12. DEBT

The Company had the following debt outstanding:



DETAIL OF DEBT
(Dollars in Thousands)

Description	Current Outstanding Par			September 30, 2013		December 31, 2012		Interest Rate Terms		Interest (6)		Maturity
Contingent convertible senior notes:
10.50% contingent convertible senior notes (the "New Notes")	$	8,121		$	8,096	$	8,068	10.50%		10.50	%	May 2014 (1)
8.00% contingent convertible senior notes (the "8.0% Convertible Notes")		8,248			8,248		-	8.00%		8.00	%	September 2018 (2)
	$	16,369		$	16,344		8,068
Junior subordinated notes:
Alesco Capital Trust I	$	28,125	(3)		10,563		10,189	4.25%		4.25	%	July 2037
Sunset Financial Statutory Trust I		20,000	(3)		7,518		7,248	4.40%		4.40	%	March 2035
	$	48,125			18,081		17,437
Subordinated notes payable	$	-			-		342	12.00%	(4)	12.00	%	June 2013
Star Asia Manager note payable	$	165			165		-	3.00%		3.00	%	(5)
Total				$	34,590	$	25,847

(1)Represents the holder’s earliest put date and the Company’s earliest redemption date. The contractual maturity for the New Notes is May 2027.

The Company may redeem all or part of the $8,121 aggregate principal amount of the New Notes for cash on or after May 20, 2014, at a redemption price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes may require the Company to repurchase all or a portion of the New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the repurchase date. The holders of the New Notes are required to provide notice to the Company of their plan to redeem the New Notes at any time during the 30 days prior to May 15, 2014; May 15, 2017; and May 15, 2022.

(2)The holders of the 8.0% Convertible Notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time prior to maturity into shares of the Company’s common stock at a conversion price of $3.00 per share, subject to customary anti-dilution adjustments.

(3)The outstanding par represents the total par amount of the junior subordinated notes held by two separate trusts. The Company does not consolidate these trusts. The Company holds $1,489 par value of these junior subordinated notes, comprised of $870 par value of junior subordinated notes related to Alesco Capital Trust I and $619 par value of junior subordinated notes related to Sunset Financial Statutory Trust I. These notes have a carrying value of $0. Therefore, the net par value held by third parties is $48,125.

(4)Comprised of 9% paid currently and 3% paid in kind. The subordinated note payable was fully repaid in June 2013.

(5)The Star Asia Manager note payable has no stated maturity date. See description of payment terms below.

(6)Represents the interest rate as of the last day of the reporting period.

Refer to note 17 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as amended, for a discussion of the Company’s debt.

Star Asia Manager Note Payable

In connection with the Star Asia Manager Repurchase Transaction in March 2013, Star Asia Manager had paid cash of $425 and issued to Mercury a note payable in the principal amount of $725. See notes 4 and 11. Under the note payable, interest accrues on the unpaid balance of the principal amount at a floating rate equal to three-month LIBOR plus 2.75% per annum. Payments will be made quarterly in an amount equal to 50% of cash available for distribution as defined in the note payable agreement. The Star Asia Manager note payable is pre-payable without penalty and has no stated maturity date.

Subordinated Notes Payable

In June 2013, the Company repaid in full the subordinated notes payable to an unrelated third party for a total of $352, including principal of $347 and cash and accrued paid in kind interest of $5.

8.0% Convertible Notes

In connection with the investments by Mead Park Capital and EBC, as assignee of CBF, in September 2013, the Company issued $8,248 in aggregate principal amount of convertible senior promissory notes. The 8.0% Convertible Notes accrue 8% interest per year, payable quarterly. The 8.0% Convertible Notes mature on September 25, 2018.

The holders of the notes may convert all or any part of the outstanding principal amount of the 8.0% Convertible Notes at any time into shares of the Company’s common stock at $3.00 per share conversion price, subject to customary anti-dilution adjustments. Accordingly, based on the current principal balance, the notes will be convertible into up to an aggregate of 2,749,167 shares of common stock. However, the 8.0% Convertible Notes have certain provisions that allow for the deferral of interest payments: (i) if dividends of less than $0.02 per share are paid on the Company’s common stock, then the Company may pay one-half of the interest payable on such date in cash, and the remaining one-half of the interest otherwise payable will be added to the principal amount of the convertible note then outstanding; and (ii) if no dividends are paid on the Company’s common stock, then the Company may make no payment in cash of the interest payable on such date, and all of the interest otherwise payable on such date will be added to the principal amount of the note then outstanding.