• Filing Date: 2020-03-06
  • Form Type: 10-K
  • Description: Annual report
v3.19.3.a.u2
Long-Term Debt
12 Months Ended
Dec. 31, 2019
Debt Disclosure [Abstract]  
Long-Term Debt

Note 13 -- Long-Term Debt

The following table summarizes the Company’s long-term debt:

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

3.875% Convertible Senior Notes, due March 15, 2019

 

$

 

 

$

89,990

 

4.25% Convertible Senior Notes, due March 1, 2037

 

 

143,750

 

 

 

143,750

 

3.95% Promissory note, due through February 17, 2020

 

 

8,881

 

 

 

9,125

 

4% Promissory note, due through February 1, 2031

 

 

7,345

 

 

 

7,857

 

3.75% Promissory note, due through September 1, 2036

 

 

7,955

 

 

 

8,290

 

4.55% Promissory note, due through August 1, 2036

 

 

5,704

 

 

 

5,928

 

Finance lease liabilities, due through August 15, 2023

 

 

60

 

 

 

55

 

Total principal amount

 

 

173,695

 

 

 

264,995

 

Less: unamortized discount and issuance costs

 

 

(10,000

)

 

 

(14,845

)

Total long-term debt

 

$

163,695

 

 

$

250,150

 

 

The following table summarizes future maturities of long-term debt as of December 31, 2019, which takes into consideration the assumption that the 4.25% Convertible Senior Notes are repurchased at the earliest call date.

 

Year

 

 

 

 

2020

 

$

10,013

 

2021

 

 

1,178

 

2022

 

 

144,974

 

2023

 

 

1,267

 

2024

 

 

1,310

 

Thereafter

 

 

14,953

 

Total

 

$

173,695

 

 

Information with respect to interest expense related to long-term debt is as follows:

 

 

 

Years Ended December 31,

 

 

 

2019

 

 

2018

 

 

2017

 

Interest Expense:

 

 

 

 

 

 

 

 

 

 

 

 

Contractual interest

 

$

8,061

 

 

$

10,740

 

 

$

10,424

 

Non-cash expense (a)

 

 

4,845

 

 

 

7,487

 

 

 

6,404

 

Capitalized interest (b)

 

 

(303

)

 

 

(131

)

 

 

(61

)

Total

 

$

12,603

 

 

$

18,096

 

 

$

16,767

 

 

(a)

Represents amortization of debt discount and issuance costs.

(b)

Interest was capitalized for construction projects.

Convertible Senior Notes

3.875% Convertible Senior Notes

On March 15, 2019, the Company repaid the outstanding principal balance of its notes totaling $89,990 plus accrued interest of $1,744. Prior to the repayment, the conversion rate was 16.4074 shares of common stock for each $1 in principal amount, which was the equivalent of approximately $60.95 per share.

4.25% Convertible Senior Notes

On March 3, 2017, the Company issued 4.25% Convertible Senior Notes in a private offering for an aggregate principal amount of $143,750. The net proceeds were $138,775 after $4,975 in related issuance and transaction costs. The notes mature March 1, 2037 and the cash interest is payable semiannually in arrears on March 1 and September 1 of each year.

The Convertible Senior Notes rank equally in right of payment to the Company’s existing and future unsecured and unsubordinated obligations. These Convertible Senior Notes do not contain any financial or operating covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. The Convertible Senior Notes provide no protection to the note holders in the event of a fundamental change or other corporate transaction involving the Company except those described in the indenture. These Convertible Senior Notes do not require a sinking fund to be established for the purpose of redemption.

Embedded Conversion Feature

The conversion feature of these Convertible Senior Notes is subject to conversion rate adjustments upon the occurrence of specified events (including payment of dividends above a specified amount) but will not be adjusted for any accrued and unpaid interest.

Since May 2018, the Company’s cash dividends on common stock have exceeded $0.35 per share, resulting in adjustments to the conversion rate of the 4.25% Convertible Notes. Accordingly, as of December 31, 2019, the conversion rate of the Company’s 4.25% Convertible Notes was 16.3667 shares of common stock for each $1 in principal amount, which was the equivalent of approximately $61.10 per share.

The holders of the Convertible Senior Notes may convert all or a portion of their Convertible Senior Notes during specified periods as follows: (1) during any calendar quarter commencing after the calendar quarter ending on the dates specified in the indenture, if the last reported sale price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than 130% of the conversion price on each applicable trading day; (2) during the five business-day period after any ten consecutive trading-day period in which the trading price per $1 principal amount of the Convertible Senior Notes is less than 98% of the product of the last reported sale price and the conversion rate on each such trading day; (3) if specified corporate events, including a change in control, occur; or (4) at any time on or after the dates specified in the indenture.

