NOTE 4. LONG–TERM DEBT

Long–term debt consisted of the following:

	September 30, 2018			December 31, 2017
Credit facility:
Principal outstanding	$	15,000		$	5,000
Unamortized debt issuance costs		(157	)		(599	)
Carrying amount		14,843			4,401

Senior loan facility - principal outstanding		29,000			29,995

6% senior secured convertible notes due 2023:
Principal outstanding		60,000			—
Unamortized debt discount and debt issuance costs		(16,494	)		—
Carrying amount		43,506			—

10% senior secured notes due 2019:
Principal outstanding		—			1,872
Unamortized debt issuance costs		—			(25	)
Carrying amount		—			1,847

10% second lien notes due 2019:
Principal outstanding		6,961			85,239
Unamortized debt issuance costs		(7	)		(189	)
Carrying amount		6,954			85,050

Total debt		94,303			121,293
Current portion of long-term debt		(6,954	)		(995	)
Total long-term debt	$	87,349		$	120,298

In January 2018, we consummated an exchange offer and consent solicitation (the “Exchange”) related to our Second Lien Notes due 2019 (the “Second Lien Notes”). Pursuant to a restructuring support agreement with holders of approximately 85% of the par value our of Second Lien Notes, we exchanged $78.0 million of our Second Lien Notes and $7 thousand of our Senior Secured Notes due 2019 (the “Senior Notes”) for (i) 0.04 million shares of common stock, (ii) 0.03 million shares of Series A preferred stock, (iii) 0.9 million shares of Series B preferred stock, and (iv) 8.3 million Series C warrants. The Exchange was accounted for as an extinguishment as we were legally released of our obligations upon delivery and acceptance of the respective equity securities and we recognized a gain of $0.1 million.

In February 2018, the maturity dates of our credit facility and senior loan facility were extended to January 2020.

In July 2018, we amended our credit facility to, among other things, increase the aggregate maximum commitment to $30.0 million. We then borrowed the $10.0 million that was available under the credit facility to redeem our outstanding Senior Notes and for general corporate purposes.

In July 2018, we also entered into a Purchase Money Loan and Security Agreement (the “Purchase Money Credit Agreement”) to fund our acquisition of the Purchased Assets (see Note 2). The Purchase Money Credit Agreement provided for $23.4 million in borrowings secured on a first lien basis by the Purchased Assets. Borrowings made under the Purchase Money Credit Agreement bore interest at a rate of 10.25% per annum, and the Purchase Money Credit Agreement was to mature in October 2018, unless terminated earlier.

In September 2018, we issued 6.00% Senior Secured Convertible Notes due 2023 (the “2023 Notes”) under an indenture dated September 26, 2018 (the “Indenture”). The 2023 Notes mature on September 26, 2023, and interest is payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year.

We may not redeem the 2023 Notes prior to October 1, 2021. After that date, we may redeem all or part of the 2023 Notes, at our option, if the last reported sale price of our common stock has been at least 150% of the conversion price then in effect (i) on the trading day immediately preceding the date of which we provide notice of redemption and (ii) for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the 2023 Notes to be redeemed, payable in cash, plus accrued and unpaid interest and any make whole premium (as described in the Indenture).

In the event of a fundamental change, as defined in the Indenture, holders of the 2023 Notes may, subject to certain restrictions, require us to repurchase for cash all or a portion of their notes equal to $1,000 or a multiple of $1,000 at a fundamental change repurchase price equal to 100% of the principal amount of 2023 Notes, plus accrued and unpaid interest, if any, to, but not including, the fundamental change repurchase date.

Upon the occurrence of an event of default, as defined within the Indenture, the trustee or the holders of at least 25% in aggregate principal amount of the 2023 Notes then outstanding may declare 100% of the principal of, and accrued and unpaid interest on, all the 2023 Notes to be due and payable immediately.

The 2023 Notes are convertible at the option of the holder into shares of common stock or, for certain holders (as defined in the Indenture), warrants to purchase an equal number of shares of common stock at an exercise price of $0.0001 per share, subject to customary adjustments. The initial conversion rate is 173.91304 shares of common stock or warrants per $1,000 principal amount, representing an initial conversion price of approximately $5.75 per share. The conversion rate is subject to adjustment upon the occurrence of certain events, as defined in the Indenture. We can satisfy the conversion obligation, at our option, in either cash, shares of common stock, warrants or a combination thereof.

When the 2023 Notes were issued, we accounted for the debt and equity components of the 2023 Notes separately, as we have the option to settle the conversion obligation in cash. At the date of issuance, we calculated the fair value of the 2023 Notes, excluding the conversion feature, based on the fair value of similar non–convertible debt instruments. The difference between the cash proceeds and the estimated fair value represented the value which was assigned to the equity component and recorded as a debt discount. The debt discount is being amortized using the effective interest rate method over the period from issuance to the maturity date of September 26, 2023. The carrying amount of the equity component of the 2023 Notes reported in additional paid in capital was initially valued at $15.4 million, which is net of $0.3 million of debt issuance costs allocated to the equity component.

Based on the closing price of our common stock of $10.30 at September 30, 2018, the if–converted value of the 2023 Notes exceeded the principal amount of $60.0 million by $47.5 million. We recorded interest expense of $0.1 million related to the 2023 Notes, of which $50 thousand related to contractual interest expense, in both the three months and nine months ended September 30, 2018.

In September 2018, we used a portion of the net proceeds from the issuance of the 2023 Notes to repay our credit facility, including a $0.3 million prepayment fee, and the Purchase Money Credit Agreement, including a $0.5 million prepayment fee. We subsequently terminated the Purchase Money Credit Agreement.

In September 2018, we also entered into a new amended and restated credit facility that provides for up to $30.0 million in borrowings, secured primarily by substantially all our assets located in the United States, subject to certain exclusions. Borrowings under the new credit facility bear interest at a rate of 11.75% through and including August 2020 and 12.75% thereafter. The new credit facility matures on August 1, 2021. We then made a $15.0 million draw under the new credit facility for general corporate purposes.

The credit agreements and indentures for our credit facility, senior loan facility, 2023 Notes and Second Lien Notes contain certain representations, warranties, covenants and other terms and conditions which are customary for agreements of these types. As of September 30, 2018, we were in compliance with these covenants.