Hercules Capital, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Debt (Tables)

Debt (Tables)

12 Months Ended

Dec. 31, 2022

Schedules Of Interest Expense, Related Debt Fees, And Losses On Debt Extinguishment [Table Text Block]

For the year ended December 31, 2022, the components of interest expense, related fees, losses on debt extinguishment and cash paid for interest expense for debt were as follows:


	Year ended December 31, 2022
(in thousands) Description	Interest expense(1)		Amortization of debt issuance cost (loan fees)		Unused facility and other fees (loan fees)		Total interest expense and fees		Cash paid for interest expense
SBA Debentures	$	3,997	$	581	$	—	$	4,578	$	2,835
2022 Notes(3)		1,011		50		—		1,061		2,293
July 2024 Notes		5,009		295		—		5,304		5,009
February 2025 Notes		2,140		115		—		2,255		2,140
June 2025 Notes		3,017		162		—		3,179		3,017
June 2025 3-Year Notes		1,567		81		—		1,648		1,500
March 2026 A Notes		2,250		95		—		2,345		2,250
March 2026 B Notes		2,275		103		—		2,378		2,275
September 2026 Notes		8,698		815		—		9,513		8,531
January 2027 Notes		11,630		782		—		12,412		5,906
2031 Asset-Backed Notes		3,975		209		—		4,184		3,671
2033 Notes		2,500		108		—		2,608		2,500
2022 Convertible Notes(3)		923		148		—		1,071		5,004
MUFG Bank Facility(2)		4,548		941		2,285		7,774		4,097
SMBC Facility		1,209		315		513		2,037		1,047
Total	$	54,749	$	4,800	$	2,798	$	62,347	$	52,075

(1)

Interest expense includes amortization of original issue discounts for the year ended December 31, 2022, of $23 thousand, $112 thousand, $166 thousand, $475 thousand, and $98 thousand related to the 2022 Notes, 2022 Convertible Notes, September 2026 Notes, January 2027 Notes, and 2031 Asset-Backed Notes, respectively.

(2)

The June 2022 amendment of the MUFG Bank Facility replaced the Union Bank Facility via an amendment which changed the lead lender.

(3)

The Company fully redeemed the 2022 Notes on February 22, 2022 and fully repaid the 2022 Convertible Notes on February 1, 2022.

For the year ended December 31, 2021, the components of interest expense, related fees, and cash paid for interest expense for debt were as follows:


	Year ended December 31, 2021
(in thousands) Description	Interest expense(1)		Amortization of debt issuance cost (loan fees)(2)		Unused facility and other fees (loan fees)		Total interest expense and fees		Cash paid for interest expense
SBA Debentures	$	1,580	$	452	$	—	$	2,032	$	2,272
2022 Notes		7,102		360		—		7,462		6,938
July 2024 Notes		5,009		295		—		5,304		5,008
February 2025 Notes		2,140		115		—		2,255		2,140
April 2025 Notes(3)		1,969		1,667		—		3,636		2,635
June 2025 Notes		3,017		162		—		3,179		3,017
March 2026 A Notes		2,250		93		—		2,343		1,875
March 2026 B Notes		1,877		85		—		1,962		1,138
September 2026 Notes		2,513		236		—		2,749		—
2033 Notes		2,500		108		—		2,608		2,500
2027 Asset-Backed Notes(3)		4,888		2,176		—		7,064		4,972
2028 Asset-Backed Notes(3)		8,139		2,351		—		10,490		8,240
2022 Convertible Notes		10,734		892		—		11,626		10,062
Wells Facility(3)		—		198		675		873		—
MUFG Bank Facility(4)		672		1,228		1,906		3,806		672
SMBC Facility		57		33		44		134		—
Total	$	54,447	$	10,451	$	2,625	$	67,523	$	51,469

(1)

Interest expense includes amortization of original issue discounts for the year ended December 31, 2021, of $165 thousand, $671 thousand, and $48 thousand for the 2022 Notes, 2022 Convertible Notes, and September 2026 Notes, respectively.

(2)

“Amortization of debt issuance cost (loan fees)” includes $1,477 thousand, $1,272 thousand, and $1,670 thousand related to debt extinguishment costs for the April 2025 Notes, 2027 Asset-Backed Notes, and 2028 Asset-Backed Notes, respectively for the year ended December 31, 2021 disclosed as a “Loss on debt extinguishment” in the Consolidated Statement of Operations.

(3)

The April 2025 Notes, 2027 Asset-Backed Notes and 2028 Asset-Backed Notes were retired on July 1, 2021 and October 20, 2021, respectively. The Wells Facility was terminated on November 29, 2021.

(4)

The June 2022 amendment of the MUFG Bank Facility replaced Union Bank Facility via an amendment as the lead lender.

For the year ended December 31, 2020, the components of interest expense, related fees, and cash paid for interest expense for debt were as follows:


	Year ended December 31, 2020
(in thousands) Description	Interest expense(1)		Amortization of debt issuance cost (loan fees)		Unused facility and other fees (loan fees)		Total interest expense and fees		Cash paid for interest expense
SBA Debentures	$	3,464	$	551	$	—	$	4,015	$	4,285
2022 Notes		7,307		360		—		7,667		6,938
July 2024 Notes		5,009		294		—		5,303		5,009
February 2025 Notes		1,938		103		—		2,041		1,070
April 2025 Notes		3,938		381		—		4,319		3,938
June 2025 Notes		1,743		92		—		1,835		1,509
March 2026 A Notes		356		14		—		370		—
2033 Notes		2,500		108		—		2,608		2,500
2027 Asset-Backed Notes		9,116		512		—		9,628		9,139
2028 Asset-Backed Notes		11,758		257		—		12,015		11,756
2022 Convertible Notes		10,733		892		—		11,625		10,062
Wells Facility		25		175		519		719		26
Union Bank Facility(2)		1,718		1,266		1,745		4,729		2,042
Total	$	59,605	$	5,005	$	2,264	$	66,874	$	58,274

(1)

Interest expense includes amortization of original issue discounts for the year ended December 31, 2020, of $165 thousand, $671 thousand, for the 2022 Notes, and 2022 Convertible Notes, respectively.

