DEBT

12 Months Ended

Jul. 31, 2022

Debt Disclosure [Abstract]

DEBT

DEBT

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

	July 31,
	2022		2021
	(In thousands)
Unsecured
7.50% Convertible Senior Note due March 1, 2024	$	14,940	$	14,940
Credit Facilities
Umpqua Revolver	—		—
Less: unamortized discounts and issuance costs(a)	(3,972)		(5,793)
Total debt, net	$	10,968	$	9,147

(a) Amounts include deferred debt issuance costs related to credit facilities of $79 thousand and $196 thousand as of July 31, 2022 and July 31, 2021, respectively, which are presented in Other Assets.

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 maturity date of the SPHG Note, 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 July 31, 2022, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of July 31, 2022, the remaining period over which the unamortized discount will be amortized is 19 months. As of July 31, 2022 and July 31, 2021, the net carrying value of the SPHG Note was $11.0 million and $9.3 million, respectively. As of July 31, 2022 and July 31, 2021, 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:

	July 31,
	2022		2021
	(In thousands)
Carrying amount of equity component	$	8,200	$	8,200
Principal amount of note	$	14,940	$	14,940
Unamortized debt discount	(3,893)		(5,597)
Net carrying amount	$	11,047	$	9,343

During the fiscal years ended July 31, 2022 and 2021, the Company recognized interest expense associated with the SPHG Note as follows:

	Fiscal Year Ended July 31,
	2022		2021
	(In thousands)
Interest expense related to contractual interest coupon	$	1,136	$	1,136
Interest expense related to accretion of the discount	1,704		1,290
	$	2,840	$	2,426

Umpqua Revolver

On March 16, 2022, ModusLink, as borrower, entered into a new credit agreement with Umpqua Bank 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 Financial Trust for its $12.5 million revolving credit facility (the “MidCap Credit Facility”), which was set to expire on December 31, 2022. There was no balance outstanding on the Midcap Credit Facility at the time of its termination. As of July 31, 2022, ModusLink was in compliance with the Umpqua Revolver's covenants, and believes it will remain in compliance with the Umpqua Revolver’s covenants for the next twelve months. As of July 31, 2022, ModusLink had available borrowing capacity of $11.9 million and there was $0.6 million outstanding for letters of credit.

The remaining interest expense of $0.3 million and $0.2 million recorded for the fiscal years ended July 31, 2022 and 2021 relate to bank fees for the Umpqua Revolver and MidCap Credit Facility, and bank fees for the MidCap Credit Facility, respectively.