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Debt | 6 Months Ended
--- | ---
Jun. 30, 2022
Debt Disclosure [Abstract] |
Debt |
8. | Debt
Our debt consisted of the following (in thousands):
|  | June 30, 2022 |  |  | December 31, 2021 |
Financing Agreement |  | $ | 90,780 |  |  | $ | 200,000 |
Less: deferred financing fees |  |  | - |  |  |  | 11,731 |
Debt, net |  | $ | 90,780 |  |  | $ | 188,269 |
Financing agreement In March 2022, we entered into Amendment No. 9 to the Financing Agreement (“Amendment No. 9”) pursuant to which, among other amendments, (i) the lenders waived various Company breaches of the Financing Agreement, including breaches of the $60.0 million minimum cash covenant and the minimum net revenue covenants for the fourth quarter of 2021; (ii) the Company and the lenders agreed to a reduced minimum cash covenant and to the removal of the minimum net revenue covenant for the first quarter of 2022; (iii) the lenders waived the existing $60.0 million prepayment penalty under the Financing Agreement and the Company agreed to pay a paid in kind (“PIK”) amendment financing fee of $30.0 million, which fee was added to the principal amount of the loans under the Financing Agreement, $16.0 million of which fee was waivable in certain conditions; (iv) the maturity date of the Financing Agreement was amended to June 1, 2022; and (v) the Company agreed to pay to the Lenders as a prepayment of the loans under the Financing Agreement the first $120.0 million of net proceeds from the vitaCare Divestiture and all net proceeds of the vitaCare Divestiture in excess of $135.0 million. Amendment No. 9 was accounted for as an extinguishment of debt modification in accordance with U.S. GAAP. Accordingly, in March 2022, we recorded an $8.4 million loss on extinguishment of debt, which represented the unamortized deferred financing fees, net of previously accrued prepayment fees. Additionally, the Amendment No. 9 PIK financing fee was recorded as deferred financing fees and was amortized over the remaining term of the Financing Agreement. In April 2022, we utilized $120.0 million of net proceeds from the vitaCare Divestiture to make a prepayment of the loans under the Financing Agreement under the terms of Amendment No. 9. Additionally, with the prepayment on the debt, $16.0 million of the PIK financing fee was waived in accordance with Amendment No. 9. In May 2022, we entered into Amendment No. 10 to the Financing Agreement (“Amendment No. 10”) pursuant to which, among other amendments, (i) interest payments under the Financing Agreement were paused, such that interest on each term loan shall be payable in cash and in arrears (a) upon any prepayment of that term loan, whether voluntary or mandatory, to the extent accrued on the amount being prepaid and (b) on the maturity date, (ii) the minimum cash covenant was set at $10.0 million, (iii) the maturity date of the Financing Agreement was amended to July 13, 2022, (iv) the termination of the Merger Agreement was added as an event of default, and (v) we agreed to a PIK financing fee of $1.8 million, which fee was added to the principal amount of the loans under the Financing Agreement. Amendment No. 10 was accounted for as a debt amendment in accordance with U.S. GAAP. Accordingly, in May 2022, the Amendment No. 10 PIK financing fee was recorded as deferred financing fees and was amortized over the remaining term of the Financing Agreement. As of June 30, 2022, there were no unamortized deferred financing fees. Also in May 2022, we entered into Amendment No. 11 (“Amendment No. 11”) to the Financing Agreement. Amendment No. 11 contains amendments to the Financing Agreement that would have gone into effect upon the satisfaction of certain conditions on or before July 13, 2022 (the “Amendment Effective Date”), including (i) the consummation of the Merger, (ii) the payment in cash of (a) all accrued and unpaid interest under the Financing Agreement through and including the Amendment Effective Date and (b) all fees, costs, expenses and taxes then payable pursuant to Section 2.7 or 10.2 of the Financing Agreement, and (iii) the delivery to the administrative agent of certain customary documents, including a Pledge Agreement, executed by Parent, with respect to the pledge of 100% of the capital stock of the Company. Since the consummation of the Merger did not occur, Amendment No. 11 never became effective. Debt covenants The Financing Agreement contains customary restrictions and covenants applicable to us that are customary for financings of this type. Among other requirements, we are required to maintain a minimum unrestricted cash balance. From February 7, 2022 to March 8, 2022, we did not maintain the required unrestricted cash balance of $60.0 million. In connection with Amendment No. 9, the lenders waived this event of default and reduced the required minimum unrestricted cash balance. As defined in Amendment No. 9, the minimum unrestricted cash balance was a base amount (the “Base Amount”) minus specified payables, which fluctuated based on our accounts payable balance. As per Amendment No.9, the Base Amount decreases over the period from March 1, 2022 through May 7, 2022, and the Base Amount was $10.0 million minus specified payables from May 8, 2022 to May 26, 2022. A s defined in Amendment No. 10, the minimum unrestricted cash balance was set at $10.0 million. Our unrestricted cash balance was above the minimum unrestricted cash balance covenant, as per Amendment Nos. 9 and 10, at all times from March 1, 2022 through August 15, 2022, the filing date of this 10-Q Report. Interest and financing costs Interest expense and other financing costs consisted of the following (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Interest expense |  | $ | 3,773 |  |  | $ | 5,329 |  |  | $ | 9,137 |  |  | $ | 11,784 |
Interest prepayment fees |  |  | — |  |  |  | 858 |  |  |  | — |  |  |  | 3,358 |
Financing fees amortization |  |  | 7,923 |  |  |  | 1,409 |  |  |  | 16,971 |  |  |  | 2,681 |
Interest expense and other financing costs |  | $ | 11,696 |  |  | $ | 7,596 |  |  | $ | 26,108 |  |  | $ | 17,823 |

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