Company: TISI
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0000318833-25-000070
Chunk: 43

Company: TEAM INC
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 1
Chunk 43
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 borrowings used to acquire machinery and equipment (including office equipment). Under some of the arrangements, the lender pays the equipment vendor directly on behalf of the Company; as a result, no cash proceeds are received by the Company. The loans are secured by the financed equipment and are repaid over fixed terms through scheduled installments. The related assets are recorded in property, plant, and equipment, net of accumulated depreciation. As of September 30, 2025 and December 31, 2024, the outstanding balance of equipment finance loans was $0.7 million and $1.4 million, respectively. Fair Value of DebtThe fair value of our debt obligations is representative of the carrying value based upon the respective interest rate terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt obligations. 1970 Group Substitute Insurance Reimbursement FacilityOn September 16, 2024, we entered into an amended and restated substitute insurance reimbursement facility agreement  with the 1970 Group Inc. (“1970 Group”) (such agreement, the “Substitute Insurance Reimbursement Facility Agreement”). Under this agreement, the 1970 Group extended credit to us in the form of a substitute reimbursement facility (the “Substitute Reimbursement Facility”) of approximately $19.0 million of letters of credit on our behalf in support of our workers’ compensation, commercial automotive and general liability insurance policies. On August 25, 2025, we entered into a new agreement with 1970 Group Originator, Inc., an affiliate of 1970 Group, titled the Substitute Insurance Collateral Facility Program Agreement (the “Collateral Facility Agreement”), which replaced the Substitute Insurance Reimbursement Facility Agreement. The Collateral Facility Agreement establishes a revised framework 

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for collateral and credit support related to our insurance programs, superseding the prior reimbursement facility. As of September 30, 2025, we have $19.1 million of letters of credit outstanding under the Collateral Facility Agreement.According to the provisions of ASC 470, Debt, the arrangement is a “Substitute Insurance Reimbursement Facility” limited to any amounts drawn under the letters of credit. Therefore, until we use or draw on the Substitute Insurance Reimbursement Facility, the letters of credit are treated as an off-balance sheet credit arrangement. The fees in the amount of $2.3 million paid by us under this arrangement are deferred and amortized to interest expense over