DEBT

6 Months Ended

Jan. 31, 2022

The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below:


	January 31, 2022		July 31, 2021
	(In thousands)
Secured
Cerberus Term Loan due December 15, 2022	$	361,330	$	364,330
Unsecured
7.50% Convertible Senior Note due March 1, 2024	14,940		14,940
Credit Facilities
Cerberus Revolving Facility	—		—
MidCap Credit Facility	—		—
Less: unamortized discounts and issuance costs	(5,131)		(6,136)
Total debt, net	371,139		373,134
Less: current portion of debt, net	(360,996)		(5,602)
Total long-term debt, net	$	10,143	$	367,532

Cerberus Term Loan

On February 25, 2022, Company transferred all of its interests in IWCO Direct to the Buyer as part of a negotiated restructuring of the capital structure and certain financial obligations of IWCO Direct which included the Cerberus Term Loan which will be derecognized upon deconsolidation. See Note 1 for more details regarding the IWCO Direct Disposal.

7.50% Convertible Senior Note

On February 28, 2019, the Company entered into a 7.50% Convertible Senior Note Due 2024 Purchase Agreement (the "SPHG Note Purchase Agreement") with SPH Group Holdings LLC ("SPHG Holdings"), whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for a 7.50% Convertible Senior Note due 2024 (the "SPHG Note"). SPHG Holdings has the right, at its option, prior to the close of business on the business day immediately preceding the SPHG Note Maturity Date, to

convert the SPHG Note or a portion thereof that is $1,000 or an integral multiple thereof, into shares of common stock (if the Company has not received a required stockholder approval) or cash, shares of common stock or a combination of cash and shares of common stock, as applicable (if the Company has received a required stockholder approval), at an initial conversion rate of 421.2655 shares of common stock, which is equivalent to an initial conversion price of approximately $2.37 per share (subject to adjustment as provided in the SPHG Note) per $1,000 principal amount of the SPHG Note, subject to, and in accordance with, the settlement provisions of the SPHG Note. As of January 31, 2022, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of January 31, 2022, the remaining period over which the unamortized discount will be amortized is 25 months. As of January 31, 2022 and July 31, 2021, the net carrying value of the SPHG Note was $10.1 million and $9.3 million, respectively. The effective interest rate on the SPHG Note, including accretion of the discount, is 27.8%. The following tables reflect the components of the SPHG Note:


					January 31, 2022		July 31, 2021
					(In thousands)
Carrying amount of equity component					$	8,200	$	8,200

Principal amount of note					$	14,940	$	14,940
Unamortized debt discount					(4,797)		(5,597)
Net carrying amount					$	10,143	$	9,343

	Three Months Ended January 31,				Six Months Ended January 31,
	2022		2021		2022		2021
	(In thousands)
Interest expense related to contractual interest coupon	$	286	$	287	$	572	$	573
Interest expense related to accretion of the discount	414		313		800		605
	$	700	$	600	$	1,372	$	1,178

On March 16, 2022, ModusLink, as borrower, entered into a new credit agreement with Umpqua Bank (the “Umpqua Revolver”), as lender and as agent. The Umpqua Revolver provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit and expires on March 16, 2024. Concurrent with signing the Umpqua Revolver, ModusLink submitted a notice of termination to MidCap for its MidCap Credit Agreement which was set to expire on December 31, 2022. ModusLink believes it will remain in compliance with the Umpqua Revolver’s covenants for the next twelve months.