DEBT

12 Months Ended

Jul. 31, 2024

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:

	Successor
	July 31, 2024		July 31, 2023
	(In thousands)
Unsecured
7.50% Convertible Senior Note due September 1, 2024	$	12,903	$	12,461
Credit Facilities
Umpqua Revolver	—		—
Total debt, net	$	12,903	$	12,461

(a) As of May 1, 2023, the Company will account for the SPHG Note under the fair value option..

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"). The SPHG Note was amended on March 9, 2023 (the "Amendment Date"), to extend the maturity date to September 1, 2024. In addition, the Company repaid $2.0 million in principal amount of the SPHG Note during fiscal year 2023. Refer to Note 22 - "Fair Value Measurements" for further information.

As of both July 31, 2024 and 2023, the principal amount of the note was $12.9 million. As of May 1, 2023, or the date of the Exchange Transaction, the Company accounts for the SPHG Note under the fair value option in order to conform with Steel Holdings' basis of accounting, with changes in fair value recognized in earnings. Refer to Note 22 - "Fair Value

Measurements" for further information. The fair value of the SPHG Note was reported as a current liability on the condensed consolidated balance sheets beginning in the first quarter of fiscal year 2024, as its maturity is less than twelve months.

The SPHG Note matured on September 1, 2024 and the Company paid off the outstanding principal and accrued interest for the SPHG Note upon its maturity.

Below is a reconciliation of interest expense related to the SPHG Note to total interest expense:

	Successor				Predecessor
	Fiscal Year Ended July 31,		May 1 to July 31,		August 1, 2022 to April 30,
	2024		2023		2023
	(In thousands)
Interest expense related to contractual interest coupon on the SPHG Note	$	996	$	261	$	844
Interest expense related to accretion of the discount on the SPHG Note(a)	—		—		1,688
Interest expense related to revolving credit facilities (see below)	—		—		36
Other	—		4		20
Total interest expense	$	996	$	265	$	2,588

(a) Prior to the date of the Exchange Transaction, the discount on the SPHG Note was accreted using the effective interest rate method. The effective interest rate on the SPHG Note was 27.8% prior to the SPHG Note Amendment, and was 23.0% subsequent to the SPHG Note Amendment.

Umpqua Revolver

ModusLink, as borrower, is party to a revolving credit agreement with Umpqua Bank as lender and as agent, which provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit (collectively, the "Umpqua Revolver"). On May 1, 2024, ModusLink, entered into a Second Amendment to the Umpqua Revolver (the “Second Amendment”). Among other things, the Second Amendment (i) extended the maturity date with respect to revolving loans from March 31, 2025 to March 31, 2026, (ii) removed certain adjustments in the definition of “Adjusted EBITDA” as set forth in the Umpqua Revolver, (iii) increased the minimum Adjusted Tangible Net Worth (as defined in the credit agreement) and (iv) removed certain caps and conditions on ModusLink’s ability to pay dividends.

As of July 31, 2024, 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 from the filing of this Annual Report. As of July 31, 2024, ModusLink had available borrowing capacity of $11.9 million and there was $0.6 million outstanding letters of credit.