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Debt | 12 Months Ended
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Dec. 31, 2013
Debt [Abstract] |
Debt | 17. DEBT The Company had the following debt outstanding:
DETAIL OF DEBT
(Dollars in Thousands)
Description |  | Current Outstanding Par |  |  | December 31, 2013 |  | December 31, 2012 |  | Interest Rate Terms |  | Interest (5) |  | Maturity
Contingent convertible senior notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
10.50% contingent convertible senior notes (the "New Notes") |  | $ | 3,121 |  |  | $ | 3,115 |  | $ | 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)
|  | $ | 11,369 |  |  | $ | 11,363 |  |  | 8,068 |  |  |  |  |  |  |  |
Junior subordinated notes: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Alesco Capital Trust I |  | $ | 28,125 | (3) |  |  | 10,697 |  |  | 10,189 |  | 4.25% |  |  | 4.25 | % |  | July 2037
Sunset Financial Statutory Trust I |  |  | 20,000 | (3) |  |  | 7,614 |  |  | 7,248 |  | 4.40% |  |  | 4.40 | % |  | March 2035
|  | $ | 48,125 |  |  |  | 18,311 |  |  | 17,437 |  |  |  |  |  |  |  |
Subordinated notes payable |  | $ | - |  |  |  | - |  |  | 342 |  | 12.00% | (4) |  | 12.00 | % |  | June 2013
Total |  |  |  |  |  | $ | 29,674 |  | $ | 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 $3,121 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)R epresents the interest rate as of the last day of the reporting period. Contingent Convertible Senior Notes 10.50% Contingent Convertible Senior Notes due 2027 The Company issued $8,121 aggregate principal amount of New Notes at par during the second half of 2011 in connection with an Exchange Offer consummated for $7,621 aggregate principal amount of the Old Notes and a privately negotiated exchange of $500 in aggregate principal amount of the Old Notes. The New Notes are senior, unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future unsubordinated, unsecured indebtedness. The New Notes are subordinate in right of payment to the Company’s existing and future secured indebtedness to the extent of such security. The New Notes bear interest at an annual rate of 10.50% and is payable semiannually on May 15 and November 15 of each year. The New Notes mature on May 15, 2027. The Company may redeem all or part of the New Notes for cash on or after May 20, 2014, at a redemption price equal to 100% of the principal amount of the New Notes, plus accrued and unpaid interest and additional interest, if any, to, but excluding, the redemption date. The holders of the New Notes may require the Company to repurchase all or a portion of their New Notes for cash on May 15, 2014; May 15, 2017; and May 15, 2022 for a repurchase price equal to 100% of 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. In October 2013, the Company repurchased $5,000 principal amount of new notes from an unrelated third party. The Company recognized a loss from repurchase of debt of $15 which was included as a component of other income / (expense) in the Company’s consolidated statement of operations. As of December 31, 2013, the Company was in compliance with the covenants of the New Notes. The Conversion Feature The New Notes are redeemable prior to their stated maturity date into cash, or if note holders exercise their conversion option, convertible into shares of the Company’s Common Stock under certain circumstances. The conversion feature of the New Notes provides that each holder may exchange their notes for the Company’s Common Stock at a conversion rate of $116.37 per share of Common Stock for every $1,000 of par value. In other words, for each $1,000 of par value held, the holder can exchange the notes for 8.5933 shares of the Company’s Common Stock. 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. As required under ASC 470, the Company accounted for the 8.0% Convertible Notes as conventional convertible debt and did not allocate any amount of the proceeds to the embedded equity option. 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 in the quarter prior to any interest payment date, then the Company may pay one-half of the interest in cash on such date, 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 in the quarter prior to any interest payment date, then the Company may make no payment in cash 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. As of December 31, 2013, the Company was in compliance with the covenants of the 8.0% Conv e rtible Notes and has paid all of the interest due there under in cash. 7.625% Contingent Convertible Senior Notes due 2027 (the “Old Notes”) The Company assumed the 7.625% Contingent Convertible Senior Notes due 2027 from AFN at the time of the Merger. The Old Notes bore interest at an annual rate of 7.625%. Interest on the Old Notes was payable semiannually on May 15 and November 15 of each year. As of December 31, 2012, the Company had no Old Notes outstanding. During the year ended December 31, 2011, the Company repurchased $1,025 aggregate principal amount of the Old Notes from unrelated third parties for $988 including accrued interest. The Company recognized a gain from repurchase of debt of $33, which was included as a component of other income / (expense) within the non-operating income / (expense) section of the Company’s consolidated statements of operations. During the year ended December 31, 2012, the Company repurchased $150 aggregate principal amount of the Old Notes from an unrelated third party for $151, including accrued interest of $4. The Company recognized a gain from repurchase of debt of $3, which was included as a component of other income / (expense) within the non-operating income / (expense) section of the Company’s consolidated statements of operations. The Company also recognized a gain from the repurchase of subordinated notes during 2012 that was also included in this line. On May 15, 2012, the holders of $10,110 aggregate principal amount of the Old Notes exercised their option to require the Company to repurchase their Old Notes. On July 5, 2012, the Company, at its option, redeemed the remaining $100 aggregate principal amount of the Old Notes outstanding. Junior Subordinated Notes The Company assumed $49,614 aggregate principal amount of junior subordinated notes outstanding at the time of the Merger. The Company recorded the debt at fair value on the acquisition date. Any difference between the fair value of the junior subordinated notes on the Merger date and the principal amount of debt is amortized into earnings over the estimated remaining life of the underlying debt as an adjustment to interest expense. The junior subordinated notes are payable to two special purpose trusts: 1. Alesco Capital Trust I: $28,995 in aggregate principal amount issued