Investment in Convertible Notes

9 Months Ended

Sep. 30, 2021

Investments, Debt and Equity Securities [Abstract]

Investment in Convertible Notes

Investment in Convertible Notes

On July 19, 2019, the Company entered into an agreement to purchase up to $30.0 million in convertible promissory notes from another terminal operator that bear interest at 3% per annum. The Company has the option of converting the notes to common stock of the terminal operator prior to the maturity date. At closing, the Company purchased a $5.0 million convertible promissory note which is subordinated to the terminal operator’s credit facility and matures six months following the satisfaction of administrative conditions.

On October 11, 2019, the Company purchased an additional $25.0 million convertible promissory note which is also subordinated to the terminal operator’s credit facility and, beginning on July 1, 2020, the balance of this note, if not previously converted, was payable in equal $1,000,000 monthly installments until all principal was repaid in full.

On July 30, 2020, the Company and the terminal operator entered into the Omnibus Amendment (the “Amendment”) to the original agreement to purchase convertible promissory notes from the terminal operator. The Amendment, among other things, extended the maturity date of the $5.0 million convertible promissory note and the beginning of the payback period for the $25.0 million convertible promissory note until December 31, 2020.

On March 9, 2021, the Company and the terminal operator entered into the Second Omnibus Amendment (the “Second Amendment”) to both of the convertible promissory notes and the agreement to purchase the convertible promissory notes. The Second Amendment, among other things, extends the December 31, 2020 maturity and conversion feature of the $5.0 million convertible promissory note to December 31, 2021, the maturity and conversion feature of the $25.0 million convertible promissory note to June 1, 2024 and the beginning of the payback period for the $25.0 million convertible promissory note from December 31, 2020 to January 1, 2022.

On July 30, 2021, the Company provided notice to the terminal operator that it was exercising its rights under the $30.0 million aggregate principal amount of convertible promissory notes to convert the entire aggregate principal amount and accrued interest, which has an accounting fair market value of $39.3 million, into common stock of the terminal operator, subject to approval from the IGB to transfer the common stock to the Company and receipt of other customary closing deliverables. As of September 30, 2021, such approval remained pending. As a result, the Company continued to account for the convertible promissory notes as available for sale debt securities as of September 30, 2021. The parties are in ongoing discussions regarding the calculated ownership percentage of the terminal operator by the Company on an as-converted basis. As a result of the ongoing discussions between the parties, assumptions impacting the valuation of the convertible notes could change in the future and those changes could materially impact the valuation.

The Company recognized within comprehensive income an unrealized loss of $0.3 million, net of income taxes, for the three months ended September 30, 2021 and an unrecognized gain of $5.4 million, net of income taxes, for the nine months ended September 30, 2021. For more information on how the Company determined the fair value of the convertible promissory notes, see Note 12.