12. BORROWINGS

South Africa

The amounts below have been translated at exchange rates applicable as of the dates specified.

July 2017 Facilities, as amended, comprising a short-term facility and long-term borrowings

Long-term borrowings – Facilities A, B, C and D

On July 21, 2017, Net1 SA entered into a Common Terms Agreement, Senior Facility A Agreement, Senior Facility B Agreement, Senior Facility C Agreement, Subordination Agreement, Security Cession & Pledge and certain ancillary loan documents (collectively, the "Original Loan Documents") with RMB, a South African corporate and investment bank, and Nedbank Limited (acting through its Corporate and Investment Banking division), an African corporate and investment bank, and any other lenders that may participate in such loans (collectively, the "Lenders"), pursuant to which, among other things, Net1 SA may borrow up to an aggregate of ZAR 1.25 billion to finance a portion of its investment in Cell C and to fund its on-going working capital requirements. Net1 agreed to guarantee the obligations of Net1 SA to the Lenders and subordinate any claims it may have against Net1 SA and certain of its subsidiaries to the Lenders' claims against such persons. On July 26, 2017, Net1 SA entered into a letter agreement (the "Letter" and together with the Original Loan Documents and March 2018 amendment described below, the "Loan Documents") with the Lenders to amend the Common Terms Agreement to, among other things, permit the amounts borrowed under the Senior Facility B to fund the acquisition of Cell C shares and adjust the terms of certain conditions precedent. On March 8, 2018, the Company amended its South African long-term facility to include an additional term loan, Facility D, of up to ZAR 210.0 million.

The Loan Documents provide for a Facility A term loan of up to ZAR 750 million, a Facility B term loan of up to ZAR 500 million, a Facility C term loan in an amount equal to the aggregate amount of voluntary prepayments of the outstanding principal amount of the Facility A loan, and a Facility D term loan of up to ZAR 210 million. Net1 SA paid non-refundable deal origination fees of approximately $0.6 million and $0.2 million in August 2017 and March 2018, respectively. Interest on the loans was payable quarterly based on the Johannesburg Interbank Agreed Rate ("JIBAR") in effect from time to time plus a margin of 2.25% for the Facility A loan, 3.5% for the Facility B loan , 2.25% for the Facility C loan and 2.75% for the Facility D loan. Interest expense incurred during the years ended June 30, 2019 and 2018, was $2.9 million and $7.2 million, respectively. During the years ended June 30, 2019 and 2018, $0.3 million and $0.5 million, respectively, of prepaid facility fees were amortized. On July 26, 2017, the Company utilized ZAR 1.25 billion (approximately $92.2 million) of its South African long-term facility to partially fund the acquisition of 15% of Cell C. On March 9, 2018, the Company utilized ZAR 84.0 million (approximately $7.1 million) of its new ZAR 210 million South African long-term facility to partially fund the acquisition of a further 4.0% in DNI and the balance of the facility to extend a ZAR 126.0 million (approximately $10.6 million) loan to DNI (refer to Note 3).

Principal repayments of the facilities were due in twelve quarterly installments commencing on September 29, 2017 and the Company made repayments of ZAR 683.8 million ($46.9 million) and ZAR 776.3 million ($60.5 million) during the years ended June 30, 2019 and 2018, respectively. A principal repayment of ZAR 151.3 million ($10.7 million, translated at exchange rates applicable as of June 30, 2019) was scheduled to be paid on June 29, 2019, however the Company settled the outstanding amount of ZAR 230.0 million ($16.0 million) in full on May 3, 2019, utilizing a combination of existing cash reserves and through the sale of DNI shares as discussed in Note 3.

The loans were secured by a pledge by Net1 SA of, among other things, its entire equity interests in Cell C and DNI. The Loan Documents contain customary covenants that require Net1 SA to maintain a specified total net leverage ratio and restrict the ability of Net1 SA, and certain of its subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make investment above specified levels, engage in certain business combinations and engage in other corporate activities, without the Lenders consent.

