| Allocation Of Private Placement Proceeds |
The allocation of the net proceeds as of the Closing Date, along with changes in the net carrying value of the Series A Preferred Stock through December 31, 2018 are set forth below (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | Series A Preferred Stock | | Common | | Convertible | | | | Shares | | Amount | | Stock | | Notes | | Total | Fair value on Closing Date: | | | | | | | | | | Series A Preferred Stock | 140,000 |
| | $ | 126,763 |
| (1) | $ | — |
| | $ | — |
| | $ | 126,763 |
| Common Stock | — |
| | — |
| | 20,131 |
| (2) | — |
| | 20,131 |
| Convertible Notes | — |
| | — |
| | — |
| | — |
| | — |
| Total | 140,000 |
| | $ | 126,763 |
| | $ | 20,131 |
| | $ | — |
| | $ | 146,894 |
| | | | | | | | | | | Pro rata allocation of fair value on Closing Date: |
| |
| |
| |
| | | Aggregate cash proceeds on Closing Date | 140,000 |
| | $ | 114,773 |
| (3) | $ | 18,227 |
| (3) | $ | — |
| | $ | 133,000 |
| Incremental and direct costs | — |
| | (3,994 | ) | (4) | (634 | ) | (4) | — |
| | (4,628 | ) | Net carrying value on Closing Date | 140,000 |
| | 110,779 |
| | $ | 17,593 |
| | $ | — |
| | $ | 128,372 |
| Accretion of discount through December 31, 2018 | — |
| | 2,373 |
| (5) | | | | | | Issuance of shares to settle PIK Dividends | 846 |
| | 846 |
| (6) | | | | | | Net carrying value as of December 31, 2018 | 140,846 |
| | $ | 113,998 |
| | | | | | |
_________________ | | (1) | The liquidation preference for each share of Series A Preferred Stock on the Closing |
| | (2) | Date was $1,000 per share for an aggregate liquidation preference of $140.0 million. The fair value of the Series A Preferred Stock was approximately$126.8 million on the Closing Date which is the basis for allocation of the net proceeds. Please refer to Note 13 for further discussion of the valuation methodology employed. |
| | (3) | The fair value of the issuance of approximately 2.9 million shares of the Common Stock was based on the last closing price of $6.95 per share prior to closing. |
| | (4) | The aggregate cash proceeds of $133.0 million on the Closing Date were allocated pro rata based on the fair value of all consideration issued of $146.9 million. |
| | (5) | Incremental and direct costs of the Private Placement were allocated pro rata based on the fair value of all consideration issued of $146.9 million. Such costs include financial advisory and professional fees of $2.7 million that were incurred by the Company, and due diligence and professional fees incurred by the investors of $1.9 million. Of the total incremental and direct costs of $4.6 million, $2.7 million was paid from the net proceeds at closing and $1.9 million was paid directly by the Company. |
| | (5) | The difference between the initial liquidation preference of $140.0 million and the initial carrying value shown above of $110.8 million on the Closing Date represents a discount of $29.2 million that is being accreted at a rate of 4.8% per annum using the effective interest method. As shown in Note 12, accretion is treated as a deduction in the calculation of earnings applicable to common stockholders. Accretion was $2.4 million for the period from July 19, 2018 through December 31, 2018, which resulted in an increase in the carrying value of the Series A Preferred Stock and a corresponding reduction in additional paid-in capital. As a result of these periodic accretion adjustments, the carrying value of $110.8 million related to the original issuance of 140,000 shares of Series A Preferred Stock will continue to increase until it is equal to the $140.0 million liquidation preference applicable to such shares on July 19, 2023 when the holders may first elect to redeem their shares for cash. |
| | (6) | A total of 846 shares of Series A Preferred Stock were issued on October 1, 2018 to settle accrued PIK Dividends for the third quarter of 2018. These shares had an initial liquidation preference of $1,000 per share for a total of $0.8 million. |
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| Summary of Dividends Declared |
Presented below is a summary of total and per share dividends declared through December 31, 2018 (dollars in thousands, except per share amounts):
| | | | | | | | | | | | | | | | | | | | Dividends Payable in: | | Total Dividends | | Dividends | | | Cash | | PIK | | | Per Share | Cash Dividends at 10.0% per annum: | | | | | | | | | Third quarter of 2018 | | $ | 2,839 |
| | $ | — |
| | $ | 2,839 |
| | $ | 20.28 |
| Fourth quarter of 2018 | | 3,521 |
| | — |
| | 3,521 |
| | 25.00 |
| PIK Dividends at 3.0% per annum: | |
| |
| |
| |
| Third quarter of 2018 | | — |
| | 846 |
| | 846 |
| | 6.04 |
| Fourth quarter of 2018 | | — |
| | 1,056 |
| | 1,056 |
| | 7.50 |
| Fractional shares payable in cash | | 6 |
| | — |
| | 6 |
| | 0.04 |
| Total dividends accrued in 2018 | | 6,366 |
| | 1,902 |
| | 8,268 |
| | 58.86 |
| Less dividends paid in 2018 | | (2,845 | ) | | (846 | ) | | (3,691 | ) | | (26.36 | ) | Liability for unpaid dividends, December 31, 2018 | | $ | 3,521 |
| | $ | 1,056 |
| | $ | 4,577 |
| | $ | 32.50 |
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