Notes Payable |
6 Months Ended |
|---|---|
Jun. 30, 2015 | |
| Debt Disclosure [Abstract] | |
| Notes Payable |
Notes Payable
Capital Royalty Group Debt
In May 2015, Navidea and its subsidiary Macrophage Therapeutics, Inc., as guarantor, executed a Term Loan Agreement (the CRG Loan Agreement) with Capital Royalty Partners II L.P. in its capacity as a lender and as control agent for other affiliated lenders party to the CRG Loan Agreement (collectively, the Lenders) in which the Lenders agreed to make a term loan to the Company in the aggregate principal amount of $50 million (the CRG Term Loan), with an additional $10 million in loans to be made available upon the satisfaction of certain conditions stated in the CRG Loan Agreement. Closing and funding of the CRG Term Loan occurred on May 15, 2015 (the Effective Date). The principal balance of the CRG Term Loan will bear interest from the Effective Date at a per annum rate of interest equal to 14.0%. The Company will make quarterly payments of interest only in arrears commencing on June 30, 2015. Through March 31, 2019, the Company has the option of paying (i) 10.00% of the per annum interest in cash and (ii) 4.00% of the per annum interest as compounded interest which is added to the aggregate principal amount of the CRG Term Loan. Principal is repayable in eight equal quarterly installments during the final two years of the term. All unpaid principal, and accrued and unpaid interest, is due and payable in full on March 31, 2021. In addition, $255,000 of interest was compounded and added to the balance of the CRG Term Loan during the quarter ended June 30, 2015. As of June 30, 2015, the outstanding principal balance of the CRG Term Loan was $50.3 million.
The Company may voluntarily prepay the CRG Term Loan in full, upon fifteen business days’ prior written notice to the Lenders, with a prepayment premium beginning at 5% and declining by 1% annually thereafter, with no premium being payable if prepayment occurs after the fifth year of the term. The CRG Term Loan required the payment on the borrowing date of a financing fee of $625,000 which was recorded as a discount to the debt. In addition, a facility fee of $1.0 million is payable at the end of the term or when the loan is repaid in full. A long-term liability has been recorded for the $1.0 million facility fee with a corresponding discount to the debt. The CRG Term Loan is collateralized by a security interest in substantially all of the Company's assets.
The CRG Loan Agreement requires that the Company adhere to certain affirmative and negative covenants, including financial reporting requirements and a prohibition against the incurrence of indebtedness, or creation of additional liens, other than as specifically permitted by the terms of the CRG Loan Agreement. The Lenders may accelerate the payment terms of the CRG Loan Agreement upon the occurrence of certain events of default set forth therein, which include the failure of the Company to make timely payments of amounts due under the CRG Loan Agreement, the failure of the Company to adhere to the covenants set forth in the CRG Loan Agreement, and the insolvency of the Company. The covenants of the CRG Loan Agreement include a covenant that the Company shall have EBITDA of no less than $5 million in each calendar year during the term or revenues from sales of Lymphoseek in each calendar year during the term of at least $11 million in 2015, with the target minimum revenue increasing in each year thereafter until reaching $45 million in 2020. If the Company fails to meet the applicable minimum EBITDA or revenue target in any calendar year, the CRG Loan Agreement provides the Company a cure right if it raises 2.5 times the EBITDA or revenue shortfall in equity or subordinated debt and deposits such funds in a separate blocked account. Additionally, the Company must maintain liquidity, defined as the balance of unencumbered cash and permitted cash equivalent investments, of at least $5 million during the term of the CRG Term Loan. The events of default under the CRG Loan Agreement also include a failure of Platinum to perform its funding obligations under the Platinum Loan Agreement (as defined below) at any time as to which the Company had negative EBITDA for the most recent fiscal quarter, as a result either of Platinum’s repudiation of its obligations under the Platinum Loan Agreement, or the occurrence of an insolvency event with respect to Platinum. As of June 30, 2015, we were in compliance with all applicable covenants of the CRG Loan Agreement.
In connection with the CRG Loan Agreement, the Company recorded a debt discount related to lender fees and other costs directly attributable to the CRG Loan Agreement totaling $2.2 million. The debt discount is being amortized as non-cash interest expense using the effective interest method over the term of the CRG Loan Agreement. As of June 30, 2015, the balance of the debt discount was $2.2 million.
Oxford Debt
In March 2014, we executed a Loan and Security Agreement (the Oxford Loan Agreement) with Oxford Finance, LLC (Oxford), providing for a loan to the Company of $30 million. Pursuant to the Oxford Loan Agreement, we issued Oxford: (1) Term Notes in the aggregate principal amount of $30 million, bearing interest at 8.5% (the Oxford Notes), and (2) Series KK warrants to purchase an aggregate of 391,032 shares of our common stock at an exercise price of $1.918 per share, expiring in March 2021 (the Series KK warrants). We began making monthly payments of interest only on April 1, 2014, and monthly payments of principal and interest beginning April 1, 2015. In May 2015, in connection with the consummation of the CRG Loan Agreement, the Company repaid all amounts outstanding under the Oxford Loan Agreement. The payoff amount of $31.6 million included payments of $289,000 as a pre-payment fee and $2.4 million as an end-of-term final payment fee. The carrying value of the Oxford Notes was $26.9 million prior to payoff. We recorded a loss on extinguishment of the Oxford Notes of $2.4 million.
