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v3.25.1

Debt | 9 Months Ended
--- | ---
Feb. 23, 2025
Debt Disclosure [Abstract] |
Debt | Debt The following table presents the components of debt:
| February 23, 2025 |  | May 26, 2024
Debt principal: |  |  |
Term loan credit facility with related party | $ | 169,287 |  |  | $ | 157,313 |
Revolving credit facility | 2,500 |  |  | 19,691 |
Leaseback liability with related party | 6,571 |  |  | 7,150 |
Finance lease liability | 6,003 |  |  | 3,385 |
Debt principal | 184,361 |  |  | 187,539 |
Unamortized debt discount on term loan credit facility with related party | (59,422) |  |  | (62,871) |
Total debt, net of discounts | $ | 124,939 |  |  | $ | 124,668 |
Classification on consolidated balance sheet: |  |  |
Accrued expenses and other current liabilities | $ | 930 |  |  | $ | 943 |
Debt, net of current portion | 8,346 |  |  | 22,906 |
Debt, net of current portion, related party | 115,663 |  |  | 100,819 |
Total debt, net of discounts | $ | 124,939 |  |  | $ | 124,668 |
The following table presents future minimum principal payments:
Remainder of fiscal year 2025 | $ | 231 |
Fiscal year: |
2026 | 937 |
2027 | 967 |
2028 | 3,501 |
2029 | 170,325 |
2030 | 1,052 |
Thereafter | 7,348 |
Debt principal | $ | 184,361 |
The following table presents the classification of interest in the consolidated financial statements:
| Three months ended |  | Nine months ended
| February 23, 2025 |  | February 25, 2024 |  | February 23, 2025 |  | February 25, 2024
Expensed in statement of operations | 5,481 |  |  | 4,289 |  |  | 16,314 |  |  | 12,300 |
Capitalized to property, plant and equipment | 798 |  |  | 1,187 |  |  | 2,254 |  |  | 3,250 |
Total interest incurred | $ | 6,279 |  |  | $ | 5,476 |  |  | $ | 18,568 |  |  | $ | 15,550 |
As of February 23, 2025, the Company was in compliance with all financial covenants under the Term Loan Credit Facility and Revolving Credit Facility. Term Loan Credit Facility On May 22, 2023, the Company entered into a Credit and Guaranty Agreement with Alcon Research, LLC ("Alcon," collectively the “Term Loan Credit Facility”). The Term Loan Credit Facility refinanced in full all obligations of the Company and their subsidiaries under its prior term loan credit facility. This facility has been amended three times for the purpose of (i) enhancing and clarifying certain reporting requirements; and (ii) most recently on November 26, 2024, to provide limited waivers of potential events of default and permit the Company to retain cash proceeds from the recent sale of the isolator-filler (see note 6). The Company initially made $142,270 of term loan borrowings under the facility. The term loans bear interest at a fixed rate of 10% per annum payable-in-kind until the third anniversary of the closing date, following which interest is payable at a fixed rate of 3% per annum in cash with the remainder payable-in-kind. The Company may elect to pay any amounts of interest in cash instead of in-kind. The obligations under the Term Loan Credit Facility mature on May 22, 2029. Term loan principal generally cannot be repaid prior to the maturity date except as follows: (i) the Company is permitted to make voluntary prepayments beginning May 22, 2028 at a rate of 110%; (ii) Alcon or the Company can require prepayment upon a change in control at a rate of 115%; (iii) Alcon can require prepayment upon uncured material default of its supply agreement with the Company at a rate of 120%; (iv) sales of certain collateral assets, with specific exception, require the Company to prepay the term loans in the amount of proceeds received. The Term Loan Credit Facility contains customary affirmative covenants including, but not limited to, financial reporting requirements and maintenance of existence requirements and negative covenants, including, but not limited to, limitations on the incurrence of debt, liens, investments, restricted payments, restricted debt payments, and affiliate transactions. The Term Loan Credit Facility contains one financial covenant, a minimum liquidity covenant, requiring $4,000 of Consolidated Liquidity (as defined in the Term Loan Credit Facility) as of May 28, 2023 and as of the end of the first, second and third fiscal quarters of 2024 of the Company. During the fourth quarter of fiscal year 2024, the minimum liquidity covenant was increased to $4,500. As of February 23, 2025, the Company’s effective annual interest rate under the Term Loan Credit Facility was 20.9%. Borrowings are guaranteed and secured by substantially all of the Company’s consolidated