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Debt | 12 Months Ended
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Dec. 31, 2016
Debt Disclosure [Abstract] |
Debt | Short-Term Borrowings DigiCore Secured Banking Facility DigiCore has a secured banking facility with Absa Bank Limited in South Africa (“Absa”), which had a maximum borrowing capacity of $1.7 million at December 31, 2016. The facility bears interest at the South Africa prime interest rate less 0.10% (10.40% at December 31, 2016) and is subject to renewal annually in April. At December 31, 2016 and 2015, $1.7 million and $1.5 million, respectively, was outstanding under this facility. DigiCore Secured Overdraft Facility DigiCore has a secured overdraft facility with Grindrod Bank Limited in South Africa, which had a maximum borrowing capacity of $1.5 million at December 31, 2016. The facility bears interest at the South Africa prime interest rate plus 1.00% (11.50% at December 31, 2016), requires monthly interest and, in certain instances, minimum principal payments. The facility is subject to renewal annually in September. At December 31, 2016 and 2015, $1.5 million and $1.8 million, respectively, was outstanding under this facility. Long-Term Debt Revolving Credit Facility On October 31, 2014, the Company and one of its subsidiaries entered into a five-year senior secured revolving credit facility in the amount of $25.0 million (the “Revolver”) with Wells Fargo Bank, NA, as lender. Concurrently with the acquisition of FW, the Company amended the Revolver to include FW as a borrower and Loan Party, as defined by the agreement. On November 17, 2015, the Revolver was amended to increase the maximum borrowing capacity to $48.0 million. The amount of borrowings that may be made under the Revolver is based on a borrowing base comprised of a specified percentage of eligible receivables. If, at any time during the term of the Revolver, the amount of borrowings outstanding under the Revolver exceeds the borrowing base then in effect, the Company is required to repay such borrowings in an amount sufficient to eliminate such excess. The Revolver includes $3.0 million available for letters of credit, $0.7 million of which was available for letters of credit at December 31, 2016. The Company may borrow funds under the Revolver from time to time, with interest payable monthly at a base rate determined by using the daily three month LIBOR rate, plus an applicable margin of 3.00% to 3.50% depending on the Company’s liquidity as determined on the last day of each calendar month. The Revolver is secured by a first priority lien on substantially all of the assets of the Company and certain of its subsidiaries, subject to certain exceptions and permitted liens. The Revolver includes customary representations and warranties, as well as customary reporting and financial covenants. There was no outstanding balance on the Revolver at December 31, 2016 and 2015. As of December 31, 2016, the Company had available borrowings of approximately $4.7 million and was in compliance with all financial covenants contained in the credit agreement. On March 20, 2017, subsequent to the balance sheet date, the Revolver was amended (the “Amendment”). The Amendment, made at the Company’s request, amended and updated the financial covenants with respect to the liquidity requirements and EBITDA targets, among other things, in order to enable draw-downs by the Company from time to time. In exchange for such accommodations, the Amendment also decreased the aggregate amount available under the Revolver from $48.0 million to $10.0 million and increased the applicable margin to 4.00% when interest is based on the daily three month LIBOR rate and 1.5% when interest is based on the prime rate. Convertible Senior Notes On June 10, 2015, Novatel Wireless issued $120.0 million aggregate principal amount of Novatel Wireless Notes. The Company incurred issuance costs of approximately $3.9 million. The Company used a portion of the proceeds from the offering to finance its acquisition of Ctrack, to pay fees and expenses related to the acquisition, and for general corporate purposes. The Novatel Wireless Notes are governed by the terms of an indenture, dated June 10, 2015 (the “Novatel Wireless Indenture”), entered into between Novatel Wireless, as issuer, Inseego Corp. and Wilmington Trust, National Association, as trustee (the “Trustee”). The Novatel Wireless Notes are senior unsecured obligations of Novatel Wireless and bear interest at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2015. The Novatel Wireless Notes will mature on June 15, 2020, unless earlier repurchased or converted. The Novatel Wireless Notes will be convertible into cash, shares of the Company’s common stock, or a combination thereof, at the election of the Company, at an initial conversion rate of 200.0000 shares of common stock per $1,000 principal amount of the Novatel Wireless Notes, which corresponds to an initial conversion price of $5.00 per share of the Company’s common stock. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day immediately preceding December 15, 2019, holders may convert their Novatel Wireless Notes at their option only under the following circumstances:
(i) | during any calendar quarter commencing after the calendar quarter ended on September 30, 2015 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter equals or exceeds 130% of the conversion price on each applicable trading day;
(ii) | during the five consecutive business day period immediately after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of the Novatel Wireless Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;
(iii) | upon the occurrence of certain corporate events specified in the Novatel Wireless Indenture; or
(iv) | if the Company has called the Novatel Wireless Notes for redemption.
