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Long Term Debt

12 Months Ended

Dec. 31, 2020

Hayfin Term Loan Agreement

On June 30, 2020, the Company entered into a Loan Agreement with, among others, Hayfin Services, LLP, (“Hayfin”) an affiliate of Hayfin Capital Management LLP (the “Hayfin Loan Agreement”), which was funded (the “Hayfin Loan Transaction”) on July 2, 2020 (the “Closing Date”) and provided the Company with a senior secured term loan in an aggregate amount of $50.0 million (the “Term Loan”) and an additional delayed draw term loan (the “DD TL”, collectively, the “Credit Facilities”) in the form of a committed but undrawn $25.0 million facility. The Company has the right to draw upon the DD TL until June 30, 2021.

The Term Loan and the DD TL (if drawn upon prior to expiry) both mature on June 30, 2025 (the “Maturity Date”). Interest is payable on the Term Loan and the DD TL for balances outstanding quarterly through the Maturity Date. No principal payments on either the Term Loan or the DD TL are due and payable until the Maturity Date.

The Term Loan and DD TL, which are senior secured obligations, were entered into together with the sale of the Company’s Series B Convertible Preferred Stock (as defined and described in Note 10, “Equity”) for $100.0 million (collectively, the “Financing Transactions”) in order to:

(1) refinance, in whole, the outstanding indebtedness (the “Refinancing”) under the Loan Agreement, dated as of June 10, 2019 (as amended and restated, the “BT Term Loan Agreement”), among the Company, the lenders and Blue Torch Finance LLC as administrative agent and collateral agent for such lenders,

(2) pay fees and expenses incurred with certain financing transactions, and

(3) finance the working capital, capital expenditures, and other general corporate obligations of the Company.

The interest rate applicable to any borrowings under the Term Loan is equal to LIBOR (subject to a floor of 1.5%) plus a margin of 6.75% per annum. If LIBOR is unavailable, the loan will carry interest at the greatest of the Prime Rate, the Federal Funds Rate plus 0.5% per annum, and 2.5%, plus the margin of 6.75%.

After December 31, 2020, the margin on the interest rate is eligible for a reduction; as follows:

•6.75% per annum if the Total Net Leverage Ratio (as defined in the Hayfin Loan Agreement) is greater than 2.0x,

•6.5% per annum if the Total Net Leverage Ratio is less than 2.0x but greater than or equal to 1.0x, or

•6.0% per annum if the Total Net Leverage Ratio is less than 1.0x.

An additional 3.0% margin is applied to the interest rate in the event of default as defined by the Hayfin Term Loan Agreement. Both at issuance and as of December 31, 2020, the Term Loan carried an interest rate of 8.3%.

The Credit Facilities contain financial covenants requiring the Company, on a consolidated basis, to maintain the following:

•Maximum Total Net Leverage Ratio of 5.0x through December 31, 2020, reduced to 4.5x through June 30, 2021, further reduced to 4.0x thereafter for the life of the loans, required to be calculated on a quarterly basis,

•Delayed Draw Term Loan Incurrence Covenant (as defined in the Hayfin Loan Agreement) of 3.5x Total Net Leverage, tested prior to any drawings under the DD TL, and

•Minimum Liquidity (as defined in the Hayfin Term Loan Agreement) of $10 million, an at-all-times financial covenant, tested monthly.

The Credit Facilities also specify that any prepayment of the loan, voluntary or mandatory, as defined in the Term Loan Agreement, subjects the Company to a prepayment premium applicable as of the date of the prepayment:

•On or before the first anniversary of the Closing Date:

◦A make-whole premium, equal to the greater of:

▪5% of the principal balance repaid,

▪102% of the principal balance plus interest that would have been accrued from the repayment date to 12 months following the Closing Date.

•After the first anniversary of the Closing Date but on or before the second anniversary of the Closing Date: 2% of the principal balance repaid.

•After the second anniversary of the Closing Date but on or before the third anniversary of the Closing Date: 1% of the principal balance repaid.

•After the third anniversary of the Closing Date: 0% of the principal balance repaid.

The Hayfin Loan Agreement also includes events of default customary for facilities of this type, and upon the occurrence of such events of default, subject to customary cure rights, all outstanding loans under the Credit Facilities may be accelerated or the lenders’ commitments terminated. The mandatory prepayments are also required in the event of a change in control, incurring other indebtedness, certain proceeds from disposal of assets and insured casualty event.

Beginning with the fiscal year ending December 31, 2021, the Company is required to prepay the outstanding loans based on the percentage of Excess Cash Flow (as defined in the Hayfin Loan Agreement), if such is generated, with the percentage determined based on the Total Net Leverage thresholds.

Hayfin maintains a first-priority security interest in substantially all of the Company’s assets.

Original issue discount and deferred financing costs incurred as part of the Financing Transactions were allocated between the sale of the Series B Convertible Preferred Stock and the Hayfin Term Loan on the basis of the relative fair values of the transactions. The costs allocated to the Hayfin Term Loan were further allocated between the Term Loan and the DD TL on the basis of the maximum potential principal outstanding between the Credit Facilities. The allocation of the deferred financing costs and original issue discount between Term Loan and the DD TL on July 2, 2020 was as follows (amounts in thousands):


	July 2, 2020
	Term Loan		DD TL		Total
	Long term debt		Other current assets
Original issue discount	$	333	$	167	$	500
Deferred financing costs	2,169		1,084		3,253

Deferred financing costs and original issue discount allocated to the Term Loan are amortized using the effective interest method through the Maturity Date. The amortization of such amounts are presented as part of interest expense (income), net on the consolidated statement of operations for the year ended December 31, 2020.

