Long-Term Debt |
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14. Long-Term Debt
Convertible Notes On December 15, 2025, the Company issued $120.0 million aggregate principal amount of Convertible Senior Notes (the “Convertible Notes”). The Convertible Notes bear interest at a rate of 4.75% annually, payable semiannually in arrears, beginning July 15, 2026, and mature on January 15, 2031. The initial conversion rate for the Convertible Notes is 576.7013 shares per $1,000 principal amount of Convertible Notes, which represents an initial conversion price of approximately $1.73 per common share, and is subject to adjustment upon the occurrence of certain specified events as set forth in the indenture governing the Convertible Notes. Upon conversion, the Company will pay or deliver, as applicable, cash, common shares, or a combination of cash and common shares. The Convertible Notes’ components as of December 31, 2025, and March 31, 2026, were as follows:
Carrying value and fair value information for the Convertible Notes from December 31, 2025, to March 31, 2026, is presented below:
The Conversion Option Derivative (see note 15) is treated as a debt discount, and its initial issuance fair value amount is amortized to interest expense with an increase to the Convertible Notes’ carrying amount over its five-year term. Using Level 3 inputs of the fair value hierarchy under US GAAP, the Conversion Option Derivative is measured and recorded at fair value using a binomial lattice model which utilizes a debt host (without) methodology. For the three months ended March 31, 2026, the Company recognized Convertible Notes’ interest expense of $1.4 million and amortization of debt discount, inclusive of debt issuance cost amortization, of $1.5 million, which are recorded as interest expense in the consolidated statements of operations and comprehensive loss. The effective interest rate on the Convertible Notes is 18.6%. |