| Debt | 7. Debt The Company’s outstanding debt obligations are as follows (in thousands):
June 30,
December 31,
2019
2018
Term Loans
$
67,080
$
25,000
Notes
60,205
60,000
$
127,285
$
85,000
Less: unamortized debt issuance costs on Term Loans
(5,903
)
(2,268
)
Less: unamortized debt issuance costs on Notes
(3,018
)
(1,747
)
Total long-term debt
$
118,364
$
80,985
Short-term loans
5,032
658
Total outstanding debt
$
123,396
$
81,643
The following discussion includes a description of the Company’s outstanding debt at June 30, 2019 and December 31, 2018. Interest expense related to the Company’s outstanding debt totaled $2,190 and $290 for the three months ended June 30, 2019 and 2018, respectively, and $3,795 and $462 for the six months ended June 30, 2019 and 2018, respectively. Interest expense includes interest on outstanding borrowings and amortization of debt issuance costs. Debt Facility On November 15, 2018, the Company’s wholly-owned indirect subsidiary Waitr Inc., as borrower, entered into the Credit and Guaranty Agreement, dated as of November 15, 2018 (as amended or otherwise modified from time to time, the “Credit Agreement”) with Luxor Capital Group, LP (“Luxor Capital”), as administrative agent and collateral agent, the various lenders party thereto, Waitr Intermediate Holdings, LLC, a Delaware limited liability company (“Intermediate Holdings”) and wholly-owned direct subsidiary of the Company, and certain subsidiaries of Waitr Inc. as guarantors. The Credit Agreement provides for a senior secured first priority term loan facility (the “Debt Facility”) to Waitr Inc. in the aggregate principal amount o f $ n January 17, 2019, Intermediate Holdings and Waitr Inc. entered into the Amendment No. 1 to Credit and Guaranty Agreement (the “First Credit Agreement Amendment”) with the various lenders party thereto and Luxor Capital, as administrative agent and collateral agent, which amended in order to provide to Waitr Inc. additional senior secured first priority term loans under the Debt Facility in the aggregate principal amount of $42,080 (the “Additional Term Loans”), the proceeds of which were used to consummate the Bite Squad Merger. On May 21, 2019, in connection with the Company’s underwritten follow-on public offering of common stock (the “Offering”) (see Note 13 – Stockholders’ Equity Notes Debt Extinguishment The Original Term Loans are guaranteed by Intermediate Holdings and secured by (i) a first priority pledge of the equity interests of Waitr Inc. and (ii) a first priority lien on substantially all other assets of Waitr Inc. and Intermediate Holdings (subject to customary exceptions). The Additional Term Loans are guaranteed by Intermediate Holdings, Bite Squad and its subsidiaries and the other guarantors party to the Credit Agreement and secured by a lien on substantially all assets of Waitr Inc., Intermediate Holdings, Bite Squad and its subsidiaries and the other guarantors under the Credit Agreement. The Additional Term Loans and Original Term Loans (together, the “Term Loans”), will mature on November 15, 2022. Interest on borrowings under the Debt Facility initially accrued at a rate of 7.0% per annum. Effective January 17, 2019, in connection with the First Credit Agreement Amendment, interest on borrowings under the Debt Facility accrues at a rate of 7.125% per annum, payable quarterly, in cash or, at the election of the borrower From the closing date of the Additional Term Loans through August 31, 2019, Waitr Inc. will be required to pay a prepayment premium of 5.0% of the principal amount of any Term Loans to be prepaid during such period in connection with (i) any prepayments (whether before or after an event of default), (ii) any payment, repayment or redemption of the obligations following an acceleration, (iii) certain bankruptcy events, or (iv) acceleration upon the termination for any reason of the definitive agreements documenting the convertible promissory notes issued under the Convertible Notes Agreement (as defined under Notes In connection with the Additional Term Loans, the Company issued to the lenders under the First Credit Agreement Amendment 325,000 shares of common stock of the Company in a private placement. The lenders under the First Credit Agreement Amendment have customary registration rights with respect to such shares. The Credit Agreement includes a number of customary covenants. Such covenants, among other things, limit or restrict the ability of each of Intermediate Holdings, Waitr Inc. and its subsidiaries to:
•
incur additional indebtedness and make guarantees;
•
incur liens on assets;
•
engage in mergers or consolidations or fundamental changes;
•
dispose of assets;
•
pay dividends and distributions or repurchase capital stock;
•
make investments, loans and advances, including acquisitions;
•
amend organizational documents and other material contracts;
•
enter into certain agreements that would restrict the ability to incur liens on assets;
•
repay certain junior indebtedness;
•
enter into certain transactions with affiliates;
•
enter into sale leaseback transactions; and
•
