12.875% Senior Secured Notes

9 Months Ended

Sep. 30, 2015

12.875% Senior Secured Notes

Debt Instrument [Line Items]

Senior Unsecured Notes

12.875% Senior Secured Notes

On November 10, 2014 (the “Initial Closing Date”), the Company, as issuer, entered into an indenture with certain of its subsidiary companies, Harbordale, LLC, Imperial Finance & Trading, LLC, Imperial Life and Annuity Services, LLC, Imperial Litigation Funding, LLC, Imperial Premium Finance, LLC, Red Reef Alternative Investments, LLC and Washington Square Financial, LLC, as guarantors (the “Guarantors”), and Wilmington Trust Company, as indenture trustee. The indenture provided for the issuance of up to $100 million in senior secured notes (the “Secured Notes), of which $25 million was issued by the Company on the Initial Closing Date. The Secured Notes issued on the Initial Closing Date were issued at 96% of their face amount and were purchased under a note purchase agreement (the “Note Purchase Agreement”) with the Company and the Guarantors by an affiliate of Indaba Capital Management, L.P. (the “Purchaser”) in a private transaction pursuant to exemptions from the registration requirements of the Securities Act of 1933, as amended. On January 21, 2015, the Company issued an additional $25.0 million in aggregate principal amount of Secured Notes, which were purchased by the Purchaser under the Note Purchase Agreement at 96% of their principal amount. Fees and expenses paid by the Company in connection with the Initial Closing Date and its subsequent issuance were approximately $1.8 million and $305,000, respectively.

Interest on issued Secured Notes accrued at 12.875% per annum and all Secured Notes issued under the indenture were scheduled to mature on November 10, 2017.

The Secured Notes were guaranteed by the Guarantors and were secured by substantially all of the Company’s and Guarantors’ assets, other than those securing the White Eagle Revolving Credit Facility, including cash on account as well as the Company’s life insurance policies that were not pledged as collateral under the White Eagle Revolving Credit Facility. The Secured Notes were also secured by pledges of the equity interests of the Guarantors and by pledges of 65% of their first tier foreign subsidiary companies.

On July 16, 2015, the Company redeemed all of the outstanding Secured Notes and discharged the Secured Note indenture. The Secured Notes were redeemed at 106% of their principal amount plus interest up to but excluding November 10, 2015. Effective as of the redemption of the Secured Notes, 159 of the life insurance policies that served as collateral for the Secured Notes were sold to Red Falcon in an internal transfer and pledged as collateral under the Red Falcon Revolving Credit Facility. Approximately $8.8 million was expensed as extinguishment related to the early repayment of the facility, in July 2015. This includes $5.2 million, $171,000, $1.7 million and $1.7 million related to interest and prepayment penalties, unused fees, write off of debt discount and write off of issuance cost.

The Company recorded $4.0 million of interest expense on the Secured Notes, including $3.2 million, $265,000, $264,000 and $277,000 from interest, unused fees, amortizing debt discounts and issuance costs, during the nine months ended September 30, 2015.