Company Quick10K Filing
Castle AM
Price2.02 EPS-8
Shares4 P/E-0
MCap7 P/FCF2
Net Debt255 EBIT-0
TEV262 TEV/EBIT-547
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-16
10-Q 2020-06-30 Filed 2020-08-14
S-1 2020-06-29 Public Filing
10-Q 2020-03-31 Filed 2020-05-15
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-11-12
10-Q 2019-06-30 Filed 2019-08-14
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-15
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-14
10-K 2017-12-31 Filed 2018-03-15
10-Q 2017-09-30 Filed 2017-11-14
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-15
10-K 2016-12-31 Filed 2017-04-07
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-09
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-15
10-Q 2015-09-30 Filed 2015-11-09
10-Q 2015-06-30 Filed 2015-08-06
10-Q 2015-03-31 Filed 2015-04-30
10-K 2014-12-31 Filed 2015-03-09
10-Q 2014-09-30 Filed 2014-10-29
10-Q 2014-06-30 Filed 2014-08-11
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-03-07
10-Q 2013-09-30 Filed 2013-11-01
10-Q 2013-06-30 Filed 2013-07-31
10-Q 2013-03-31 Filed 2013-05-02
10-K 2012-12-31 Filed 2013-03-11
10-Q 2012-09-30 Filed 2012-11-02
10-Q 2012-06-30 Filed 2012-08-07
10-Q 2012-03-31 Filed 2012-05-03
10-K 2011-12-31 Filed 2012-03-14
10-Q 2011-09-30 Filed 2011-11-03
10-Q 2011-06-30 Filed 2011-08-03
10-Q 2011-03-31 Filed 2011-05-06
10-K 2010-12-31 Filed 2011-03-14
10-Q 2010-09-30 Filed 2010-11-05
10-Q 2010-06-30 Filed 2010-07-29
10-Q 2010-03-31 Filed 2010-04-29
10-K 2009-12-31 Filed 2010-03-12
8-K 2020-11-16
8-K 2020-10-30
8-K 2020-08-14
8-K 2020-06-30
8-K 2020-05-14
8-K 2020-05-01
8-K 2020-03-27
8-K 2020-03-23
8-K 2020-02-26
8-K 2020-01-07
8-K 2019-11-12
8-K 2019-08-14
8-K 2019-05-07
8-K 2019-05-01
8-K 2019-03-14
8-K 2018-12-21
8-K 2018-11-13
8-K 2018-11-05
8-K 2018-08-07
8-K 2018-06-01
8-K 2018-05-14
8-K 2018-04-25
8-K 2018-03-13
8-K 2018-02-06

CTAM 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-22.1 ctam-ex221listofissuer.htm
EX-31.1 ctam-ex311x93020.htm
EX-31.2 ctam-ex312x93020.htm
EX-32.1 ctam-ex321x93020.htm

Castle AM Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
79061744427198-752012201420172020
Assets, Equity
29521212946-37-1202012201420172020
Rev, G Profit, Net Income
553617-2-21-402012201420172020
Ops, Inv, Fin

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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For Quarterly Period Ended September 30, 2020
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from             to            
Commission File Number: 1-5415
A. M. Castle & Co.
(Exact name of registrant as specified in its charter) 
 

Maryland36-0879160
(State or other jurisdiction of incorporation of organization)(I.R.S. Employer Identification No.)
1420 Kensington Road, Suite 220,Oak Brook,Illinois60523
(Address of principal executive offices)(Zip Code)
Registrant’s telephone, including area code (847) 455-7111

(Former name, former address and former fiscal year, if changed since last report) None
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, Par Value $0.01 Per ShareCTAMOCTQX Best Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    
Yes   No    
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    
Yes   No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


Table of Contents
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    
Yes   No    
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    
Yes   No    
The number of shares outstanding of the registrant’s common stock as of November 13, 2020 was 73,910,334 shares.


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A. M. Castle & Co.
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  Page



Table of Contents
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Amounts in thousands, except par value and per share data
A.M. Castle & Co.
Condensed Consolidated Balance Sheets
 As of
 September 30, 2020December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$24,230 $6,433 
Accounts receivable, less allowances of $2,514 and $1,766, respectively
46,768 74,697 
Inventories140,085 144,411 
Prepaid expenses and other current assets9,717 9,668 
Income tax receivable2,486 1,995 
Total current assets223,286 237,204 
Goodwill and intangible assets5,500 8,176 
Prepaid pension cost7,504 5,758 
Deferred income taxes1,497 1,534 
Operating right-of-use assets29,943 29,423 
Other noncurrent assets550 792 
Property, plant and equipment:
Land5,578 5,579 
Buildings20,928 20,950 
Machinery and equipment41,562 41,054 
Property, plant and equipment, at cost68,068 67,583 
Accumulated depreciation(24,115)(20,144)
Property, plant and equipment, net43,953 47,439 
Total assets$312,233 $330,326 
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$40,589 $41,745 
Accrued and other current liabilities10,785 11,188 
Operating lease liabilities6,508 6,537 
Income tax payable542 573 
Short-term borrowings1,980 2,888 
Current portion of finance leases663 596 
Current portion of long-term debt2,000  
Total current liabilities63,067 63,527 
Long-term debt, less current portion213,253 263,523 
Deferred income taxes1,543 3,775 
Finance leases, less current portion7,893 8,208 
Other noncurrent liabilities3,621 2,894 
Pension and postretirement benefit obligations6,554 6,709 
Noncurrent operating lease liabilities23,563 22,760 
Commitments and contingencies (see Note 12)
Stockholders’ equity (deficit):
Common stock, $0.01 par value—400,000 Class A shares authorized with 74,079 shares issued and shares outstanding at September 30, 2020, and 3,818 shares issued and 3,650 shares outstanding at December 31, 2019
741 38 
Additional paid-in capital123,958 61,461 
Accumulated deficit(118,579)(88,741)
Accumulated other comprehensive loss(12,927)(13,374)
Treasury stock, at cost — 168 shares at September 30, 2020 and 168 shares at December 31, 2019
(454)(454)
Total stockholders’ equity (deficit)(7,261)(41,070)
$312,233 $330,326 

The accompanying notes are an integral part of these financial statements.