On September 4, 2019, Net1 SA further amended the July 2017 Facilities agreement, which included adding Main Street 1692 (RF) Proprietary Limited ("Debt Guarantor"), a South African company incorporated for the sole purpose of holding collateral for the benefit of the Lenders and acting as debt guarantor. The covenants were also amended and now include customary covenants that require Net1 SA to maintain a specified total asset cover ratio and restrict the ability of Net1 SA, and certain of its subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make investment above specified levels, engage in certain business combinations and engage in other corporate activities. Net1 also agreed that in the event of any sale of KSNET, Inc., it would deposit a portion of the proceeds in an amount of the USD equivalent of the Facility F loan and the Nedbank general banking facility commitment into a bank account secured in favor of the Debt Guarantor. Net1 SA also entered into a pledge and cession agreement with the Debt Guarantor pursuant to which, among other things, Net1 SA agreed to cede its shareholdings in Cell C, DNI and Net1 FIHRST Holdings (Pty) Ltd to the Debt Guarantor.

Short-term facility - Facility E

On September 26, 2018, Net1 SA further amended its amended July 2017 Facilities agreement with RMB to include an overdraft facility ("Facility E") of up to ZAR 1.5 billion ($106.5 million, translated at exchange rates applicable as of June 30, 2019) to fund the Company's ATMs. The available Facility E overdraft facility was subsequently reduced to ZAR 1.2 billion ($85.2 million) in September 2019. Interest on the overdraft facility is payable on the last day of each month and on the final maturity date based on South African prime rate. The overdraft facility will be reviewed in September 2020. The overdraft facility amount utilized must be repaid in full within one month of utilization and at least 90% of the amount utilized must be repaid with 25 days. The overdraft facility is secured by a pledge by Net1 SA of, among other things, cash and certain bank accounts utilized in the Company's ATM funding process, the cession of an insurance policy with Senate Transit Underwriters Managers Proprietary Limited, and any rights and claims Net1 SA has against Grindrod Bank Limited. The Company paid a non-refundable origination fee of approximately ZAR 3.8 million ($0.3 million) in October 2018. As at June 30, 2019, the Company had utilized approximately ZAR 1.0 billion ($69.6 million) of this overdraft facility. This ZAR 1.2 billion overdraft facility may only be used to fund ATMs and therefore the overdraft utilized and converted to cash to fund the Company's ATMs is considered restricted cash. The prime rate on June 30, 2019, was 10.25%, and reduced to 10.00% on July 19, 2019, following a reduction in the South African repo rate.

Short-term facility - Facility F

On September 4, 2019, Net1 SA further amended its amended July 2017 Facilities agreement with RMB to include an overdraft facility ("Facility F") of up to ZAR 300.0 million ($21.3 million, translated at exchange rates applicable as of June 30, 2019) for the sole purposes of funding the acquisition of airtime from Cell C. Net1 SA may not dispose of the airtime acquired from Cell C prior to April 1, 2020, without the prior consent of RMB, Absa Bank Limited and Investec Asset Management Proprietary Limited. Facility F comprises (i) a first Senior Facility F loan of ZAR 220 million (ii) a second Senior Facility F loan of ZAR 80 million, or such lesser amount as may be agreed by the facility agent. Facility F is required to be repaid in full nine month following the first utilization of the facility. Net1 SA is required to prepay Facility F subject to customary prepayment terms. Interest on Facility F is payable quarterly in arrears based JIBAR plus a margin of 5.50% per annum. The margin on the Facility F will increase by 1% per annum if Net1 SA has not disposed of certain assets by October 31, 2019, and will increase by a further 1% if Net1 SA has not disposed of its shareholding in DNI by January 31, 2020. Net1 SA paid a non-refundable structuring fee of ZAR 2.2 million to the Lenders in September 2019.

