Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Class A Redeemable Convertible Preferred Stock (Tables)

v3.6.0.2
Class A Redeemable Convertible Preferred Stock (Tables)
12 Months Ended
Dec. 31, 2016
Temporary Equity Disclosure [Abstract]  
Summary of Product of Paid-in-kind Dividend Rate

 

 

 

 

 

 

For the Period:

  

PIK Dividend Rate
per Annum in Effect

 

Commencing on the Original Issue Date and ending on the 1st anniversary of the Original Issue Date

  

 

0.0

Commencing on the day after the 1st anniversary of the Original Issue Date and ending on the 4th anniversary of the Original Issue Date

  

 

4.0

Commencing on the day after the 4th anniversary of the Original Issue Date and ending on the 5th anniversary of the Original Issue Date

  

 

5.0

Commencing on the day after the 5th anniversary of the Original Issue Date and ending on the 6th anniversary of the Original Issue Date

  

 

6.0

Commencing on the day after the 6th anniversary of the Original Issue Date and ending on the 7th anniversary of the Original Issue Date

  

 

7.0

Commencing on the day after the 7th anniversary of the Original Issue Date and ending on the 8th anniversary of the Original Issue Date

  

 

8.0

Commencing on the day after the 8th anniversary of the Original Issue Date and ending on the 9th anniversary of the Original Issue Date

  

 

9.0

Commencing on the day after the 9th anniversary of the Original Issue Date and ending on the date of automatic conversion

  

 

10.0

 

Schedule of Redemption Discounts

 

For the Period:

  

Discount

 

Commencing on the Original Issue Date and ending on the 1st anniversary of the Original Issue Date

  

 

9.0909

Commencing on the day after the 1st anniversary of the Original Issue Date and ending on the 2nd anniversary of the Original Issue Date

  

 

6.8182

Commencing on the day after the 2nd anniversary of the Original Issue Date and ending on the 3rd anniversary of the Original Issue Date

  

 

4.5455

Commencing on the day after the 3rd anniversary of the Original Issue Date and ending on the 4th anniversary of the Original Issue Date

  

 

2.2727

 

Schedule of Originally Issued and Remaining Series A Preferred Stock Accretion to Ten Year Liquidation Value

The fair value of the Series A Preferred Stock originally issued was being accreted to the ten year liquidation value of $190.8 million using an effective interest rate of approximately 10.06% as follows (in thousands):

 

 

 

Anniversary of Closing Date - Original Issuance on 14,666,667 shares

 

 

 

Year 1

 

 

Year 2

 

 

Year 3

 

 

Year 4

 

 

Year 5

 

 

Year 6

 

 

Year 7

 

 

Year 8

 

 

Year 9

 

 

Year 10

 

Carrying Value

 

$

73,200

 

 

$

80,560

 

 

$

88,661

 

 

$

97,576

 

 

$

107,387

 

 

$

118,185

 

 

$

130,069

 

 

$

143,147

 

 

$

157,541

 

 

$

173,382

 

Deemed Dividends

 

 

7,360

 

 

 

8,101

 

 

 

8,915

 

 

 

9,811

 

 

 

10,798

 

 

 

11,884

 

 

 

13,078

 

 

 

14,394

 

 

 

15,841

 

 

 

17,434

 

 

 

$

80,560

 

 

$

88,661

 

 

$

97,576

 

 

$

107,387

 

 

$

118,185

 

 

$

130,069

 

 

$

143,147

 

 

$

157,541

 

 

$

173,382

 

 

$

190,816

 

After redemption, the fair value of the remaining Series A Preferred Stock will be accreted to the ten year liquidation value of $85.9 million using an effective interest rate of approximately 10.06% as follows (in thousands):

 

 

 

Anniversary of Closing Date - Post Redemption on 6,600,000 shares remaining

 

 

 

Year 1

 

 

Year 2

 

 

Year 3

 

 

Year 4

 

 

Year 5

 

 

Year 6

 

 

Year 7

 

 

Year 8

 

 

Year 9

 

 

Year 10

 

Fair Value

 

$

32,940

 

 

$

36,252

 

 

$

39,897

 

 

$

43,909

 

 

$

48,324

 

 

$

53,183

 

 

$

58,531

 

 

$

64,416

 

 

$

70,893

 

 

$

78,021

 

Deemed Dividends

 

 

3,312

 

 

 

3,645

 

 

 

4,012

 

 

 

4,415

 

 

 

4,859

 

 

 

5,348

 

 

 

5,885

 

 

 

6,477

 

 

 

7,128

 

 

 

7,846

 

 

 