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A.M. Castle & Co.
Condensed Consolidated Statements of Operations
and Comprehensive Loss
Three Months EndedNine Months Ended
 September 30,September 30,
2020201920202019
Net sales$79,535 $136,113 $290,857 $433,570 
Costs and expenses:
Cost of materials (exclusive of depreciation)58,610 103,019 211,806 323,918 
Warehouse, processing and delivery expense13,394 18,759 45,584 59,577 
Sales, general and administrative expense13,515 16,048 41,815 49,027 
Depreciation expense1,921 2,055 6,035 6,306 
Impairment of goodwill2,676  2,676  
Total costs and expenses90,116 139,881 307,916 438,828 
Operating loss(10,581)(3,768)(17,059)(5,258)
Interest expense, net5,077 10,204 20,146 29,503 
Unrealized gain on embedded debt conversion option  (2,010) 
Other income, net(342)(697)(2,194)(4,779)
Loss before income taxes(15,316)(13,275)(33,001)(29,982)
Income tax benefit(572)(1,079)(3,163)(1,479)
Net loss$(14,744)$(12,196)$(29,838)$(28,503)
Basic and diluted loss per common share$(0.20)$(5.49)$(0.59)$(13.11)
Comprehensive loss:
Net loss$(14,744)$(12,196)$(29,838)$(28,503)
Change in unrecognized pension and postretirement benefit costs, net of tax25 23 75 69 
Foreign currency translation adjustments, net of tax1,284 (1,068)372 (1,811)
Comprehensive loss$(13,435)$(13,241)$(29,391)$(30,245)
The accompanying notes are an integral part of these financial statements.


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A.M. Castle & Co.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended
September 30,
 20202019
Operating activities:
Net loss$(29,838)$(28,503)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation6,035 6,306 
Amortization of deferred financing costs and debt discount5,207 8,511 
Loss on sale of property, plant and equipment101 210 
    Unrealized foreign currency loss (gain)682 (223)
Unrealized gain on embedded debt conversion option(2,010) 
Noncash interest paid in kind8,277 11,810 
Noncash rent expense290 204 
Noncash compensation expense778 1,715 
Noncash impairment of goodwill2,676  
Deferred income taxes(2,319)(2,016)
Changes in assets and liabilities:
Accounts receivable27,926 (8,356)
Inventories4,679 10,029 
Prepaid expenses and other current assets(39)5,873 
Other noncurrent assets911 (134)
Prepaid pension costs(1,671)(566)
Accounts payable(1,460)5,093 
Income tax payable and receivable(512)(1,805)
Accrued and other current liabilities(448)(3,451)
Pension and postretirement benefit obligations and other noncurrent liabilities572 (111)
Net cash provided by operating activities19,837 4,586 
Investing activities:
Capital expenditures(2,426)(3,530)
Proceeds from sale of property, plant and equipment78 442 
Net cash used in investing activities(2,348)(3,088)
Financing activities:
Proceeds from long-term debt including credit facilities19,673 3,500 
Repayments of long-term debt including credit facilities(15,655)(4,488)
Repayments of short-term borrowings, net(931)(1,238)
Principal paid on financing leases(243)(454)
Payments of debt restructuring costs(2,752) 
Net cash provided by (used in) financing activities92 (2,680)
Effect of exchange rate changes on cash and cash equivalents216 13 
Net change in cash and cash equivalents17,797 (1,169)
Cash and cash equivalents - beginning of year6,433 8,668 
Cash and cash equivalents - end of period$24,230 $7,499 

The accompanying notes are an integral part of these financial statements.
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A.M. Castle & Co.
Consolidated Statements of Stockholders' Equity (Deficit)
Common
Shares
Treasury
Shares
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Accumulated DeficitAccumulated Other
Comprehensive
Loss
Total
Balance as of June 30, 20193,818 (168)$38 $(454)$58,556 $(66,533)$(15,045)$(23,438)
Net loss— — — — — (12,196)— (12,196)
Foreign currency translation, net of tax— — — — — — (1,068)(1,068)
Change in unrecognized pension and postretirement benefit costs, net of $0 tax effect
— — — — — — 23 23 
Reclassification to equity of interest paid in kind attributable to conversion option, net of $326 tax effect
— — — — 927 — — 927 
Share-based compensation— — — — 371 — — 371 
Balance as of September 30, 20193,818 (168)$38 $(454)$59,854 $(78,729)$(16,090)$(35,381)
Balance as of June 30, 202074,079 (168)$741 $(454)$123,510 $(103,835)$(14,236)$5,726 
Net loss— — — — — (14,744)— (14,744)
Foreign currency translation, net of tax— — — — — — 1,284 1,284 
Change in unrecognized pension and postretirement benefit costs, net of $0 tax effect
— — — — — — 25 25 
Reclassification to equity of interest paid in kind attributable to conversion option, net of $106 tax effect
— — — — 299 — — 299 
Share-based compensation— — — — 149 — — 149 
Balance as of September 30, 202074,079 (168)$741 $(454)$123,958 $(118,579)$(12,927)$(7,261)
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A.M. Castle & Co.