June 2018 Facility, a long-term borrowing (a DNI facility)

On June 28, 2018, DNI entered into a Revolving Credit Facility Agreement ("DNI Credit Facility Agreement") with RMB and K2018318388 (South Africa) (RF) Proprietary Limited ("Debt Guarantor"), a South African company incorporated for the sole purpose of holding collateral for the benefit of RMB and acting as debt guarantor. DNI, RMB and the Debt Guarantor concurrently entered into a Subordination Agreement; Shareholder Guarantee, Cession and Pledge Agreement; Guarantee Cession and Pledge Agreement (collectively with the DNI Credit Facility Agreement, the "Revolving Credit Agreement Documents"), with various other parties, including DNI's subsidiaries and DNI's shareholders (except Net1 SA), pursuant to which, among other things, DNI obtained a ZAR 200.0 million revolving credit facility with a term of three years to June 2021 from RMB to finance the acquisition and/ or requisition of telecommunication towers. The facility has been deconsolidated from the Company's consolidated balance sheet following the disposal of DNI on March 31, 2019, as described in Note 3.

Interest on the revolving credit facility is payable quarterly based on JIBAR in effect from time to time plus a margin of 2.75%. Interest expense incurred by the Company during the year ended June 30, 2019, was $0.6 million. DNI paid a non-refundable deal origination fee of approximately ZAR 2.3 million ($0.2 million) in July 2018. DNI's shareholders, excluding Net1 SA, have agreed to pledge their entire equity interest in DNI to RMB, guarantee the obligations of DNI to RMB and subordinate any claims they may have against DNI and certain of its subsidiaries to RMB's claims against such persons. DNI has agreed to ensure that Net1 SA will become bound by the terms and conditions applicable to the other DNI shareholders party to the Shareholder Guarantee, Cession and Pledge Agreement once the DNI shares pledged as security for the July 2017 facilities are released. The revolving credit facility is also secured by a pledge by DNI of, among other things, its entire equity interests in its subsidiaries and it has also agreed to arrange for the registration of notarial bonds over its movable property. The Loan Documents contain customary covenants that require DNI to maintain specified net senior debt to EBITDA and EBITDA to net senior interest ratios and restrict the ability of DNI, and certain of its subsidiaries to make certain distributions with respect to their capital stock, prepay other debt, encumber their assets, incur additional indebtedness, make investment above specified levels, engage in certain business combinations and engage in other corporate activities, without the approval of RMB.

Nedbank facility, comprising short-term facilities

As of June 30, 2019, the aggregate amount of the Company's short-term South African credit facility with Nedbank Limited was ZAR 450.0 million ($32.0 million). The credit facility comprises an overdraft facility of (i) up to ZAR 300 million ($21.3 million), which is further split into (a) a ZAR 250.0 million ($17.8 million) overdraft facility which may only be used to fund ATMs used at pay points and (b) a ZAR 50 million ($3.6 million) general banking facility and (ii) indirect and derivative facilities of up to ZAR 150 million ($10.7 million), which include letters of guarantees, letters of credit and forward exchange contracts. The ZAR 250.0 million component of the primary amount may only be used to fund ATMs and therefore this component of the primary amount utilized and converted to cash to fund the Company's ATMs is considered restricted cash.

The Company has ceded its investment in Cash Paymaster Services Proprietary Limited ("CPS"), a South African subsidiary, as well as all of its rights, title and interest in an insurance policy issued by Fidelity Risk Proprietary Limited as security for its repayment obligations under the facility. A commitment fee of 0.35% per annum is payable on the monthly unutilized amount of the overdraft portion of the short-term facility. The Company is required to comply with customary non-financial covenants, including, without limitation, covenants that restrict its ability to dispose of or encumber its assets, incur additional indebtedness or engage in certain business combinations. The short-term facility provides Nedbank with the right to set off funds held in certain identified Company bank accounts with Nedbank against any amounts owed to Nedbank under the facility. As of June 30, 2019, the Company had total funds of $2.7 million in bank accounts with Nedbank which have been set off against $8.6 million drawn under the Nedbank facility, for a net amount drawn under the facility of $5.9 million. As of June 30, 2019, the interest rate on the overdraft facility was 9.10%, and reduced to 8.85% on July 19, 2019, following a reduction in the South African repo rate.

