ROCKET PHARMACEUTICALS, INC.RCKT

ROCKET PHARMACEUTICALS, INC. Debt Disclosure

10-KFiled Feb 28, 20232 min read
8.
Convertible Notes


2021 Convertible Notes


On January 4, 2018, in connection with its reverse merger with Inotek Pharmaceuticals Corporation (“Inotek”), the Company assumed the obligations of Inotek under its outstanding convertible notes, with an aggregate original principal amount of $52.0 million, (the “2021 Convertible Notes”).



2022 Convertible Notes


On February 20, 2020, and June 5, 2020, the Company entered into separate, privately negotiated exchange agreements (the “Exchange Agreements”) with certain holders of the 2021 Convertible Notes. Pursuant to the Exchange Agreements, on February 20, 2020, the Company exchanged approximately $39.4 million aggregate principal amount of the 2021 Convertible Notes for (a) approximately $39.4 million aggregate principal amount of 6.25% Convertible Senior Notes due August 2022 (the “2022 Convertible Notes”). Also pursuant to the Exchange Agreements, on June 12, 2020, the Company exchanged $7.5 million aggregate principal amount of the 2021 Convertible Notes for (a) $7.5 million aggregate principal amount of its newly issued 6.25% Convertible Senior Notes due 2022.


On April 26, 2021, the Company redeemed the remaining approximately $38.4 million principal amount of the 2022 Convertible Notes as the Company’s stock price traded 30% above the initial conversion price for more than 20 trading days during a 30-day consecutive trading period. Holders of the remaining principal amount of the 2022 Convertible Notes converted such notes in accordance with the terms of the Exchange Agreements into approximately 1.3 million shares of the Company’s common stock and cash in lieu of fractional shares. In accordance with ASC 470-Debt, the settlement of the 2022 Convertible Notes is accounted for as a conversion since the 2022 Convertible Notes did not include a beneficial conversion feature and the carrying amount of the 2022 Convertible Notes. As of December 31, 2022, there were no 2022 Convertible Notes were outstanding.


Accretion of the 2021 Convertible Notes discount was $0, $0.3 million, and $1.3 million for the years ended December 31, 2022, 2021, and 2020, respectively. Accretion of the 2022 Convertible Notes discount was $0, $0.5 million and $1.5 million for the years ended December 31, 2022, 2021 and 2020, which was recorded in interest expense in the consolidated statements of operations.

Historical Timeline

Fiscal YearFiled
2022Feb 28, 2023Showing above
2021Feb 28, 2022
2017Mar 7, 2018
2016Mar 16, 2017
2015Mar 23, 2016

About Debt Disclosures

Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.

Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.

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