Consolidated Statements of Stockholders' Equity (Deficit)
Common
Shares
Treasury
Shares
Common
Stock
Treasury
Stock
Additional
Paid-in
Capital
Accumulated DeficitAccumulated Other
Comprehensive
Loss
Total
Balance as of December 31, 20183,803  $38 $ $55,421 $(50,472)$(14,348)$(9,361)
Cumulative effect from adoption of the new lease standard (Leases: Topic 842)— — — — — 246 — 246 
Net loss— — — — — (28,503)— (28,503)
Foreign currency translation, net of tax— — — — — — (1,811)(1,811)
Change in unrecognized pension and postretirement benefit costs, $0 tax effect
— — — — — — 69 69 
Reclassification to equity of interest paid in kind attributable to conversion option, net of $961 tax effect
— — — — 2,735 — — 2,735 
Share-based compensation— — — — 1,143 — — 1,143 
Vesting of restricted shares and other15 (168)— (454)555 — — 101 
Balance as of September 30, 20193,818 (168)$38 $(454)$59,854 $(78,729)$(16,090)$(35,381)
Balance as of December 31, 20193,818 (168)$38 $(454)$61,461 $(88,741)$(13,374)$(41,070)
Net loss— — — — — (29,838)— (29,838)
Foreign currency translation, net of tax— — — — — — 372 372 
Change in unrecognized pension and postretirement benefit costs, $0 tax effect
— — — — — — 75 75 
Reclassification to equity of interest paid in kind attributable to conversion option, net of $215 tax effect
— — — — 604 — — 604 
Reclassification of conversion option to equity, net of $0 tax effect (Note 8)
— — — — 36,952 — — 36,952 
Conversion of debt (Note 6)70,261 — 703 — 24,606 — — 25,309 
Share-based compensation— — — — 585 — — 585 
Vesting of restricted shares and other— — — — (250)— — (250)
Balance as of September 30, 202074,079 (168)$741 $(454)$123,958 $(118,579)$(12,927)$(7,261)
The accompanying notes are an integral part of these financial statements.
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A. M. Castle & Co.
Notes to Condensed Consolidated Financial Statements
Unaudited - Amounts in thousands except per share data and percentages
(1) Basis of Presentation
The Condensed Consolidated Financial Statements of A.M. Castle & Co. and its consolidated subsidiaries (collectively, the "Company") included herein and the notes thereto have been prepared by the Company, without audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), and accounting principles generally accepted in the United States of America (“GAAP”). The Condensed Consolidated Balance Sheet at December 31, 2019 is derived from the audited financial statements at that date. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. In the opinion of the Company's management, the unaudited statements included herein contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of financial results for the interim period. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The operating results for the three and nine months ended September 30, 2020, as reported herein, may not necessarily be indicative of the Company’s operating results for the full year.
(2) New Accounting Standards
Standards Updates Adopted
In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” ASU No. 2018-13 amends Fair Value Measurement (Topic 820) to add, remove, and modify fair value measurement disclosure requirements. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 820's disclosure requirements under the aforementioned FASB disclosure framework project. The Company adopted the disclosure requirements of ASU No. 2018-13 in the first quarter of 2020. The Company determined the adoption of the disclosure requirements had no impact on its fair value disclosures herein.
In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” ASU 2019-12 amends ASC 740 to simplify the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in the accounting standard under the FASB’s simplification initiative. ASU 2019-12 is effective for public entities for fiscal years beginning after December 15, 2020. Upon adoption, the amendments in ASU 2019-12 should be applied on a prospective basis to all periods presented. Early adoption is permitted. The Company adopted the new guidance under ASU 2019-12 in the first quarter of 2020 and removed the exception for intraperiod allocations from its interim period tax provision calculation, accordingly.
On March 2, 2020, the SEC issued Final Rule Release No. 33-10762, "Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities" (the “final rule”). The final rule simplifies the disclosure requirements related to certain registered securities under SEC Regulation S-X, Rules 3-10 and 3-16, which currently require separate financial statements for (1) subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met and (2) affiliates that collateralize registered securities offerings if the affiliates’ securities are a substantial portion of the collateral. Under the final rule, alternative financial disclosures or narrative disclosures (referred to collectively as “Alternative Disclosures”) may be provided in lieu of separate financial statements of the guarantors or affiliates. The amendments in the final rule are generally effective for filings on or after January 4, 2021, with early application permitted. The Company has elected to adopt the amendments of the final rule for the quarter ended March 31, 2020 and accordingly, has elected to present the alternative disclosures of the guarantors of its registered securities in Part I Item 2, Management's Discussion and Analysis, of this Form 10-Q.
