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Debt | 3 Months Ended
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Mar. 31, 2018
Transfers And Servicing [Abstract] |
Debt | 10. DEBT Debt consisted of the following (in thousands):
|  | March 31, 2018 |  |  | December 31, 2017 |
JGB Debt |  | $ | — |  |  | $ | 7,743 |
Danske Bank Credit Facility |  |  | 461 |  |  |  | 6,763 |
SSP Primers Loan |  |  | — |  |  |  | 1,215 |
Current portion of long-term debt |  | $ | 461 |  |  | $ | 15,721 |
JGB Debt |  | $ | — |  |  | $ | 14,168 |
Danske Bank Term Loan |  |  | 5,622 |  |  |  | — |
FastPartner Subordinated Promissory Notes |  |  | 2,363 |  |  |  | 2,400 |
Al Amoudi Subordinated Promissory Notes |  |  | 1,744 |  |  |  | 1,770 |
Long-term debt, net of current portion |  | $ | 9,729 |  |  | $ | 18,338 |
Unamortized debt discount and issuance costs as of March 31, 2018 and December 31, 2017 were zero and $4.6 million, respectively. Total interest accrued on debt as of March 31, 2018 and December 31, 2017 was $0.3 million and $0.3 million, respectively. The long-term accrued interest balance on March 31, 2018 was $0.3 million, and was recorded in other liabilities in the condensed consolidated balance sheets. The current accrued interest balance of $0.1 million and long-term accrued interest balance of $0.2 million as of December 31, 2017, were recorded in accrued and other liabilities and in other liabilities long-term, respectively, in the condensed consolidated balance sheets. As of March 31, 2018, future debt maturities were as follows (in thousands):
Years Ending December 31, |  | Amount |
Remainder of 2018 |  | $ | 6,083 |
2019 |  |  | 4,107 |
Total debt maturities |  |  | 10,190 |
Less: current portion of long-term debt |  |  | (461 | )
Long-term debt, net carrying value |  | $ | 9,729 |
On April 17, 2018, the Company entered into a credit agreement with Perceptive (refer to Note 17) for an initial term loan of $15.0 million. Proceeds from the Perceptive credit agreement were used to repay existing outstanding debt. As of March 31, 2018, the Company classified all outstanding debt, except the Danske Credit Facility of $0.5 million, as non-current in its condensed consolidated balance sheets in accordance with the debt classification guidance related to subsequent refinancing arrangements. JGB Debt On March 15, 2017, the Company entered into a Securities Purchase Agreement with JGB pursuant to which the Company issued to JGB the JGB debenture (the “Debentures”) with an aggregate principal amount of $27.8 million and warrants to purchase shares of the Company’s common stock (the “JGB Warrants”) for net proceeds of $24.0 million (the “Financing”). The Company used $11.2 million of the net proceeds from the Financing to repay its existing indebtedness under the Loan Agreement with East West Bank and was required to maintain restricted cash of $9.4 million. Under the Securities Purchase Agreement, the Debentures would have matured on February 28, 2020, accrued interest at 9.5% per year and were convertible into an aggregate of approximately 6,092,105 shares of the Company’s common stock at a price of $4.56 per share (the “Conversion Price”), subject to adjustment for accrued and unpaid interest and upon the occurrence of certain transactions, at the holder’s option. Additionally, after September 1, 2017, upon the satisfaction of certain conditions, including the volume weighted average price of the Company’s common stock exceeding 250% of the Conversion Price for twenty consecutive trading days, the Company could have required that the Debentures be converted into shares of the Company’s common stock, subject to certain limitations. Commencing on March 1, 2018, each of the holders of the Debentures had the right, at its option, to require the Company to redeem up to $937,500 of the outstanding principal amount of its Debenture per month. The Company was required to promptly, but in any event no more than one trading day after the holder delivers a redemption notice to the Company, pay the applicable redemption amount in cash or, at the Company’s election and subject to certain conditions, in shares of the Company’s common stock. If the Company elected to pay the redemption amount in shares of the Company’s common stock, then the shares would have been delivered based on a price equal to the lowest of (a) 88% of the average of the