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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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November Indenture and Notes
On December 12, 2022, the Company completed the private placement of $25 million aggregate principal amount of its 10.625% Senior Notes due November 2024 (the “December Notes”), which are fully and unconditionally guaranteed on a senior unsecured basis by the Guarantors (as defined below). The December Notes were sold and issued under the Indenture, dated as of December 12, 2022 (the “December Indenture”), by and among the Company, as issuer, the guarantors party thereto (the “Guarantors”) and UMB Bank, National Association, as trustee. The December Notes are senior unsecured obligations of the Company. Net proceeds of the offering, after giving effect to the original issue discount, placement agent compensation and fees and expenses, were approximately $23 million. The proceeds will be used for general corporate purposes.
Interest and Maturity
The December Notes will mature on November 15, 2024. The December Notes bear interest at the rate of 10.625% per annum, payable semi-annually on each May 15 and November 15, commencing May 15, 2023.
Optional Redemption
At any time on or after November 15, 2023, the Company may redeem all, but not a part, of the December Notes at a redemption price equal to 100% of the principal amount of the December Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.
At any time prior to November 15, 2023, the Company may redeem all, but not a part, of the December Notes at a redemption price equal to 100% of the principal amount of the December Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption, plus a “make-whole premium.”
Change of Control
If the Company experiences certain defined changes of control, each holder of the December Notes may require the Company to repurchase all or a portion of its December Notes at a price equal to 100% of the aggregate principal amount of such December Notes, plus any accrued and unpaid interest to, but not including, the date of repurchase.
Certain Covenants
The December Indenture contains covenants that, among other things and subject to certain exceptions and qualifications, limit the Company’s ability and the ability of its restricted subsidiaries to: (i) incur additional indebtedness or issue preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from their subsidiaries to them; (vii) consolidate, merge or transfer all or substantially all of their assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.
Events of Default
If an Event of Default (as defined in the Indenture) occurs and is continuing, the trustee or the holders of at least 35% in aggregate principal amount of the then outstanding December Notes (with a copy to the trustee) may declare the principal of, and accrued and unpaid interest, if any, on all outstanding December Notes immediately due and payable, except that an Event of Default resulting from certain events of bankruptcy or insolvency with respect to the Company, any restricted subsidiary of the Company that is a significant subsidiary or any group of subsidiaries that, taken together, would constitute a significant subsidiary, will automatically cause the principal of, and accrued and unpaid interest, if any, on all outstanding December Notes to become immediately due and payable without further action or notice.
The foregoing description of the December Indenture is qualified in its entirety by reference to the December Indenture, a copy of which is attached hereto as Exhibit 4.1 and is incorporated herein by reference.