Standards Updates Issued Not Yet Effective
In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 adds a current expected credit loss (“CECL”) impairment model to U.S. GAAP that is based on expected losses rather than incurred losses. Modified retrospective adoption is required with any cumulative-effect adjustment recorded to retained earnings as of the beginning of the period of adoption. ASU 2016-13 is effective for smaller
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reporting companies for fiscal years beginning after December 15, 2022, including interim periods within the year of adoption. Early adoption is permitted. The Company will adopt the guidance and disclosure requirements of ASU 2016-13 in fiscal year 2023.
In August 2018, the FASB issued ASU No. 2018-14, “Compensation – Retirement Benefits – Defined Benefit Plans - General (Topic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plan.” ASU No. 2018-14 amends Compensation - Retirement Benefits (Topic 715) to add or remove certain disclosure requirements related to defined benefit pension and other postretirement plans. The ASU’s changes to disclosures aim to improve the effectiveness of Topic 715's disclosure requirements under the FASB’s disclosure framework project. ASU No. 2018-14 is effective for public entities for fiscal years beginning after December 15, 2020. ASU No. 2018-14 does not impact the interim disclosure requirements of Topic 715. Early adoption is permitted. The Company will adopt the disclosure requirements of this new guidance in fiscal year 2021.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The purpose of ASU 2020-04 is to provide optional guidance for a limited time to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In response to concerns about structural risks of interbank offered rates, and, in particular, the risk of cessation of the London Interbank Offered Rate (LIBOR), reference rate reform refers to a global initiative to identify alternative reference rates that are more observable or transaction-based and less susceptible to manipulation. ASU 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by topic or industry subtopic as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. Once elected for a topic or an industry subtopic, the amendments in ASU 2020-04 must be applied prospectively for all eligible contract modifications for that topic or industry subtopic. The Company is currently assessing the accounting and financial impact of reference rate reform and will consider applying the optional guidance of ASU 2020-04 accordingly.
(3) Revenue
The Company recognizes revenue from the sale of products when the earnings process is complete and when the title and risk and rewards of ownership have passed to the customer, which is primarily at the time of shipment. Revenue recognized other than at the time of shipment represented less than 1% of the Company’s consolidated net sales in the three and nine months ended September 30, 2020 and September 30, 2019, respectively. Customer payment terms are established prior to the time of shipment. Provisions for allowances related to sales discounts and rebates are recorded based on terms of the sale in the period that the sale is recorded. The Company utilizes historical information and the current sales trends of the Company's business to estimate such provisions. The provisions related to discounts and rebates due to customers are recorded as a reduction within net sales in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss.
The Company records revenue from shipping and handling charges in net sales. Costs incurred in connection with shipping and handling the Company’s products, which are related to third-party carriers or performed by Company personnel, are included in warehouse, processing and delivery expenses. In the three months ended September 30, 2020 and September 30, 2019, shipping and handling costs included in warehouse, processing and delivery expenses were $4,559 and $5,869, respectively. In the nine months ended September 30, 2020 and September 30, 2019, shipping and handling costs included in warehouse, processing and delivery expenses were $15,007 and $18,165, respectively. As a practical expedient under Accounting Standards Codification No. 606, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), the Company has elected to account for shipping and handling activities as fulfillment costs and not a promised good or service. As a result, there is no change to the Company's accounting for revenue from shipping and handling charges under ASC 606.
The Company maintains an allowance for doubtful accounts related to the potential inability of customers to make required payments. The allowance for doubtful accounts is maintained at a level considered appropriate based on historical experience and specific identification of customer receivable balances for which collection is unlikely. The provision for doubtful accounts is recorded in sales, general and administrative expense in the Company’s Condensed Consolidated Statements of Operations and Comprehensive Loss. Estimates of doubtful accounts are based on historical write-off experience as a percentage of net sales and judgments about the probable effects of economic conditions on certain customers. The Company increased its allowance for doubtful accounts during the three months ended September 30, 2020 primarily in response to certain customers that declared bankruptcy due to ongoing financial hardship. The Company continues to consider the economic impact of the novel coronavirus
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("COVID-19") pandemic as well as the currently unfavorable economic conditions on the collectability of customer accounts receivable. The Company continues to experience slowing in payments from customers due to the financial uncertainties resulting from the COVID-19 pandemic and will continue to analyze any financial and commercial impacts of the COVID-19 pandemic, including any adverse impact the COVID-19 pandemic may have on the collectability of customer accounts receivable.
The Company also maintains an allowance for credit memos for estimated credit memos to be issued against current sales. Estimates of allowance for credit memos are based upon the application of a historical issuance lag period to the average credit memos issued each month.
Accounts receivable allowance for doubtful accounts and credit memos activity is as follows:
 Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
Balance, beginning of period$1,912 $1,701 $1,766 $1,364 
Add Provision charged to expense(a)
687 142 911 529 
Recoveries(3)7 (5)18 
Less Charges against allowance
(82)(3)(158)(64)
Balance, end of period$2,514 $1,847 $2,514 $1,847 
(a) Includes the net amount of credit memos reserved and issued.
