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Long Term Debt | 3 Months Ended
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Mar. 31, 2022
Debt Disclosure [Abstract] |
Long Term Debt | 12. Long Term Debt Debt instruments, excluding vehicle floorplan facilities, which are discussed in Note 10 — Vehicle Floorplan Facilities, and warehouse credit facilities of consolidated VIEs, which are discussed in Note 11 — Warehouse Credit Facilities of Consolidated VIEs, consisted of the following (in thousands):
|  | March 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |
Current portion of securitization debt of consolidated VIEs |  | $ | 138,935 |  |  | $ | — |
Convertible senior notes |  |  | 611,424 |  |  |  | 610,618 |
Securitization debt of consolidated VIEs, net of current portion |  |  | 65,692 |  |  |  | — |
Junior subordinated debentures |  |  | 10,310 |  |  |  | — |
Long term debt, net of current portion |  | $ | 687,426 |  |  | $ | 610,618 |
Total debt |  | $ | 826,361 |  |  | $ | 610,618 |
Convertible Senior Notes On June 18, 2021, the Company issued $625.0 million aggregate principal amount of 0.75% unsecured Convertible Senior Notes due 2026 (the “Notes”), including $75.0 million aggregate principal amount of such notes pursuant to the exercise in full of the overallotment option granted to the initial purchasers. The Notes were issued pursuant to an indenture (the “Indenture”), between the Company and U.S. Bank National Association, as trustee. The Notes bear interest at a rate of 0.75% per annum, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2022. The Notes will mature on July 1, 2026, subject to earlier repurchase, redemption or conversion. The total net proceeds from the offering, after deducting commissions paid to the initial purchasers and debt issuance costs paid to third-parties, were approximately $608.9 million. Each $1,000 principal amount of the Notes will initially be convertible into 17.8527 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $56.01 per share, subject to adjustment upon the occurrence of specified events. The Notes are convertible, at the option of the noteholders, on or after April 1, 2026. Prior to April 1, 2026, the Notes are convertible only under the following circumstances: • During any fiscal quarter commencing after the fiscal quarter ending on September 30, 2021 (and only during such fiscal 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 fiscal quarter is greater than or equal to 130% of the conversion price of the Notes on each applicable trading day; • During the five consecutive business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the Notes for each day of that ten consecutive trading day period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate of the Notes on such trading day; • If the Company calls any or all of the Notes for redemption; or • Upon the occurrence of specific corporate events such as a change in control or certain beneficial distributions to common stockholders (as set forth in the Indenture). The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election. The Company may not redeem the Notes prior to July 6, 2024. On or after July 6, 2024, the Company may redeem all or any portion of the Notes for cash equal to 100% of the principal amount of the Notes being redeemed plus any accrued and unpaid interest if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period. If the Company undergoes a fundamental change (as defined in the Indenture), subject to certain conditions, holders of the Notes may require the Company to repurchase for cash all or any portion of their Notes at a repurchase price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest. In addition, if specific corporate events occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate by pre-defined amounts for a holder who elects to convert their Notes in connection with such a corporate event. During the year ended March 31, 2022, the conditions allowing holders of the Notes to convert were not met. The Company accounts for the Notes as a single liability-classified instrument measured at amortized cost. As of March 31, 2022, the unamortized debt discount and debt issuance costs was $13.6 million and the net carrying value was $611.4 million. The Notes were issued at par value and fees associated with the issuance of these Notes are amortized to interest expense using the effective interest method over the contractual term of the Notes. The interest expense for the three months ended March 31, 2022 was $2.0 million. The effective interest rate of the Notes is 1.3%. Securitization Debt of Consolidated VIEs The securitization debt was issued under UACC's securitization program. The Company elected to account for the securitization