Note 12—Convertible Senior Notes

Convertible senior notes consist of the following (in thousands):

	December 31, 2016						December 31, 2017
	Principal/		Debt				Principal/		Debt
	Fair Value		Issuance		Net		Fair Value		Issuance		Net
	Amount		Costs		Amount		Amount		Costs		Amount
3.25% convertible senior notes (due 2020) *	$	―	$	―	$	―	$	22,469	$	―	$	22,469
4.25% convertible senior notes (due 2018)		93,865		1,098		92,767		21,178		103		21,075
4.875% convertible senior notes (due 2020)		113,000		2,760		110,240		113,000		1,972		111,028
Total convertible senior notes, net of debt issuance costs	$	206,865	$	3,858	$	203,007	$	156,647	$	2,075	$	154,572

* The amount presented for the 3.25% 2020 convertible senior notes within the table represents the fair value as of December 31, 2017. The principal amount of these notes is $21.5 million.

In July 2013, the Company sold an aggregate of $100.0 million principal amount of 4.25% Convertible Senior Notes due 2018 (the “2018 Notes”). The 2018 Notes are senior unsecured obligations of the Company paying interest semi-annually in arrears on August 1 and February 1 of each year at a rate of 4.25% per annum and will mature on August 1, 2018. The initial and still current conversion rate for the 2018 Notes is 114.3674 shares of the Company’s common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $8.74 per share of common stock, subject to adjustment in certain events. Upon conversion, the 2018 Notes will be settled in shares of the Company’s common stock. Holders of the 2018 Notes may require that the Company repurchase for cash all or some of their notes upon the occurrence of a fundamental change (as defined in the 2018 Notes). In 2016, the Company repurchased and retired an aggregate of approximately $6.1 million principal amount of the 2018 Notes. In addition, approximately $0.1 million of the unamortized debt issuance costs were written off and a nominal gain was recognized in conjunction with the retirement of the 2018 Notes. During the first quarter of 2017, the Company exchanged and retired $39.1 million principal amount of the 2018 Notes at par for $24.1 million in cash and approximately 2.9 million shares of its common stock. During the second quarter of 2017, the Company exchanged and retired $12.0 million principal amount of the 2018 Notes at par for $11.6 million in cash and 112,400 shares of its common stock, and approximately $0.1 million of the unamortized debt issuance costs were written off and a $0.1 million gain was recognized in conjunction with the exchange and retirement of the 2018 Notes.

In August 2017, the Company agreed with Oasis Management and Oasis Investments II Master Fund Ltd., the holder of approximately $21.5 million face amount of its 4.25% Convertible Senior Notes due in 2018, to extend the maturity date of these notes to November 1, 2020. In addition, the interest rate was reduced to 3.25% per annum and the conversion rate was increased to 328.0302 shares of the Company’s common stock per $1,000 principal amount of notes, among other things. After execution of a definitive agreement for the modification and final approval by the other members of the Company’s Board of Directors and Oasis’ Investment Committee the transaction closed on November 7, 2017. In connection with this transaction, the Company recognized a loss on extinguishment of the debt of approximately $0.6 million. Further, the Company elected to measure and present the new debt held by Oasis at fair value using Level 3 inputs (see Note 2) and as a result, recognized a loss of $0.3 million related to changes in the fair value of the 3.25% 2020 Notes. At December 31, 2017, the 3.25% 2020 Notes had a fair value of $22.5 million.

In June 2014, the Company sold an aggregate of $115.0 million principal amount of 4.875% Convertible Senior Notes due 2020 (the “2020 Notes”). The 2020 Notes are senior unsecured obligations of the Company paying interest semi-annually in arrears on June 1 and December 1 of each year at a rate of 4.875% per annum and will mature on June 1, 2020. The initial and still current conversion rate for the 2020 Notes is 103.7613 shares of the Company’s common stock per $1,000 principal amount of notes, equivalent to an initial conversion price of approximately $9.64 per share of common stock, subject to adjustment in certain events. Upon conversion, the 2020 Notes will be settled in shares of the Company’s common stock. Holders of the 2020 Notes may require that the Company repurchase for cash all or some of their notes upon the occurrence of a fundamental change (as defined in the 2020 Notes). In January 2016, the Company repurchased and retired an aggregate of $2.0 million principal amount of the 2020 Notes. In addition, approximately $0.1 million of the unamortized debt issuance costs were written off and a $0.1 million gain was recognized in conjunction with the retirement of the 2020 Notes.

Key components of the 4.25% convertible senior notes due 2018 consist of the following (in thousands):

	Years Ended December 31,
	2015		2016		2017
Contractual interest expense on the coupon	$	4,250	$	4,191	$	2,184
Amortization of debt discount and debt issuance costs recognized as interest expense		836		1,172		844
	$	5,086	$	5,363	$	3,028

Key components of the 3.25% convertible senior notes due 2020 consist of the following (in thousands):

	Years Ended December 31,
	2015		2016		2017
Contractual interest expense	$	―	$	―	$	103
Amortization of debt issuance costs recognized as interest expense		―		―		―
	$	―	$	―	$	103

Key components of the 4.875% convertible senior notes due 2020 consist of the following (in thousands):

	Years Ended December 31,
	2015		2016		2017
Contractual interest expense	$	5,606	$	5,508	$	5,509
Amortization of debt issuance costs recognized as interest expense		811		804		789
	$	6,417	$	6,312	$	6,298