Financing Arrangements

6 Months Ended

Jun. 30, 2024

Financing Arrangements

Financing Arrangements

(7) Financing Arrangements

Loan and Security Agreement

On June 21, 2024, (the “Amendment Date”), the Company entered into the Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”), by and between Trinity Capital Inc., as lender (the “Lender”), and  Rigetti & Co, LLC and Rigetti Intermediate LLC (the “Company”), as borrowers, which amended and restated in its entirety the Company’s existing loan and security agreement, dated as of March 10, 2021 (as amended from time to time, the “Existing Loan Agreement”).  

Under the Existing Loan Agreement, the Company drew $12.0 million in March 2021, $8.0 million in May 2021, $7.0 million in November 2021 and $5.0 million in January 2022 (collectively, the “Term Loans”). The outstanding principal balance of the Term Loans as of the Amendment Date was $16.2 million. There are currently no additional amounts available to be drawn under the Amended Loan Agreement. Each Term Loan amortizes in equal monthly installments through 48 months following the disbursement date of each Term Loan (each, a “Maturity Date”), and bears interest at a rate equal to the greater of 11% or the US Prime Rate plus 7.50% per annum, payable monthly. The economic terms and cash flows of the Term Loans remain unchanged under the Amended Loan Agreement.

The Company may prepay, in whole or in part, the outstanding Term Loans, subject to a prepayment premium that remains unchanged from the Existing Loan Agreement, which is 1.5% on or after the 19^th month following the disbursement date of each Term Loan (each, an “Amortization Date”) and before the first anniversary of the Amortization Date, 1.0% on or after the first anniversary of the Amortization Date and before the second anniversary of the Amortization Date and 0.50% on or after the second anniversary of the Amortization Date and before the Maturity Date.

In addition, the Company is required to pay on the respective Maturity Date or the date of an earlier prepayment a final payment fee equal to 2.75% of the aggregate original principal amount of the Term Loans being repaid, which remains consistent with the Existing Loan Agreement. The final payment fee is being accreted and amortized into interest expense using the effective interest rate method over the term of the loan.

The Amended Loan Agreement contains representations and warranties and customary affirmative and negative covenants applicable to the Loan Parties (as defined below) and its consolidated subsidiaries, including, among other things, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions, which were amended from the covenants in the Existing Loan Agreement to increase flexibility for the Company.

The Amended Loan Agreement also includes events of default, including failure to pay principal, interest or certain other amounts when due, material inaccuracy of representations and warranties, violation of covenants, specified cross-default and cross-acceleration to other material indebtedness, certain bankruptcy and insolvency events, certain undischarged judgments, material invalidity of guarantees or grant of security interest, and change of control, in certain cases subject to certain thresholds and grace periods. If one or more events of default occurs and continues beyond any applicable cure period, the Lender may declare all of the obligations of the Company under the Amended Loan Agreement to be immediately due and payable, which remains consistent with the Existing Loan Agreement.

The obligations of the Company under the Amended Loan Agreement are currently guaranteed by the Company’s wholly owned subsidiaries, Rigetti & Co, LLC and Rigetti Intermediate LLC (which, together with the Company, are collectively referred to as the “Loan Parties” and each, a “Loan Party”) and will be guaranteed by any future domestic subsidiaries of the Company. The obligations of the Loan Parties under the Amended Loan Agreement and other loan documents are secured, subject to customary permitted liens and other agreed upon exceptions, by a perfected security interest in all assets of the Loan Parties.

The effective interest rate for all tranches of the debt was approximately 23.1% and 22.5% as of June 30, 2024 and December 31, 2023, respectively.

Long term debt and the unamortized discount balances are as follows (in thousands):

	June 30, 2024		December 31, 2023
Outstanding principal amount	$	16,177	$	22,376
Add: accreted liability of final payment fee		259		673
Less: unamortized debt discount, long-term		(58)		(224)
Less: current portion of long-term debt principal		(13,014)		(12,931)
Debt – net of current portion	$	3,364	$	9,894
Current portion of long-term debt – principal		13,014		12,931
Add: accreted liability of final payment fee		511		—
Less: current portion of unamortized debt discount		(483)		(767)
Debt – current portion	$	13,042	$	12,164

During the three and six months ended June 30, 2024, the Company recorded interest expense of $1.0 million and $2.1 million, respectively, which includes accretion of the end-of-term liability, amortization of the commitment fee asset and amortization of debt issuance costs totaling $0.2 million and $0.5 million, respectively. During the three and six months ended June 30, 2023, the Company recorded interest expense of $1.6 million and $3.0 million, respectively, which includes accretion of the end-of-term liability, amortization of the commitment fee asset and amortization of debt issuance costs totaling $0.3 million and $0.7 million, respectively.

The unamortized debt discount as of June 30, 2024 and December 31, 2023 of $0.5 million and $1.0 million, respectively, is offset against the carrying value of the term loan in the condensed consolidated balance sheets.

Scheduled principal payments on total outstanding debt are as follows (in thousands):

	June 30,2024
2024	$	6,718
2025		9,060
2026		399
	$	16,177