Private Placement Notes

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Private Placement Notes

NOTE 11. PRIVATE PLACEMENT NOTES

2024 Notes

In 2019, the Company completed two private placement arrangements (the “June Notes” and the “November Notes”), each comprised of 5-year senior secured promissory notes with a face value of $70.0 million and $60.0 million, respectively. Both notes accrue interest at an annual rate of 9.75%, payable semi-annually, in equal installments, in arrears, on June 18 and December 18 of

each year. The purchasers of the June Notes received warrants to purchase 1,470,000 Subordinate Voting Shares and the purchasers of the November Notes received warrants to purchase 1,560,000 Subordinate Voting Shares, which can be exercised for three years after closing. The unexercised warrants expired in June 2022.

During the three and six months ended June 30, 2022, accretion expense for the June Notes was $0.5 million and $0.9 million, respectively. During the three and six months ended June 30, 2021, accretion expense for the June Notes was $0.4 million and $0.8 million, respectively.

During the three and six months ended June 30, 2022, accretion expense for the November Notes was $0.4 million and $0.8 million, respectively. During the three and six months ended June 30, 2021, accretion expense for the November Notes was $0.4 million and $0.7 million, respectively.

2026 Notes

On January 28, 2022, the Company closed on a second tranche private placement of 8% Senior Secured Notes (the "2026 Notes") for aggregate gross proceeds of $76.9 million and net proceeds of $75.6 million. The 2026 Notes bear interest at a rate of 8% per annum, payable semi-annually in equal installments until the maturity date, unless earlier redeemed or repurchased. The 2026 Notes mature on October 6, 2026, and may be redeemed in whole or in part, at the Company's option, at any time, on or after October 6, 2023, at the applicable redemption price. The Company intends to use the net proceeds for capital expenditures and other general corporate purposes. During the three and six months ended June 30, 2022, accretion expense for the 2026 Notes was less than $0.1 million and $0.1 million, respectively. During the three months ended June 30, 2022, the Company repaid $1.9 million in principal on the 2026 Notes.

On October 6, 2021, the Company closed its private placement of 8% Senior Secured Notes (the "2026 Notes") for aggregate gross proceeds of $350.0 million and net proceeds of $342.6 million. The 2026 Notes bear interest at a rate of 8% per annum, payable semi-annually in equal installments until the maturity date, unless earlier redeemed or repurchased. The 2026 Notes mature on October 6, 2026, and may be redeemed in whole or in part, at the Company's option, at any time, on or after October 6, 2023, at the application redemption price set forth in the Indenture. The Company used a portion of the net proceeds to redeem certain outstanding indebtedness of Harvest and intends to use the remaining net proceeds for capital expenditures and other general corporate purposes. During the three and six months ended June 30, 2022 the Company incurred $0.3 million and $0.6 million in accretion expense.

Accretion expense on the private placement notes is included as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive (loss) income as interest expense.

Stated maturities of the principal portion of private placement notes, net outstanding as of June 30, 2022, are as follows:

	(in thousands)
Remaining 2022		—
2023		—
2024		130,000
2025		—
2026		425,000
Thereafter		—
Total private placement notes		555,000
Less: Unamortized debt discount & issuance costs		(16,023	)
Private placement notes, net	$	538,977