Long-Term Debt
In February 2019, the Company entered into a loan and security agreement (“Term Loan”) with Western Alliance Bank for an aggregate amount of up to $40.0 million and incurred an immaterial amount of debt issuance costs, which were recorded on the Company’s consolidated balance sheets and are being amortized over the life of the Term Loan using the effective-interest method.
The Term Loan was subsequently amended several times, with the most recent amendment taking place in December 2023. As amended, the Term Loan matures on July 14, 2027 and provides for an aggregate borrowing amount of up to $48.8 million, of which $22.5 million remains available and is designated for the purchase of certain equipment. The Term Loan bears interest at the prime rate published in the Wall Street Journal plus a margin of 1.25%, with a floor of 4.75%.
The Term Loan requires the Company to comply with certain financial covenants, including, among other things, liquidity requirements, performance metrics, and a debt service coverage ratio. The Term Loan also contains affirmative and negative covenants customary for financings of this type, including, among other things, limitations or prohibitions on repurchasing common shares, declaring and paying dividends and other distributions, redeeming and repurchasing certain other indebtedness, loans and investments, additional indebtedness, liens, mergers, asset sales and transactions with affiliates. In addition, the Term Loan contains customary events of default. As of December 31, 2024, the Company was in compliance with its debt covenants under the Term Loan.
The Term Loan is payable in consecutive monthly installments. Interest is due monthly on amounts outstanding under the Term Loan. The Company is also permitted to make voluntary prepayments without penalty or premium at any time.
As of December 31, 2024 and 2023, the effective interest rate for borrowings under the Term Loan was 9.71% and 10.73%, respectively.
During the years ended December 31, 2024 and 2023, the Company did not make any borrowings under the Term Loan and repaid $4.0 million each year on amounts outstanding under the Term Loan. As of December 31, 2024 and 2023, the amount outstanding under the Term Loan was $22.3 million and $26.3 million, respectively.
During the years ended December 31, 2024 and 2023, the Company incurred interest costs of $2.5 million and $2.9 million, respectively, related to the Term Loan. There was no capitalized interest for the year ended December 31, 2024, and $0.6 million was capitalized as part of an asset for the year ended December 31, 2023.
As of December 31, 2024, annual scheduled principal payments of the Term Loan were as follows:
| | | | | | | | |
| | Amount |
| | (in thousands) |
| 2025 | | $ | 4,000 | |
| 2026 | | 4,000 | |
| 2027 | | 14,333 | |
| Total principal payments | | 22,333 | |
| Less: unamortized debt discount | | (327) | |
| Less: current portion of long-term debt | | (3,855) | |
| Non-current portion of long-term debt | | $ | 18,151 | |