Quarterly report pursuant to Section 13 or 15(d)

Debt and Other Financing

v3.24.1.u1
Debt and Other Financing
 3 Months Ended
Mar. 31, 2024
Debt Disclosure [Abstract]  
Debt and Other Financing 7. Debt and Other Financing
The carrying value of the Company’s outstanding debt consisted of the following amounts:
March 31, December 31,
2024 2023
(in thousands)
Current portion of long-term debt $ 375  $ — 
Non-current portion of long-term debt 85,703  84,578 
Total long-term debt 86,078  84,578 
Unamortized debt issuance costs (1,079) (1,076)
Outstanding balance $ 84,999  $ 83,502 

Effective Interest Rate March 31, December 31,
Name of Loan 2024 2023
(in thousands)
Loans from Related Parties
12.23% - 12.57%
 $ 84,578  $ 84,578 
Satellite Procurement Vendor Financing
 12.74% 1,500  — 
Total $ 86,078  $ 84,578 
Satellite Procurement Vendor Financing
The Company entered into a vendor financing agreement for multiple launches providing for $27.0 million, of which a portion will be drawn down equally per launch and will be repaid quarterly on a pro-rata basis across a three-year period after each successful launch milestone. Payments will accrue interest at 12.6% per annum, beginning on each launch date. The Company may prepay at any time until the maturity date without premium or penalty.
Commercial Bank Line
On April 11, 2024, the Company, and certain subsidiaries of the Company, as co-borrowers, entered into a commercial bank line with Stifel Bank. The commercial bank line provides for a $20.0 million revolving credit
facility, including a $0.5 million sub-facility for the issuance of letters of credit and other ancillary banking services. The commercial bank line provides that $10.0 million of the commitments were immediately available for borrowing, and the remaining $10.0 million of commitments are available at any time after June 28, 2024. The commercial bank line matures on June 30, 2026.
The commercial bank line accrues interest at a rate equal to the greater of (A) the prime rate or (B) 6%. Interest on the loan is payable quarterly in arrears. The Company is required to pay an unused line fee of 0.25% per annum, payable quarterly in arrears. The Company may borrow, prepay and re-borrow revolving loans, without premium or penalty. The principal amount of outstanding loans, together with accrued and unpaid interest, is due on the loan maturity date. The Company is also obligated to pay a fee to the lender upon the occurrence of certain change of control events or the refinancing, repayment, or termination of the commercial bank line, along with other customary fees for a loan facility of this size and type.
The Company’s obligations under the commercial bank line are secured by substantially all of the Company’s assets, including intellectual property. Pursuant to a subordination arrangement, the security interest granted to Stifel Bank is senior to the security interest the Company granted to Intelsat Jackson Holdings SA pursuant to that certain Amended and Restated Loan and Security Agreement, dated as of October 31, 2019, as amended.
The commercial bank line contains customary affirmative and negative covenants, including covenants limiting the Company's ability to, among other things, incur debt, grant liens, pay dividends and distributions on its capital stock, make investments and acquisitions, and make capital expenditures, in each case subject to customary exceptions for a loan facility of this size and type. The commercial bank line also contains financial covenants requiring compliance with a minimum revenue covenant, measured at the end of each fiscal quarter, and maintenance, at all times, of unrestricted cash and cash equivalents with Stifel Bank or in controlled accounts in an aggregate amount at least equal to the outstanding obligations under the commercial bank line. If the Company fails to meet the minimum cash covenant, the commercial bank line provides the Company with the ability to cure the breach with the deposit of proceeds from the issuance of capital stock or subordinated debt.
Fair Value of Debt
The estimated fair value of the Company’s outstanding long-term debt was $91.0 million and $78.7 million as of March 31, 2024 and December 31, 2023, respectively, which is different than the historical cost of the long-term debt as reflected in the Company’s unaudited condensed consolidated balance sheets. The fair value of the long-term debt was estimated using Level 3 inputs, based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements and credit rating.
Compliance with Debt Covenants
As of March 31, 2024, all debt instruments contain customary covenants and events of default. The Company was in compliance with all financial and non-financial covenants as of March 31, 2024.