three lowest volume weighted average prices of the Company’s common stock over the prior 20 trading days, (b) 88% of the prior trading day’s volume weighted average price, or (c) the Conversion Price. After either a change of control transaction, as defined in the Debentures, or February 28, 2018, subject to the satisfaction of certain conditions, the Company could have redeemed all of the then outstanding principal amount of the Debentures for cash by paying the outstanding principal balance, accrued and unpaid interest, and a payment premium. The payment premium would have been calculated by multiplying the outstanding balance and the following percentage: (i) 15% if the Debentures were prepaid on or prior to March 1, 2018, (ii) 8% if the Debentures were prepaid after March 1, 2018 but prior to March 1, 2019, and (iii) 5% if the Debentures were prepaid on or after March 1, 2019. The Company’s obligations under the Debentures could have been accelerated upon the occurrence of certain events of default as specified in the agreement. In the event of default and acceleration of the Company’s obligations, the Company would have been required to pay (i) 115% of all amounts of principal and interest then outstanding under the Debentures in cash if the Debentures were accelerated prior to March 1, 2018, (ii) 108% of all amounts of principal and interest then outstanding under the Debentures in cash if the Debentures were accelerated after March 1, 2018, but prior to March 1, 2019, and (iii) 105% of all amounts of principal and interest then outstanding under the Debentures in cash if the Debentures were accelerated after March 1, 2019. The Company’s obligations under the Debentures were secured under a Security Agreement by a senior lien on all of the Company’s assets, other than its interest in CareDx International AB (formerly known as Allenex AB), which was subject to a negative pledge prohibiting the incurrence of additional or replacement debt. The Debentures contained customary affirmative and restrictive covenants and representations and warranties, including financial reporting obligations, a restriction on the Company’s ability to pay cash dividends on its common stock and limitations on indebtedness, liens, investments, distributions, transfers, corporate changes, deposit accounts and subsidiaries. The Company was also required to maintain a minimum cash amount at all times, achieve commercialization of AlloSure by a certain date and achieve certain gross profit targets for sales of its AlloMap product. In connection with the Financing, on March 15, 2017, the Company and the Purchasers entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company agreed to prepare and file one or more registration statements with the SEC for the purpose of registering for resale any shares of Common Stock that may be issued by the Company upon the conversion or redemption of the Debentures or the exercise of the JGB Warrants. The Debentures included certain embedded derivatives that required bifurcation, including settlement and penalty provisions. The compound embedded derivatives were remeasured at each reporting period and the change in fair value was recognized in the consolidated statements of operations. See also Note 4, “Fair Value Measurements”. The following table summarizes the Company’s carrying value of the JGB debt (in thousands) on the March 15, 2017 issuance date:
|  | March 15, 2017 |
Debt principal |  | $ | 27,780 |
Less: Issuance cost |  |  | (998 | )
Original issue discount |  |  | (2,780 | )
Original warrant valuation |  |  | (900 | )
Embedded Derivative Liability |  |  | (2,290 | )
Total debt discount |  |  | (6,968 | )
Carrying Value |  | $ | 20,812 |
As a result of the issuance of 1,022,544 shares of the Company’s common stock issued at a price per share equal to $1.12 pursuant to the amendments to the Conditional Share Purchase Agreements, the conversion price of the Debentures decreased from $4.56 per share to $4.40 per share, effective July 3, 2017. As a result of the 2017 Public Offering in accordance with the anti-dilution provisions in the Debentures, effective October 5, 2017, the conversion price of the Debentures decreased from $4.40 to $4.34 per share. On October 5, 2017, JGB elected to convert $1.25 million of outstanding principal under the Debentures into shares of common stock. Accordingly, the Company issued 