Long-Term Debt

9 Months Ended

Sep. 30, 2011

11. Long-Term Debt

The components of long-term debt are as follows:


	September 30			December 31
	2011			2010
	(In thousands)
Senior Convertible Debentures due 2027, 2.75%
Principal amount of debt component	$	325,000		$	325,000
Less: Unamortized debt discount		(71,849	)		(79,055	)

Carrying amount of debt component		253,151			245,945
Title XI Bonds due 2025, 7.71%		53,460			57,420

Total long-term debt		306,611			303,365
Less: Current maturities		3,960			3,960

Long-term debt less current maturities	$	302,651		$	299,405

		Senior Convertible Debentures

		Our Senior Convertible Debentures were separated into debt and equity components when they were issued and a value was assigned to each. The value assigned to the debt component is the estimated fair value of similar debentures without the conversion feature. The difference between the debenture cash proceeds and this estimated fair value was recorded as debt discount and is being amortized to interest expense over the 10-year period ending August 1, 2017. This is the earliest date that holders of the Senior Convertible Debentures may require us to repurchase all or part of their Senior Convertible Debentures for cash.

		The Senior Convertible Debentures are convertible into cash, and if applicable, into shares of Common Stock, or under certain circumstances and at our election, solely into Common Stock, based on a conversion rate of 28.1821 shares per $1,000 principal amount of Senior Convertible Debentures, which represents an initial conversion price of $35.48 per share. As of September 30, 2011 and December 31, 2010, the Senior Convertible Debentures' if-converted value does not exceed the Senior Convertible Debentures' principal of $325 million.

		The equity component of our Senior Convertible Debentures is comprised of the following:


	September 30		December 31
	2011		2010
	(In thousands)
Debt discount on issuance	$	107,261	$	107,261
Less: Issuance costs		2,249		2,249
Deferred income tax		36,772		36,772

Carrying amount of equity component	$	68,240	$	68,240

The interest expense for our Senior Convertible Debentures is comprised of the following:


	Three Months Ended						Nine Months Ended
	September 30						September 30
	2011			2010			2011			2010
	(In thousands)						(In thousands)
Contractual interest coupon, 2.75%	$	2,235		$	2,235		$	6,703		$	6,703
Amortization of debt discount		2,451			2,277			7,205			6,694

Total Debentures interest expense	$	4,686		$	4,512		$	13,908		$	13,397


Effective interest rate		7.5	%		7.5	%		7.5	%		7.5	%

At the effective time of the Merger, our Senior Convertible Debentures shall remain outstanding and be treated in accordance with their terms. The Merger will constitute a "fundamental change" as such term is defined in the indenture governing the Senior Convertible Debentures, and the holders of the Senior Convertible Debentures will have the rights related to a "fundamental change" under the indenture.

		Title XI Bonds

		We have agreed to use our reasonable best efforts to obtain, and to deliver to Technip, copies of any required consent, waiver or approval of the Maritime Administration of the United States Department of Transportation required in connection with the consummation of the transactions contemplated by the Merger Agreement under and in respect of our United States Government Guaranteed Export Ship Financing Obligations, 2000 Series to ensure that no default or event of default occurs thereunder on terms reasonably satisfactory to Technip. We submitted to the Maritime Administration our request for such consent on September 20, 2011.

		Revolving Credit Facility

		Our Revolving Credit Facility, which matures on October 18, 2012, provides a borrowing capacity of up to $150.0 million. As of September 30, 2011, we had no borrowings against the facility and $14.9 million of letters of credit outstanding thereunder. Due to the sale of vessels mortgaged under the Revolving Credit Facility, our effective maximum borrowing capacity was $134.1 million as of September 30, 2011, with credit availability of $119.2 million.

		On February 24, 2011, we amended our Revolving Credit Facility. The amendment allows us, at our option, to choose to cash collateralize our letter of credit exposure when covenant compliance, as defined in the Revolving Credit Facility, is not possible and thereby achieve compliance. During periods of cash collateralization, no borrowings, letters of credit, or bank guarantees unsecured by cash are permitted. We did not meet the financial covenants of the Revolving Credit Facility as of September 30, 2011. Consequently, we have cash collateralized our outstanding letters of credit in order to achieve compliance and are currently unable to borrow under the Revolving Credit Facility.

		Our Revolving Credit Facility has a customary cross default provision triggered by a default of any of our other indebtedness, the aggregate principal amount of which is in excess of $5 million.

		We also have a $6.0 million short-term credit facility at one of our foreign locations. At September 30, 2011, we had $0.1 million of letters of credit outstanding and $5.9 million of credit availability under this particular credit facility.

		At the request of Technip, we have agreed to reasonably cooperate with Technip in good faith in connection with negotiating and consummating any financing that Technip or any of its affiliates may desire to enter into in order to finance or refinance payment of amounts owed pursuant to the Merger, the other transactions contemplated by the Merger Agreement and/or to refinance our or our subsidiaries' existing debt; provided, however, that we shall not be required to produce any financial statements outside the ordinary course of business. In addition, at the request of Technip, we shall cooperate with Technip in discussions with lenders under our Revolving Credit Facility to terminate as of the effective time of the Merger the Revolving Credit Facility or to seek amendments or waivers thereunder; provided, however, that prior to the effective time of the Merger we shall not be required to pay any fees that are payable in connection with any such amendments of waivers.