The Company operates primarily in North America. Net sales are attributed to countries based on the location of the Company’s subsidiary that is selling direct to the customer. Net sales exclude assessed taxes such as sales and excise tax. Company-wide geographic data is as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Net sales
United States$54,602 $89,407 $199,654 $278,430 
Canada5,237 9,916 20,287 33,464 
Mexico8,225 11,700 26,105 37,221 
France5,492 13,013 22,201 41,638 
China5,253 7,751 15,925 29,329 
All other countries726 4,326 6,685 13,488 
Total$79,535 $136,113 $290,857 $433,570 
The Company does not incur significant incremental costs when obtaining customer contracts and any costs that are incurred are generally not recoverable from its customers. Substantially all of the Company's customer contracts are for a duration of less than one year and individual customer purchase orders for contractual customers are fulfilled within one year of the purchase order date. As a practical expedient under ASC 606, the Company has elected to continue to recognize incremental costs of obtaining a contract, if any, as an expense when incurred if the amortization period of the asset would have been one year or less. The Company does not have any costs to obtain a contract that are capitalized under ASC 606.
(4) Loss Per Share
Diluted loss per common share is computed by dividing net loss by the weighted average number of shares of the common stock of A.M. Castle & Co. outstanding plus outstanding common stock equivalents. Common stock equivalents consist of restricted stock awards and other share-based payment awards, and shares that may be issued upon conversion of the Company’s outstanding 5.00% / 7.00% Convertible Senior Secured Paid-in-Kind ("PIK") Toggle Notes due 2022 (the “5.00%/7.00% Convertible Notes”) and the Company's outstanding 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due 2024 (the “3.00%/5.00% Convertible Notes”), which are included in the calculation of weighted average shares outstanding using the if-converted method. Refer to Note 6 - Debt, for further description of the 5.00%/7.00% Convertible Notes and the 3.00%/5.00% Convertible Notes.
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The following table is a reconciliation of the basic and diluted loss per common share calculations:
 
Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
Numerator:
Net loss$(14,744)$(12,196)$(29,838)$(28,503)
Denominator:
Weighted average common shares outstanding72,924 2,221 50,599 2,174 
Effect of dilutive securities:
Outstanding common stock equivalents    
Denominator for diluted loss per common share72,924 2,221 50,599 2,174 
Basic loss per common share$(0.20)$(5.49)$(0.59)$(13.11)
Diluted loss per common share$(0.20)$(5.49)$(0.59)$(13.11)
Excluded outstanding share-based awards having an anti-dilutive effect986 1,429 1,083 1,488 
The computation of diluted loss per common share does not include common shares issuable upon conversion of the Company’s 5.00%/7.00% Convertible Notes or 3.00%/5.00% Convertible Notes, as they were anti-dilutive under the if-converted method.
The 5.00%/7.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share. The 3.00%/5.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $0.46 per share. In future periods, absent a fundamental change as described in Note 6 - Debt, the outstanding 5.00%/7.00% Convertible Notes and 3.00%/5.00% Convertible Notes could increase diluted average shares outstanding by a maximum of approximately 215,090 shares.
(5) Goodwill and Intangible Asset
As of December 31, 2019, the Company had goodwill with a carrying value of $2,676, none of which was tax deductible. As a result of the COVID-19 pandemic, which has spread across the globe to many countries in which the Company does business and is impacting worldwide economic activity, the Company has determined that the potential impact on its business, including, but not limited to, a potential decrease in revenue, supply chain disruptions and/or facility closures, represented facts and circumstances indicating that it was likely that its goodwill and indefinite lived trade name could be impaired, and performed interim impairment tests. Based on the results of the Company's interim goodwill impairment test performed in the third quarter of 2020, the Company determined its one reporting unit's goodwill was impaired. The Company recorded a non-cash goodwill impairment charge of $2,676 during the three months ended September 30, 2020, reducing the remaining balance of its goodwill to zero as of September 30, 2020.
The gross carrying value of the Company's trade name intangible asset, which is not subject to amortization, was $5,500 at both September 30, 2020 and December 31, 2019. Based on the results of the interim impairment tests of the indefinite-lived trade name assets performed in the first, second and third quarters of 2020, the Company determined its one reporting unit's indefinite-lived trade name asset was not impaired as of September 30, 2020.
While the Company considered the impact the COVID-19 pandemic may have on its future cash flows when preparing its interim goodwill and intangible asset impairment tests, the full extent of the impact that the COVID-19 pandemic will have on the Company's business, operations and financial condition is currently unknown. The Company will continue to assess its indefinite-lived trade name intangible asset for impairment as events and circumstances change.
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(6) Debt
Long-term debt consisted of the following:
 
As of
September 30, 2020December 31, 2019
LONG-TERM DEBT
Floating rate Revolving A Credit Facility due February 28, 2022$89,246 $102,000 
12.00% Revolving B Credit Facility due February 28, 2022(a)
28,216 25,788 
3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes
due August 31, 2024(b)
97,568  
5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes
due August 31, 2022(c)
3,890 193,660 
1.00% Paycheck Protection Program Term Note due April 28, 2022
10,000  
France Term Loan7,020  
Total principal balance of long-term debt235,940 321,448 
Less: unvested restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024(d)
(109) 
Less: unvested restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022(d)
 (323)
Less: unamortized discount(20,389)(57,313)
Less: unamortized debt issuance costs(189)(289)
Total long-term debt215,253 263,523 
Less: current portion of long-term debt2,000  
Total long-term portion$213,253 $263,523 
(a) Included in balance is interest paid in kind of $6,716 as of September 30, 2020 and $4,288 as of December 31, 2019.
(b) Included in balance is interest paid in kind of $2,434 as of September 30, 2020.
(c) Included in balance is interest paid in kind of $198 as of September 30, 2020 and $28,991 as of December 31, 2019.
