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NOTES PAYABLE | 3 Months Ended
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Jun. 30, 2015
Debt Disclosure [Abstract] |
NOTES PAYABLE | NOTES PAYABLE Notes payable consisted of the following:
|  | As of June 30, 2015 |  | As of March 31, 2015
(In thousands) |  | Current Portion |  | Long Term Portion |  | Current Portion |  | Long Term Portion
2013 Term Loans, net of debt discount |  | $ | 24,750 |  |  | $ | 29,089 |  |  | $ | 25,125 |  |  | $ | 36,418 |
Prospect Loan |  | — |  |  | 67,449 |  |  | — |  |  | 67,967 |
KBC Facilities |  | 7,649 |  |  | 17,451 |  |  | 7,649 |  |  | 19,361 |
P2 Vendor Note |  | 133 |  |  | 375 |  |  | 125 |  |  | 393 |
P2 Exhibitor Notes |  | 75 |  |  | 167 |  |  | 74 |  |  | 186 |
Total non-recourse notes payable |  | $ | 32,607 |  |  | $ | 114,531 |  |  | $ | 32,973 |  |  | $ | 124,325 |
5.5% Senior Convertible Notes Due 2035 |  | — |  |  | 64,000 |  |  | — |  |  | — |
Cinedigm Term Loans |  | — |  |  | — |  |  | — |  |  | 17,965 |
Cinedigm Revolving Loans |  | 15,127 |  |  | — |  |  | 24,294 |  |  | — |
2013 Notes |  | — |  |  | 3,857 |  |  | — |  |  | 3,785 |
Total recourse notes payable |  | $ | 15,127 |  |  | $ | 67,857 |  |  | $ | 24,294 |  |  | $ | 21,750 |
Total notes payable |  | $ | 47,734 |  |  | $ | 182,388 |  |  | $ | 57,267 |  |  | $ | 146,075 |
Non-recourse debt is generally defined as debt whereby the lenders’ sole recourse with respect to defaults, is limited to the value of the asset, which is collateral for the debt. Certain of our subsidiaries are liable with respect to, and their assets serve as collateral for, certain indebtedness for which our assets and the assets of our other subsidiaries that are not parties to the transaction are generally not liable. We have referred to this indebtedness as "non-recourse debt" because the recourse of the lenders is limited to the assets of specific subsidiaries. Such indebtedness includes the Prospect Loan, the KBC Facilities, the 2013 Term Loans, the P2 Vendor Note and the P2 Exhibitor Note. 2013 Term Loans In February 2013, CDF I, our wholly owned subsidiary, entered into an amended and restated credit agreement (the “2013 Credit Agreement”) with Société Générale and other lenders. Under the terms of the 2013 Credit Agreement, CDF I may borrow an aggregate principal amount of $130.0 million, $5.0 million of which was allowed to be assigned to an affiliate of CDF I. Under the 2013 Credit Agreement, each of the 2013 Term loans bear interest, at the option of CDF I, based on a base rate (generally, the bank prime rate) or the one-month LIBOR rate set at a minimum of 1.00%, plus a margin of 1.75% (in the case of base rate loans) or 2.75% (in the case of LIBOR rate loans). The 2013 Term Loans mature and must be paid in full by February 28, 2018. In addition, CDF I may prepay the 2013 Term Loans, in whole or in part, subject to paying certain breakage costs, if applicable. The one-month LIBOR rate at June 30, 2015 was 0.19%. The 2013 Credit Agreement also requires each of CDF I’s existing and future direct and indirect domestic subsidiaries (the "Guarantors") to guarantee the obligations under the 2013 Credit Agreement with a first priority perfected security interest in all of the collective assets of CDF I and the Guarantors, including real estate owned or leased, and all capital stock or other equity interests in C/AIX, our wholly owned subsidiary and the direct holder of CDF I’s equity. The 2013 Credit Agreement contains customary representations, warranties, affirmative covenants, negative covenants and events of