Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt, Net of Debt Discount and Financing Fees

v3.23.1
Long-Term Debt, Net of Debt Discount and Financing Fees
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Long-Term Debt, Net of Debt Discount and Financing Fees Long-Term Debt, Net of Debt Discount and Financing Fees
Long-term debt, net of debt discount and financing fees consists of the following:
(in thousands) March 31,
2023		 December 31, 2022
Credit Facility - first tranche $ 35,000  $ 35,000 
Credit Facility - second tranche 15,000  15,000 
Less - unamortized debt discount and deferred financing fees (4,069) (4,288)
Long-term debt, net of debt discount and financing fees $ 45,931  $ 45,712 
Credit Facility
On June 30, 2020, the Company entered into a seven-year financing agreement (the "Credit Facility") with Oberland Capital and its affiliates TPC Investments II LP and Argo LLC (collectively, the "Lender") and obtained the first tranche of $35,000 at closing. On June 30, 2021, the second tranche of $15,000 was drawn down by the Company.
Each tranche under the Credit Facility requires quarterly interest payments for seven years. Interest is calculated as 7.5% plus the greater of LIBOR or 2.0% (12.25% at March 31, 2023). Each tranche of the Credit Facility has a term of seven years from the date of issuance (with the first tranche issued on June 30, 2020, maturing on June 30, 2027, and the second tranche issued on June 30, 2021, maturing on June 30, 2028). In connection with the Credit Facility, the Company entered into a revenue participation agreement (the “Revenue Participation Agreement”) with the Lender, which provided that, among other things, a quarterly royalty payment as a percentage of the Company’s net revenues, up to $70 million in any given year, after April 1, 2021, ending on the date upon which all amounts owed under the Credit Facility have been paid in full. This structure results in approximately 1.0% per year of additional interest payments on the outstanding loan amount. The Company recorded $396 and $335 as interest expense for this Revenue Participation Agreement for the three months ended March 31, 2023, and 2022, respectively. The Company pays the quarterly debt interest on the last day of the quarter and for the three months ended March 31, 2023, and 2022, paid $1,532 and $1,187, respectively, to the Lender. The Company capitalized interest of $2,147 and $1,445 for the three months ended March 31, 2023, and 2022, respectively, towards the costs to construct and retrofit the Axogen Processing Center ("APC Facility") in Vandalia, Ohio. See Note 12 - Commitments and Contingencies. To date, the Company has capitalized interest of $13,576 related to this project. The capitalized interest is recorded as part of property and equipment, net in the condensed consolidated balance sheets. As of March 31, 2023, the Company was in compliance with all financial covenants.
Embedded Derivatives
The fair values of the debt derivative liabilities were $4,703 and $4,518 at March 31, 2023, and December 31, 2022, respectively. See Note 6 - Fair Value Measurement.
Unamortized Debt Discount and Financing Fees
The unamortized debt discount consists of the remaining initial fair values of the embedded derivatives related to the Credit Facility.
The financing fees for the Credit Facility were $642 and were recorded as a contra liability to long-term debt on the consolidated balance sheet.
Amortization of debt discount and deferred financing fees for the three months ended March 31, 2023, and 2022 was $219 and $220, respectively.
Other Credit Facilities
The Company had restricted cash of $6,252 and $6,251 at March 31, 2023, and December 31, 2022, respectively. The March 31, 2023, and December 31, 2022 balances both include $6,000 and $250, which represent collateral for two irrevocable standby letters of credit.