Note 2 - Long-Term Debt

9 Months Ended

Sep. 30, 2013

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 2 – LONG-TERM DEBT

  At September 30, 2013 and December 31, 2012, the carrying amount of the Company’s outstanding debt is summarized as follows (in thousands):

	September 30,		December 31,
	2013		2012
Zero coupon secured convertible term loan	$	-	$	65,262
Senior secured debt due March 5, 2016 Interest accrues at 8% per annum		31,412		-
Convertible bond instrument due March 5, 2018     Interest accrues at 7% per annum		55,647		-
Other loans		42		50
Debt discount, net of accumulated accretion		-		(2,051	)
		87,101		63,261
Less current portion		11		11
	$	87,090	$	63,250

 The carrying value of the Company’s debt approximates fair value.  The fair value of the Company’s debt (Level 2) is determined based on an estimation of discounted future cash flows of the debt at rates currently quoted or offered to the Company for similar debt instruments of comparable maturities by its lenders.

 Pursuant to the Company’s loan agreements, annual maturities of long-term debt outstanding on September 30, 2013, are as follows:

12 Months Ending September 30	(in thousands)
2014		11
2015		11
2016		31,424
2017		8
2018		55,647
	$	87,101

 In June 2006, the Company raised $36.4 million through the private placement of a five-year zero coupon convertible term loan with Peloton Partners LLP (“Peloton”), as administrative agent, and an affiliate of Peloton and another investor, as lenders (the “Term Loan”).  In April 2008, the Company was advised that Peloton’s interest in the Term Loan had been assigned to an affiliate of Lampe, Conway & Company LLC (“Lampe Conway”), and Lampe Conway subsequently replaced Peloton as administrative agent of the loan.  In June 2009, the Company completed arrangements to amend the Term Loan and extend its maturity to June 2013.  This facility was further modified as to certain of its conversion features in October 2010, in connection with a new $10 million working capital facility with its existing lenders.  In October 2012, the Company increased the capacity of its existing Term Loan facility with an additional $5 million facility.  As a result of this transaction, the Company issued warrants to lenders to purchase shares of common stock.  The value of the warrants totaled approximately $533 thousand and was recorded as additional debt discount with a corresponding amount recorded as additional paid-in capital.

 On March 5, 2013, the Company completed arrangements with its senior lenders to refinance the Company’s existing $66 million corporate term debt.  The new arrangements established two separate debt instruments, a $30 million senior secured mortgage loan due in three years, and a new $53.5 million convertible bond due in five years, with no principal or interest payments due on either instrument until maturity.  The new debt instruments replaced all existing term debt as of March 5, 2013, and provided $17.5 million in new working capital to fund the Company’s current operations, including pre-construction activities related to the Project.

 The major components of the refinancing included:

·   A $30 million senior term loan secured by the underlying assets of the Company, including landholdings and infrastructure (the “Senior Secured Debt”).  The instrument accrues interest at 8% per annum and requires no principal or interest payments before maturity on March 5, 2016.  Prepayment would be mandatory following any asset sale or voluntarily at the Company’s option, subject to a premium. The Senior Secured Debt has a senior position to any other Company debt instrument.

·   A $53.5 million convertible bond (the “Convertible Bond”).  The Convertible Bond provides for convertibility into the Company’s common stock at a price of $8.05 per share.  Interest accrues at 7% per annum, with no principal or interest payments required before maturity on March 5, 2018. This instrument has a junior position to the Senior Secured Debt.

·   $17.5 million in new working capital provided as part of the Convertible Bond issuance to fund Company operations.

 The new credit facility does not constitute a troubled debt restructuring and was accounted for as a debt extinguishment under ASC 470-50.  The fair value of the new credit facility was recorded at face value.  The Company recorded a loss on extinguishment of debt in the amount of $1.06 million which consisted of the write-off of unamortized debt discount, unamortized debt issuance costs and fees paid to the lenders.

 The Company incurred $1.2 million of legal expenses and placement agent fees related to the negotiation and documentation of the refinancing which will be amortized over the life of the Convertible Bond.

 In July 2013, the majority interest of the Senior Secured Debt was acquired in a private transaction by MSD Credit Opportunity Master Fund, L.P. (“MSD Credit”).  In October 2013, the Company completed arrangements with MSD Credit to increase the Senior Secured Debt facility by $10 million to fund additional working capital.  See Note 8, “Subsequent Events”.

 Both the Senior Secured Debt and the Convertible Bond contain representations, warranties and covenants that are typical for agreements of this type, including restrictions that would limit the Company’s ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investments and merge or consolidate with another person.  However, while there are affirmative covenants, there are no financial maintenance covenants and no restrictions on the Company’s ability to issue additional common stock to fund future working capital needs.  The debt covenants were negotiated by the parties with a view towards the Company’s operating and financial condition as it existed at the time the agreements were executed.  At September 30, 2013, the Company was in compliance with its debt covenants.