Quarterly report pursuant to Section 13 or 15(d)

Debt Obligations

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Debt Obligations
6 Months Ended
Jun. 30, 2015
Debt Disclosure [Abstract]  
Debt Obligations
8. DEBT OBLIGATIONS:

Quanta’s long-term debt obligations consisted of the following (in thousands):

 

     June 30, 2015      December 31, 2014  

Borrowings under credit facility

   $ 204,255       $ 68,793   

Other long-term debt, interest rates ranging from 1.4% to 4.3%

     5,906         6,370   

Capital leases, interest rates ranging from 6.0% to 7.3%

     6,732         1,146   
  

 

 

    

 

 

 

Total long-term debt obligations

     216,893         76,309   

Less — Current maturities of long-term debt

     2,638         3,820   
  

 

 

    

 

 

 

Total long-term debt obligations, net of current maturities

   $ 214,255       $ 72,489   
  

 

 

    

 

 

 

Quanta’s current maturities of long-term debt and short-term borrowings consisted of the following (in thousands):

 

     June 30, 2015      December 31, 2014  

Short-term borrowings

   $ —         $ 5,056   

Current maturities of long-term debt

     2,638         3,820   
  

 

 

    

 

 

 

Current maturities of long-term debt and short-term borrowings

   $ 2,638       $ 8,876   
  

 

 

    

 

 

 

Credit Facility

On October 30, 2013, Quanta entered into an amended and restated credit agreement with various lenders that provides for a $1.325 billion senior secured revolving credit facility maturing October 30, 2018. The entire amount available may be used for revolving loans and letters of credit in U.S. dollars and certain foreign currencies. Swing line loans are limited to $50.0 million in U.S. dollars, $30.0 million in Canadian dollars and $20.0 million in Australian dollars. In addition, subject to the conditions specified in the credit agreement, Quanta has the option to increase the revolving commitments by up to $300.0 million from time to time upon receipt of additional commitments from new or existing lenders. Borrowings under the credit agreement are to be used to refinance existing indebtedness and for working capital, capital expenditures and other general corporate purposes.

As of June 30, 2015, Quanta had approximately $324.7 million of outstanding letters of credit and bank guarantees, $223.1 million of which was denominated in U.S. dollars and $101.6 million of which was denominated in Australian or Canadian dollars, and $204.3 million of outstanding borrowings under the credit facility, $109.3 million of which was denominated in Canadian dollars and $95.0 million of which was denominated in U.S. dollars. The remaining $796.0 million was available for borrowings or issuing new letters of credit or bank guarantees. Information on borrowings under Quanta’s credit facility and the applicable interest rates during the three and six months ended June 30, 2015 and 2014 is as follows (dollars in thousands):

 

    Three Months Ended
June 30, 2015
    Three Months Ended
June 30, 2014
    Six Months Ended
June 30, 2015
    Six Months Ended
June 30, 2014
 

Maximum amount outstanding during the period

  $ 330,473      $ 83,410      $ 330,473      $ 83,410   

Average daily amount outstanding under the credit facility

  $ 171,638      $ 23,940      $ 132,213      $ 11,983   

Weighted-average interest rate

    2.01     2.67     2.13     2.67

 

Effective April 1, 2014, amounts borrowed under the credit agreement in U.S. dollars bear interest, at Quanta’s option, at a rate equal to either (i) the Eurocurrency Rate (as defined in the credit agreement) plus 1.125% to 2.125%, as determined based on Quanta’s Consolidated Leverage Ratio (as described below), or (ii) the Base Rate (as described below) plus 0.125% to 1.125%, as determined based on Quanta’s Consolidated Leverage Ratio. Amounts borrowed as revolving loans under the credit agreement in any currency other than U.S. dollars bear interest at a rate equal to the Eurocurrency Rate plus 1.125% to 2.125%, as determined based on Quanta’s Consolidated Leverage Ratio. Standby letters of credit issued under the credit agreement are subject to a letter of credit fee of 1.125% to 2.125%, based on Quanta’s Consolidated Leverage Ratio, and Performance Letters of Credit (as defined in the credit agreement) issued under the credit agreement in support of certain contractual obligations are subject to a letter of credit fee of 0.675% to 1.275%, based on Quanta’s Consolidated Leverage Ratio. Quanta is also subject to a commitment fee of 0.20% to 0.40%, based on its Consolidated Leverage Ratio, on any unused availability under the credit agreement.