default. Collections of CDF I accounts receivable are deposited into accounts designated to pay certain operating expenses, principal, interest, fees, costs and expenses relating to the 2013 Credit Agreement. Amounts designated for these purposes totaled $4.0 million and $3.9 million as of June 30, 2015 and March 31, 2015, respectively, and are included in cash and cash equivalents on our Condensed Consolidated Balance Sheets. We also maintain a debt service fund under the 2013 Credit Agreement for future principal and interest payments. As of June 30, 2015 and March 31, 2015, the debt service fund had a balance of $5.8 million, which is classified as restricted cash on our Condensed Consolidated Balance Sheets. The balance of the 2013 Term Loans, net of the original issue discount, was as follows:
(In thousands) |  | As of June 30, 2015 |  | As of March 31, 2015
2013 Term Loans, at issuance, net |  | $ | 125,087 |  |  | $ | 125,087 |
Payments to date |  | (71,070 | ) |  | (63,348 | )
Discount on 2013 Term Loans |  | (178 | ) |  | (196 | )
2013 Term Loans, net |  | 53,839 |  |  | 61,543 |
Less current portion |  | (24,750 | ) |  | (25,125 | )
Total long term portion |  | $ | 29,089 |  |  | $ | 36,418 |
Prospect Loan In February 2013, our DC Holdings, AccessDM and Phase 2 DC subsidiaries entered into a term loan agreement (the “Prospect Loan”) with Prospect Capital Corporation (“Prospect”), pursuant to which DC Holdings borrowed $70.0 million. The Prospect Loan bears interest at LIBOR plus 9.0% (with a 2.0% LIBOR floor), which is payable in cash, and at an additional 2.50% to be accrued as an increase to the aggregate principal amount of the Prospect Loan until the 2013 Credit Agreement is paid off, at which time all accrued interest will be payable in cash. Collections of DC Holdings accounts receivable are deposited into accounts designated to pay certain operating expenses, principal, interest, fees, costs and expenses relating to the Prospect Loan. On a quarterly basis, if funds remain after the payment of all such amounts, they are applied to prepay the Prospect Loan. Amounts designated for these purposes, included in cash and cash equivalents on the Condensed Consolidated Balance Sheets, totaled $6.0 million and $6.5 million as of June 30, 2015 and March 31, 2015, respectively. We also maintain a debt service fund under the Prospect Loan for future principal and interest payments. As of June 30, 2015 and March 31, 2015, the debt service fund had a balance of $1.0 million, which is classified as restricted cash on our Condensed Consolidated Balance Sheets. The Prospect Loan matures on March 31, 2021 and may be accelerated upon a change in control (as defined in the agreement) or other events of default as set forth therein and would be subject to mandatory acceleration upon insolvency of DC Holdings. We are permitted to pay the full outstanding balance of the Prospect Loan at any time after the second anniversary of the initial borrowing, subject to the following prepayment penalties:
• | 5.0% of the principal amount prepaid between the second and third anniversaries of issuance;
• | 4.0% of the principal amount prepaid between the third and fourth anniversaries of issuance;
• | 3.0% of the principal amount prepaid between the fourth and fifth anniversaries of issuance;
• | 2.0% of the principal amount prepaid between the fifth and sixth anniversary of issuance;
• | 1.0% of the principal amount prepaid between the sixth and seventh anniversaries of issuance; and
• | No penalty if the balance of the Prospect Loan, including accrued interest, is prepaid thereafter.