As of June 30, 2019, the Company has utilized approximately ZAR 82.8 million ($5.9 million) of its ZAR 250 million overdraft facility to fund ATMs and utilized none of its ZAR 50 million general banking facility. As of June 30, 2019 and 2018, the Company had utilized approximately ZAR 93.6 million ($6.6 million) and ZAR 108.0 million ($7.9 million), respectively, of its indirect and derivative facilities of ZAR 150 million to enable the bank to issue guarantee, letters of credit and forward exchange contracts, in order for the Company to honor its obligations to third parties requiring such guarantees (refer to Note 22).

October 2016 long-term facilities

On October 4, 2016, Net1 SA, entered into a Subscription Agreement (the "Blue Label Subscription Agreement") with Blue Label Telecoms Limited ("Blue Label"), a JSE-listed company which is a leading provider of prepaid electricity and airtime in South Africa. Pursuant to the Blue Label Subscription Agreement, Net1 SA intended to subscribe for approximately 117.9 million ordinary shares of Blue Label at a price of ZAR 16.96 per share, for an aggregate price of ZAR 2.0 billion. Net1 SA entered into a facility agreement with RMB to fund ZAR 1.4 billion of the required ZAR 2 billion Blue Label transaction and paid a guarantee fee of approximately ZAR 16.0 million ($1.1 million) during the year ended June 30, 2017. In May 2017, Blue Label and Net1 SA mutually agreed that Net1 SA would not subscribe for the shares in Blue Label and the Blue Label Subscription Agreement was terminated. Interest expense for the year ended June 30, 2017, includes the ZAR 16.0 million guarantee fee expensed related to the October 2016 facilities obtained from RMB.

United States, a short-term facility

On September 14, 2018, the Company renewed its $10.0 million overdraft facility from Bank Frick and on February 4, 2019, the Company increased the overdraft facility to $20.0 million. The interest rate on the facilities is 4.50% plus 3-month US dollar LIBOR and interest is payable on a quarterly basis. The 3-month US dollar LIBOR rate was 2.31988% on June 30, 2019. The facility has no fixed term, however, it may be terminated by either party with six weeks written notice. The facility is secured by a pledge of the Company's investment in Bank Frick. As of June 30, 2019, the Company had utilized approximately $9.5 million of this facility.

South Korea

Short-term facility

The Company obtained a one year KRW 10 billion ($8.6 million) short-term overdraft facility from Hana Bank, a South Korean bank, in January 2019. The interest rate on the facilities is 1.984% plus 3-month CD rate. The CD rate as of June 30, 2019, was 1.780%. The facility expires in January 2020, however it can be renewed. The facility is unsecured with no fixed repayment terms. As of June 30, 2019, the Company had not utilized this facility.

Long-term borrowings

The Company's wholly owned subsidiary, Net1 Applied Technologies Korea ("Net1 Korea"), signed a five-year senior secured facilities agreement (the "Facilities Agreement") with a consortium of South Korean banks in October 2013. On October 20, 2017, the Company made an unscheduled repayment of $16.6 million and settled the full outstanding balance, including interest, related to these borrowings and the Company was released from its security obligations created under the Facilities Agreement. The Company made a scheduled repayment of its Facility A loan of KRW 10 billion ($8.8 million), unscheduled voluntary principal repayments towards its Facility A loan of KRW 22.1 billion ($19.6 million) and a prepayment towards its Facility C revolving credit facility of KRW 10.0 billion ($8.9 million) during the year ended June 30, 2017. The Company utilized approximately KRW 0.3 billion ($0.3 million) and KRW 0.9 billion ($0.8 million), of its Facility C revolving credit facility to pay interest due during the year ended June 30, 2018 and 2017, respectively.

