6. Senior Convertible Notes

On November 3, 2014, Synergy closed a private offering of $200 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019 (including the full exercise of the over-allotment option granted to the initial purchasers to purchase an additional $25 million aggregate principal amount of 7.50% Convertible Senior Notes due 2019, (the “Notes”), interest payable semiannually in arrears on May 1 and November 1 of each year, beginning on May 1, 2015. The net proceeds from the offering were $187.3 million after deducting the initial purchasers’ discounts and offering expenses.

The Notes are unsecured. Interest expense not including amortization of deferred financing costs for three and nine months ended September 30, 2015 was $2.7 million and $9.9 million, respectively. There was no such expense in the three and nine months ended September 30, 2014. On May 1, 2015 Synergy made its first semiannual interest payment of $7.4 million. Accrued interest payable was $5.0 million and $2.5 million as of September 30, 2015 and December 31, 2014 respectively. A summary of quarterly activity is listed below (dollars in thousands):

Interest payable on Senior Convertible Debenture at 1/1/2015	$	2,500
Accrued interest expense during the 3 months ended March 31, 2015	3,750

Interest Payable on Senior Convertible Debenture at March 31, 2015	6,250
Accrued interest expense during the 3 months ended June 30, 2015	3,388
Interest Payment on Senior Convertible Debenture at May 1, 2015	(7,416		)

Interest payable on Senior Convertible Debenture as of June 30, 2015	2,222
Accrued interest expense during the 3 months ended September 30, 2015	2,747

Interest payable on Senior Convertible Debenture as of September 30, 2015	$	4,969

The Notes will mature on November 1, 2019, unless earlier purchased or converted. The Notes are convertible, at any time, into shares of Synergy’s common stock at an initial conversion rate of 321.5434 shares per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $3.11 per share. During the three months ended September 30, 2015, $18.8 million aggregate principal amount of the Notes was converted into 6.0 million shares of Synergy common stock. During the nine months ended September 30, 2015, $41.0 million aggregate principal amount of the Notes was converted into 13.2 million shares of Synergy common stock. This brings the principal balance of the Notes to $159.0 million at September 30, 2015 as compared to $200.0 million at December 31, 2014. All conversions were noteholder initiated with no inducement or solicitation on the part of the Company. Transaction costs associated with the Notes of $12.7 million have been deferred and are being recognized as expense over the expected term of the Notes, calculated using the effective interest rate method. Amortization expense, including amortization associated with reduction of the principal due to the conversion of the debentures on a prorated basis for three and nine months ended September 30, 2015 were $1.5 million and $4.1 million, respectively. There were no such expenses in the three and nine months ended September 30, 2014. The remaining transaction costs have been presented as a reduction of the Notes in accordance with the newly adopted Accounting Standards Update (“ASU”) No. 2015-03 “Simplifying the Presentation of Debt Issuance Costs”. A summary of quarterly activity and balances associated with the Notes and related deferred transaction costs is presented below ($ in thousands):

	Notes Balance			Transactions Costs			Notes, net of Transaction Costs

Balance at issuance November 1, 2014	$	200,000		$	12,747		$	187,253
Less: amortization two months ended December 31, 2014	—			(411		)	411


Balance December 31, 2014	200,000			12,336			187,664
Less: amortization three months ended March 31, 2015	—			(617		)	617


Balance March 31, 2015	200,000			11,719			188,281

Less: amortization three months ended June 30, 2015 (1)	—			(1,899		)	1,899

Conversions	(22,213		)	—			(22,213		)


Balance June 30, 2015	177,787			9,820			167,967
Less: amortization three months ended September 30, 2015	—			(1,544		)	1,544
Conversions	(18,776		)	—			(18,776		)

Balance September 30, 2015	$	159,011		$	8,276		$	150,735

(1)

Includes accelerated amortization of deferred financing costs attributable to conversions