XML 24 R13.htm IDEA: XBRL DOCUMENT v3.23.3
Long-term Debt
 3 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Long-term Debt

7. Long-term Debt

Long-term debt consisted of the following at the end of each period presented.

 

 

September 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

 

(in thousands)

 

Convertible note

 

$

63,561

 

 

$

61,710

 

Vehicle notes payable

 

 

138

 

 

 

148

 

Total debt

 

 

63,699

 

 

 

61,858

 

Current portion of debt

 

 

41

 

 

 

40

 

Long-term debt

 

 

63,658

 

 

 

61,818

 

Unamortized convertible note discount — embedded conversion feature

 

 

(19,447

)

 

 

(20,691

)

Unamortized debt issuance costs - convertible note

 

 

(3,248

)

 

 

(3,456

)

Long-term debt, net

 

$

40,963

 

 

$

37,671

 

On August 15, 2023 the Company elected to issue additional notes as payment for $1.85 million of interest accrued during the period from February 16, 2023 through August 15, 2023.

Interest expense consisted of the following.

 

 

Three months ended September 30,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Convertible note interest

 

$

940

 

 

$

269

 

Vehicle notes payable interest

 

 

1

 

 

 

2

 

Amortization of debt issuance costs and discount — convertible note

 

 

1,452

 

 

 

550

 

Other interest

 

 

18

 

 

 

—

 

Gross interest expense

 

 

2,411

 

 

 

821

 

Less: amount capitalized to construction in progress

 

 

624

 

 

 

—

 

Interest expense, net of amounts capitalized

 

$

1,787

 

 

$

821

 

 

 

 

 

 

 

 

 Effective interest rate — convertible note

 

 

23.2

%

 

 

23.4

%

Convertible Note

On August 11, 2022, the Company executed a $60 million private placement of Senior Secured Convertible Note (the "Note” or "Convertible Note"), with Bluescape Energy Partners. The Note, which is convertible into the Company's common stock and matures in August 2027, closed on August 26, 2022. At the Company's election, the Note bears interest at an annual rate of 4.50% if paid in cash, or at an annual rate of 6.00% if paid through the issuance of additional notes. Interest is paid semi-annually on February 15 and August 15 of each year. The Note contains a financial covenant requiring us to maintain a cash balance of at least $10 million and is secured by a security interest in substantially all of our assets. The purchaser may convert the Note at any time before August 2027 at a conversion price of $17.60 (“Conversion Price”). The Company has the right, at any time on or before the twenty-four (24) month anniversary of the closing date of the Note (“Closing Date”), to convert the Note into the Company's common stock in whole or in part if the closing price of the Company's common stock is at least 200% of the Conversion Price of the Note (“Threshold Price”) for each of the twenty (20) consecutive trading days prior to the time we deliver a conversion notice. The Threshold Price for the Company's right to convert the Note decreases to 150% after the twenty-four (24) month anniversary of the Closing Date and on or before the thirty-six (36) month anniversary of the Closing, and to 130% at any time after the thirty-six (36) month anniversary of the Closing Date.

Due to a provision in the Convertible Note agreement that allowed for a change in the conversion price upon a digressive issuance by the Company within three months of the Closing Date, the conversion feature of the Note was deemed an embedded derivative requiring separate accounting as a stand-alone derivative instrument (the "Convertible Note Derivative"). The Note was recorded at its face amount of $60 million less debt issuance costs of $4.2 million and the fair value of the Convertible Note Derivative of $24.9 million. The provision resulting in the separate accounting for the conversion feature of the Convertible Note Derivative expired November 26, 2022, and accordingly, the fair value of the Convertible Note Derivative at expiration of the provision was transferred to additional paid-in capital (see Note 8). Fair value information for the Convertible Note and Convertible Note Derivative follows.

 

 

September 30,

 

 

June 30,

 

 

 

2023

 

 

2023

 

 

 

(in thousands)

 

Fair value of convertible note (Level 2)

 

$

42,273

 

 

$

40,316

 

Total fair value of convertible note instrument

 

$

42,273

 

 

$

40,316

 

 

The valuation model for the Convertible Note and related Convertible Note Derivative requires the input of subjective assumptions including expected share price volatility, risk-free interest rate and debt rate. Changes in the input assumptions as well as the Company's underlying share price can materially affect the fair value estimates. Prior to the expiration of the provision that required separate accounting for the Convertible Note Derivative, the changes in fair value of the Convertible Note Derivative materially affected reported net income (loss) but had no related impact on our cash position or cash flows. Changes in the reported fair value of the Convertible Note are not recognized in net income and therefore have no effect on reported net income (loss).

The significant assumptions used in the fair value model for the Convertible Note and related Convertible Note Derivative include the following, with a change in volatility and debt rate having the most significant impact on the related fair values.

 

 

September 30,

 

June 30,

 

 

2023

 

2023

Risk-free interest rate

 

4.8%

 

4.4%

Volatility

 

50.0%

 

50.0%

Debt rate

 

16.9%

 

17.5%

Stock price per share

 

$2.26

 

$3.28

 

On November 6, 2026, the Company entered into a standstill agreement with its Lender and holder of the Convertible Note. Refer to Notes 1 and 13 for additional information.