Debt

6 Months Ended

Jun. 30, 2021

Convertible Senior Notes due September 1, 2024

In September 2019, the Company issued an aggregate principal amount of €125.0 million of the 2024 Notes and an additional €14.8 million pursuant to the partial exercise of the option to purchase additional 2024 Notes granted to the initial purchasers, in a private placement, pursuant to an exemption from the registration requirements afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), to qualified institutional buyers (as defined in Rule 144A promulgated under the Securities Act). The net proceeds from the issuance, after deducting initial purchaser discounts and debt issuance costs of €6.0 million, were €133.8 million. The 2024 Notes mature on September 1, 2024, unless earlier repurchased, redeemed or converted, and bear interest at a fixed rate of 1.75% per year payable semi-annually on March 1 and September 1 of each year. Each €1,000 of principal amount of the 2024 Notes will initially be convertible, subject to adjustment upon the occurrence of specified events, into 19.3234 ADSs, corresponding to 19.3234 of the Company’s ordinary shares per €1,000 principal amount of the 2024 Notes as of the date hereof, which initial conversion rate is equivalent to an initial conversion price of approximately €51.75 per ADS calculated on the basis of the closing price of the Company’s ADSs of $38.72 and a euro to U.S. Dollar exchange rate of €1 to $1.1036 on the pricing date of the 2024 Notes. Refer to Note 9, Debt, of the Company’s consolidated financial statements for the year ended December 31, 2020 for details of the issuance of the 2024 Notes.

As of June 30, 2021, none of the conditions permitting the holders of the 2024 Notes to early convert had been met. Therefore, the 2024 Notes were classified as long-term debt for such period.

Holders of the 2024 Notes have the right to require the Company to repurchase all or a portion of their 2024 Notes upon the occurrence of a “fundamental change” (as defined in the indenture for the 2024 Notes) before the maturity date at a repurchase price equal to 100% of the principal amount of the 2024 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. If consummated, the pending acquisition by Thoma Bravo would result in the occurrence of a “fundamental change” under the indenture for the 2024 Notes. In addition, the pending acquisition by Thoma Bravo, if consummated, would trigger a conditional conversion feature that would entitle holders of 2024 Notes to convert their 2024 Notes during a specified period at their option. Upon conversion of the 2024 Notes, unless we elect to deliver solely ADSs to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2024 Notes being converted. The pending tender offer by Thoma Bravo, if consummated, will also constitute a "make-whole fundamental change" (as defined in the indenture for the 2024 Notes) that not only will permit holders of the 2024 Notes to elect to convert their 2024 Notes, but also require us to increase the conversion rate for the 2024 Notes that any note holders elect to convert in connection with such make-whole fundamental change.

The net carrying amount of the 2024 Notes was as follows as of June 30, 2021 and December 31, 2020 (in thousands):


	June 30, 2021		December 31, 2020
Principal	$	166,107	$	171,599
Unamortized debt discount	(15,849)		(18,704)
Unamortized debt issuance costs	(4,023)		(4,766)
Net carrying amount	$	146,235	$	148,129

The net carrying amount of the equity component of the 2024 Notes was as follows as of June 30, 2021 and December 31, 2020 (in thousands):


	June 30, 2021		December 31, 2020
Gross amount	$	21,866	$	21,866
Allocated debt issuance costs	(945)		(945)
Net carrying amount	$	20,921	$	20,921

Interest expense related to the 2024 Notes was as follows during the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Contractual interest expense	$	737	$	674	$	1,474	$	1,352
Amortization of debt discount	1,157		1,008		2,287		2,006
Amortization of issuance costs	301		267		600		535
Total	$	2,195	$	1,949	$	4,361	$	3,893

Talend S.A. 10-Q