288,022 shares of common stock to JGB at a price per share of $4.34. As a result of the sale of the 651,240 shares of common stock pursuant to the underwriters’ full exercise of their option to purchase additional shares in accordance with the anti-dilution provisions in the Debentures, effective October 10, 2017, the conversion price of the Debentures were decreased from $4.34 per share to $4.33 per share. As of December 31, 2017, the JGB debt had an outstanding principal balance of $26.5 million. On March 1, 2018, the Company notified JGB of its intent to prepay on April 13, 2018 in full the outstanding principal and interest under the Debentures. Pursuant to the terms of the Debentures, on April 13, 2018, the Company would have been obligated to pay the full amount of the outstanding principal balance of the Debentures, plus accrued and unpaid interest thereon and a prepayment premium equal to 8% of the outstanding principal balance in cash. In February and March 31, 2018, JGB converted the remaining $26.7 million of principal and accrued interest of the JGB debt into an aggregate of 6,161,331 shares of the Company’s common stock. In connection with these conversions in the three months ended March 31, 2018, the Company recognized $6,000 to common stock and $38.8 million to additional paid in capital; the unamortized debt discount of $2.7 million was extinguished; and the compound derivative liability of $12.1 million was also extinguished. The JGB Debt conversion resulted in a $2.8 million loss on debt extinguishment that was included in other expense, net in the condensed consolidated statements of operations. Danske Bank Term Loan and Credit Facility On June 25, 2013, Allenex entered into a term loan facility (the “Term Loan Facility”) with Danske in an aggregate principal amount of up to SEK 71,000,000 (approximately $8.8 million). The Term Loan Facility was available for utilization in advances of a minimum of SEK 5,000,000 (approximately $0.6 million) and if more, integral multiples of SEK 1,000,000 (approximately $0.1 million). The interest rate applicable to each advance was the percentage rate per annum calculated as the aggregate of (i) Stockholm Interbank Offered Rate (“STIBOR”) (as defined in the Term Loan Facility) and (ii) the Margin (as described in the Term Loan Facility) at 3% conditional on the fulfillment of certain criteria. In March 2015, Allenex entered into a first amendment to the Term Loan Facility, pursuant to which additional loans were granted. In August 2015, Allenex entered into a second amendment to the Term Loan Facility, pursuant to which the term of the Term Loan Facility was extended. In December 2015, Allenex entered into a waiver and amendment agreement relating to the Term Loan Facility, pursuant to which the change of control provision was waived and amended. In March 2016, Allenex entered into another amendment to the Term Loan Facility, which modified the repayment schedule for advances under the Term Loan Facility. Under this Term Loan Facility, SEK 47,000,000 (approximately $5.6 million) was outstanding as of March 31, 2018 and was due on June 30, 2018. This was classified as a current debt as of March 31, 2018. On June 18, 2015, Allenex also entered into a short term credit facility (“Credit Facility”) with Danske with total available credit of SEK 8,000,000 (approximately $1.0 million). As of August 4, 2016, the available credit under the Credit Facility with Danske was increased to SEK 10,000,000 (approximately $1.2 million). As of March 31, 2018, the total outstanding balance due to Danske under the Credit Facility was approximately SEK 3,850,000 (approximately $0.5 million), and was due on June 30, 2018. A quarterly debt covenant in the Term Loan Facility with Danske was violated on March 31, 2017, June 30, 2017, and September 30, 2017. The Company obtained a waiver for these violations. The waiver was conditional upon, among other things, the Company making a principal repayment of SEK 6,000,000 (approximately $0.7 million) by October 31, 2017. This amount was paid on October 31, 2017. The Company was not in compliance with certain debt covenants as of December 31, 2017 or March 31, 2018. Refer to Note 17 for details regarding the Company’s repayment of the Danske Term Loan and Credit Facility using the proceeds from the Perceptive loan on April 17, 2018. FastPartner Subordinated Promissory