Item 1.01 Entry into a Material Definitive Agreement.
On May 29, 2009, Superior Energy Services, Inc., a Delaware corporation (the
"Company"), and SESI, L.L.C., a Delaware limited liability company and
wholly-owned subsidiary of the Company ("SESI"), entered into a Second Amended
and Restated Credit Agreement (the "Credit Agreement") with JPMorgan Chase Bank,
N.A., as administrative agent, and the lenders named therein. The following
description of the Credit Agreement is a summary only and is qualified by the
full text of the Credit Agreement which is filed herewith as Exhibit 10.1 and
incorporated herein by reference.
The Credit Agreement amends and restates that certain First Amended and
Restated Credit Agreement dated July 1, 2007 among the Company, SESI, JPMorgan
Chase Bank, N.A. and the lenders party thereto to increase the aggregate
principal amount of the revolving credit facility from $250 million to
$325 million.
The proceeds of the credit facility may be used for capital expenditures,
certain acquisitions as set forth in the Credit Agreement and general corporate
purposes. Indebtedness under the Credit Agreement is secured by (a) the non-real
estate assets of SESI and certain of its domestic subsidiaries, (b) the
liftboats, derrick barge and other large vessels owned by SESI and certain of
its domestic subsidiaries as of July 1, 2007, (c) certain outstanding shares of
stock or partnership or membership interests of certain of SESI's domestic
subsidiaries, (d) 66% of the outstanding equity interests of each foreign
subsidiary owned directly by SESI and certain of its domestic subsidiaries,
(e) the Company's entire membership interest of SESI, (f) joint and several
guaranties by certain of SESI's domestic subsidiaries and (g) a joint and
several guaranty by the Company.
Borrowings will bear interest at a fluctuating rate per annum equal to the
sum of (i) the quotient of (a) the applicable LIBOR rate, divided by (b) one
minus the applicable maximum aggregate reserve requirement imposed under
Regulation D on Eurocurrency liabilities (expressed as a decimal), plus (ii) an
applicable margin ranging from 2.50% to 3.50%. All outstanding revolving loans,
and accrued and unpaid interest, will be due and payable on June 14, 2011, the
maturity date of the credit facility.
The Credit Agreement contains certain affirmative and negative covenants,
including, among others, covenants regarding financial reporting, use of
proceeds, notice requirements, taxes, insurance policies, compliance with laws,
maintenance of properties, restrictions on certain payments, limitations on
incurring indebtedness, mergers, acquisitions, certain sales of assets, granting
liens, transactions with affiliates, incurring liabilities and investments. The
Credit Agreement also contains certain financial covenants, including leverage
ratio, adjusted leverage ratio and fixed charge coverage ratio requirements.
The Credit Agreement contains customary events of default. Upon the
occurrence of an event of default that remains uncured after any applicable cure
period, the lenders' commitment to make further loans may terminate and SESI may
be required to make immediate repayment of all indebtedness to the lenders, and
the lenders would be entitled to pursue other remedies against SESI, the
collateral and the Company and the other guarantors under their guaranty.
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