Long-term Debt and Line of Credit

The Company has a credit agreement (the "Credit Agreement") with Wells Fargo Bank, National Association, as administrative agent, and Wells Fargo Securities, LLC.

The Credit Agreement, as amended from time to time, provides for borrowings under a revolving line of credit and swingline loans, an accordian, and a term loan (together, the “Credit Facility”). The Credit Facility is guaranteed by the subsidiaries of the Company, secured by the assets of the Company, including stock held in its subsidiaries, and may be used to finance working capital, repay indebtedness, fund acquisitions, and for other general corporate purposes. Interest is computed based on the designation of the loans, and bear interest at either a prime-based interest rate or a LIBOR-based interest rate. Principal balances drawn under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty. Amounts repaid under the revolving line of credit may be re-borrowed. The credit facility matures on June 30, 2015.

Provisions of the revolving line of credit and accordian

The Company has a maximum borrowing availability under the revolving line of credit and swingline loans (as defined in the Credit Agreement) of $35 million, with a $20 million sublimit for the issuance of letters of credit. An additional $25 million is available subject to the Lender's discretion.

Revolving loans may be designated as prime rate based loans (“ABR Loans”) or Eurodollar Loans, at the Company’s request, and may be made in an integral multiple of $500,000, in the case of an ABR Loan, or $1 million in the case of a Eurodollar Loan. Swingline loans may only be designated as ABR Loans, and may be made in amounts equal to integral multiples of $100,000. The Company may convert, change or modify such designations from time to time.

Borrowings are subject to a borrowing base, which is calculated as the sum of 80% of eligible accounts receivable, plus 90% of adjusted cash balances, as defined in the Credit Agreement. At December 31, 2014, our borrowing base reflected no limitation in borrowing availability.

At December 31, 2014, $26.0 million was outstanding on the revolver, reflecting the draws to fund the purchases of the dredge material placement area in Houston, Texas in February 2014 for $22.5 million and the dry-dock in September 2014 for $3.5 million. The $3.5 million draw represented interim funding for the dry-dock and was repaid in full on January 5, 2015 with proceeds from the term loan. Outstanding letters of credit, which totaled $1.1 million at December 31, 2014, reduced our maximum borrowing availability to approximately $7.9 million.

Provisions of the term loan

At December 31, 2014, the term loan components of the Credit Facility totaled $11 million and is secured by specific assets of the Company. In December 2014, the Company obtained a second term loan for $4.0 million for the purchase of a dry-dock, also secured by specific assets of the Company. This loan replaces the draw on the revolver. Principal payments on the first term loan, in the amount of $389,000 are due quarterly. Payments on the second term loan are $53,000, which represents both principal and interest at a rate of 3.1%. We anticipate that the second term loan will be paid in full in December 2017, at its maturity.

Financial covenants

Restrictive financial covenants under the Credit Facility and term loan include:


•	A Fixed Charge Coverage Ratio of not less than 1.50 to 1.00 at all times;


•	A Leverage Ratio of not greater than 2.50 to 1.00 at all times; and


•	A Profitability Covenant such that the Company and its subsidiaries shall not sustain a consolidated net loss in respect of any four consecutive fiscal quarter periods, commencing with the third quarter of 2014.

In addition, the Credit Facility contains events of default that are usual and customary for similar transactions, including non-payment of principal, interest or fees; inaccuracy of representations and warranties; violation of covenants; bankruptcy and insolvency events; and events constituting a change of control.

The Company is subject to a commitment fee, at a current rate of 0.25% of the unused portion of the maximum available to borrow under the Credit Facility. The commitment fee is payable quarterly in arrears.

Interest at December 31, 2014, for the first term loan and revolver, was based on a LIBOR-option interest rate of 2.19%. For the year ended December 31, 2014, the weighted average interest rate was 2.19%.

At December 31, 2014, the Company was in compliance with its financial covenants and expects to be in compliance for at least the next 12 months.

The Company expects to meet its future internal liquidity and working capital needs, and maintain its equipment fleet through capital expenditure purchases and major repairs, from funds generated by its operating activities for at least the next 12 months. We believe our cash position is adequate for our general business requirements and to service our debt.