(d) Represents the unvested portion of restricted 3.00% / 5.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2024 issued to certain members of management and the unvested portion of restricted 5.00% / 7.00% Convertible Senior Secured PIK Toggle Notes due August 31, 2022 issued to certain members of management (see Note 9 - Share-based compensation).
Credit Facilities
On August 31, 2017, the Company entered into the Revolving Credit and Security Agreement with PNC Bank, National Association ("PNC") as lender and as administrative and collateral agent (the “Agent”), and other lenders party thereto (the "Original ABL Credit Agreement"). The Original ABL Credit Agreement provided for a $125,000 senior secured, revolving credit facility (the "Revolving A Credit Facility") under which the Company and four of its subsidiaries each are borrowers (collectively, in such capacity, the “Borrowers”). The obligations of the Borrowers have been guaranteed by the subsidiaries of the Company named therein as guarantors.
On June 1, 2018, the Company entered into an Amendment No. 1 to Original ABL Credit Agreement (the “Credit Agreement Amendment No. 1”) by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement to provide for additional borrowing capacity. On March 27, 2020, the Company entered into an Amendment No. 2 to the Original ABL Credit Agreement (the "Credit Agreement Amendment No. 2") by and among the Company, the Borrowers and guarantors party thereto and the Agent and the other lenders party thereto, which amended the Original ABL Credit Agreement (as amended by the Credit Agreement Amendment No. 1 and Credit Agreement No. 2, the “ABL Credit Agreement”) to permit the Exchange Offer (defined below) to proceed.
The ABL Credit Agreement provides for an additional $25,000 last out Revolving B Credit Facility (the "Revolving B Credit Facility" and together with the Revolving A Credit Facility, the "Credit Facility"). The Credit Facility was made available in part by way of a participation in the Revolving B Credit Facility by certain of the Company’s stockholders. Borrowings under the Credit Facility will mature on February 28, 2022.
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Subject to certain exceptions and permitted encumbrances, the obligations under the ABL Credit Agreement are secured by a first priority security interest in substantially all of the assets of each of the Borrowers and certain subsidiaries of the Company that are named as guarantors. The proceeds of the advances under the ABL Credit Agreement may only be used to (i) pay certain fees and expenses to the Agent and the lenders under the ABL Credit Agreement, (ii) provide for the Borrowers' working capital needs and reimburse drawings under letters of credit, (iii) repay the obligations under the Debtor-in-Possession Revolving Credit and Security Agreement dated as of July 10, 2017, by and among the Company, the lenders party thereto, and PNC, and certain other existing indebtedness, and (iv) provide for the Borrowers' capital expenditure needs, in accordance with the ABL Credit Agreement.
The Company may prepay its obligations under the ABL Credit Agreement at any time without premium or penalty, and must apply the net proceeds of material sales of collateral in prepayment of such obligations. Payments made must be applied to the Company's obligations under the Revolving A Credit Facility, if any, prior to its obligations under the Revolving B Credit Facility. In connection with an early termination or permanent reduction of the Revolving A Credit Facility prior to March 27, 2021, a 0.50% fee shall be due and, for the period from March 28, 2021 through September 27, 2021, a 0.25% fee shall be due, in each case in the amount of such commitment reduction, subject to reduction as set forth in the ABL Credit Agreement. Indebtedness for borrowings under the ABL Credit Agreement is subject to acceleration upon the occurrence of specified defaults or events of default, including (i) failure to pay principal or interest, (ii) the inaccuracy of any representation or warranty of a loan party, (iii) failure by a loan party to perform certain covenants, (iv) defaults under indebtedness owed to third parties, (v) certain liability producing events relating to ERISA, (vi) the invalidity or impairment of the Agent’s lien on its collateral or of any applicable guarantee, and (vii) certain adverse bankruptcy-related and other events.
Interest on indebtedness under the Revolving A Credit Facility accrues at a variable rate based on a grid with the highest interest rate being the applicable LIBOR-based rate plus a margin of 3.0%, as set forth in the ABL Credit Agreement. Interest on indebtedness under the Revolving B Credit Facility accrues at a rate of 12.0% per annum, which will be paid in kind unless the Company elects to pay such interest in cash and the Revolving B payment conditions specified in the ABL Credit Agreement are satisfied. Additionally, the Company must pay a monthly facility fee equal to the product of (i) 0.25% per annum (or, if the average daily revolving facility usage is less than 50% of the maximum revolving advance amount, 0.375% per annum) multiplied by (ii) the amount by which the maximum revolving advance amount exceeds such average daily revolving facility usage for such month.
The weighted average interest rate on outstanding borrowings under the Revolving A Credit Facility for the three and nine months ended September 30, 2020 was 3.26% and 3.83%, respectively, and 5.29% and 5.47% for the three and nine months ended September 30, 2019, respectively. The weighted average facility fee for each such period was 0.25%. The Company pays certain customary recurring fees with respect to the ABL Credit Agreement. Interest expense related to the Revolving B Credit Facility of $840 and $2,428 was paid in kind in the three and nine months ended September 30, 2020. Interest expense related to the Revolving B Credit Facility of $744 and $2,145 was paid in kind in the three and nine months ended September 30, 2019, respectively.