The Prospect Loan is secured by, among other things, a first priority pledge of the stock of CDF2 Holdings, our wholly owned unconsolidated subsidiary, the stock of AccessDM, owned by DC Holdings, and the stock of our Phase 2 DC subsidiary, and is also guaranteed by AccessDM and Phase 2 DC. We provide limited financial support to the Prospect Loan not to exceed $1.5 million per year in the event financial performance does not meet certain defined benchmarks. The Prospect Loan contains customary representations, warranties, affirmative covenants, negative covenants and events of default. The following table summarizes the activity related to the Prospect Loan:
(In thousands) |  | As of June 30, 2015 |  | As of March 31, 2015
Prospect Loan, at issuance |  | $ | 70,000 |  |  | $ | 70,000 |
PIK Interest |  | 4,066 |  |  | 3,640 |
Payments to date |  | (6,617 | ) |  | (5,673 | )
Prospect Loan, net |  | 67,449 |  |  | 67,967 |
Less current portion |  | — |  |  | — |
Total long term portion |  | $ | 67,449 |  |  | $ | 67,967 |
KBC Facilities In December 2008 we began entering into multiple credit facilities to fund the purchase of Systems to be installed in movie theatres as part of our Phase II Deployment. There were no draws on the KBC Facilities during the fiscal quarter ended June 30, 2015. The following table presents a summary of the KBC Facilities (dollar amounts in thousands):
|  |  |  |  |  |  |  | Outstanding Principal Balance
Facility 1 |  | Credit Facility |  | Interest Rate 2 |  | Maturity Date |  | As of June 30, 2015 |  | As of March 31, 2015
1 |  |  | 22,336 |  |  | 3.75 | % |  | September 2018 |  | 9,574 |  |  | 10,371 |
2 |  |  | 13,312 |  |  | 3.75 | % |  | September 2018 |  | 6,181 |  |  | 6,656 |
3 |  |  | 11,425 |  |  | 3.75 | % |  | March 2019 |  | 6,120 |  |  | 6,528 |
4 |  |  | 6,450 |  |  | 3.75 | % |  | December 2018 |  | 3,225 |  |  | 3,455 |
|  | $ | 53,523 |  |  |  |  |  |  | 25,100 |  |  | 27,010 |
1. | For each facility, principal is to be repaid in twenty-eight quarterly installments.
2. | Each of the facilities bears interest at the three-month LIBOR rate, which was 0.28% at June 30, 2015, plus the interest rate noted above.
5.5% Convertible Notes Due April 2035 On April 29, 2015 we issued $64.0 million aggregate principal amount of unsecured senior convertible notes payable (the "Convertible Notes") that bear interest at a rate of 5.5% per year, payable semiannually. The Convertible Notes will mature on April 15, 2035, unless repurchased earlier, redeemed or converted and will be convertible at the option of the holders at any time until the close of business on the business day immediately preceding the maturity date. Upon conversion, we will deliver to holders in respect of each $1,000 principal amount of Convertible Notes being converted a number of shares of our Class A common stock equal to the conversion rate, together with a cash payment in lieu of delivering any fractional share of Class A common stock. The conversion rate applicable to the Convertible Notes on the offering date was 824.5723 shares of Class A common stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $1.21 per share of Class A common stock), which is subject to adjustment if certain events occur. Holders of the Convertible Notes may require us to repurchase all or a portion of the Convertible Notes on April 20, 2020, April 20, 2025 and April 20, 2030 and upon the occurrence of certain fundamental changes at a repurchase price in cash equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued and unpaid interest, if any. The Convertible Notes will be redeemable by us at our option on or after April 20, 2018 upon the satisfaction of a sale price condition with respect to our Class A common stock and on or after April 20, 2020 without regard to the sale price condition, in each case, at a redemption price in cash equal to 100% of the principal amount of the notes to be repurchased plus accrued and unpaid interest, if any. The net proceeds from the Convertible Note offering was $60.9 million, after deducting offering expenses. We used $18.6 million of the net proceeds from the offering to repay borrowings under and terminate one of our term loans under our 2013 Credit Agreement, of which $18.2 million was used to pay the remaining principal balance. Concurrently with the closing of the Convertible Notes transaction, we repurchased 2.7 million shares of our Class A common stock from certain purchasers of Convertible Notes in privately negotiated transactions for $2.6 million. In addition, $11.4 million of the net proceeds was used to fund the cost of repurchasing 11.8 million shares of our Class A common stock