In November 2018, we issued $210.0 million aggregate principal amount 6.25% Convertible Senior Notes due 2023 (the Convertible Notes) and received net proceeds of $24.0 million, as summarized below:

The Convertible Notes accrue interest at an annual rate of 6.25% per annum, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2019. The Convertible Notes mature on November 15, 2023, unless earlier repurchased, redeemed or converted in accordance with their terms and are unsecured.

The Convertible Notes will be convertible into cash, shares of our common stock or a combination thereof, as we elect at our sole discretion. The initial conversion rate is 52.0183 shares of our common stock per $1,000 of note principal (equivalent to an initial conversion price of approximately $19.22 per share of common stock), subject to adjustment in certain circumstances.

The Convertible Notes will be convertible at the option of the holders on or after May 15, 2023 at any time prior to the close of business on the second scheduled trading day immediately preceding the stated maturity date of

November 15, 2023. Additionally, holders may convert their Convertible Notes at their option at specified times prior to the maturity date of November 15, 2023, only if:

Subject to the satisfaction of certain conditions, we may redeem all, but not less than all, of the Convertible Notes at our option prior to the maturity date at a cash redemption price equal to the principal amount of the Convertible Notes to be redeemed, plus any accrued and unpaid interest. The Convertible Notes are subject to redemption only if certain requirements are satisfied, including that the last reported sale price per share of our common stock exceeds 150% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date we send the related redemption notice and (ii) the trading day immediately before the date we send such notice.

In order to reduce the dilutive impact or potential cash expenditure associated with conversion of the Convertible Notes, we used $33.2 million of the proceeds from sale of the Convertible Notes to enter into a capped call transaction (the Capped Call Transaction). The Capped Call Transaction will cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of our common stock underlying the Convertible Notes when our common stock is trading between the initial conversion price of approximately $19.22 and $28.8360. However, if the market price of our common stock exceeds the $28.8360 cap price, then the conversion of the Convertible Notes would have a dilutive impact and/or require a cash expenditure to the extent the market price exceeds the cap price.

We evaluated the accounting for the issuance of the Convertible Notes and concluded that the embedded conversion features meet the requirements for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity in its balance sheet, and that the cash conversion guidance applies. Therefore, the Convertible Notes issuance proceeds of $210.0 million are allocated first to the liability component based on the fair value of non-convertible debt with otherwise identical residual terms with the residual proceeds allocated to equity for the conversion features. The debt issuance costs associated with the Convertible Notes of $6.8 million were allocated to the liability and equity component in the same proportion as the issuance proceeds. We also evaluated the interest feature on default and redemption features embedded in the Convertible Notes and concluded that they are clearly and closely related to the Convertible Notes, and therefore they would not be separately accounted for as a derivative. For the contingent interest features unrelated to our creditworthiness, we concluded that they should be separately accounted for as a compound derivative instrument with de-minimis value. Further, we concluded the Capped Call Transaction qualifies for a derivative scope exception for instruments that are both indexed to an entity’s own stock and classified in stockholders’ equity in its balance sheet. Consequently, the fair value of the Capped Call of $33.2 million is classified as equity and will not be subsequently remeasured.

The balance of our Convertible Notes at December 31, 2019 and 2018, is as follows:


	December 31,		December 31,
	2019		2018
	(In thousands)
Principal amount	$	210,000	$	210,000
Unamortized discount		(47,660)		(56,156)
Unamortized issuance costs attributable to principal amount		(4,127)		(4,863)
Total Convertible Notes, net	$	158,213	$	148,981
Fair value of outstanding Convertible Notes	$	208,163	$	186,900
Amount by which the Convertible Notes if-converted value exceeds their principal amount	$	—	$	—

The unamortized debt discount and debt issuance costs related to the Convertible Notes are being amortized to interest expense using the effective interest method through the scheduled maturity of November 15, 2023.

The estimated fair value of the Convertible Notes at December 31, 2019, as determined through consideration of quoted market prices, was $208.2 million. The fair value is classified as Level 3 due to the limited trading activity for the Convertible Notes.