Derivative Instruments and Hedging Strategies

3 Months Ended

Mar. 31, 2021

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Strategies

7. DERIVATIVE INSTRUMENTS AND HEDGING STRATEGIES

Derivative instruments are classified as either assets or liabilities based on their individual fair values. The fair values of the Company’s derivative instruments were as follows (in thousands):

	March 31, 2021				December 31, 2020
	Derivative Asset		Derivative Liability		Derivative Asset		Derivative Liability
Derivatives designated as hedging instruments:
Interest rate swap agreements (cash flow hedges)	$	—	$	3,156	$	—	$	3,698
		—		3,156		—		3,698
Derivatives not designated as hedging instruments:
Forward Exchange Contract							893
Conversion option liability on Convertible Senior Notes		—		37		—		2
	$	—	$	3,193	$	—	$	895

Economic Hedges. The Company enters and settles forward currency exchange, option and future contracts with respect to various foreign currencies. These contracts enable the Company to buy currencies in the future at fixed exchange rates, which could offset possible consequences of changes in currency exchange rates with respect to the Company’s business conducted outside of the U.S. The Company generally does not enter into contracts with forward settlement dates beyond twelve to eighteen months. During the three months ended March 31, 2021, the Company recognized gains of $0.4 million on these contracts which were recognized concurrently in earnings. As of March 31, 2021, the Company no longer has open forward currency exchange contracts.

Cash Flow Hedges. The Company and certain of its 50% or less owned companies have interest rate swap agreements designated as cash flow hedges. By entering into these interest rate swap agreements, the Company and its 50% or less owned companies have converted the variable LIBOR component of certain of their outstanding borrowings to a fixed interest rate. The Company recognized gains on derivative instruments designated as cash flow hedges of $0.5 million for the three months ended March 31, 2021, and losses of $1.9 million for the three months ended March 31, 2020 as a component of other comprehensive loss. As of March 31, 2021, the interest rate swaps held by the Company and certain of the Company’s 50% or less owned companies were as follows:

• SEACOR Marine Foreign Holdings Inc. , an indirect wholly-owned subsidiary of SEACOR Marine (“SMFH”) has an interest rate swap agreement maturing in 2023 that calls for SMFH to pay a fixed rate of interest of 3.32% per annum on the amortized notional value of $7.6 million and receive a variable interest rate based on LIBOR on the amortized notional value;

• SMFH has an interest rate swap agreement maturing in 2023 that calls for SMFH to pay a fixed rate of interest of 3.195% per annum on the amortized notional value of $41.6 million and receive a variable interest rate based on LIBOR on the amortized notional value;

• SEACOR 88 LLC and SEACOR 888 LLC, both indirect wholly-owned subsidiaries of SEACOR Marine (collectively, “SEACOR 88/888”), have an interest rate swap agreement maturing in 2023 that calls for SEACOR 88/888 to pay a fixed rate of interest of 3.175% per annum on the amortized notional value of $5.5 million and receive a variable interest rate based on LIBOR on the amortized notional value; and

• Mantenimiento Express Maritimo, S.A.P.I. de C.V. (“MexMar”), in which the Company has a 49% noncontrolling interest, has five interest rate swap agreements with maturities in 2023 that call for MexMar to pay fixed rates of interest ranging from 1.71% to 2.10% per annum on the aggregate amortized notional value of $65.9 million and receive a variable interest rate based on LIBOR on the aggregate amortized notional value.

Other Derivative Instruments. The Company recognized gains (losses) on derivative instruments not designated as hedging instruments for the three months ended March 31, 2021 and March 31, 2020 as follows (in thousands):

	Three Months Ended March 31,
	2021			2020
Conversion option liability on Convertible Senior Notes	$	(35	)	$	5,114
Forward currency exchange, option, and future contracts		390			—
	$	355		$	5,114

The conversion option liability relates to the bifurcated embedded conversion option in the Convertible Senior Notes issued to investment funds managed and controlled by The Carlyle Group (see “Note 8. Fair Value Measurements”).