in June 2007. The notes mature on July 30, 2037 and may be called by the Company at par any time after July 30, 2012. The notes accrued interest payable quarterly at a fixed interest rate equal to 9.495% per annum through the distribution payment date on July 30, 2012 and thereafter accrue at a floating interest rate equal to LIBOR plus 400 basis points per annum through July 30, 2037. All principal is due at maturity. The Alesco Capital Trust I simultaneously issued 870 shares of the Alesco Capital Trust I’s common securities to the Company for a purchase price of $870, which constitutes all of the issued and outstanding common securities of the Alesco Capital Trust I. 2. Sunset Financial Statutory Trust I (“Sunset Financial Trust”): $20,619 in aggregate principal amount issued in March 2005. The notes mature on March 30, 2035. The notes accrue interest payable quarterly at a floating rate of interest of 90-day LIBOR plus 415 basis points. All principal is due at maturity. The Sunset Financial Trust simultaneously issued 619 shares of the Sunset Financial Trust’s common securities to the Company for a purchase price of $619, which constitutes all of the issued and outstanding common securities of the Sunset Financial Trust. Alesco Capital Trust I and Sunset Financial Trust (collectively, ”the Trusts”) described above are VIEs pursuant to variable interest provisions included in FASB ASC 810 because the holders of the equity investment at risk do not have adequate decision making ability over the Trust’s activities. The Company is not the primary beneficiary of the Trusts as it does not have the power to direct the activities of the Trusts. The Trusts are not consolidated by the Company and, therefore, the Company’s consolidated financial statements include the junior subordinated notes issued to the Trusts as a liability, and the investment in the Trusts’ common securities as an asset. The common securities were deemed to have a fair value of $0 as of the Merger Date. These are accounted for as cost method investments; therefore we do not adjust the value at each reporting period. Any income generated on the common securities is recorded as interest income, a component of interest expense, net, in the consolidated statement of operations. The junior subordinated notes have several financial covenants. Since the Merger, IFMI has been in violation of one covenant of the Alesco Capital Trust I. As a result of this violation, IFMI is prohibited from issuing additional debt that is either subordinated to or pari passu with the Alesco Capital Trust I debt. This violation does not prohibit IFMI from issuing senior debt or the Operating LLC from issuing debt of any kind. IFMI is in compliance with all other covenants of the junior subordinated notes. The Company does not consider this violation to have a material adverse impact on its operations or on its ability to obtain financing in the future. Subordinated Notes Payable The Subordinated Notes matured and were paid i n full on June 20, 2013 and bore interest at an annual rate of 12%. A portion of this interest, 9%, was payable in cash semiannually on May 1 and November 1 of each year. The remaining portion, 3%, was paid in kind at an annual rate of 3%, which was also payable semiannually. All accrued in kind interest was added to the unpaid principal balance of the Subordinated Notes on each May 1 and November 1, and thereafter the increased principal balance accrued interest at the annual rate of 12%. The Subordinated Notes were unsecured obligations of the Company. In September 2012, the Company repurchased $1,177 principal amount of Subordinated Notes from an unrelated third party for $1,139, including accrued cash interest and paid in kind interest of $50. The Company recognized a gain from repurchase of debt of $83, net of expenses, which was included as a component of other income / (expense) within the non-operating income / (expense) section of the Company’s consolidated statements of operations. See note 29. 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. Promissory Notes Issued In Connection With the Repurchase of Mandatorily Redeemable Equity Interests On October 5, 2012, PrinceRidge and the Company entered into a Separation, Release and Repurchase Agreement (collectively, the “PrinceRidge Separation Agreements”) with each of Ahmed Alali, Ronald J. Garner, and Matthew G. Johnson (collectively, the “PrinceRidge Separated Employees”). Under the PrinceRidge Separation Agreements, the PrinceRidge Separated Employees resigned from all positions and offices held with PrinceRidge and its affiliates as well as any membership that the PrinceRidge Separated Employees may have held with the Board of Managers of the PrinceRidge GP. In connection with the repurchase of the mandatorily redeemable equity interests, PrinceRidge paid $2,640 in cash and issued to the PrinceRidge Separated Employees promissory notes in the initial aggregate principal amount of $4,824. See note 18. The promissory notes were issued on October 5, 2012. The terms and conditions of each of the promissory notes were substantially the same. Under each of the promissory notes, interest accrued on the unpaid balance of the principal amount at a rate of five percent (5%) per annum from October 5, 2012 until the aggregate principal amount of $4,824 was paid in full on December 21, 2012. 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 15. Under the note payable, interest accrued on the unpaid balance of the principal amount at a floating rate equal to three-month LIBOR plus 2.75% per annum. Payments were 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 was pre-payable without penalty and had no stated maturity date. The Star Asia Manager note payable was paid in full in October 2013. Deferred Financing The Company paid $670 of deferred financing costs during the year ended December 31, 2013 associated with the issuance of the 8.0% Convertible Notes. The Company recognized interest expense from deferred financing costs of $26, $0, and $282 for the years ended December 31, 2013, 2012, and 2011, respectively. Interest Expense, net Interest expense includes interest incurred in connection with the Company’s debt described in this note, the amo rtization of deferred financing related to the 8.0% Convertible N otes, the amortization of discount related to the convertible senior notes and the junior subordinated notes, interest income or expense related to the amounts owed to withdrawing partners of PrinceRidge (see note 18), and the amortization of discount related to a settlement payable in connection with a legal proceeding that involved CCS (see note 13).

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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