The note holders who elect to convert their Convertible Senior Notes in connection with a fundamental change as described in the indentures will be entitled to a “make-whole” adjustment in the form of an increase in the conversion rate. Upon conversion, the Company has options to satisfy its conversion obligation by paying or delivering cash, shares of its common stock or a combination of cash and shares of its common stock. As of December 31, 2019, none of the conditions allowing the holders of the Convertible Senior Notes to convert had been met.

The Company determined that the Convertible Senior Notes’ embedded conversion feature is not a derivative financial instrument but rather is required to be separately accounted for in equity because the Company may elect to settle the conversion option entirely or partially in cash. At issuance, the Company accounted for the equity component of the embedded conversion feature as a reduction in the carrying amount of the debt and an increase in additional paid-in capital.

Embedded Redemption Feature – Fundamental Change

The note holders have the right to require the Company to repurchase for cash all or any portion of the Convertible Senior Notes at par prior to the maturity date should any of the fundamental change events described in the indenture occur. The Company concluded that this embedded redemption feature is not a derivative financial instrument and that it is not probable at issuance that any of the specified fundamental change events will occur. Therefore, this embedded redemption feature is not substantive and will not affect the expected life of the liability component.

Embedded Redemption Feature – Put Option of the Note Holder

At the option of the holders of the Convertible Senior Notes, the Company is required to repurchase for cash all or any portion of the Convertible Senior Notes at par on March 1, 2022, March 1, 2027 or March 1, 2032. The Company concluded that this embedded feature is not a derivative financial instrument. In addition, based on economic factors at the time when the Convertible Senior Notes were issued, the Company determined it is probable that the note holders will exercise this option. Thus, the Company amortizes the liability component and related issuance costs associated with the Convertible Senior Notes over the period from March 3, 2017 to March 1, 2022.

The effective interest rate for the Convertible Senior Notes, taking into account both cash and non-cash components, approximates 7.6%. Had a 20-year term been used for the amortization of the liability component and issuance costs, the annual effective interest rate charged to earnings would have decreased to approximately 5.4%. As of December 31, 2019, the remaining amortization period of the debt discount was expected to be 2.2 years.

The following table summarizes information regarding the equity and liability components of the Convertible Senior Notes:

 

 

 

December 31,

 

 

 

2019

 

 

2018

 

Principal amount

 

$

143,750

 

 

$

233,740

 

Unamortized discount

 

 

(7,545

)

 

 

(11,316

)

Liability component – net carrying value before issuance costs

 

$

136,205

 

 

$

222,424

 

Equity component – conversion, net of offering costs

 

$

15,151

 

 

$

31,051

 

Promissory Notes

3.95% Promissory Note

On February 27, 2017, the Company converted its outstanding revolving credit facility of $9,441 into a three-year mortgage loan primarily collateralized by a retail shopping center in Melbourne, Florida. Shortly after the loan conversion, the Company withdrew an additional amount of $109, thereby increasing the loan amount to $9,550. The loan bore a fixed annual interest rate of 3.95%. Approximately $50 of principal and interest was payable in 35 monthly installments beginning March 17, 2017 plus a final balloon payment of $8,891 including principal and unpaid interest payable on February 17, 2020.

3.75% Callable Promissory Note

The loan bears interest at a fixed annual rate of 3.75% and is collateralized by a retail shopping center in Sorrento, Florida and the lease agreements associated with this property. Approximately $53 of principal and interest is payable in 240 monthly installments. The promissory note may be repaid in full as long as the Company provides at least 60 days’ written notice and pays a prepayment premium as specified in the loan agreement. In addition, the lender may require full payment of the outstanding principal and unpaid interest on September 1, 2031 provided a written notice of its intention to call the note is given at least six months in advance.

4% Promissory Note

The loan is collateralized by the Company’s Tampa, Florida headquarters, which is owned by HCPCI Holdings, LLC, and the lease agreements associated with this property. The loan bears interest at a fixed annual rate of 4%. Approximately $68 of principal and interest is payable in 180 monthly installments. The promissory note may be repaid in full as long as the Company provides at least 60 days’ written notice and pays a prepayment premium as specified in the loan agreement.

4.55% Promissory Note

On July 6, 2018, Century Park Holdings, LLC, a subsidiary of the Company, entered into a 18-year loan agreement for $6,000 secured by commercial real estate in Tampa, Florida and an associated lease agreement. The loan bears interest at a fixed annual rate of 4.55%. Approximately $41 of principal and interest is payable in 216 monthly installments. The promissory note may be repaid in full or in part after September 1, 2020 as long as the Company provides at least 30 days’ written notice and pays a prepayment consideration as specified in the loan agreement.