DEBT

3 Months Ended

Oct. 31, 2024

Debt Disclosure [Abstract]

DEBT

DEBT

The components of debt are presented in the table below:

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

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.

The SPHG Note matured on September 1, 2024 and the Company paid off the outstanding principal balance of $12.9 million plus accrued interest of $0.5 million for the SPHG Note upon its maturity. As such, the balance of the SPHG Note was zero as of October 31, 2024. As of July 31, 2024, the principal amount of the note was $12.9 million, and the fair value of the note was $12.9 million. As of May 1, 2023, or the date of the Exchange Transaction, the Company accounted 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 until the note matured. Refer to Note 17 - "Fair Value Measurements" for further information.

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

	Three Months Ended October 31,
	2024		2023
	(In thousands)
Interest expense related to contractual interest coupon on the SPHG Note	$	111	$	247
Total interest expense	$	111	$	247

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 October 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 Form 10-Q. As of October 31, 2024, ModusLink had available borrowing capacity of $11.9 million and there was $0.6 million outstanding letters of credit.