Global Industries, a provider of pipeline construction, platform installation and diving services to the oil and gas industry, is conducting a stock offering worth approximately $72 million to comply with bank loan covenants. In exchange, the bank group, led by BANK ONE, will pony up a $45 million, 364-day credit facility to provide extra liquidity, explained William J. Dore, v.p., director of investor relations for Global. The proceeds of the offering will repay a $51 million term loan, he said, as a net worth covenant in the banking agreement stipulated debt had to be below a certain level. Furthermore, the credit facility amended in November last year and again last month, reduces permitted capital expenditure to $35 million.
Debt to equity was 60%, but will now be nearer to 30%, Dore said. Despite the limitations in the agreement, the share offer and the new credit line opens up working capital, noted Dore. "The backlog of projects is at a record high right now," he said, with the market growing substantially internationally. Commenting on the international oil situation, Dore noted, "the fear of an oil embargo encourages offshore construction. We are highly dependent on oil from the Gulf of Mexico and natural gas," he added.
The company also has a $100 million revolver maturing in Dec. 30, 2004 with spreads ranging from 1% to 31/ 2% over LIBOR. Other lenders include Credit Lyonnais, Wells Fargo, Credit Suisse First Boston, Fuji Bank and Massachusetts Mutual Life Insurance.