F-21
the retirement. During the second half of 2013, we repurchased an additional $28,938 of the outstanding 2014 Notes and recorded a
loss of $178 on the retirement including transaction costs. On May 8, 2013, we retired $50,000 in aggregate principal of these 2014
Notes, in exchange for $50,000 of new 7.75% Convertible Senior Notes due 2018, as discussed above.
The 2014 Notes are not registered and were offered under Rule 144A of the Securities Act of 1933. Concurrent with the
issuance of the 2014 Notes, we entered into convertible note hedge transactions and warrant transactions, also detailed below, that are
expected to reduce the potential dilution associated with the conversion of the 2014 Notes. Holders may convert the 2014 Notes at
their option on any day prior to the close of business on the second “scheduled trading day” (as defined in the Indenture) immediately
preceding November 1, 2014. The conversion rate will initially be 96.637 shares of Class A common stock per $1 (one thousand)
principal amount of 2014 Notes, equivalent to an initial conversion price of approximately $10.35 per share of Class A common stock.
The effect of the convertible note hedge and warrant transactions is an increase in the effective conversion premium of the 2014 Notes
to $12.74 per share.
The convertible note hedge and the warrant transactions are separate transactions, each entered into by the Company with the
counterparties, which are not part of the terms of the 2014 Notes and will not affect the holders’ rights under the 2014 Notes. The cost
of the convertible note hedge transactions to the Company was approximately $23,800, and was accounted for as an equity transaction
in accordance with ASC 815-40
, Contracts in Entity’s own Equity
. The Company received proceeds of approximately $13,000 related
to the sale of the warrants, which has also been classified as equity as the warrants meet the classification criteria under ASC 815-40-
25, in which the warrants and the convertible note hedge transactions require settlements in shares and provide the Company with the
choice of a net cash or common shares settlement. As the convertible note hedge and warrants are indexed to our common stock, we
recognized them in permanent equity in
Additional paid-in capital,
and will not recognize subsequent changes in fair value as long as
the instruments remain classified as equity.
Interest on the 2014 Notes is payable semiannually on November 1 and May 1 of each year, beginning May 1, 2010. The 2014
Notes will mature and convert on November 1, 2014, unless previously converted in accordance with their terms. The 2014 Notes are
TCS’s senior unsecured obligations and rank equally with all of its present and future senior unsecured debt and senior to any future
subordinated debts and will be effectively subordinate to all of TCS’s present and future secured debt to the extent of the collateral
securing that debt.
As a result of the repurchase and exchange of $88,938 of the outstanding 2014 Notes, the convertible note hedge was adjusted to
reflect the reduced number of outstanding 2014 Notes. The convertible note hedge transactions’ originally covering 10,001 shares was
adjusted to cover proportionally fewer of shares of Class A common stock. The warrants were not affected by the retirements of the
2014 Notes.
Term loan from commercial bank
In July 2012, we borrowed $45,000 under a term loan agreement (“2012 Term Loan”) with the Silicon Valley Bank, as
administrative agent and collateral agent (“SVB”). Approximately $19,400 of the borrowings under the 2012 Term Loan were used to
pay off the prior term loan with SVB and transaction fees and approximately $20,000 were used as part of the acquisition of
microDATA. The 2012 Term Loan was paid in full with funds borrowed under the new Term Loan A Facility, as discussed above.
Promissory notes payable to microDATA sellers
On July 6, 2012, we issued $14,250 in promissory notes as part of the consideration paid for our acquisition of microDATA
bearing simple interest at 6%. The promissory notes are due in two installments: $7,500 plus interest was paid June 30, 2013 and
$6,750 due June 30, 2014, less post-closing indemnification adjustments of $1,941 as of December 31, 2013, up to a maximum
adjustment of $2,000. The promissory notes are effectively subordinated to TCS’s structured debt.
