can be no assurance, however, that we would be able to negotiate acceptable terms for any such amendment.

Norwegian Facility Agreement

We are also party to a senior secured revolving credit facility, or the Norwegian Facility Agreement, among GulfMark Offshore, Inc., as guarantor, one of our indirect wholly-owned subsidiaries, as the borrower, which we refer to as the Norwegian Borrower, and DNB Bank ASA, a Norwegian bank, as lead lender, which we refer to as the Norwegian Lender. The Norwegian Facility Agreement has a scheduled maturity date of September 30, 2019 and commits the Norwegian Lender to provide loans up to an aggregate principal amount of 600.0 million NOK (or approximately $72.0 million at March 31, 2016) at any one time outstanding, subject to certain terms and conditions. Loans under the Norwegian Facility Agreement accrue interest at the Norwegian InterBank Offered Rate, plus an applicable margin, which may range from 2.50% to 4.00%, depending on the interest coverage ratio. The fee for unused commitments is 1.25% per annum. We are subject to certain financial and other covenants under the Norwegian Facility Agreement, including covenants and restrictions requiring, among other things:

●

maintenance of a Capitalization Ratio, as defined, not to exceed 60% at the end of each fiscal quarter;

●

maintenance of a minimum ratio of Adjusted EBITDA to Interest Expense, each as defined, of 1.50 to 1.00 beginning at the end of our third fiscal quarter of 2017 and increasing periodically thereafter;

●

maintenance of minimum consolidated Adjusted EBITDA, as defined, as of the end of each fiscal quarter, of $5.0 million for the fourth quarter of 2015, $10.0 million for the six months ended March 31, 2016, $15.0 million for the nine months ending June 30, 2016 and $20.0 million for the four-quarter period ending September 30, 2016 and thereafter;

●

minimum liquidity (as determined under the Norwegian Facility Agreement) at the end of each fiscal quarter of $35.0 million;

●

mandatory prepayments and/or reductions in total commitments if our PSV under construction by Simek is delivered after March 31, 2017, or if the market value of the vessels securing the Norwegian Facility Agreement (as determined under the Norwegian Facility Agreement) is less than 300% of outstanding unpaid loans or less than 200% of total commitments, in each case unless certain additional security is provided;

●

a mandatory prepayment if we have amounts drawn under the Multicurrency Facility Agreement and/or the Norwegian Facility Agreement and, on a consolidated basis, we have Cash, as defined, at the end of a fiscal quarter in excess of $35.0 million;

●

restrictions, subject to exceptions, on certain mergers, consolidations, divestitures, reconstructions and changes of business;

●

restrictions, subject to exceptions, on liens on certain of our assets; and

●

that we remain listed on the New York Stock Exchange or another recognized stock exchange.

In January 2016, we entered into an amendment to the Norwegian Facility Agreement

that, among other things:

●

provided for liens to be granted by the Norwegian Borrower on four vessels as additional collateral;

●

increased the rate of interest;

●

replaced EBITDA measurements with an Adjusted EBITDA measurement that, among other things, includes addbacks for certain costs associated with redeployment of vessels in connection with discontinued operations and certain severance costs;

●

extended the period for delivery of our PSV under construction by Simek until March 31, 2017 without triggering a mandatory prepayment or reduction in commitments;

●

added mandatory prepayment requirements in the event that the market value of the vessels securing the Norwegian Facility Agreement, as determined in accordance with its terms,

is less than 300% of outstanding unpaid loans or less than 200% of total commitments, in each case unless certain additional security is provided;

●

added a mandatory prepayment requirement in the event that we, on a consolidated basis, have excess cash, as defined, at the end of a fiscal quarter;

●

provided for certain accelerated or more frequent financial reporting;

●

deferred the applicability of the interest coverage ratio requirement until the third quarter of 2017;

●

increased the permitted Capitalization Ratio, as defined, to 60%;

●

reduced the minimum liquidity requirement from $50 million to $35 million;

●

added a new minimum quarterly Adjusted EBITDA requirement;

●

increased the unused commitment fee rate to 1.25% per annum;

●

eliminated the covenant requiring maintenance of a minimum market value of the vessels securing the Norwegian Facility Agreement

; and

●

expressly permitted us to stack or lay up vessels securing the Norwegian Facility Agreement

We have unamortized fees paid to the arrangers, the agent and the security trustee totaling $1.6 million at March 31, 2016, which fees are being amortized into interest cost on a straight-line basis over the life of the Norwegian Facility Agreement.

The Norwegian Facility Agreement is secured by

four vessels owned by our subsidiary GulfMark UK Ltd and by four vessels of the Norwegian Borrower and our additional North Sea PSV under construction. The collateral that secures the loans under the Norwegian Facility Agreement may also secure all of the Norwegian Borrower’s obligations under any hedging agreements between the Norwegian Borrower and the Norwegian Lender or other hedge counterparty to the Norwegian Facility Agreement.

We unconditionally guaranteed all existing and future indebtedness and liabilities of the Norwegian Borrower arising under the Norwegian Facility Agreement and other related loan documents. Such guarantee may also cover obligations of the Norwegian Borrower arising under any hedging arrangements described above. At March 31, 2016, there were no amounts borrowed and outstanding under the Norwegian Facility Agreement and we were in compliance with all the covenants under the Norwegian Facility Agreement.

If we need to supplement our cash flow or results of operations to continue to comply with the financial covenants under our Norwegian Facility Agreement, we may stack additional vessels, reduce the onshore and offshore workforce, or adjust the capital structure through open market purchases of debt at fair value or, if necessary, seek amendments to our Norwegian Facility Agreement depending on facts and circumstances at the time. There can be no assurance, however, that we would be able to negotiate acceptable terms for any such amendment.