Note 23—Subsequent Events

Zonda Arbitration.

On January 15, 2020, the Tribunal awarded SHI approximately $320 million with respect to its claims against the Zonda Debtors. See Note 16.

Revolving Credit Facility.

On February 7, 2020, the Company, as borrower, Angelo, Gordon Energy Servicer, LLC (“Angelo Gordon”), as administrative agent and the lenders party thereto, entered into a revolving credit agreement that provides a $50.0 million first lien superpriority revolving credit facility (the “Revolving Credit Facility”). As of March 6, 2020, no amounts were drawn on the facility.

All borrowings under the Revolving Credit Facility are expected to be incurred at the Company level. The Revolving Credit Facility will mature on April 1, 2023.

New borrowings may be limited if, at the time of such borrowing, the ratio of (i) the sum of (a) eligible accounts receivable and (b) unrestricted cash to (ii) total commitments is less than 1.3 to 1 or if the effective availability period has not been extended beyond August 7, 2021 pursuant to a scheduled redetermination by the administrative agent.

The Company’s obligations under the Revolving Credit Facility are guaranteed by all of the subsidiaries that guaranty the Company’s First Lien Notes and Second Lien PIK Notes.

The Revolving Credit Facility is secured by a sole first-priority lien on the Company’s and the guarantors’ accounts receivable and a shared first-priority lien (with holders of the First Lien Notes), on all assets serving as collateral under such First Lien Notes, with a superpriority right to repayment ahead of other first lien holders in an enforcement action.

Borrowings under the Revolving Credit Facility will be used to finance working capital and capital expenditure needs of the Company and its subsidiaries.

Borrowings under the Revolving Credit Facility will bear interest at a LIBO rate determined by reference to the then effective three-month LIBO rate, with a 1.5% floor, adjusted for statutory reserve requirements, plus an applicable percentage of 7.5%, payable quarterly. The Company will pay a quarterly commitment fee at a 1.5% annual rate for unused commitments.

The Company may voluntarily prepay amounts outstanding under the Revolving Credit Facility, in whole or in part, without premium or penalty (except as described below) in minimum amounts of $5.0 million.

The Company will be required to pay a “prepayment premium” in connection with prepayments resulting in commitment reductions or commitment termination and termination of the Revolving Credit Facility equal to a percentage of the principal amount of such commitments reduced or terminated (the “Yield Maintenance Amount”):

· During the first 12 months following the closing date – 2.0%; and

· During months 13-24 following the closing date – 1.0%.

The Company will be required to prepay amounts borrowed under the Revolving Credit Facility with any net proceeds from asset sales or insurance proceeds, and permanently reduce commitments in a corresponding amount, in the event the Vessel Fleet Value is less than $500.0 million. The “Vessel Fleet Value” means, at any time of determination, the lesser of (a) the net book value of the vessels described as Collateral Vessels under the Revolving Credit Facility at such time or (b) the fair market value of the vessels described as Collateral Vessels under the Revolving Credit Facility pursuant to the most recent appraisal (using the lowest value in the range if a range is provided in such appraisal).

The Revolving Credit Facility contains covenants substantially similar to those set forth in the indenture governing the First Lien Notes except that certain provisions related to (i) the ability to make restricted payments and permitted investments, (ii) the permitted application of net proceeds from asset sales and (iii) the ability to incur additional indebtedness are subject to additional restrictions if the Vessel Fleet Value is less than $500.0 million.

In addition, the Revolving Credit Facility contains customary events of default, including among other things, (i) failure to make required payments; (ii) failure to comply with certain agreements or covenants; (iii) failure to pay certain other indebtedness; (iv) the occurrence of a Change of Control; (v) certain events of bankruptcy and insolvency; and (vi) failure to pay certain judgments. Upon an event of default, the lenders party to the Revolving Credit Facility are entitled, subject to certain limitations, to declare any obligations of the Company or its subsidiaries to the lenders immediately due and payable and to take all actions permitted to be taken by a secured creditor.