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Term Notes Payable
 9 Months Ended
Sep. 30, 2024
Term Notes Payable  
Term Notes Payable

11. Term Notes Payable

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2024 Term Loan

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On July 28, 2024, the Company entered into a Second Amended and Restated Loan Agreement by and among the Company, certain of its subsidiaries party thereto as guarantors, BioPharma Credit PLC as collateral agent, and BioPharma Credit Investments V (Master) LP and BPCR Limited Partnership (investment funds managed by Pharmakon Advisors, LP) as the lenders (the “Lenders”) party thereto (the “2024 Loan Agreement”). The 2024 Loan Agreement provided for a $645,833 secured term loan (the “2024 Term Loan”), consisting of a $320,833 initial term loan and a $325,000 delayed draw term loan. On the effective date of the 2024 Loan Agreement, the Company used the proceeds of the initial term loan to refinance in full all outstanding indebtedness under the 2022 Term Loan. On the closing date of the Ironshore Acquisition, the Company used the proceeds of the delayed draw term loan to fund a portion of the consideration to complete the Ironshore Acquisition and the 2024 Loan Agreement. The Company will use the remainder for general corporate purposes.

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The 2024 Loan Agreement was accounted for as a debt modification as there was no change in the debtor or creditor and the present value of the cash flows under the terms of the new debt instrument were not at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. The Company concluded that the present value of the cash flows under the terms of the new debt instrument were not at least 10% different from the present value of the remaining cash flows under the terms of the original instrument. Accordingly, the new effective interest rate was determined based on the carrying amount of the original debt instrument adjusted for the increase in debt, and transaction fees of $126 were expensed. In connection with the 2024 Loan Agreement, the Company paid loan commitment and other fees to the lender of $11,825, which together with preexisting debt issuance costs and note discounts of $4,192 are amortized over the term of the loan using the effective interest rate.

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The 2024 Term Loan is scheduled to mature on July 28, 2029 (provided, however, that if the aggregate principal amount outstanding under the 2029 Convertibles Notes is more than $50,000 as of November 18, 2028, then the 2024 Term Loan will mature on November 18, 2028) and is guaranteed by certain of the Company’s material subsidiaries. The 2024 Term Loan is secured by substantially all of the assets of the Company and its material subsidiaries. Until September 30, 2024, the 2024 Term Loan bore an annual interest rate equal to term SOFR plus a spread adjustment of 0.13% (subject to a 1.20% floor), plus a margin of 7.50%. Following September 30, 2024, the 2024 Term Loan bears an annual interest rate equal to term SOFR plus a spread adjustment of 0.13% (subject to a 4.00% floor), plus a margin of 4.50% per annum, and is subject to quarterly amortization payments equal to 2.50% of the original funded amount of the 2024

Term Loan. The Company paid a one-time fee of 1.25% of the initial term loan principal amount on July 29, 2024 and paid a one-time fee of 2.25% of the delayed draw term loan principal amount on September 3, 2024. As of September 30, 2024, the contractual interest rate was 13.0%. The Company is required to pay the $645,833 principal balance under the 2024 Term Loan in equal quarterly installments of $16,146 over the remaining four years with a $387,500 final payment.

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The 2024 Loan Agreement contains certain covenants and obligations of the parties, including, without limitation, covenants that limit the Company’s ability to incur additional indebtedness or liens, make acquisitions or other investments or dispose of assets outside the ordinary course of business. Failure to comply with these covenants would constitute an event of default under the 2024 Loan Agreement, notwithstanding the Company’s ability to meet its debt service obligations. The 2024 Loan Agreement also includes various customary remedies for secured lenders following an event of default, including the acceleration of the outstanding amounts under the 2024 Loan Agreement and enforcement upon the collateral securing obligations under the 2024 Loan Agreement.

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The following table presents the total interest expense recognized related to the 2024 Term Loan during the three and nine months ended September 30, 2024 and 2023.

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Three Months Ended September 30,

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Nine Months Ended September 30,

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2024

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2023

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2024

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2023

Contractual interest expense

$

13,936

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$

16,746

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$

39,691

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$

52,089

Amortization of debt discounts and debt issuance costs

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947

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1,821

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3,745

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5,808

Total interest expense

$

14,883

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$

18,567

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$

43,436

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$

57,897

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As of September 30, 2024, the effective interest rate on the 2024 Term Loan was 10.9%, which includes the impact of the reduction in the stated interest rate in the contract from 7.50% to 4.50% as part of the debt modification.

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As of September 30, 2024, scheduled principal repayments under the 2024 Term Loan were as follows:

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Years ended December 31,

Principal Payments

2024

$

16,146

2025

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64,583

2026

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64,583

2027

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64,583

2028

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435,938

Total before unamortized discount and issuance costs

$

645,833

Less: unamortized discount and issuance costs

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(15,534)

Term notes carrying value

$

630,299

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