Convertible Debt Instruments

3 Months Ended

Mar. 31, 2025

Convertible Debt Instruments

Convertible Debt Instruments

9. Convertible Debt Instruments

6.00% Convertible Debenture

On November 11, 2024, the Company entered into the Debenture Purchase Agreement pursuant to which the Company issued to Yorkville the 6.00% Convertible Debenture in exchange for the payment of $190.0 million. The 6.00% Convertible Debenture was issued in a private placement in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The 6.00% Convertible Debenture ranks pari passu in right of payment with all other outstanding and future senior indebtedness of the Company.

The Debenture Purchase Agreement provides that Yorkville may convert all or any portion of the principal amount of the 6.00% Convertible Debenture, together with any accrued and unpaid interest thereon, at an initial conversion price of $2.90 (the “Fixed Price”), representing a conversion premium of 146% to the last reported sale price of the Company’s common stock on November 11, 2024. The Fixed Price is subject to adjustment in certain circumstances including if the Company issues shares of common stock at price per share that is less than the Fixed Price or certain convertible securities with a conversion price that is less than the Fixed Price (the “Dilutive Price”), in which case the Fixed Price would be adjusted to equal the Dilutive Price, subject to certain exceptions. On March 20, 2025, the Company issued shares of common stock at a price of $1.51 in the Offering, which reduced the Fixed Price of the 6.00% Convertible Debenture from $2.90 to a Dilutive Price of $1.51. Refer to Note 11, “Stockholders’ Equity”, and Note 21, “Subsequent Events”, for additional information.

In certain circumstances, Yorkville will be permitted to convert up to $22.5 million aggregate principal amount of the 6.00% Convertible Debenture plus accrued and unpaid interest thereon, each calendar month beginning with December 2024, at a conversion price equal to the lower of the (1) Fixed Price and (2) 97.25% of the lowest daily volume-weighted average price for the Company’s common stock during the three trading days immediately preceding the applicable conversion date (the “Market Price”); provided that such Market Price is not less than $0.3941 (the “Floor Price”). During the three months ended March 31, 2025, Yorkville converted $45.0 million aggregate principal amount of the 6.00% Convertible Debenture into cash and $30.0 million aggregate principal amount of the 6.00% Convertible Debenture into 10,440,906 shares of the Company’s common stock.

The following table shows change in the carrying amount of the 6.00% Convertible Debenture (in thousands):

	Three months ended
	March 31, 2025
Beginning balance as of December 31, 2024	$	173,150
Payments of principal settled in cash		(45,000)
Payment of principal settled in common stock		(30,000)
Loss on extinguishment of convertible debenture		2,416
Change in fair value of the convertible debenture		7,338
Amortization of discount		746
Ending balance as of March 31, 2025	$	108,650

The Company incurred losses on extinguishment of convertible debt instruments and debt of $3.7 million during the three months ended March 31, 2025, of which $2.4 million was due to the difference between the carrying amount of the 6.00% Convertible Debenture and principal settled in cash, as noted above, and $1.3 million was due to a premium cost on the principal settled in cash of the 6.00% Convertible Debenture.

The following table summarizes the total interest expense and effective interest rate related to the 6.00% Convertible Debenture for the three months ended March 31, 2025 (in thousands, except for the effective interest rate):

	Three months ended
	March 31, 2025
Interest expense	$	1,881
Amortization of discount		746
Total	$	2,627
Effective interest rate		8.8%

7.00% Convertible Senior Notes

As of March 31, 2025 and December 2024, the 7.00% Convertible Senior Notes consisted of the following (in thousands):

	March 31, 2025		December 31, 2024
Principal amounts:
Principal	$	140,396	$	140,396
Unamortized debt premium, net of offering costs(1)		6,231		7,514
Net carrying amount	$	146,627	$	147,910

(1) Included in the unaudited interim condensed consolidated balance sheets within convertible debt instruments, net and amortized over the remaining life of the notes using the effective interest rate method.

The following table summarizes the total interest expense and effective interest rate related to the 7.00% Convertible Senior Notes for the three months ended March 31, 2025 and 2024 (in thousands, except for the effective interest rate):

	Three months ended
	March 31, 2025		March 31, 2024
Interest expense	$	2,423	$	296
Amortization of premium		(1,284)		(159)
Total	$	1,139	$	137
Effective interest rate		3.0%		3.0%

There were no conversions of the 7.00% Convertible Senior Notes during the three months ended March 31, 2025 and 2024. The estimated fair value of the 7.00% Convertible Senior Notes as of March 31, 2025 and December 31, 2024  was approximately $121.4 million and $112.5 million, respectively. The fair value estimation was primarily based on a quoted price in an active market.

3.75% Convertible Senior Notes

As of March 31, 2025 and December 2024, the 3.75% Convertible Senior Notes consisted of the following (in thousands):

	March 31, 2025		December 31, 2024
Principal amounts:
Principal	$	58,462	$	58,462
Unamortized debt issuance costs(1)		(78)		(189)
Net carrying amount	$	58,384	$	58,273

(1) Included in the unaudited interim condensed consolidated balance sheets within convertible debt instruments, net and amortized over the remaining life of the notes using the effective interest rate method.

The following table summarizes the total interest expense and effective interest rate related to the 3.75% Convertible Senior Notes for the three months ended March 31, 2025 and 2024 (in thousands, except for the effective interest rate):

	Three months ended
	March 31, 2025		March 31, 2024
Interest expense	$	548	$	1,690
Amortization of debt issuance costs		111		316
Total	$	659	$	2,006
Effective interest rate		4.5%		4.5%

There were no conversions of the 3.75% Convertible Senior Notes during the three months ended March 31, 2025 and 2024. The estimated fair value of the 3.75% Convertible Senior Notes as of March 31, 2025 and December 31, 2024 was approximately $57.2 million and $44.9 million, respectively. The fair value estimation was primarily based on a quoted price in an active market.