CREDIT FACILITIES AND DEBT |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CREDIT FACILITIES AND DEBT |
4. CREDIT FACILITIES AND DEBT LC Facility On May 3, 2024, we amended our LC Facility to extend its maturity date to June 30, 2026. The LC Facility provides for up to $10.0 million of letters of credit, subject to our cash securitization of the letters of credit, and at December 31, 2024, we had $1.2 million of outstanding letters of credit under the LC Facility. Commitment fees on the unused portion of the LC Facility are 0.4% per annum and interest on outstanding letters of credit is 1.5% per annum. See Note 7 for further discussion of our letters of credit and associated security requirements. Surety Bonds We issue surety bonds in the ordinary course of business to support our projects and certain of our insurance coverages. At December 31, 2024, we had $28.2 million of outstanding surety bonds, of which $12.6 million relates to our second forty-vehicle ferry project for our Shipyard Division (which is anticipated to terminate in March 2025 upon expiration of the warranty period for the vessel) and $15.6 million relates to our Fabrication Division contracts and certain of our insurance coverages. See Note 2 for further discussion of the expiration of the warranty period for our second forty-vehicle ferry project and Note 7 for further discussion of our surety bonds and related indemnification obligations. Note Agreement In connection with the resolution of our previous MPSV Litigation and the Settlement Agreement, on November 6, 2023, we entered into a promissory note (“Note Agreement”) with one of our Sureties (Fidelity & Deposit Company of Maryland and Zurich American Insurance Company (collectively, “Zurich”)), pursuant to which we will pay Zurich $20.0 million. The Note Agreement bears interest at a fixed rate of 3.0% per annum commencing on January 1, 2024, with principal and interest payable in 15 equal annual installments of approximately $1.7 million. The first payment was made on December 30, 2024 and the final payment is due on December 31, 2038. At December 31, 2024, our outstanding balance and future annual principal maturities under the Note Agreement, were as follows (in thousands):
(1)
At December 31, 2024, the estimated fair value of the Note Agreement amount was $12.3 million based on an estimated market rate of interest.
(2)
Due to the forbearance of interest until January 1, 2024, the effective rate on the Note Agreement is 2.9% per annum. Unamortized interest represents the difference between the effective interest rate and stated interest on the Note Agreement.
Interest expense for 2024 and 2023 was $0.6 million and $0.1 million, respectively. See Note 7 for further discussion of the resolution of our MPSV Litigation and the Settlement Agreement. Mortgage Agreement We have a multiple indebtedness mortgage arrangement (“Mortgage Agreement”) with Zurich to secure our obligations and liabilities under the Note Agreement and our general indemnity agreement with Zurich associated with an outstanding surety bond for our second forty-vehicle ferry project. The Mortgage Agreement, as amended, encumbers all real estate associated with the Houma Facilities, includes certain covenants and events of default, and requires that 50 percent of the net proceeds (as defined by the Mortgage Agreement) received by us in excess of $8.0 million from the sale of any real estate of our Houma Facilities be used to make early payments on the principal balance under the Note Agreement. The obligations and liabilities of Zurich associated with the surety bond for the second forty-vehicle ferry project are anticipated to be discharged in March 2025 upon expiration of the warranty period for the vessel. Accordingly, the Mortgage Agreement will terminate when the Note Agreement is repaid. See “Surety Bonds” above for further discussion of the surety bond for our second forty-vehicle ferry project and “Note Agreement” above for further discussion of the Note Agreement.
Insurance Finance Arrangements In connection with the renewal of certain of our insurance coverages during 2023 and 2022, we entered into short-term premium finance arrangements (“Insurance Finance Arrangements”), the last of which matured in the third quarter 2023. We considered the transactions to be non-cash financing activities, with the initial financed amount reflected within accrued expenses and other liabilities, and a corresponding asset reflected within prepaid expenses and other assets, on our Balance Sheet. During 2023, we made principal payments of $1.3 million, which have been reflected as a financing activity on our Statement of Cash Flows. |
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