TETRA TECHNOLOGIES INC 10-Q

Item 3. Quantitative and Qualitative Disclosures about Market Risk. Interest Rate Risk The interest on our borrowings is subject to market risk exposure related to changes in applicable interest rates. Borrowings under the Term Credit Agreement bear interest at a rate per annum equal to, at the option of TETRA, either (i) SOFR (subject to a 1% floor) plus a margin of 6.25% per annum or (ii) a base rate plus a margin of 5.25% per annum. Borrowings under our ABL Credit Agreement bear interest at an agreed-upon percentage rate spread above SOFR. Borrowings under our Argentina Credit Facility and Swedish Credit Facility bear interest at fixed rates of 2.50% and 2.95%, respectively. The following table sets forth as of June 30, 2023, the principal amount due under our long-term debt obligations and their respective weighted average interest rates. As of June 30, 2023, we had no balance outstanding under our ABL Credit Agreement or Swedish Credit Facility. We are not a party to an interest rate swap contract or other derivative instrument designed to hedge our exposure to interest rate fluctuation risk. Interest June 30, 2023 Scheduled Maturity Rate (in thousands) Term Credit Agreement September 10, 2025 11.40% $ 163,072 Argentina Credit Facility October 19, 2023 2.50% 1,900 TETRA total debt, including current portion $ 164,972 Exchange Rate Risk We have currency exchange rate risk exposure related to revenues, expenses, operating receivables, and payables denominated in foreign currencies. We may enter into short-term foreign-currency forward derivative contracts as part of a program designed to mitigate the currency exchange rate risk exposure on selected transactions of certain foreign subsidiaries. Although contracts pursuant to this program will serve as an economic 33 Table of Contents hedge of the cash flow of our currency exchange risk exposure, they are not expected to be formally designated as hedge contracts or qualify for hedge accounting treatment. Accordingly, any change in the fair value of these derivative instruments during a period will be included in the determination of earnings for that period. As of June 30, 2023, we did not have any foreign currency exchange contracts outstanding.