pursuant to the forward stock purchase agreement described in Note 6 - Stockholders' Deficit. We recorded interest expense of $0.6 million during the period ended June 30, 2015 related to the Convertible Notes. We recorded debt issuance costs of $3.6 million related to the issuance of the Convertible Notes during the three month period ended June 30, 2015, which are being amortized over the contractual term of the Convertible Notes using the effective interest method. Cinedigm Credit Agreement On October 17, 2013, we entered into a credit agreement (the “Cinedigm Credit Agreement”) with Société Générale. Under the Cinedigm Credit Agreement, as amended in February 2015 and April 2015, we were permitted to borrow an aggregate principal amount of up to $55.0 million, including term loans of $25.0 million (the “Cinedigm Term Loans”) and revolving loans of up to $30.0 million (the “Cinedigm Revolving Loans”). Interest under the Cinedigm Term Loans was charged at a base rate plus 5.0%, or the Eurodollar rate plus 6.0% until the Cinedigm Term Loan was repaid on April 29, 2015 in connection with the Convertible Notes offering. The Cinedigm Revolving Loans bear interest at the base rate plus 4.0% or the Eurodollar rate plus 5.0%. The Base rate, per annum, is equal to the highest of (a) the rate quoted by the Wall Street Journal as the “base rate on corporate loans by at least 75% of the nation’s largest banks,” (b) 0.50% plus the federal funds rate, and (c) the Eurodollar rate plus 1.0%. Collections of certain CEG accounts receivable are be deposited into a special blocked account, from which amounts are used to pay certain operating expenses and principal, interest, fees, costs and expenses relating to the Cinedigm Credit Agreement according to designated priorities. When amounts collected are in excess of such principal, interest, fees, costs and expenses, a portion of the excess collections is used to prepay the Cinedigm Term Loans. We may prepay the Cinedigm Term Loans and Cinedigm Revolving Loans, in whole or in part, subject to paying certain breakage costs, as applicable. We repaid the entire outstanding balance of the Cinedigm Term Loans and amended the terms of the Cinedigm Revolving Loans in connection with our issuance of the Convertible Notes. In connection with the repayment of the Cinedigm Term Loans, we wrote-off certain unamortized debt issuance costs and the discount that remained on the balance of the note payable. As a result, we recorded $0.9 million as a loss on extinguishment of debt in the quarter ended June 30, 2015. The April 2015 amendment to the Cinedigm Revolving Loans extended the term of the agreement to March 31, 2018, provided for the release of the equity interests in the subsidiaries that we had previously pledged as collateral, changed the interest rate and replaced all financial covenants with a single debt service coverage ratio test commencing at June 30, 2016 and a $5.0 million minimum liquidity covenant. The Cinedigm Revolving Loans, as amended, bear interest at Base Rate (as defined in the amendment) plus 3% or LIBOR plus 4%, at our election, but in no event may the elected Base Rate or LIBOR rate be less than 1%. Availability under the Cinedigm Revolving Loans was $20.1 million at June 30, 2015. 2013 Notes In October 2013, we entered into securities purchase agreements with certain investors, pursuant to which we sold notes in the aggregate principal amount of $5.0 million (the “2013 Notes”) and warrants to purchase an aggregate of 1,500,000 shares of Class A Common Stock (the “2013 Warrants”) to such investors. The proceeds of the sales of the 2013 Notes and 2013 Warrants were used for working capital and general corporate purposes, including financing, in part, the GVE Acquisition (as defined below). We allocated a proportional value of $1.6 million to the 2013 Warrants using a Black-Scholes option valuation model with the following assumptions:
Risk free interest rate |  | 1.38 | %
Dividend yield |  | — |
Expected life (years) |  | 5 |
Expected volatility |  | 76.25 | %
We have treated the proportional value of the 2013 Warrants as a debt discount. The debt discount of the 2013 Notes is being amortized through the maturity of the 2013 Notes as interest expense. The principal amount outstanding under the 2013 Notes is due on October 21, 2018. The 2013 Notes bear interest at 9.0% per annum, payable in quarterly installments over the term of the 2013 Notes. The 2013 Notes may be redeemed at any time on or after October 21, 2015, subject to certain premiums. At June 30, 2015, we were in compliance with all of our debt covenants.

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