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Derivatives
 9 Months Ended
Sep. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivatives
DERIVATIVES
 
In connection with certain borrowings disclosed in Note 3, the Company was required to record derivative instruments on its condensed consolidated balance sheets. None of these derivative instruments are designated as a hedge. The following tables disclose the fair values and classification of the derivative instruments on the Company’s condensed consolidated balance sheets (in thousands):
 
 
September 30,
2014
 
December 31, 2013
Intangible and other assets:
 

 
 

Interest rate cap
$
72

 
$
185

Total intangible and other assets
$
72

 
$
185

Derivative liabilities, current:
 

 
 

Warrants issued with 8.00% Notes Issued in 2009
$
—

 
$
(57,048
)
Derivative liabilities, non-current:
 

 
 

Compound embedded derivative with 8.00% Notes Issued in 2009
$
—

 
$
(66,022
)
Compound embedded derivative with 8.00% Notes Issued in 2013
(109,896
)
 
(109,794
)
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
(465,907
)
 
(229,662
)
Total derivative liabilities, non-current:
(575,803
)
 
(405,478
)
Total derivative liabilities, current and non-current
$
(575,803
)
 
$
(462,526
)

 
The following table discloses the changes in value during the three and nine months ended September 30, 2014 and 2013 recorded as derivative gain (loss) on the Company’s condensed consolidated statement of operations (in thousands):
 
 
Three Months Ended
 
September 30, 2014
 
September 30, 2013
Interest rate cap
$
(7
)
 
$
(30
)
Warrants issued with 8.00% Notes Issued in 2009
—

 
(6,323
)
Compound embedded derivative with 8.00% Notes Issued in 2009
—

 
(29,986
)
Contingent put feature embedded in the 5.0% Convertible Senior Notes
—

 
848

Compound embedded derivative with 8.00% Notes Issued in 2013
43,050

 
(25,590
)
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
123,946

 
(36,453
)
Total derivative gain (loss)
$
166,989

 
$
(97,534
)
 
 
Nine Months Ended
 
September 30, 2014
 
September 30, 2013
Interest rate cap
$
(113
)
 
$
86

Warrants issued with 8.00% Notes Issued in 2009
(67,523
)
 
(28,949
)
Compound embedded derivative with 8.00% Notes Issued in 2009
(16,406
)
 
(37,233
)
Contingent put feature embedded in the 5.0% Convertible Senior Notes
—

 
2,133

Compound embedded derivative with 8.00% Notes Issued in 2013
(98,376
)
 
(26,495
)
Compound embedded derivative with the Amended and Restated Thermo Loan Agreement
(236,245
)
 
(36,453
)
Total derivative loss
$
(418,663
)
 
$
(126,911
)


Intangible and Other Assets
 
Interest Rate Cap
 
In June 2009, in connection with entering into the Facility Agreement, which provides for interest at a variable rate, the Company entered into five ten-year interest rate cap agreements. The interest rate cap agreements reflect a variable notional amount ranging from $586.3 million to $14.8 million at interest rates that provide coverage to the Company for exposure resulting from escalating interest rates over the term of the Facility Agreement. The interest rate cap provides limits on the six-month Libor rate (“Base Rate”) used to calculate the coupon interest on outstanding amounts on the Facility Agreement and is capped at 5.50% should the Base Rate not exceed 6.5%. Should the Base Rate exceed 6.5%, the Company’s Base Rate will be 1% less than the then six-month Libor rate. The Company paid an approximately $12.4 million upfront fee for the interest rate cap agreements. The interest rate cap did not qualify for hedge accounting treatment, and changes in the fair value of the agreements are included in the condensed consolidated statements of operations.
 
Derivative Liabilities
 
The Company has identified various embedded derivatives resulting from certain features in the Company’s debt instruments. These embedded derivatives required bifurcation from the debt host instrument. All embedded derivatives that required bifurcation are recorded as a derivative liability on the Company’s condensed consolidated balance sheet with a corresponding debt discount netted against the principal amount of the related debt instrument. The Company accretes the debt discount associated with each derivative liability to interest expense over the term of the related debt instrument using an effective interest rate method. The fair value of each embedded derivative liability is marked-to-market at the end of each reporting period with any changes in value reported in its condensed consolidated statements of operations. See below for further discussion for each liability and the features embedded in the debt instrument which required the Company to account for the instrument as a derivative.


 
Warrants Issued with 8.00% Notes Issued in 2009
 
Due to the reset features in the 8.00% Warrants issued with the 8.00% Notes Issued in 2009, the Company recorded the 8.00% Warrants as an embedded derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which was netted against the principal amount of the 8.00% Notes Issued in 2009. The Company determined the fair value of the warrant derivative using a Monte Carlo simulation model. The exercise period for the 8.00% Warrants expired in June 2014; accordingly, the derivative liability for the 8.00% Warrants is no longer outstanding.
 
Compound Embedded Derivative with 8.00% Notes Issued in 2009
 
As a result of the conversion rights and features and the contingent put feature embedded within the 8.00% Notes Issued in 2009, the Company recorded a compound embedded derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which was netted against the principal amount of the 8.00% Notes Issued in 2009. The Company determined the fair value of the compound embedded derivative using a Monte Carlo simulation model. On April 15, 2014, the remaining principal amount of 8.00% Notes Issued in 2009 was converted into common stock; accordingly, the derivative liability embedded in the 8.00% Notes Issued in 2009 is no longer outstanding.
 
Contingent Put Feature Embedded in the 5.0% Convertible Senior Notes
 
As a result of the contingent put feature within the 5.0% Convertible Senior Notes (“5.0% Notes”), the Company recorded a derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which was netted against the principal amount of the 5.0% Notes.  The Company determined the fair value of the contingent put feature derivative using a Monte Carlo simulation model. On November 7, 2013, the remaining principal amount of the 5.0% Notes was converted into common stock; accordingly, the derivative liability embedded in the 5.0% Notes is no longer outstanding.
 
Compound Embedded Derivative with 8.00% Notes Issued in 2013
 
As a result of the conversion option and the contingent put feature within the 8.00% Notes Issued in 2013, the Company recorded a compound embedded derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which is netted against the face value of the 8.00% Notes Issued in 2013. The Company determined the fair value of the compound embedded derivative liability using a blend of a Monte Carlo simulation model and market prices.
 
Compound Embedded Derivative with the Amended and Restated Thermo Loan Agreement
 
As a result of the conversion option and the contingent put feature within the Loan Agreement with Thermo entered into in July 2013, the Company recorded a compound embedded derivative liability on its condensed consolidated balance sheet with a corresponding debt discount which is netted against the face value of the Amended and Restated Loan Agreement. The Company determined the fair value of the compound embedded derivative liability using a blend of a Monte Carlo simulation model and market prices.