The ABL Credit Agreement includes negative covenants customary for an asset-based revolving loan. Such covenants include limitations on the ability of the Borrowers to, among other things, (i) effect mergers and consolidations, (ii) sell assets, (iii) create or suffer to exist any lien, (iv) make certain investments, (v) incur debt and (vi) transact with affiliates. In addition, the ABL Credit Agreement includes customary affirmative covenants for an asset-based revolving loan, including covenants regarding the delivery of financial statements, reports and notices to the Agent. The ABL Credit Agreement also contains customary representations and warranties and event of default provisions for a secured term loan.
The Company's ABL Credit Agreement contains a springing financial maintenance covenant requiring the Company to maintain a Fixed Charge Coverage Ratio of 1.0 to 1.0 in any Covenant Testing Period (as defined in the ABL Credit Agreement) when the Company's cash liquidity (as defined in the ABL Credit Agreement) is less than $12,500. The Company was not in a Covenant Testing Period as of and for the three and nine months ended September 30, 2020.
Unamortized debt issuance costs of $189 associated with the ABL Credit Agreement were recorded as a reduction in long-term debt as of September 30, 2020.
Convertible Senior Secured Notes
On March 27, 2020, the Company completed an exchange offer and consent solicitation (the “Exchange Offer”) to issue its 3.00%/5.00% Convertible Notes and shares of its common stock in exchange for its 5.00%/7.00%
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Convertible Notes, including any accrued and unpaid interest on the 5.00%/7.00% Convertible Notes as of the date in which the Exchange Offer was completed. Pursuant to the terms of the Exchange Offer, $190,200 in aggregate principal amount of the 5.00%/7.00% Convertible Notes were tendered and accepted and in exchange, the Company issued $95,135 in aggregate principal amount of its 3.00%/5.00% Convertible Notes and 70,261 shares of its common stock. The 3.00%/5.00% Convertible Notes are guaranteed on a senior basis by all current and future domestic subsidiaries (other than those designated as "unrestricted subsidiaries") of the Company (the "Guarantors"). An aggregate principal amount of 5.00%/7.00% Convertible Notes in the amount of $3,693 were not tendered and remained outstanding at the date of Exchange Offer.
The 3.00%/5.00% Convertible Notes have substantially the same terms that the 5.00%/7.00% Convertible Notes had prior to the completion of the Exchange Offer except for the following primary differences: (i) the 3.00%/5.00% Convertible Notes are not exempt from the registration requirements of the Securities Act of 1933, as amended, and have the benefit of registration rights to the holders of the 3.00%/5.00% Convertible Notes, (ii) the interest on the 3.00%/5.00% Convertible Notes accrues at the rate of 3.00% per annum if paid in cash and at the rate of 5.00% per annum if paid in kind, compared to interest on the 5.00%/7.00% Convertible Notes, which accrues at the rate of 5.00% per annum if paid in cash and at the rate of 7.00% per annum if paid in kind, and (iii) the 3.00%/5.00% Convertible Notes have a maturity date of August 31, 2024, compared to the 5.00%/7.00% Convertible Notes, which have a maturity date of August 31, 2022.
In conjunction with the Exchange Offer, on March 27, 2020, the Company, the guarantors of the 5.00%/7.00% Convertible Notes and the trustee for the 5.00%/7.00% Convertible Notes entered into a supplemental indenture to the indenture governing the 5.00%/7.00% Convertible Notes (the “5.00%/7.00% Convertible Notes Indenture”) to provide for, among other things, the elimination or amendment of substantially all of the restrictive covenants, the release of all collateral securing the Company’s obligations under the 5.00%/7.00% Convertible Notes Indenture, and the modification of certain of the events of default and various other provisions contained in the 5.00%/7.00% Convertible Notes Indenture (the "Supplemental Indenture").
Also on March 27, 2020, PNC (in its capacity as “First Lien Agent”), the trustee for the 5.00%/7.00% Convertible Notes and the Company and certain of its subsidiaries executed an intercreditor agreement (the “New Intercreditor Agreement”) providing for the lien priority of the first lien facility over the 3.00%/5.00% Convertible Notes. The terms and conditions of the New Intercreditor Agreement are substantially consistent with those applicable to the intercreditor agreement between the First Lien Agent and the trustee for the 5.00%/7.00% Convertible Notes prior to the completion of the Exchange Offer (the “5.00%/7.00% Convertible Notes Intercreditor Agreement”). PNC and the trustee for the 5.00%/7.00% Convertible Notes also entered into an amendment of the 5.00%/7.00% Convertible Notes Intercreditor Agreement to, among other things, remove certain limitations and rights of the 5.00%/7.00% Convertible Notes with respect to the first lien facility.
The 3.00%/5.00% Convertible Notes were issued pursuant to an indenture (the “3.00%/5.00% Convertible Notes Indenture”), which the Company and the Guarantors entered into with Wilmington Savings Fund Society, FSB, as trustee and collateral agent ("Indenture Agent"), on March 27, 2020. The 3.00%/5.00% Convertible Notes are, secured by a lien on all or substantially all of the assets of the Company, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the Agent under the ABL Credit Agreement.
