Convertible Loan, Related Party

3 Months Ended

Mar. 31, 2016

Debt Disclosure [Abstract]

Convertible Loan, Related Party

6. CONVERTIBLE LOAN, RELATED PARTY

On November 13, 2013, the Company entered into a loan agreement (the “RCF Loan”) with Resource Capital Fund V L.P. (“RCF”), whereby RCF agreed, subject to the terms and conditions set forth in the RCF Loan, to provide a secured convertible loan facility of up to $15.0 million to the Company, which was subsequently amended on April 29, 2014 to reduce the amount available thereunder from $15.0 million to $8.0 million. No additional amounts may be drawn under the RCF Loan.

Amounts drawn under the RCF Loan mature on December 31, 2016 and bear interest at 10% per annum, payable quarterly in arrears in shares of the Company’s common stock or, at RCF’s election, in cash. The number of shares to be issued as payment for interest is determined based upon the volume weighted-average price (“VWAP”) of the Company’s common stock for the 20 trading days preceding the last day of each quarter. Accordingly, the Company issued 38,086 shares of common stock on January 4, 2016 for settlement of interest expense of $0.2 million related to the three-month period ended December 31, 2015.

As of March 31, 2016, interest expense of $0.2 million relating to the three-month period ended March 31, 2016 was included in accrued liabilities on the Company’s Condensed Consolidated Balance Sheets. RCF has elected to receive cash, payable on May 31, 2016.

The following table represents the key components of our convertible loan:

	March 31, 2016			December 31, 2015
(thousands of dollars)
Debt principal	$	8,000		$	8,000
Unamortized discount		(1,396	)		(1,846	)
Carrying value of convertible loan, end of period	$	6,604		$	6,154

For the three-month period ended March 31, 2016, the Company recorded amortization of the debt discount and commitment fee of $0.5 million, which has been included in interest expense in the Company’s Condensed Consolidated Statements of Operations.

RCF may convert amounts drawn under the RCF Loan into shares of the Company’s common stock at any time prior to maturity on December 31, 2016. The conversion price is set at $31.20 per share. As of May 11, 2016, RCF owned 718,137 shares or 12.4% of the Company’s outstanding common stock. If RCF were to convert the entire $8.0 million outstanding under the RCF Loan, RCF would receive 256,410 shares of the Company’s common stock, and RCF’s ownership percentage in the Company would increase to 16.2%.