Great Lakes Dredge & Dock amends revolver, enters new term loan

By Marisa Wong

Madison, Wis., Nov. 5 – Great Lakes Dredge & Dock Corp. entered into a sixth amendment to its senior revolving credit facility dated June 4, 2012 with Wells Fargo Bank, NA as administrative agent in connection with its acquisition of Magnus Pacific Corp. and a new term loan facility, according to an 8-K filing with the Securities and Exchange Commission.

The amendment, completed on Nov. 4, permits the entrance into the term loan facility and incurrence of liens securing the term loan and permits voluntary prepayments of the term loan so long as, after giving effect to any such prepayment, the company’s maximum total leverage ratio is 3.00 to 1.00 and its minimum fixed-charge coverage ratio is 1.25 to 1.00.

The amendment also allows for the acquisition of Magnus Pacific without diminishing the amount currently available under the credit agreement for additional permitted acquisitions, as defined in the credit agreement.

In addition, the amendment excludes the potential earnout obligation of the company in connection with the acquisition of up to $11.4 million from debt and the total leverage ratio under the credit agreement.

Finally, the credit agreement was amended to permit the issuance of up to an additional $50 million of the company’s currently outstanding 7 3/8% senior notes due 2019.

Term loan

Great Lakes entered into a new senior secured term loan facility on Nov. 4 consisting of a $50 million five-year term loan with Bank of America, NA as administrative agent.

The company borrowed a total of $50 million, less closing fees and expenses and a $2.64 million holdback amount to be held by the administrative agent and released to the company upon completion of the reclamation and refurbishment of certain pledged equipment.

Proceeds will be used for working capital and general corporate purposes, including repaying borrowings under the amended revolver made to finance the construction of the company’s dual mode articulated tug/barge trailing suction hopper dredge.

Borrowings bear interest at a fixed rate of 4.655%. If an event of default occurs, the interest rate will increase by 200 basis points per year during the continuance of the event of default.

The term loan provides for monthly amortization payments beginning on Dec. 4, at an annual amount of about 10% during the first two years, about 20% during the third and fourth years and about 25% during the final year, with the remainder due at maturity.

The new term loan agreement includes the same financial covenants that are under the revolving credit agreement.

Great Lakes Dredge & Dock is an Oak Brook, Ill.-based provider of dredging services.

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