Notes On June 28, 2013, Allenex issued a SEK 9,400,000 (approximately $1.1 million) subordinated promissory note to FastPartner, which had an interest rate of 10.00%. On December 29, 2015, Allenex issued a SEK 2,000,000 (approximately $0.2 million) subordinated promissory note to FastPartner, which had an annual interest rate of 10.00%. On March 7, 2016, Allenex issued a SEK 4,000,000 (approximately $0.5 million) subordinated promissory note to FastPartner, which had an annual interest rate of 10.00%. Pursuant to an intercreditor agreement, until the Term Loan Facility with Danske is repaid, FastPartner may not demand or receive payment of its subordinated promissory note, or foreclose on any collateral securing Allenex’s obligations under the subordinated promissory note, without Danske’s prior written consent. Allenex’s obligations under the promissory note are secured by a pledge of Allenex shares to FastPartner. The full amount of the subordinated promissory note was due July 1, 2017. On July 1, 2017, the Company entered into a note agreement with FastPartner (the “FastPartner Note Agreement”) pursuant to which, among other things, Allenex and FastPartner agreed that all amounts owed under the above subordinated promissory notes would be governed by the FastPartner Note Agreement and to defer repayment of the principal outstanding amount of SEK 15,400,000 (approximately $1.9 million) plus accrued interest of $0.5 million until March 31, 2019. Interest began accruing on such amount at a rate of 10% per annum, and in the event the Company makes any cash amortization repayments to JGB of the JGB debt, or any replacement debt, Allenex will repay in cash a portion of the amount outstanding under the FastPartner Note Agreement equal to 8% of any such cash amortization repayment. As of each of March 31, 2018 and December 31, 2017, the principal outstanding amount remained at SEK 19,757,000 (approximately $2.4 million). Refer to Note 17 for details regarding the Company’s repayment of the FastPartner Note Agreement using proceeds from the Perceptive loan on April 17, 2018. Mohammed Al Amoudi Subordinated Promissory Note On June 28, 2013, Allenex issued a SEK 10,600,000 (approximately $1.2 million) subordinated promissory note to Mohammed Al Amoudi, which provides for an annual interest rate of 10.00%. Pursuant to an intercreditor agreement, until the Term Loan Facility with Danske is repaid, Mohammed Al Amoudi may not demand or receive payment of his subordinated promissory note, or foreclose on any collateral securing Allenex’s obligations under the subordinated promissory note, without Danske’s prior written consent. Allenex’s obligations under the promissory note are secured by a pledge of Allenex shares to Mohammed Al Amoudi. The full amount of the subordinated promissory note was due July 1, 2017. On July 1, 2017, the Company entered into a note agreement with Mohammed Al Amoudi (the “Al Amoudi Note Agreement”) pursuant to which, among other things, Allenex and Mohammed Al Amoudi agreed to defer repayment of the principal outstanding amount of SEK 10,600,000 (approximately $1.3 million) plus accrued interest of $0.5 million until March 31, 2019. Interest began accruing on such amount at a rate of 10% per annum, and in the event the Company makes any cash amortization repayments to JGB of the JGB debt, or any replacement debt, Allenex will repay in cash a portion of the amount outstanding under the Al Amoudi Note Agreement equal to 6% of any such cash amortization repayment. As of each of March 31, 2018 and December 31, 2017, the principal outstanding amount remained at SEK 14,575,000 (approximately $1.7 million). Refer to Note 17 for details regarding the Company’s repayment of the Al Amoudi Note Agreement using proceeds from the Perceptive loan on April 17, 2018. Loan Agreement with SSP Primers Aktieboulag On February 25, 2015, Allenex entered into a SEK 14,000,000 (approximately $1.7 million) loan agreement with SSP Primers Aktieboulag, pursuant to which SEK 4,000,000 (approximately $0.5 million) was paid on March 7, 2016. The loan amount outstanding as of December 31, 2017 was SEK 10,000,000 (approximately $1.2 million) plus accrued interest of SEK 650,000 (approximately $0.1 million) and was fully paid on February 26, 2018.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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