$

36,252

 

 

$

39,897

 

 

$

43,909

 

 

$

48,324

 

 

$

53,183

 

 

$

58,531

 

 

$

64,416

 

 

$

70,893

 

 

$

78,021

 

 

$

85,867

 

 

Schedule of Beneficial Conversion Feature At Original Issue Date

The calculation of the Beneficial Conversion Feature at the Original Issue Date is as follows (in thousands except share and per share amounts):

 

Issue date

fair value

 

$

73,200

 

 

Common shares the stock converts into

 

 

14,666,667

 

Common shares

the stock coverts into

 

 

14,666,667

 

 

Excess fair value of stock over conversion price

 

$

3.05

 

Effective

conversion price

 

$

4.99

 

 

Value of beneficial conversion feature

 

$

44,720

 

 

 

 

 

 

 

 

 

 

 

 

Stock price on

issue date

 

$

8.04

 

 

Fair Value

 

$

73,200

 

Effective conversion price

 

$

4.99

 

 

Value of Beneficial Conversion Feature

 

$

(44,720

)

Excess fair value over conversion price

 

$

3.05

 

 

Carrying Value

 

$

28,480

 

 

Schedule of Components of Series A Preferred Stock, Separately for Shares Redeemed and for Shares Remaining, After Redemption and Loss on Redemption

The following table details the amounts recorded for the components of the Series A Preferred stock separately for the shares redeemed and for the shares remaining after redemption:

 

Reconciliation of amounts recorded

 

Original

Issue Date

 

 

Redeemed

Shares

 

 

Shares

Remaining

 

 

Income Statement Impact

 

Shares of Series A Preferred Stock

 

 

14,666,667

 

 

 

8,066,667

 

 

 

6,600,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Face (conversion) value

 

$

110,000

 

 

$

60,500

 

 

$

49,500

 

 

$

-

 

Issue discount

 

 

(36,800

)

 

 

(20,240

)

 

 

(16,560

)

 

 

-

 

Beneficial conversion feature

 

 

(44,720

)

 

 

(24,596

)

 

 

(20,124

)

 

 

-

 

Carrying value at Original Issue Date

 

 

28,480

 

 

 

15,664

 

 

 

12,816

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deemed dividends expense recorded

 

 

7,360

 

 

 

4,048

 

 

 

3,312

 

 

 

7,360

 

Amortization expense of BCF

 

 

14,988

 

 

 

8,244

 

 

 

6,745

 

 

 

14,988

 

Carrying value pre-redemption

 

$

50,828

 

 

$

27,956

 

 

$

22,873

 

 

$

22,348

 

Accelerate discount expense on redeemed shares

 

 

 

 

 

 

18,973

 

 

 

-

 

 

 

18,973

 

Remove deemed dividends not payable on redeemed shares

 

 

 

 

 

 

(2,781

)

 

 

-

 

 

 

(2,781

)

Remove BCF not realized by holder

 

 

 

 

 

 

(8,244

)

 

 

-

 

 

 

(8,244

)

Add original amount of BCF back to Series A Preferred Stock from APIC

 

 

 

 

 

 

24,596

 

 

 

-

 

 

 

-

 

Record cash paid at redemption of $55.0 million

 

 

 

 

 

 

(60,500

)

 

 

-

 

 

 

(5,500

)

Carrying value after redemption at December 31, 2016

 

 

 

 

 

 

-

 

 

 

22,873

 

 

 

-

 

Cumulative impact on income statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amounts from deemed dividends and discounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18,051

 

Amounts from BCF

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,745

 

 

To calculate any gain or loss realized on the redemption of the Series A Preferred Stock, the Company took the carrying value of the shares of Series A Preferred Stock before the redemption and added the amount of the beneficial conversion feature originally recorded with the redeemed shares and compared that total to the consideration being paid, in this case the $55 million. The following table summarizes the calculation of the net loss realized upon the redemption of the 8,066,667 shares of Series A Preferred Stock which agrees with the cumulative impact on the income statement in the table above.

 

Calculation of loss on redemption

 

 

 

 

Carrying value pre-redemption on shares redeemed

 

$

27,956

 

Value of original BCF on redeemed shares

 

 

24,596

 

 

 

 

52,552

 

Cash paid to redeem shares

 

 

55,000

 

Loss on redemption of Series A Preferred Stock

 

 

(2,448

)

 

 

 

 

 

Income statement expense pre-redemption

 

 

22,348

 

Plus:  Loss on redemption of Series A Preferred Stock

 

 

2,448

 

Cumulative income statement impact as of December 31, 2016

 

$

24,796