On or after December 15, 2019, the holders may convert any of their Novatel Wireless Notes at any time prior to the close of business on the business day immediately preceding the maturity date. The Company may redeem all or a portion of the Novatel Wireless Notes at its option on or after June 15, 2018 if the last reported sale price per share of the Company’s common stock equals or exceeds 140% of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately prior to the date on which the Company provides written notice of redemption, at a redemption price equal to 100% of the principal amount of the Novatel Wireless Notes to be redeemed, plus any accrued and unpaid interest on such Novatel Wireless Notes, subject to the right of holders as of the close of business on an interest record date to receive the related interest. In addition, if the Company calls the Novatel Wireless Notes for redemption, a “make-whole fundamental change” (as defined in the Novatel Wireless Indenture) will be deemed to occur. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Novatel Wireless Notes in connection with such redemption. No “sinking fund” is provided for the Novatel Wireless Notes, which means that the Company is not required to periodically redeem or retire the Novatel Wireless Notes. If the Company undergoes a “fundamental change” (as defined in the Novatel Wireless Indenture), subject to certain conditions, holders may require the Company to repurchase for cash all or part of their Novatel Wireless Notes in principal amounts of $1,000, or an integral multiple of $1,000 in excess thereof. The fundamental change repurchase price will be equal to 100% of the principal amount of the Novatel Wireless Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date, subject to the right of holders as of the close of business on an interest record date to receive the related interest. In addition, every fundamental change is a make-whole fundamental change. As a result, the Company will, in certain circumstances, increase the conversion rate for holders who convert their Novatel Wireless Notes in connection with such fundamental change. The Novatel Wireless Indenture also provides for customary events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the Trustee, by notice to the Company, or the holders of at least 25% in principal amount of the outstanding Novatel Wireless Notes, by notice to the Company and the Trustee, may declare the principal and accrued and unpaid interest on the outstanding Novatel Wireless Notes to be immediately due and payable. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal and accrued and unpaid interest of the Novatel Wireless Notes will automatically become immediately due and payable. Notwithstanding the foregoing, the Novatel Wireless Indenture provides that, to the extent the Company elects and for up to 60 days, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants consists exclusively of the right to receive special interest on the Novatel Wireless Notes at a rate equal to 0.50% per annum on the principal amount of the outstanding Novatel Wireless Notes. In accordance with accounting guidance for debt with conversion and other options, the Company separately accounts for the liability and equity components of the Novatel Wireless Notes by allocating the proceeds between the liability component and the embedded conversion option, or equity component, due to its ability to settle the Novatel Wireless Notes in cash, common stock, or a combination of cash and common stock, at the Company’s option. The carrying amount of the liability component was calculated by measuring the fair value of a similar instrument that does not have an associated convertible feature. The allocation was performed in a manner that reflected the Company’s non-convertible debt borrowing rate for similar debt. The equity component of the Novatel Wireless Notes was recognized as a debt discount and represents the difference between the aggregate proceeds from the issuance of the Novatel Wireless Notes and the fair value of the liability of the Novatel Wireless Notes on the date of issuance. The excess of the aggregate principal amount of the liability component over its carrying amount, or debt discount, is amortized to interest expense using the effective interest method over five years, or the life of the Novatel Wireless Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The Novatel Wireless Notes consisted of the following at December 31, 2016 (in thousands):
Liability component: |
Principal | $ | 120,000 |
Less: unamortized debt discount and debt issuance costs | (29,092 | )
Net carrying amount | $ | 90,908 |
Equity component | $ | 38,305 |
