which have payoff at maturity of two times the face value of the note plus accrued interest. The total amount that would be owed on the Secured Convertible Notes outstanding as of March 31, 2022 if held to maturity was $448.4 million. The total amount that would be owed on the Convertible Notes if prepaid as of March 31, 2022 was $767.3 million. See Note 7 for further information on fair value measurement of the Convertible Notes.
—In August 2021, the Company entered into a $
30.0 million master equipment finance facility agreement with Trinity Capital Inc. (“Trinity”) to finance the Company’s acquisition of blockchain computing equipment and received a loan of $
1.0 million at close. The loan has a term of
36 months from issuance. Interest expense on the loan has been recognized based on an effective interest rate of
11.0%. In November and December 2021, the Company borrowed $
14.0 million and $
5.0 million, respectively. The remaining balance of $
10.0 million was drawn in February 2022.
– In October 2021, the Company entered into a lending agreement with Bremer Bank, National Association to borrow up to $
16.2 million in
two tranches through May 22, 2022 for the purchase of blockchain mining equipment and improvements to data center and infrastructure. In December 2021, the Company entered into an additional term loan to borrow up to $
9.6 million. The Company borrowed $
15.2 million in October through December 2021. The Company borrowed an additional $
4.8 million in January through March 2022. The loans bear interest at
5.5% annually and are due at the earlier of the date of sale of the underlying mining equipment or
60 months from issuance. Interest expense on the loans has been recognized based on an effective interest rate of
5.6%. The loans require the Company to maintain the following financial covenants: (1) a minimum debt service coverage ratio (defined in the agreement as EBITDA divided by scheduled principal and interest payments) of not less than
1.2:1, measured annually beginning December 31, 2022; and (2) a fixed charge coverage ratio (defined in the agreement as EBITDA minus net distributions divided by scheduled principal and interest payments) of
1:1, measured annually beginning December 31, 2022. The loans are secured by a first priority security interest in certain of the assets financed by the loans.
Additionally, an interest buydown agreement was made between Grand Forks Growth Fund and the Bank of North Dakota acting on behalf of the PACE Program for the purpose of a buydown on the interest for certain the Company’s loans financed through Bremer Bank. The total amount of interest buydown over the term of the loan is $0.8 million and payments will begin to be received beginning when principal payments are due from the Company beginning May 2022. In order to receive the interest buydown incentive, the Company must (a) continue operation in the jurisdiction for a minimum of five years from the benefit date, (b) employ 13 new full-time employees within two years of receiving the incentive and continue to keep them employed for the duration of the agreement and (c) continue to make debt payments and no event of default should occur. If the Company discontinues operation in the jurisdiction within the next five years, it is obligated to repay the incentive back to the Bank of North Dakota. If after two years, the Company does not employ 13 new full-time employees, the interest buydown will be prorated to reflect any partial fulfillment and the Company, at a minimum, is required to pay back the value of the incentive to the Bank of North Dakota. For the three months ended March 31, 2022 and 2021, there was no interest buydown.
– In December 2021, the Company entered into
two lending agreements with Blockfi Lending, LLC to borrow up to $
110.0 million for the purchase of blockchain mining equipment. The first agreement consists of $
10.0 million and bears interest at
9.7% with a term of
24 months from issuance. Interest expense on the loans issued in December 2021 has been recognized based on an effective interest rate of
10.1%. The second agreement consists of $
100.0 million and bears interest at
13.1% with a term of
24 months from issuance. The company borrowed the first tranche totaling $
60.0 million across the two loans in December 2021 and borrowed the second tranche of $
20.0 million in January 2022. The remaining $
30.0 million expired unused in March 2022. Interest expense on the loans issued in December 2021 has been recognized based on an effective interest rate of
13.1%. The loans are secured by a first priority security interest in certain of the assets financed by the loans.