CONVERTIBLE DEBT

A summary of our convertible debt as of December 31, 2016 and 2015 is as follows (in thousands):



	December 31, 2016			December 31, 2015
Convertible debt:
2018 Notes, due February 1, 2018	$	32,485		$	61,632
2019 Notes, due October 1, 2019	148,073			149,500
Total debt	180,558			211,132
Add:
Fair value of embedded derivative	—			82
Less:
Unamortized debt discount	(5,668		)	(8,749		)
Debt issuance costs	(270		)	(450		)
Long-term portion of debt	$	174,620		$	202,015

Total interest costs incurred related to our total debt (including amortization of loan fees and debt discount) were $13.5 million, $14.2 million and $11.7 million for 2016, 2015 and 2014, respectively. Total interest costs capitalized during 2014 were $0.6 million, related to our investment in the SB Oils JV. We were in compliance with all debt covenants as of December 31, 2016 and 2015.

Convertible Senior Subordinated Notes -2018 Notes—On January 24, 2013 we issued $125.0 million aggregate principal amount of 6.00% Convertible Senior Subordinated Notes due 2018 (2018 Notes) in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. As of December 31, 2016, we had $32.5 million aggregate principal amount of 2018 Notes outstanding. The 2018 Notes bear interest at a fixed rate of 6.00% per year, payable semiannually in arrears on August 1 and February 1 of each year. The 2018 Notes are convertible into our common stock and may be settled as described below. The 2018 Notes will mature on February 1, 2018, unless earlier repurchased or converted. We may not redeem the 2018 Notes prior to maturity.

The 2018 Notes are convertible at the option of the holders at any time prior to the close of business on the scheduled trading day immediately preceding February 1, 2018 into shares of our common stock at the then-applicable conversion rate. The conversion rate is 121.1240 shares of common stock per $1,000 principal amount of 2018 Notes (equivalent to an initial conversion price of approximately $8.26 per share of common stock). With respect to any conversion prior to November 1, 2016 (other than conversions in connection with certain fundamental changes where we may be required to increase the conversion rate as described below), in addition to the shares deliverable upon conversion, holders were entitled to receive an early conversion payment equal to $83.33 per $1,000 principal amount of 2018 Notes surrendered for conversion that may be settled, at our election, in cash or, subject to satisfaction of certain conditions, in shares of our common stock.

Convertible Senior Subordinated Notes - 2019 Notes—On April 1, 2014, we issued $149.5 million aggregate principal amount of 5.00% Convertible Senior Subordinated Notes due 2019 (2019 Notes) in a public offering. As of December 31, 2016, we had $148.1 million aggregate principal amount of 2019 Notes outstanding. The 2019 Notes bear interest at a fixed rate of 5.00% per year, payable semiannually in arrears on April 1 and October 1 of each year. The 2019 Notes are convertible into our common stock and may be settled early as described below. The 2019 Notes will mature on October 1, 2019, unless earlier repurchased or converted. We may not redeem the 2019 Notes prior to maturity.

The 2019 Notes are convertible at the option of the holders on any day prior to and including the scheduled trading day prior to October 1, 2019. The 2019 Notes are convertible at a conversion rate of 75.7576 shares of Common Stock per $1,000 principal amount of 2019 Notes (equivalent to an initial conversion price of $13.20 per share of Common Stock), subject to adjustment upon the occurrence of certain events. With respect to any conversion prior to January 1, 2018 (other than conversions in connection with certain fundamental changes where we may be required to increase the conversion rate as described below), in addition to the shares deliverable upon conversion, holders are entitled to receive an early conversion payment equal to $83.33 per $1,000 principal amount of 2019 Notes surrendered for conversion that may be settled, at the Company’s election, in cash or shares of our common stock.

We issued the Notes pursuant to our indenture agreements with Wells Fargo Bank, National Association, as trustee. The indentures provide for customary events of default, including cross acceleration to certain other indebtedness of the Company and its significant subsidiaries.

If we undergo a fundamental change (as defined), holders may require us to repurchase for cash all or part of their Notes at a purchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if certain fundamental changes occur, we may be required in certain circumstances to increase the conversion rate for any Notes converted in connection with such fundamental changes by a specified number of shares of our common stock.

The Notes are our general unsecured obligations and will be subordinated in right of payment to any senior debt outstanding. The Notes will be equal or senior in right of payment to any of our indebtedness other than senior debt. The Notes will effectively rank junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness and be structurally junior to all indebtedness and other liabilities of our subsidiaries, including trade payables.

Debt Conversion —During 2016, we exchanged 2018 and 2019 Notes totaling approximately $30.6 million by issuing 9,022,954 new shares (including 4,550,208 inducement shares) of our common stock. We recorded a non-cash debt conversion expense of approximately $9.8 million related to the exchange in 2016, representing the fair value of the securities transferred in excess of the fair value of the securities issuable upon the original conversion terms of the 2018 and 2019 Notes.

As of December 31, 2016, we had agreed to exchange approximately $7.6 million of 2019 Notes, and final settlement was confirmed on March 15, 2017 with an associated debt conversion expense of approximately $2.5 million, which we will record in the three months ending March 31, 2017.

During 2014, we exchanged 2018 Notes totaling approximately $17.5 million by issuing 2,409,964 new shares (including 160,670 inducement shares) of our common stock. We recorded a non-cash debt conversion expense of approximately $1.8 million related to the exchange in 2014, representing the fair value of the securities transferred in excess of the fair value of the securities issuable upon the original conversion terms of the 2018 Notes. In addition, we exchanged Notes with no inducement for approximately $2.6 million by issuing 333,511 common shares.

A summary of debt maturity as of December 31, 2016 was as follows (in thousands):



2017	$	—
2018	32,485
2019	148,073
Total	$	180,558

SVB Standby Letter of Credit and Loan and Security Agreement—In the second quarter of 2016, we entered into an agreement with Silicon Valley Bank (SVB Agreement) that provides for a $12.9 million letter of credit facility (the Facility) denominated in U.S. dollars or a foreign currency. On April 29, 2016, Silicon Valley Bank issued a standby letter of credit (SVB SLOC) to support a bank guarantee issued on our behalf to BNDES in connection with the loan agreement entered into in 2013 between BNDES and the SB Oils JV. The SVB SLOC is being supported by a bank confirmation issued by the Bank of Nova Scotia (the Scotia Bank Confirmation) on behalf of Silicon Valley Bank. We are required to pay fees of 1.5% and 0.7% of the collateral per annum related to the SVB SLOC and the Scotia Bank Confirmation, respectively. We are also required to pay a fee of 1.99% of the collateral per annum for the issuance of the bank guarantee to BNDES. We are subject to customary events of default under the SVB Agreement. We have not recorded any liability for this guarantee as of December 31, 2016, as performance is not considered probable. Under the SVB Agreement, we are subject to financial covenants and covenants related to our 2018 Notes and 2019 Notes, as well as customary negative covenants. The SVB Agreement also contains certain customary representations and warranties, affirmative covenants and provisions relating to events of default.