Platinum Credit Facility
In connection with the Company entering into the CRG Loan Agreement, the Company and Platinum entered into a Third Amendment (the Third Platinum Amendment) to the Loan Agreement between the Company and Platinum, dated July 25, 2012, as amended June 25, 2013 and March 4, 2014 (the Platinum Loan Agreement). Platinum and the Lenders also entered into a Subordination Agreement (the Subordination Agreement), which the Company consented to and acknowledged, providing for the subordination of the Company’s indebtedness to Platinum under the Platinum Loan Agreement to the Company’s indebtedness under the CRG Loan Agreement, among other customary terms and conditions. Contemporaneously with the execution of the Third Platinum Amendment, the Company delivered a Third Amended and Restated Promissory Note, dated the Effective Date (the Third Amended Platinum Note), which amends and restates the Second Amended Promissory Note, dated March 4, 2014, made by the Company in favor of Platinum in the original principal amount of up to $35 million. Among other things, the Third Platinum Amendment (i) extends the term of the Platinum Loan Agreement until September 30, 2021 or six months following an early repayment of the CRG Term Loan; (ii) changes the interest rate to the greater of (a) the United States prime rate as reported in The Wall Street Journal plus 6.75%, (b) 10.0% or (c) the highest rate of interest then payable pursuant to the CRG Term Loan plus 0.125% (the effective interest rate as of June 30, 2015 was 14.125%); (iii) requires such interest to compound monthly; and (iv) changes the provisions of the Platinum Loan Agreement governing Platinum’s right to convert advances into common stock of the Company. The Platinum Loan Agreement formerly provided for the optional conversion of advances made on or after June 25, 2013 beginning two years from the date of the advance at a conversion price equal to the lesser of (i) 90% of the lowest volume weighted average price for the 10 trading days preceding the date of such conversion request, or (ii) the average volume weighted average trading price for the 10 trading days preceding the date of such conversion request. Under the Third Platinum Amendment, the conversion right now applies to all advances made under the Platinum Loan Agreement, but not until such time as the average daily volume weighted average price of the Company’s common stock for the ten preceding trading days exceeds $2.53 per share. As of the Effective Date, the net advances to the Company under the Platinum Loan Agreement were $7.7 million.
The Platinum Loan Agreement provides us with a credit facility of up to $50 million. The Company borrowed an additional $4.5 million under the Platinum Loan Agreement during the six-month period ended June 30, 2015. In addition, $174,000 of interest was compounded and added to the balance of the Third Amended Platinum Note during the quarter ended June 30, 2015. The Third Amended Platinum Note is reflected on the consolidated balance sheets at its estimated fair value, which includes the estimated fair value of the embedded conversion option of $2.5 million. Changes in the estimated fair value of the Third Amended Platinum Note of $1.9 million and $96,000, respectively, were recorded as non-cash changes in fair value of financial instruments during the three-month periods ended June 30, 2015 and 2014. Changes in the estimated fair value of the Third Amended Platinum Note of $126,000 and $(298,000), respectively, were recorded as non-cash changes in fair value of financial instruments during the six-month periods ended June 30, 2015 and 2014. The estimated fair value of the Third Amended Platinum Note was $10.4 million as of June 30, 2015. As of June 30, 2015, the outstanding principal balance of the Third Amended Platinum Note was approximately $7.9 million, with $27.3 million currently available under the credit facility. An additional $15 million is potentially available under the credit facility on terms to be negotiated.
R-NAV Debt
As of June 30, 2015, the outstanding principal balance of the note payable to R-NAV was $666,666 consisting of two payments of $333,333 each due in July 2015 and July 2016, respectively.
Interest on our Debt
During the three-month periods ended June 30, 2015 and 2014, we recorded interest expense of $1.6 million and $914,000, respectively, related to our notes payable. Of these amounts, $146,000 and $195,000, respectively, related to amortization of the debt discounts related to our notes payable. An additional $429,000 of total interest expense was compounded and added to the balance of our notes payable during the three-month period ended June 30, 2015. During the six-month periods ended June 30, 2015 and 2014, we recorded interest expense of $2.5 million and $1.9 million, respectively, related to our notes payable. Of these amounts, $359,000 and $437,000, respectively, related to amortization of the debt discounts related to our notes payable. An additional $429,000 of total interest expense was compounded and added to the balance of our notes payable during the six-month period ended June 30, 2015.
|