Interest on the loans and revolving credit facility was payable quarterly and was based on the South Korean CD rate in effect from time to time plus a margin of 3.10% for the Facility A loan and Facility C revolving credit facility. Total interest expense related to the facilities during the years ended June 30, 2018 and 2017, was $0.4 million and $1.2 million, respectively. Prepaid facility fees amortized during each of the years ended June 30, 2018 and 2017, was approximately $0.1 million, respectively.

Movement in short-term borrowings

Summarized below are the Company's short-term facilities as of June 30, 2019, and the movement in the Company's short-term facilities from as of June 30, 2018 to as of June 30, 2019:


								United			South
		South Africa						States			Korea
		Amended						Bank			Hana
		July 2017			Nedbank			Frick			Bank		Total
Short-term facilities as of June 30, 2019:	$	85,203		$	31,951		$	20,000		$	8,648	$	145,802
Overdraft		-			3,550			20,000			8,648		32,198
Overdraft restricted as to use for ATM
funding only		85,203			17,751			-			-		102,954
Indirect and derivative facilities		-			10,650			-			-		10,650

Movement in utilized overdraft facilities:
Balance as of June 30, 2018		-			-			-			-		-
Utilized		722,375			85,843			14,536			-		822,754
Repaid		(655,612	)		(80,365	)		(4,992	)		-		(740,969	)
Foreign currency adjustment⁽¹⁾		2,803			402			-			-		3,205
Balance as of June 30, 2019⁽²⁾		69,566			5,880			9,544			-		84,990
Restricted as to use for
ATM funding only		69,566			5,880			-			-		75,446
No restrictions as to use		-			-			9,544			-		9,544

Movement in utilized indirect and
derivative facilities:
Balance as of June 30, 2018		-			7,871			-			-		7,871
Guarantees cancelled		-			(1,075	)		-			-		(1,075	)
Utilized		-			46			-			-		46
Foreign currency adjustment⁽¹⁾		-			(199	)		-			-		(199	)
Balance as of June 30, 2019	$	-		$	6,643		$	-		$	-	$	6,643

(1) Represents the effects of the fluctuations between the ZAR and the U.S. dollar.

(2) Nedbank as of June 30, 2019, of $5.9 million comprises the net of total overdraft facilities withdrawn of $8.6 million offset against funds in bank accounts with Nedbank of $2.7 million.

Movement in long-term borrowings

Summarized below is the movement in the Company's long term borrowing from as of June 30, 2017, to as of June 30, 2019:


		South Korea						South Africa
		Continuing						Discontinued
								June
					Amended			2018			Other
		Net1 Korea			July 2017			Facility			(Note 3)			Total

Balance as of July 1, 2017, allocated to	$	16,239		$	-		$	-		$	-		$	16,239
Current portion of long-term borrowings		8,738			-			-			-			8,738
Long-term borrowings		7,501			-			-			-			7,501
Utilized		197			112,960			-			-			113,157
Repaid		(16,592	)		(60,470	)		-			-			(77,062	)
DNI acquisition (Note 3)		-			-			-			616			616
Foreign currency adjustment⁽¹⁾		156			(2,942	)		-			-			(2,786	)
Balance as of June 30, 2018, allocated to		-			49,548			-			616			50,164
Current portion of long-term borrowings		-			44,079			-			616			44,695
Long-term borrowings		-			5,469			-			-			5,469
Utilized		-			-			14,613			-			14,613
Repaid		-			(31,844	)		(4,944	)		(569	)		(37,357	)
Repaid from sale of DNI shares (Note 3)		-			(15,011	)		-			-			(15,011	)
Deconsolidated (Note 3)		-			-			(10,435	)		-			(10,435	)
Foreign currency adjustment⁽¹⁾		-			(2,693	)		766			(47	)		(1,974	)
Balance as of June 30, 2019	$	-		$	-		$	-		$	-		$	-

(1) Represents the effects of the fluctuations between the ZAR and the Korean won, against the U.S. dollar.