XML 27 R16.htm IDEA: XBRL DOCUMENT v3.22.2.2
DEBT
 3 Months Ended
Oct. 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:
October 31,
2022		July 31,
2022
(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)
(3,450)(3,972)
Total debt, net$11,490 $10,968 
(a)Amounts include deferred debt issuance costs related to credit facilities of $67 thousand and $79 thousand as of October 31, 2022 and July 31, 2022, 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 March 1, 2024, 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 October 31, 2022, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of October 31, 2022, the remaining period over which the unamortized discount will be amortized is 16 months. As of October 31, 2022 and July 31, 2022, the net carrying value of the SPHG Note was $11.6 million and $11.0 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:
October 31,
2022		July 31,
2022
(In thousands)
Carrying amount of equity component $8,200 $8,200 
Principal amount of note$14,940 $14,940 
Unamortized debt discount(3,383)(3,893)
Net carrying amount$11,557 $11,047 
Three Months Ended
October 31,
20222021
(In thousands)
Interest expense related to contractual interest coupon$286 $286 
Interest expense related to accretion of the discount510 386 
Interest expense related to revolving credit facilities (see below)30 89 
$826 $761 
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 October 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 October 31, 2022, ModusLink had available borrowing capacity of $11.9 million and there was $0.6 million available for letters of credit.