Fitch Rates SEACOR Holdings' $250MM Senior Note Offering 'BBB-'

--IDR 'BBB-';

--Senior unsecured credit facility 'BBB-';

--Senior unsecured notes 'BBB-';

--Convertible debentures 'BBB-'.

Approximately $1.04 billion in total debt is outstanding at SEACOR. The Rating Outlook is Stable.

Proceeds from the debt offering are expected to be used for general corporate purposes, to replenish cash proceeds used to finance the repayment of the company's 7.2% senior notes ($33 million) which came due on Sept. 15, redemption of its 9.5% senior notes ($82 million) which were called on Aug. 14, and to increase liquidity/reserve for potential future debt retirements. As a result, the debt offering is expected to be modestly leveraging for the company. However, Fitch notes that SEACOR continues to maintain $125 million in outstanding borrowings on its credit facility which could be repaid. Additional flexibility in the company's capital structure stems from the 2.875% convertible debentures which are redeemable by the company on Dec. 20, 2009. The company's stock price (approximately $81.68/share) is currently trading above the strike price ($73.15/share) in the convertible notes. In addition, as of June 30, 2009, Fitch estimates that the company has remaining authorization from the Board of Directors to repurchase $145.4 million in common stock or the 2.875% Convertible Debentures due 2024.

SEACOR's ratings are supported by the company's historically stable credit profile, diversity of operations, and the size, diversity and quality of the company's fleet of offshore vessels. The company's conservative credit profile is further supported by management's willingness to maintain large cash and securities balances throughout industry cycles which have resulted in Seacor typically maintaining very low (and often negative) leverage levels as measured on a net debt basis. In addition, management has taken action in the current downturn to reduce capital expenditure levels, thereby increasing free cash flows; reduce debt balances; and has halted share repurchases. Less positive factors for the rating include declining market conditions in many of the markets in which SEACOR operates, SEACOR's history of generating significant proceeds from asset sales, along with the potential for increased acquisition activity and increased commodity trading activity.

For the quarter ending June 30, 2009, SEACOR generated latest-12-months (LTM) EBITDA of $445.3 million and finished the period with debt of $881 million. As a result, debt-to-EBITDA is currently estimated at 2.0 times (x) and interest coverage is currently 7.0x. SEACOR generated $71.9 million of free cash flow (FCF) during the LTM period ending June 30, 2009, which represented a significant improvement over the past two years. Additionally, after adjusting for asset sales, FCF was positive $230.9 million for the LTM period, which is a significant improvement over full-year 2008 when the company continued to fund significant capital expenditures. SEACOR also curtailed all share repurchase activity during the first half of the year, and used cash flows for debt reduction ($82.6 million) and to build cash balances ($93.6 million).

Fitch expects SEACOR to generate positive FCF in 2009 stemming from the significantly reduced capital expenditures which should allow the company to repay debt maturities without significantly drawing down cash balances or increasing revolver borrowings. Rising debt levels (given the current asset base) or significant share repurchases would be a catalyst for negative rating action.

SEACOR maintains liquidity from cash and equivalents ($749.4 million at June 30, 2009, composed of $415.6 million of cash and equivalents, $20.8 million of restricted cash, $47.3 million of marketable securities and $265.6 million of Construction Reserve Funds Title XI Reserve Funds), its $450 million credit facility due November 2013 ($127.1 million of borrowings and letters of credit outstanding on the facility at June 30, 2009) and operating cash flows. The company's next maturities do not occur until 2012 and 2013, when the its remaining unsecured notes mature following the recent repayment of the 7.2% notes. SEACOR's 2.875% convertible debentures due 2024 become putable by noteholders on Dec. 15, 2011 at par and are redeemable by the company beginning Dec. 20, 2009.

Key covenants are primarily associated with the company's senior unsecured credit facility and include minimum interest coverage (3.0x covenant level), maximum secured debt to total capitalization (25% covenant level), and maximum funded debt to total capitalization (50% covenant level). SEACOR currently maintains a sizable cushion to covenant levels that would allow the company's EBITDA levels to fall by an estimated 69% before the interest coverage covenant would be exceeded.

SEACOR is a diversified, global company that owns, operates, invests in and markets equipment, primarily in the offshore oil and gas and marine transportation industries. The company operates in six business segments including offshore marine services, marine transportation services, inland river services, aviation services, environmental services, and commodity trading. Additionally, the company has harbor and offshore towing services, asset leasing activities and other joint ventures and equity investments. SEACOR's corporate headquarters are located in Fort Lauderdale, Florida.

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SOURCE: Fitch Ratings

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