Prior to April 1, 2014, amounts borrowed under the credit agreement in U.S. dollars bore interest, at Quanta’s option, at a rate equal to either (i) the Eurocurrency Rate plus 1.25%, or (ii) the Base Rate plus 0.25%. Amounts borrowed as revolving loans under the credit agreement in any currency other than U.S. dollars bore interest at a rate equal to the Eurocurrency Rate plus 1.25%. Standby letters of credit issued under the credit agreement were subject to a letter of credit fee of 1.25%, and Performance Letters of Credit issued under the credit agreement in support of certain contractual obligations were subject to a letter of credit fee of 0.75%. Quanta was also subject to a commitment fee of 0.20% on any unused availability under the credit agreement.

The Consolidated Leverage Ratio is the ratio of Quanta’s Consolidated Funded Indebtedness to Consolidated EBITDA (as those terms are defined in the credit agreement). For purposes of calculating Quanta’s Consolidated Leverage Ratio, Consolidated Funded Indebtedness is reduced by available cash and Cash Equivalents (as defined in the credit agreement) in excess of $25.0 million. The Base Rate equals the highest of (i) the Federal Funds Rate (as defined in the credit agreement) plus 0.5%, (ii) the prime rate publicly announced by Bank of America, N.A. and (iii) the Eurocurrency Rate plus 1.00%.

Subject to certain exceptions, the credit agreement is secured by substantially all the assets of Quanta and Quanta’s wholly owned U.S. subsidiaries and by a pledge of all of the capital stock of Quanta’s wholly owned U.S. subsidiaries and 65% of the capital stock of direct foreign subsidiaries of Quanta’s wholly owned U.S. subsidiaries. Quanta’s wholly owned U.S. subsidiaries also guarantee the repayment of all amounts due under the credit agreement. Subject to certain conditions, all collateral will automatically be released from the liens at any time Quanta maintains an Investment Grade Rating (defined in the credit agreement as two of the following three conditions being met: (i) a corporate credit rating that is BBB- or higher by Standard & Poor’s Rating Services, (ii) a corporate family rating that is Baa3 or higher by Moody’s Investors Services, Inc. or (iii) a corporate credit rating that is BBB- or higher by Fitch Ratings, Inc.).

The credit agreement contains certain covenants, including a maximum Consolidated Leverage Ratio and a minimum Consolidated Interest Coverage Ratio (as defined in the credit agreement). The credit agreement also limits certain acquisitions, mergers and consolidations, indebtedness, asset sales and prepayments of indebtedness and, subject to certain exceptions, prohibits liens on Quanta’s assets. The credit agreement allows cash payments for dividends and stock repurchases subject to compliance with the following requirements (after giving effect to the dividend or stock repurchase): (i) no default or event of default under the credit agreement; (ii) continued compliance with the financial covenants in the credit agreement; and (iii) at least $100 million of availability under the credit agreement and/or cash and cash equivalents on hand. As of June 30, 2015, Quanta was in compliance with all of the covenants in the credit agreement.

 

The credit agreement provides for customary events of default and contains cross-default provisions with Quanta’s underwriting, continuing indemnity and security agreement with its sureties and all other debt instruments exceeding $75.0 million in borrowings or availability. If an Event of Default (as defined in the credit agreement) occurs and is continuing, on the terms and subject to the conditions set forth in the credit agreement, the lenders may declare all amounts outstanding and accrued and unpaid interest immediately due and payable, require that Quanta provide cash collateral for all outstanding letter of credit obligations, terminate the commitments under the credit agreement, and foreclose on the collateral.