| LINE OF CREDIT
We have a credit agreement with Whitney Bank and JPMorgan Chase Bank N.A. that provides for an $40.0 million revolving credit facility maturing November 29, 2018. The credit agreement allows the Company to use up to the full amount of the available borrowing base for letters of credit and for general corporate purposes. Our obligations under the credit agreement are secured by substantially all of our assets (other than real estate). Amounts borrowed under the credit agreement bear interest, at our option, at either the prime lending rate established by JPMorgan Chase Bank, N.A. or LIBOR plus 2.0 percent. We must comply with the following financial covenants:
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(i) |
minimum net worth requirement of not less than $255.0 million plus:
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a) |
50% of net income earned in each quarter beginning December 31, 2016, and
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b) |
100% of proceeds from any issuance of common stock;
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c) |
less the amount of any impairment on certain assets owned by Gulf Marine Fabricators, L.P. (our South Texas assets held for sale) up to $30.0 million;
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(ii) |
debt to EBITDA ratio not greater than 2.5 to 1.0; and
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(iii) |
interest coverage ratio not less than 2.0 to 1.0.
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At March 31, 2017, no amounts were outstanding under the credit facility, and we had outstanding letters of credit totaling $4.6 million, reducing the unused portion of our credit facility for additional letters of credit and borrowings to $35.4 million. As of March 31, 2017, we were in compliance with all of our covenants.
We are currently in discussions with one of our financial institutions to enter into a new revolving line of credit with comparable availability, but with less restrictive financial covenants and reduced fees as compared to our current revolving credit facility. We expect to close on this new revolving credit facility and terminate our existing revolving credit facility in the second quarter of 2017.
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