Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Tabular disclosure of financial instruments measured at fair value on a recurring basis

The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of March 31, 2017:



(in thousands)	Level 1		Level 2		Level 3		Total
Warrant consideration⁽¹⁾	$	—	$	1,560	$	—	$	1,560
Tax amortization benefit contingency⁽²⁾	—		—		154,323		154,323
Deferred acquisition payment⁽³⁾	—		—		1,874		1,874
Stock appreciation rights⁽⁴⁾	—		—		71		71
Phantom shares⁽⁵⁾	—		—		10		10
Total	$	—	$	1,560	$	156,278	$	157,838

The following table presents the fair value of the Company’s financial instruments that are measured at fair value on a recurring basis as of December 31, 2016:



(in thousands)	Level 1		Level 2		Level 3		Total
Warrant consideration⁽¹⁾	$	—	$	1,080	$	—	$	1,080
Tax amortization benefit contingency⁽²⁾	—		—		150,260		150,260
Deferred acquisition payment⁽³⁾	—		—		2,498		2,498
Stock appreciation rights⁽⁴⁾	—		—		22		22
Phantom shares⁽⁵⁾	—		—		4		4
Total	$	—	$	1,080	$	152,784	$	153,864

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(1)	This liability relates to warrants to purchase the Company's common stock and future obligations to deliver additional such warrants in relation to the Business Combination. The inputs used in the fair value measurement were directly observable quoted prices for identical assets in an inactive market.


(2)	The fair value of the tax amortization benefit contingency is measured using an income approach based on the Company's best estimate of the undiscounted cash payments to be made, tax effected at 37% and discounted to present value utilizing an appropriate market discount rate. The valuation technique used did not change during the three months ended March 31, 2017.

(3)

The fair value of the deferred acquisition payment is measured using a Black-Scholes option pricing model and based on the Company's best estimate of the Company's average Business EBITDA, as defined in the Purchase Agreement (as defined in Note 18), over the two year period from January 1, 2016 to December 31, 2017. The valuation technique used did not change during the three months ended March 31, 2017

Changes in financial instruments measured at level 3 fair value on a recurring basis

The following table presents the changes during the period presented in our Level 3 financial instruments that are measured at fair value on a recurring basis. These instruments relate to contingent consideration payable to Dow in connection to the Business Combination.



(in thousands)	Tax amortization benefit contingency		Deferred acquisition payment			Stock appreciation rights		Phantom shares		Total
Balance, December 31, 2016	$	150,260	$	2,498		$	22	$	4	$	152,784
Accretion	3,704		—			—		—		3,704
Mark to market adjustment	359		(624		)	49		6		(210		)
Balance, March 31, 2017	$	154,323	$	1,874		$	71	$	10	$	156,278