Convertible Loan, Related Party

9 Months Ended

Sep. 30, 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, all of which has been drawn. 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. RCF elected to receive cash in lieu of shares for the March 31, 2016 and the June 30, 2016 interest payments. On June 10, 2016, the Company paid $0.3 million to RCF which included $0.2 million in interest owing from March 31, 2016 and a $0.1 million interest penalty on the late payment. On July 10, 2016, the Company paid $0.2 million to RCF in interest owing from June 30, 2016.

As of September 30, 2016, interest expense of $0.2 million relating to the three-month period ended September 30, 2016 was included in accrued liabilities on the Company’s Condensed Consolidated Balance Sheets. The Company subsequently paid this interest in cash on October 11, 2016.

The following table represents the key components of the RCF Loan:

	September 30,	December 31,
	2016	2015
(thousands of dollars)
Debt principal	$      8,000	$            8,000
Unamortized discount	(491)	(1,846)
Carrying value of convertible loan, end of period	$      7,509	$            6,154

For the three- and nine-month periods ended September 30, 2016, the Company recorded amortization of the debt discount and establishment fee of $0.5 million and $1.4 million, respectively, 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 November 10, 2016, RCF owned 718,137 shares or 5.4% 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 7.14%.