Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.24.3
Debt
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
The Company’s outstanding debt, net of debt discounts, consisted of the following (in thousands):
September 30,
2024		 December 31,
2023
Structural Debt Facility $ 24,666  $ 64,162 
Siena Revolver 7,500  7,500 
Total debt $ 32,166  $ 71,662 
Less: debt, current (10,000) — 
Total debt, noncurrent $ 22,166  $ 71,662 
Structural Debt Facility

In December 2022, the Company entered into a Loan and Security Agreement (“Structural Debt Facility”) with Structural Capital Investments III, LP, Structural Capital Investments IV, LP and Series PCI Grove series of Structural Capital Primary Co-Investment Fund, LLC (collectively, “Structural Funds”) and Avenue Sustainable Solutions Fund, L.P. (“Avenue”) (collectively, “Structural Lenders”) to borrow $72.0 million which was used primarily to settle previously outstanding obligations with a prior lender. The Structural Debt Facility bears an annual rate of interest at the greater of 15.00% or 7.50% plus the prime rate, payable monthly. Prior to the maturity date, the Company may prepay all outstanding amounts under this facility at any time. Under the agreement, when amounts are prepaid or repaid in full at the maturity date, the Company may be obligated to pay additional fees which would allow for Structural Funds and Avenue to reach a Minimum Return, as defined by the agreement.

On July 16, 2024, the Company entered into Amendment 2 to the Loan and Security Agreement with Structural Lenders (“Structural Amendment”). The terms of the Structural Amendment required the Company to make a payment on the outstanding principal balance of the Structural Debt Facility of $42.0 million. The terms of the Structural Amendment also provided for a reduction of the amount of unrestricted cash required to be maintained by the Company. Furthermore, the terms of the Structural Amendment provided for a delay in the start of the principal repayment period which was July 1, 2025 under the original terms and is now January 1, 2026. The original maturity date of December 21, 2026 did not change. As the terms of the Structural Debt Facility after the Structural Amendment were not deemed to be substantially different from the original agreement, the Company accounted for the Structural Amendment with debt modification accounting. Issuance costs related to the Structural Amendment were nominal.

The Structural Debt Facility is collateralized by the assets of the Company and includes financial covenants the Company must meet in order to avoid an Event of Default, as defined by the original agreement and Structural Amendment. Such covenants include (i) maintaining a minimum of $23.75 million in unrestricted cash at all times and (ii) achieving certain revenue targets for the trailing four quarter period. In accordance with the loan agreement, Structural Lenders have been provided with the Company’s periodic financial statements and updated projections to
facilitate their ongoing assessment of the Company. As of September 30, 2024, the Company was in compliance with these debt covenants.
On December 21, 2022, in connection with the initial closing of the Structural Debt Facility, the Company issued to Structural Funds, including certain affiliates, and to Avenue a total of 990,000 shares of the Company’s Class A common stock (the “Structural Closing Shares”). The Company recorded a debt discount of $1.1 million related to the issuance of these shares, with a corresponding offset to the Company’s Class A common stock and additional paid-in capital. Further, if there are outstanding obligations relating to the Structural Debt Facility on July 21, 2025, representing the thirty-month anniversary of such closing, the Company agrees to issue to Structural Funds, including certain affiliates, and to Avenue, the aggregate number of shares of the Company’s Class A common stock equal to $9,900,000, divided by the lower of (i) $10.00 and (ii) the volume weighted average price of the Company’s Class A common stock for the sixty trading days prior to such date, as further described in the related issuance agreements (the “Structural Subsequent Shares”).
The Company has identified several features within the Structural Debt Facility consisting of the contingent obligation to issue the Structural Subsequent Shares, mandatory and voluntary prepayment features and default interest rate (“Structural Derivative Liability”), which are required to be bifurcated and accounted for as a compound embedded derivative at fair value.
Closing costs consisted of $3.3 million in costs directly related to the issuance of the Structural Facility to third parties, issuance of certain Structural Closing Shares amounting to $1.1 million and incurrence of an additional Structural Derivative Liability amount of $7.1 million. As of September 30, 2024, the Company had $30.0 million in principal outstanding under the Structural Debt Facility with an effective interest rate of 26.43%. In connection with the issuance of Series A’ Preferred Stock (Note 8, Convertible Preferred Stock), the Company is required to prepay $10.0 million of the principal amount on the Structural Debt Facility on or before November 30, 2024; therefore such amounts are classified as debt, current, on the Company’s condensed consolidated balance sheet.
Siena Revolver

In March 2023, the Company entered into a Loan and Security Agreement (the “Siena Revolver”) with Siena Lending Group, LLC (“Siena”) which permits the Company to receive funding through a revolving line of credit with an initial commitment of $35.0 million. The Company’s borrowing capacity under the Siena Revolver is subject to certain conditions, including the Company’s eligible inventory and accounts receivable balances among other limitations as specified in the agreement. In connection with this facility the Company incurred $1.1 million of debt issuance costs which have been included in other assets on the Company’s condensed consolidated balance sheet and being amortized through the Siena Revolver’s scheduled maturity date. On July 16, 2024, the Company entered into Amendment 1 to Loan and Security Agreement with Siena (“Siena Amendment”). The Siena Amendment modifies certain terms related to how the Company’s available borrowing capacity is determined. The Siena Amendment did not modify any other terms related to the Siena Revolver, including maturity date or maximum borrowing capacity. The Company accounted for the Siena Amendment under debt modification accounting due to the terms being deemed not substantially different. The Company paid $0.3 million of issuance costs related to the Siena Amendment which are included within other assets on the Company’s condensed consolidated balance sheets and being amortized through the Siena Revolver’s scheduled maturity date.

The interest rates applicable to borrowings under the Siena Revolver are based on a fluctuating rate of interest measured by reference to either, at the Company’s option, (i) a Base Rate, plus an applicable margin, or (ii) the term Secured Overnight Financing Rate (“SOFR”) then in effect, plus 0.10% and an applicable margin. The Base Rate is defined as the greatest of: (1) Prime Rate as published in the Wall Street Journal, (2) Federal Funds Rate plus 0.50% and (3) 5.00% per annum. The applicable margin for Siena Revolver borrowings is based on the Company’s monthly average principal balance outstanding and ranges from 2.75% to 4.50% per annum in the case of Base Rate Borrowings, as defined by the Siena Revolver, and 3.75% to 5.50% per annum in the case of Term SOFR Borrowings, as defined by the Siena Revolver. The Siena Revolver also contains various financial covenants the Company must maintain to avoid an Event of Default, as defined by the agreement. In accordance with the agreement, Siena has been provided with the Company’s periodic financial statements and updated projections to facilitate their ongoing assessment of the Company. As of September 30, 2024, the Company was in compliance with these debt covenants.
The Siena Revolver matures on March 10, 2026. As of September 30, 2024, the Company has an outstanding principal balance of $7.5 million under the Siena Revolver. The interest rate on the outstanding balance as of September 30, 2024 was 9.18%. Additional borrowing capacity from the Siena Revolver was $6.8 million as of September 30, 2024.