In connection with the issuance of the Novatel Wireless Notes, the Company incurred approximately $3.9 million of issuance costs, which primarily consisted of underwriting, legal and other professional fees, and allocated the costs to the liability and equity components based on the allocation of the proceeds. Of the approximately $3.9 million of issuance costs, approximately $1.3 million were allocated to the equity component and recorded as a reduction to additional paid-in capital and $2.6 million were allocated to the liability component and recorded as a decrease to the carrying amount of the liability component on the unaudited condensed consolidated balance sheet. The portion allocated to the liability component is amortized to interest expense over the expected life of the Novatel Wireless Notes using the effective interest method. The Company determined the expected life of the debt was equal to the five-year term of the Novatel Wireless Notes. The effective interest rate on the liability component was 16.55% for the year ended December 31, 2016. The following table sets forth total interest expense recognized related to the Novatel Wireless Notes during the year ended December 31, 2016 (in thousands):
| Year Ended December 31,
| 2016 |  | 2015
Contractual interest expense | $ | 6,600 |  |  | $ | 3,667 |
Amortization of debt discount | 7,920 |  |  | 4,400 |
Amortization of debt issuance costs | 527 |  |  | 292 |
Total interest expense | $ | 15,047 |  |  | $ | 8,359 |
On January 9, 2017, subsequent to the balance sheet date, in connection with the settlement of an exchange offer and consent solicitation with respect to the Novatel Wireless Notes, the Company issued approximately $119.8 million aggregate principal amount of the Inseego Notes. The Inseego Notes were issued in exchange for the approximately $119.8 million aggregate principal amount of outstanding Novatel Wireless Notes that were validly tendered and accepted for exchange and subsequently canceled. The Inseego Notes, and the common stock issuable upon conversion of such notes, were registered under the Securities Act of 1933, as amended, pursuant to a Registration Statement on Form S-4 (No. 333-214966) which was filed with the SEC on December 7, 2016 and declared effective by the SEC on January 4, 2017. The Inseego Notes are governed by the terms of an indenture, dated January 9, 2017, between the Company, as issuer, and Wilmington Trust, National Association, as trustee (the “Trustee”). The Inseego Notes are senior unsecured obligations of the Company and bear interest from, and including, December 15, 2016, at a rate of 5.50% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2017. The Inseego Notes will mature on June 15, 2022, unless earlier converted, redeemed or repurchased. The Inseego Notes are subject to repurchase by the Company at the option of the holders on June 15, 2020 at a repurchase price in cash equal to 100% of the principal amount of the Inseego Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the optional repurchase date, subject to the right of holders of the Inseego Notes on a record date to receive interest through the corresponding interest payment date. Because the exchange of the Novatel Wireless Notes for the Inseego Notes described above was treated as a debt modification in accordance with applicable FASB guidance (it was between a parent and a subsidiary company and for substantially identical notes), the Company did not recognize a gain or loss with respect to the issuance of the Inseego Notes. During the year ended December 31, 2016, the Company incurred approximately $1.1 million in connection with the issuance of the Inseego Notes, which is included in general and administrative expenses in the consolidated statements of operations. Following the settlement of the exchange offer and consent solicitation, approximately $0.2 million aggregate principal amount of Novatel Wireless Notes remain outstanding. In connection with the exchange offer and consent solicitation, the Novatel Wireless Indenture and the Novatel Wireless Notes were amended to, among other things, eliminate certain events of default and substantially all of the restrictive covenants in the Novatel Wireless Indenture and the Novatel Wireless Notes, including the merger covenant, which sets forth certain requirements that must be met for Novatel Wireless to consolidate, merge or sell all or substantially all of its assets, and the reporting covenant, which requires Novatel Wireless to provide certain periodic reports to noteholders. The Novatel Wireless Indenture, as amended, also provides that the form of settlement of any conversions of the Novatel Wireless Notes will be elected by the Company. DigiCore Mortgage Bond DigiCore has a mortgage bond with Absa that is secured by certain property of DigiCore. The mortgage bond has a ten year term, expiring in December 2018, and bears interest at the South Africa prime rate minus 1.75% (8.75% at December 31, 2016). At December 31, 2016 and 2015, $0.6 million and $0.7 million, respectively, remained outstanding under the mortgage bond. At December 31, 2016, the minimum calendar year principal payments and maturities of long-term debt were as follows (in thousands):
2017 | $ | 238 |
2018 | 347 |
2019 | — |
2020 | 120,000 |
2021 | — |
Thereafter | — |
Total | $ | 120,585 |

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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 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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