change the conduct of its business. The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments In connection with the Debt Facility, the Company issued to Luxor Capital warrants which are currently exercisable for 399,726 shares of the Company’s common stock (the “Debt Warrants”). See Note 13 – Stockholders’ Equity Notes In connection with the closing of the Landcadia Business Combination, the Company entered into the Credit Agreement, dated as of November 15, 2018 (as amended or otherwise modified from time to time, the “Convertible Notes Agreement”), pursuant to which the Company issued unsecured convertible promissory notes to Luxor Capital Partners, LP, Luxor Capital Partners Offshore Master Fund, LP, Luxor Wavefront, LP and Lugard Road Capital Master Fund, LP (the “Luxor Entities”) in the aggregate principal amount of $60,000 (the “Notes”). In connection with the First Credit Agreement Amendment, the Company entered into the Amendment No. 1 to Credit Agreement, dated as of January 17, 2019 (the “Convertible Notes First Amendment”), among the Company, the lenders party thereto and Luxor Capital, as administrative agent, which amended the Convertible Notes Agreement, to permit the Bite Squad Merger and to make certain other amendments in conformity with the First Credit Agreement Amendment. On May 21, 2019, in connection with the Offering, the Company entered into the Amendment No. 2 to Credit Agreement (the “Convertible Notes Second Amendment”), which amended the Convertible Notes Agreement. Prior to the execution of the Convertible Notes Second Amendment, t he Notes had an interest rate of 1.0 revisions in the Convertible Notes Second Amendment, along with those in Debt Extinguishment The Notes will mature four years from the date of the closing of the Landcadia Business Combination, unless earlier converted at the election of the holder. Upon maturity, the outstanding Notes (and any accrued but unpaid interest) will be repaid in cash or converted into shares of common stock, at the holder’s election. The effective interest rate for borrowings on the Notes, after considering the allocated discount, is approximately 7.77%. The Notes include customary anti-dilution protection, including broad-based weighted average adjustments for issuances of additional shares (down-round features), and the shares issuable upon their conversion have certain registration rights. The Company may only prepay the Notes with the consent of the holders of at least a majority-in-interest of the outstanding Notes. Prior to the Offering, at any time at the holder’s election, each Note was convertible in whole or in part into shares of the Company’s common stock at a rate of $13.00 per share (subject to a 9.9% conversion cap). The Company’s payment Debt Extinguishment To apply the debt extinguishment assessment, management determined that the Term Loans and Notes should be viewed as one instrument, as both are held by the same lender (Luxor Capital, along with the Luxor Entities) before and after the May 21, 2019 amendments and they were amended concurrently. The revisions to the interest rate and the conversion rate in the Convertible Notes Second Amendment were deemed substantial, resulting in the application of debt extinguishment accounting. The Company recorded a gain on debt extinguishment of $1,897 based on (a) the difference between the fair value of the amended Notes of $56,894 and the carrying amount of the original Notes of $58,421 on May 21, 2019 and (b) the difference between the fair value of the amended Term Loans of $61,014 and the carrying amount of the original Term Loans of $61,385 on May 21, 2019. Based on management’s determination that the sole lender under the Term Loans and Notes (Luxor Capital, along with the Luxor Entities) is a related party to the Company, in accordance with ASC 470-50, the Company recorded the gain on debt extinguishment as a capital contribution in the unaudited condensed consolidated statement of stockholders’ equity. For purposes of calculating net loss per share attributable to common stockholders (see Note 14 – Loss Per Share Attributable to Common Stockholders ), the gain on debt extinguishment was added to net loss. Short-term loans On June 26, 2019, the Company entered into a loan agreement with First Insurance Funding to finance a portion of its annual insurance premium obligation. The principal amount of the loan is $5,032, payable in monthly installments, until maturity. The loan matures on April 1, 2020 and carries an annual interest rate of 4.08%. On June 4, 2018, the Company entered into a loan agreement with First Insurance Funding to finance a portion of its annual insurance premium obligation. The loan had a principal amount of $2,172, payable in monthly installments, until maturity, and carried an annual interest rate of 3.39%. As of December 31, 2018, $658 was outstanding under such loan. The loan was paid in full upon maturity on March 21, 2019. Series 2018 Convertible Promissory Notes Between March 2, 2018 and March 15, 2018, the Company issued a series of convertible promissory notes (“Series 2018 Notes”) to various investors with a maturity date of 24 months from the date of issuance with an aggregate principal amount of $2,470, of which $1,410 was received in cash, $1,000 in advertising services receivable, and $60 was debt assumed in the IndiePlate LLC asset acquisition. The Series 2018 Notes accrued interest at a rate of 8% per annum that was due and payable at maturity, unless otherwise converted prior to maturity. In connection with the Landcadia Business Combination, the Series 2018 Notes were either ultimately converted into common stock of the post-combination company or redeemed for cash. The Company determined that the feature in the Series 2018 Notes providing for conversion into shares sold in the next financing at a stated discount and the ability for holders to redeem their notes at a substantial premium, represented an embedded derivative, requiring separate accounting recognition, in accordance with subtopic ASC 815-15 . Note 8 – Derivatives |