assets. Pursuant to an intercreditor agreement between Alcon and BMO (as defined below), Alcon is generally entitled to a priority claim with respect to property, plant and equipment, intellectual property and all other collateral to which BMO does not have a priority claim, as described further below. The facility contains customary financial covenants and events of default under which the obligations thereunder could be accelerated and / or the interest rate increased in specified circumstances. Revolving Credit Facility On December 31, 2020, the Company entered into a revolving credit agreement with BMO Harris Bank, N.A. ("BMO," collectively the "Revolving Credit Facility"). The Revolving Credit Facility has been amended nine times for the purpose of (i) providing limited waivers from historical events of default; (ii) as a result of discontinued operations, reducing the maximum committed amount to its current level of $40,000; (iii) creating an additional $2,500 borrowing tranche beyond the maximum committed amount that must be repaid prior to any other borrowings (the "FILO Tranche"); and (iv) most recently on November 26, 2024. extending the maturity date to November 26, 2027, reducing the applicable interest rates and making certain other changes to the financial and reporting covenants. The Company can make ordinary borrowings under the facility in an amount up to the lesser of (i) the maximum committed amount and (ii) a specified borrowing base calculated as of the end of each month. The monthly borrowing base is determined using specified percentages of qualifying accounts receivable and inventory that serve as collateral under the facility, net of reserves. As of February 23, 2025, the Company's borrowing base was $25,500, and the Company had no outstanding borrowings. These borrowings, when outstanding, bear interest based on an average daily SOFR rate plus a spread of 2.50% per annum for a total interest rate of 8.67% as of February 23, 2025. The facility also bears a commitment fee on unused availability of 0.375% per annum. As of February 23, 2025, the Company has a $2,500 borrowing under the FILO Tranche. This borrowing bears interest at the same rate as ordinary borrowings as described above. The following table presents average borrowings and interest rates for the periods presented:
| Three months ended |  | Nine months ended
| February 23, 2025 |  | February 25, 2024 |  | February 23, 2025 |  | February 25, 2024
Average borrowings | $ | 4,500 |  |  | $ | 18,757 |  |  | $ | 12,023 |  |  | $ | 19,551 |
Weighted average interest rate | 8.72 | % |  | 10.97 | % |  | 9.08 | % |  | 10.32 | %
Borrowings are guaranteed and secured by substantially all of the Company’s consolidated assets. Pursuant to an intercreditor agreement between Alcon and BMO, BMO is generally entitled to a priority claim with respect to cash and cash equivalents, accounts receivable and inventory, subject to certain specific exclusions. The facility contains customary financial covenants and events of default under which the obligations thereunder could be accelerated and / or the interest rate increased in specified circumstances. Leaseback liability with related party On May 22, 2023, the Company entered into an equipment sale and leaseback transaction with Alcon. The sale and leaseback did not meet the requirements for sale-leaseback accounting, which resulted in the creation of a $7,730 leaseback liability representing the Company's total payment obligation under the lease. The lease expires on the earlier of May 22, 2033 or the date on which the Company exercises its option to repurchase the leased equipment, at which time the Company shall automatically repurchase the equipment for a nominal amount. During the lease term, the Company is obligated to make quarterly principal payments to Alcon of $193 plus interest at a rate of 6% per annum on the unpaid principal balance. The lease contains terms and provisions that are generally customary for a commercial lease of this nature, including obligations relating to the use, operation and maintenance of the equipment. During the term of the lease, Alcon is not permitted to sell or encumber the equipment. Alcon is only entitled to cancel the lease in the event of insolvency, liquidation or bankruptcy; its remedies for other breaches of the lease are limited to monetary damages.

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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/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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