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Convertible Notes | 6 Months Ended
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Jun. 30, 2020
Debt Disclosure [Abstract] |
Convertible Notes | 13. Convertible Notes On June 16, 2020, the Company issued $150,000 in aggregate principal amount of 4.25% Convertible Senior Notes due 2023 (the “Convertible Notes”) pursuant to an Indenture (the “Indenture”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”), in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended. The Company used approximately $23,850 of the net proceeds from the issuance to repurchase 6,445,949 shares of the Company’s common stock at a price of $3.70 per share. Key terms of the Convertible Notes are as follows:
| • |  | Maturity date : June 15, 2023, unless earlier converted, repurchased or redeemed.
| • |  | Interest rate of 4.25%: Payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2020.
| • |  | Conversion price of $5.92 : Convertible at an initial conversion rate of 168.9189 shares of the Company’s common stock, per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $5.92 per share, which represents a conversion premium of approximately 60% to the last reported sales price of $3.70 per share of the Company’s common stock on June 9, 2020, the day immediately preceding the pricing date ) .
| • |  | Conversion : Holders may convert at their option at any time prior to the close of business on the business day immediately preceding March 15, 2023 only under the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price of the Company’s common stock for at least 20 trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sales price of the Company’s common stock and the conversion rate on each such trading day; (iii) upon a notice of redemption delivered by the Company in accordance with the terms in the Indenture but only with respect to the Convertible Notes called (or deemed called) for redemption; or (iv) upon the occurrence of specified corporate events. On or after March 15, 2023 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time, regardless of the foregoing circumstances.
| • |  | Cash settlement of principal amount : Upon conversion, the Company will pay cash up to the aggregate principal amount of the Convertible Notes to be converted. At its election, the Company will also settle its conversion obligation in excess of the aggregate principal amount to the Convertible Notes being converted in either cash, shares of its common stock or a combination of cash and shares of its common stock.
| • |  | Redemption price of $7.70 : The Company may redeem for cash all or any portion of the notes, at its option, on or after June 20, 2021 and on or prior to the 55 th scheduled trading day immediately preceding the maturity date, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading
|  |  | days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption, at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding the redemption date. No sinking fund is provided for the Convertible Notes.
| • |  | Limited investor put rights : Holders of the Convertible Notes have the right to require the Company to repurchase for cash all or a portion of their notes at 100% of their principal amount, plus any accrued and unpaid interest, upon the occurrence of certain change of control transactions or liquidation, dissolution or common stock delisting events.
| • |  | Conversion rate increase in certain customary circumstances : In certain circumstances, conversions in connection with a “make-whole fundamental change” (as defined in the Indenture) or conversions of Convertible Notes called (or deemed called) for redemption may result in an increase to the conversion rate, provided that the conversion rate will not exceed 270.2702 shares of the Company’s common stock per $1,000 principal amount of the Convertible Notes (the equivalent of 40,540,530 shares of the Company’s common stock), subject to adjustment.
| • |  | Seniority and Security : The Convertible Notes are the Company’s senior unsecured obligations, but are subordinated in right of payment to the Company’s obligations to make certain redemption payments (if and when due) in respect of its Series A Non-Voting Convertible Preferred Stock (Note 14).
The Indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Convertible Notes outstanding may declare the entire principal amount of all the Convertible Notes to be repurchased, plus any accrued special interest, if any, to be immediately due and payable. The following table provides a summary of the carrying value of the Convertible Notes at June 30, 2020:
Amount borrowed |  | $ | 150,000 |
Less: Unamortized debt discount and issuance costs |  |  | (8,521 | )
Carrying amount |  | $ | 141,479 |
Effective interest rate (1) |  |  | 6.23 | %
(1) | Includes amortization of discount arising from the bifurcation of the conversion option and issuance costs allocated to the Convertible Notes.
Convertible instruments are required to be separated into their liability and equity components by allocating the issuance proceeds to each of those components. The liability component for convertible instruments that qualify for a derivative scope exception (applicable to the Convertible Notes) is allocated proceeds equal to the estimated fair value of similar debt without the conversion option. The difference between the gross proceeds received from the issuance of the Convertible Notes and the proceeds allocated to the liability component represents the residual amount that is recorded in additional paid-in capital. The debt discount arising from the recognition of this residual amount is amortized as interest expense over the life of the Convertible Notes. The Company estimated the fair value of the liability component to be $145,847 , which represents the present value of the future contractual payments, discounted using the Company’s estimated nonconvertible debt borrowing rate of 5.33% (classified as level 2 in the fair value hierarchy) on the pricing date. The excess of the gross proceeds received over the estimated fair value of the liability component totaling $4,153 was allocated to the conversion option (along with a proportional share of issuance costs totaling $128) and was recorded in additional paid-in capital, net of deferred taxes. Interest expense recognized during the three months ended June 30, 2020 was $377 and is inclusive of the amortization of the discount arising from the bifurcation of the conversion option and issuance costs allocated to the Convertible Notes. Interest payable of $377 at June 30, 2020 is included in accounts payable and other liabilities on the Consolidated Balance Sheets. The fair value of the Convertible Notes (classified as Level 2 in the fair value hierarchy) was $142,202 at June 30, 2020. The if-converted value of the Convertible Notes did not exceed the principal amount at June 30, 2020.

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