(2)

The June 2022 amendment of the MUFG Bank Facility replaced Union Bank Facility via an amendment as the lead lender.

Schedule of Available and Outstanding Debt

As of December 31, 2022 and December 31, 2021, the Company had the following available and outstanding debt:


(in thousands)	December 31, 2022						December 31, 2021
	Total Available		Principal		Carrying Value (1)		Total Available		Principal		Carrying Value (1)
SBA Debentures (2)	$	175,000	$	175,000	$	169,738	$	175,000	$	150,500	$	145,498
2022 Notes		—		—		—		150,000		150,000		149,563
July 2024 Notes		105,000		105,000		104,533		105,000		105,000		104,238
February 2025 Notes		50,000		50,000		49,751		50,000		50,000		49,637
June 2025 Notes		70,000		70,000		69,595		70,000		70,000		69,433
June 2025 3-Year Notes		50,000		50,000		49,616		—		—		—
March 2026 A Notes		50,000		50,000		49,700		50,000		50,000		49,605
March 2026 B Notes		50,000		50,000		49,673		50,000		50,000		49,570
September 2026 Notes		325,000		325,000		321,358		325,000		325,000		320,376
January 2027 Notes		350,000		350,000		344,604		—		—		—
2031 Asset-Backed Notes		150,000		150,000		147,957		—		—		—
2033 Notes		40,000		40,000		38,826		40,000		40,000		38,718
2022 Convertible Notes		—		—		—		230,000		230,000		229,740
MUFG Bank Facility (2)(3)		545,000		107,000		107,000		400,000		—		—
SMBC Facility (2)		225,000		72,000		72,000		100,000		29,925		29,925
Total	$	2,185,000	$	1,594,000	$	1,574,351	$	1,745,000	$	1,250,425	$	1,236,303

(1)

Except for the SMBC Facility and MUFG Bank Facility (f.k.a. Union Bank Facility), all carrying values represent the principal amount outstanding less the
remaining unamortized debt issuance costs and unaccreted premium or discount, if any, associated with the debt as of the balance sheet date.

(2)

Availability subject to the Company meeting the borrowing base requirements.

(3)

The June 2022 amendment of the MUFG Bank Facility replaced the Union Bank Facility via an amendment which changed the lead lender.

Schedule of Debt Issuance Costs, Net of Accumulated Amortization

Debt issuance costs, net of accumulated amortization, were as follows as of December 31, 2022 and December 31, 2021:


(in thousands)	December 31, 2022		December 31, 2021
SBA Debentures	$	5,262	$	5,002
2022 Notes		—		300
July 2024 Notes		467		762
February 2025 Notes		249		363
June 2025 Notes		405		567
June 2025 3-Year Notes		384		—
March 2026 A Notes		300		395
March 2026 B Notes		327		430
September 2026 Notes		3,642		4,624
January 2027 Notes		5,396		—
2031 Asset-Backed Notes		2,043		—
2033 Notes		1,174		1,282
2022 Convertible Notes		—		149
MUFG Bank Facility (1)		1,292		1,239
SMBC Facility (1)		1,701		922
Total	$	22,642	$	16,035

The MUFG Bank Facility (f.k.a. Union Bank Facility) and SMBC Facility, are line-of-credit arrangements, the debt issuance costs associated with these
instruments are included within Other assets on the Consolidated Statements of Assets and Liabilities in accordance with ASC Subtopic 835-30.

SBA Debentures

Schedule of Available and Outstanding Debt

The Company held the following SBA debentures outstanding principal balances as of December 31, 2022 and December 31, 2021:


(in thousands) Issuance/Pooling Date	Maturity Date	Interest Rate (1)	December 31, 2022		December 31, 2021
March 26, 2021	September 1, 2031	1.58%	$	37,500	$	37,500
June 25, 2021	September 1, 2031	1.58%		16,200		16,200
July 28, 2021	September 1, 2031	1.58%		5,400		5,400
August 20, 2021	September 1, 2031	1.58%		5,400		5,400
October 21, 2021	March 1, 2032	3.21%		14,000		14,000
November 1, 2021	March 1, 2032	3.21%		21,000		21,000
November 15, 2021	March 1, 2032	3.21%		5,200		5,200
November 30, 2021	March 1, 2032	3.21%		20,800		20,800
December 20, 2021	March 1, 2032	3.21%		10,000		10,000
December 23, 2021	March 1, 2032	3.21%		10,000		10,000
December 28, 2021	March 1, 2032	3.21%		5,000		5,000
January 14, 2022	March 1, 2032	3.21%		4,500		—
January 21, 2022	March 1, 2032	3.21%		20,000		—
Total SBA Debentures			$	175,000	$	150,500

(1)

Interest rates are determined initially at issuance and reset to a fixed rate at the debentures pooling date. The rates are inclusive of annual SBA charges.