The 3.00%/5.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $0.46 per share, which rate is subject to adjustment as set forth in the 3.00%/5.00% Convertible Notes Indenture. Under the 3.00%/5.00% Convertible Notes Indenture, upon the conversion of the 3.00%/5.00% Convertible Notes in connection with a Fundamental Change (as defined in the 3.00%/5.00% Convertible Notes Indenture), for each $1.00 principal amount of the 3.00%/5.00% Convertible Notes, that number of shares of the Company’s common stock issuable upon conversion shall equal the greater of (a) $1.00 divided by the then applicable conversion price or (b) $1.00 divided by the price paid per share of the Company's common stock in connection with such Fundamental Change calculated in accordance with the 3.00%/5.00% Convertible Notes Indenture, subject to other provisions of the 3.00%/5.00% Convertible Notes Indenture. Subject to certain exceptions, under the 3.00%/5.00% Convertible Notes Indenture a “Fundamental Change” includes, but is not limited to, the following: (i) the acquisition of more than 50% of the voting power of the Company’s common equity by a “person” or “group” within the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended; (ii) the consummation of any recapitalization, reclassification, share exchange, consolidation or merger of the Company pursuant to which the Company’s common stock will be converted into cash, securities or other property; (iii) the “Continuing Directors” (as defined in the 3.00%/5.00% Convertible Notes Indenture) cease to constitute at
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least a majority of the board of directors; and (iv) the approval of any plan or proposal for the liquidation or dissolution of the Company by the Company’s stockholders.
The 5.00%/7.00% Convertible Notes are convertible into shares of the Company’s common stock at any time at the initial conversion price of $3.77 per share, which rate is subject to adjustment as set forth in the Supplemental Indenture. Under the Supplemental Indenture, the conversion of the 5.00%/7.00% Convertible Notes in connection with a Fundamental Change (as defined in the Supplemental Indenture) is substantially the same as under the 3.00%/5.00% Convertible Notes Indenture, other than the applicable conversion price.
Upon conversion of the 3.00%/5.00% Convertible Notes and/or the 5.00%/7.00% Convertible Notes, the Company will pay and/or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, together with cash in lieu of fractional shares. The value of shares of the Company’s common stock for purposes of the settlement of the conversion right, if the Company elects to settle in cash, will be calculated as provided in the 3.00%/5.00% Convertible Notes Indenture or Supplemental Indenture, as applicable, using a 20 trading day observation period.
As discussed previously, the 3.00%/5.00% Convertible Notes are convertible into common stock at the option of the holder. As of March 27, 2020, the date of the Exchange Offer, the Company determined that the conversion option was not clearly and closely related to the economic characteristics of the 3.00%/5.00% Convertible Notes, nor did the conversion option meet the own equity scope exception as the Company did not have sufficient authorized and unissued common stock shares to satisfy the maximum number of common stock shares that could be required to be issued upon conversion. As a result, the Company concluded that the embedded conversion option must be bifurcated from the 3.00%/5.00% Convertible Notes, separately valued, and accounted for as a derivative liability, which was classified in long term debt and marked to fair value through earnings.
On June 30, 2020, the Company filed articles of amendment to increase the number of shares of common stock authorized (see Note 8 - Stockholders' Equity). As a result of this increase, the number of the Company's common stock shares available for issuance upon conversion of the 3.00%/5.00% Convertible Notes is sufficient to allow the conversion option to be share-settled in full. The Company has concluded that as of June 30, 2020 the conversion option qualifies for equity classification and the bifurcated derivative liability will no longer need to be accounted for as a separate derivative on a prospective basis from the date of reassessment. As of June 30, 2020, the fair value of the conversion option of $36,952 was classified to equity as additional paid-in capital. The remaining debt discount that arose at the date of debt issuance from the original bifurcation will continue to be amortized through interest expense.
The 3.00%/5.00% Convertible Notes are fully and unconditionally guaranteed, jointly and severally, by certain subsidiaries of the Company. The 3.00%/5.00% Convertible Notes and the related guarantees are secured by a lien on substantially all of the Company’s and the guarantors’ assets, subject to certain exceptions pursuant to certain collateral documents pursuant to the 3.00%/5.00% Convertible Notes Indenture. The terms of the 3.00%/5.00% Convertible Notes contain numerous covenants imposing financial and operating restrictions on the Company's business. These covenants place restrictions on the Company’s ability and the ability of its subsidiaries to, among other things, pay dividends, redeem stock or make other distributions or restricted payments; incur indebtedness or issue certain stock; make certain investments; create liens; agree to certain payment restrictions affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.
Neither the 3.00%/5.00% Convertible Notes nor the 5.00%/7.00% Convertible Notes may be redeemed by the Company in whole or in part at any time prior to maturity, except the Company may be required to make an offer to purchase the 3.00%/5.00% Convertible Notes using the proceeds of certain material asset sales involving the Company or one of its restricted subsidiaries, as described more particularly in the 3.00%/5.00% Convertible Notes Indenture. In addition, if a Fundamental Change (as defined in the 3.00%/5.00% Convertible Notes Indenture and the Supplemental Indenture, as applicable) occurs at any time, each holder of any 3.00%/5.00% Convertible Notes or 5.00%/7.00% Convertible Notes has the right to require the Company to repurchase such holder’s notes for cash at a repurchase price equal to 100% of the principal amount thereof, together with accrued and unpaid interest thereon, subject to certain exceptions.
The Company must use the net proceeds of material sales of collateral, which proceeds are not used for other permissible purposes, to make an offer of repurchase to holders of the 3.00%/5.00% Convertible Notes. Indebtedness for borrowings under the 3.00%/5.00% Convertible Notes Indenture and the Supplemental Indenture is subject to acceleration upon the occurrence of specified defaults or events of default as set forth under each such indenture, including failure to pay principal or interest, the inaccuracy of any representation or warranty of any