debt under the fair value option on February 1, 2022 using the measurement alternative. Fair value adjustments are recorded in "Other loss (income), net" in the condensed consolidated statements of operations. Refer to Note 16 – Financial Instruments and Fair Value Measurements. For all securitization transactions consummated prior to the Acquisition Date, UACC consolidated VIEs and accounted for these transactions as secured borrowings. Refer to Note 4 - Variable Interest Entities and Securitizations for further discussion. UACC retained the servicing rights for the finance receivables that were securitized; therefore, is responsible for the administration and collection of the amounts owed under the contracts. The securitization agreements also require certain funds to be held in restricted cash accounts to provide additional collateral for the borrowings or to be applied to make payments on the securitization debt. Restricted cash under the various agreements totaled approximately $25.5 million as of March 31, 2022. Upon the issuance of the securitization debt, UACC retained the right to receive excess cash flows over time from the underlying pool of securitized transactions. The wholly owned bankruptcy remote subsidiaries of UACC were formed to facilitate the above asset-backed financing transactions. Bankruptcy remote refers to a legal structure in which it is expected that the applicable entity would not be included in any bankruptcy filing by its parent or affiliates. All of the assets of these subsidiaries have been pledged as collateral for the related debt. None of the assets of these subsidiaries are available to pay other creditors of the Company or its affiliates. The debt issued is included in "Long Term Debt" on the consolidated balance sheet. The securitization debt of consolidated VIEs consisted of the following (in thousands):
As of March 31, 2022 |
Series |  | Final Scheduled Payment Date |  | Initial Principal |  |  | Contractual Interest Rate |  | Outstanding Principal |  |  | Fair Value |
United Auto Credit 2020-1-C |  | February 10, 2025 |  | $ | 32,780 |  |  | 2.15 | % | $ | 10,748 |  |  | $ | 10,750 |
United Auto Credit 2020-1-D |  | February 10, 2025 |  |  | 31,450 |  |  | 2.88 | % |  | 31,450 |  |  |  | 31,532 |
United Auto Credit 2020-1-E |  | February 10, 2025 |  |  | 18,730 |  |  | 5.19 | % |  | 18,730 |  |  |  | 18,897 |
United Auto Credit 2020-1-F |  | January 12, 2026 |  |  | 7,360 |  |  | 9.08 | % |  | 7,360 |  |  |  | 7,389 |
United Auto Credit 2021-1-A |  | July 10, 2023 |  |  | 122,070 |  |  | 0.34 | % |  | 11,433 |  |  |  | 11,422 |
United Auto Credit 2021-1-B |  | March 11, 2024 |  |  | 33,540 |  |  | 0.68 | % |  | 33,540 |  |  |  | 33,382 |
United Auto Credit 2021-1-C |  | June 10, 2026 |  |  | 29,640 |  |  | 0.84 | % |  | 29,640 |  |  |  | 29,228 |
United Auto Credit 2021-1-D |  | June 10, 2026 |  |  | 29,380 |  |  | 1.14 | % |  | 29,380 |  |  |  | 28,560 |
United Auto Credit 2021-1-E |  | June 10, 2026 |  |  | 20,800 |  |  | 2.58 | % |  | 20,800 |  |  |  | 19,962 |
United Auto Credit 2021-1-F |  | September 10, 2027 |  |  | 13,910 |  |  | 4.30 | % |  | 13,910 |  |  |  | 13,505 |
|  |  |  | $ | 339,660 |  |  |  |  | $ | 206,991 |  |  | $ | 204,627 |
The Final Scheduled Payment Date represents final legal maturity of the securitization debt. Securitization debt is expected to become due and to be paid prior to those dates, based on amortization of the finance receivables pledged to the Trusts. Expected payments, which will depend on the performance of such receivables, as to which there can be no assurance, are $110.5 million in 2022, $64.4 million in 2023, $25.3 million in 2024 and $6.7 million in 2025. The aggregate principal balance and the fair value of finance receivables pledged to the securitization debt consists of the following (in thousands):
|  | As of March 31, 2022 |
|  | Aggregate Principal Balance |  |  | Fair Value |
United Auto Credit 2020-1 |  | $ | 76,086 |  |  | $ | 62,338 |
United Auto Credit 2021-1 |  |  | 142,157 |  |  |  | 127,131 |
Total finance receivables of CFEs |  | $ | 218,243 |  |  | $ | 189,469 |
Junior Subordinated Debentures On July 31, 2003, UACC issued junior subordinated debentures (trust preferred securities) of $10.0 million through a subsidiary, UPFC Trust I. The trust issuer is a 100 percent owned finance subsidiary and the securities are fully and unconditionally guaranteed by UACC. The interest is paid quarterly at a variable rate, equal to the three-month LIBOR plus 3.05 percent. The final maturity of these securities is on October 7, 2033; however, they can be called at par any time at the Company’s discretion.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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