Deferred financing costs and original issue discount associated with the DD TL are amortized using the straight-line method through the earlier of the expiration of the DD TL commitment term on June 30, 2021, or the date the balance of the DD TL is funded. To the extent that there are unamortized deferred financing costs or original issue discount associated with the DD TL upon funding, such amounts will be amortized using the effective interest method through the Maturity Date. Amortization of these amounts are presented as part of interest expense (income), net on the consolidated statements of operations. Unamortized deferred financing costs and original issue discount associated with the DD TL are presented as other current assets on the consolidated balance sheet as of December 31, 2020.

The DD TL is subject to a commitment fee of 1% per annum of the amount undrawn, which is recognized as interest expense. The DD TL was not drawn upon as of December 31, 2020.

The balances of the Term Loan as of December 31, 2020 were as follows (amounts in thousands):


	December 31, 2020
Outstanding principal	$	50,000
Deferred financing costs	(1,996)
Original issue discount	(307)
Long term debt	$	47,697

Components of interest expense related to the Term Loan, included in interest expense (income), net on the consolidated statements of operations, was as follows (amounts in thousands):


	Year ended December 31, 2020
Stated interest	$	2,085
Amortization of deferred financing costs	173
Accretion of original issue discount	26
Interest expense	$	2,284

Interest expense related to the DD TL, included in interest (expense) income, net in consolidated statements of operations, was as follows (amounts in thousands):


	Year ended December 31, 2020
Commitment fee	$	128
Amortization of deferred financing costs	542
Accretion of original issue discount	83
Interest expense	$	753

Scheduled principal payments on the Term Loan as of December 31, 2020 are as follows:


Year ending December 31,	Principal
2021	$	—
2022	—
2023	—
2024	—
2025	50,000
Thereafter	—
Outstanding principal	$	50,000

The DD TL was not funded as of December 31, 2020. Consequently, no principal payments are owed.

As of December 31, 2020, the fair value of the Term Loan was $52.8 million. This valuation was calculated based on a series of Level 2 and Level 3 inputs, including a discount rate based on the credit risk spread of debt instruments of similar risk character in reference to U.S. Treasury instruments with similar maturities, with an incremental risk premium for risk factors specific to the Company. The remaining cash flows associated with the Term Loan were discounted to December 31, 2020 using this discount rate to derive the fair value.

BT Term Loan

On June 10, 2019, the Company entered into a loan agreement (the “BT Loan Agreement”) with Blue Torch Finance LLC (“Blue Torch”), as administrative agent and collateral agent, to borrow funds with a face value of $75.0 million (the “BT Term Loan”), of which the full amount was borrowed and funded. The proceeds from the BT Term Loan were used (i) for working capital and general corporate purposes and (ii) to pay transaction fees, costs and expenses incurred in connection with the BT Term Loan and the related transactions. The BT Term Loan would have matured on June 20, 2022 and was repayable in quarterly installments of $0.9 million, with the balance due on June 20, 2022. Blue Torch maintained a first-priority security interest in substantially all the Company’s assets. The BT Term Loan was issued net of the original issue discount of $2.3 million. The Company incurred $6.7 million of deferred financing costs.

On April 22, 2020, the Company amended the BT Loan Agreement with Blue Torch. The amendment provided for an increase in the maximum Total Leverage Ratio, which was a quarterly test, for the remainder of 2020, and also provided for a reduction in the minimum Liquidity requirement from April 2020 through November 2020. In connection with the amendment, the Company agreed to pay a one-time fee of approximately $0.7 million, added to the principal balance, and a 1 percentage point increase in the interest rate to LIBOR plus 9%.

On July 2, 2020, a portion of the proceeds from the Financing Transactions were used to repay the outstanding balance of principal, accrued but unpaid interest, and prepayment premium under the BT Loan Agreement. In connection with the repayment of the BT Term Loan, the Company terminated the BT Loan Agreement. The Company has no continuing obligations related to the BT Term Loan as of December 31, 2020. The Company recorded a loss on extinguishment of debt of $8.2 million. The composition of the loss on extinguishment of debt was as follows (amounts in thousands):


	July 2, 2020
Unamortized deferred financing costs	$	4,528
Unamortized original issue discount	1,538
Unamortized amendment fee	671
Prepayment premium	1,439
Other fees	25
Loss on extinguishment of debt	$	8,201

The balances of the BT Term Loan were as follows (amounts in thousands):


	December 31, 2019
		Current portion		Long-term
Outstanding principal		$	3,750	$	69,375
Original issue discount		—		(1,890)

Deferred financing cost		—		(5,579)
Long-term debt		$	3,750	$	61,906

Interest expense related to the BT Term Loan, included in interest (expense) income, net in the consolidated statements of operations was as follows (amounts in thousands):


	Year ended December 31,
	2020		2019
Interest on principal balance	$	3,773	$	4,331
Accretion of original issue discount	354		360
Accretion of amendment fee	53		—
Amortization of deferred financing costs	1,051		1,071
Total BT Term Loan interest expense	$	5,231	$	5,762

Paycheck Protection Program Loan

The Company applied for and, on April 24, 2020, received proceeds of $10.0 million in the form of a loan under the Paycheck Protection Program (the “PPP Loan”). On May 11, 2020, the Company repaid the PPP Loan in full. There are no continuing obligations under the PPP Loan as of December 31, 2020.