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Borrowings
 6 Months Ended
Dec. 31, 2022
Borrowings [Abstract]  
Borrowings

8.Borrowings

 

Refer to Note 12 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended June 30, 2022, for additional information regarding its borrowings.

 

South Africa

 

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

 

RMB Facilities, as amended, comprising a short-term facility (Facility E) and long-term borrowings

 

Long-term borrowings - Facility G and Facility H

 

On December 29, 2022, the Company, through Lesaka Technologies (Pty) Ltd, entered into an Amendment Agreement (the “Amendment Agreement”), with FirstRand Bank Limited, acting through its Rand Merchant Bank division (“RMB”), which amends its Senior Facility G Agreement and its Senior Facility H Agreement. Pursuant to the Amendment Agreement, the Senior Facility G Agreement was amended to (i) extend the final maturity date by approximately two years and eight months to December 31, 2025, (ii) delete the definitions of Trigger Event and Trigger Event Date and (iii) delete the clause (clause 12) regarding the operation of any trigger event. The Senior Facility H Agreement was amended to extend the final maturity date by approximately two years and eight months to December 31, 2025. Interest on Facility G and H is payable quarterly in arrears, however, RMB agreed to a delay in the payment of interest for the three months ended December 31, 2022, in order to support the Company’s liquidity position.

 

Available short-term facility - Facility E

 

As of December 31, 2022, the aggregate amount of the Company’s short-term South African overdraft facility with RMB was ZAR 1.4 billion ($82.3 million). As of December 31, 2022, the Company had utilized approximately ZAR 0.9 billion ($54.3 million) of this overdraft facility. This 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 interest rate on this facility is equal to the prime rate. The prime rate on December 31, 2022, was 10.50%, and increased to 10.75% on January 27, 2023, following an increase in the South African repo rate.

 

Connect Facilities, comprising long-term borrowings and a short-term facility

 

As of December 31, 2022, the Connect Facilities include (i) an overdraft facility (general banking facility) of ZAR 205.0 million (of which ZAR 180.0 million has been utilized); (ii) Facility A of ZAR 700.0 million; (iii) Facility B of ZAR 350.0 million (both fully utilized); and (iv) an asset-backed facility of ZAR 200.0 million (of which ZAR 117.6 million has been utilized).

 

K2020 facility, comprising long-term borrowings

 

The Company, through K2020 Connect (Pty) Limited (“K2020”), an indirect South African subsidiary, entered into a revolving credit facility agreement with RMB on February 15, 2021. The revolving credit facility was for an amount of ZAR 150.0 million and matured on August 12, 2022, and has been replaced with the facility described below. The facility continued to operate normally in agreement with K2020’s lender after maturity, while the parties concluded the legal agreements to significantly increase and extend the facility. Interest on the revolving credit facility was payable quarterly in arrears based on the prime rate in effect from time to time plus a margin. A commitment fee of 1.5% per annum was charged on the undrawn available facility amount.

 

On November 29, 2022, the Company, through its indirect South African subsidiary Cash Connect Capital (Pty) Limited (“CCC”), entered into a Revolving Credit Facility Agreement (the “Loan Document”) with RMB and other Company subsidiaries within the Connect Group of companies listed therein, as guarantors. The transaction closed on December 1, 2022.

 

The Loan Document contains customary covenants that require CCC and K2020 to collectively maintain a specified capital adequacy ratio, restrict the ability of the entities to make certain distributions with respect to their capital stock, encumber their assets, incur additional indebtedness, make investments, engage in certain business combinations and engage in other corporate activities.

 

Pursuant to the Loan Document, CCC may borrow up to an aggregate of ZAR 300.0 million (“Revolving Credit Facility”) for the sole purposes of funding CCC’s consumer lending business, providing a limited recourse loan to K2020, settling up to ZAR 35.0 million related to an intercompany loan to CCC’s direct parent, and paying the structuring and execution fee and legal costs. The Revolving Credit Facility replaces K2020’s existing lending arrangement and increases the borrowings available to facilitate further growth of the business.

 

Interest on the Revolving Credit Facility is payable on the last business day of each calendar month and is based on the South African prime rate in effect from time to time plus a margin of 0.95% per annum.

 

The Company paid a non-refundable structuring and execution fee of ZAR 1.7 million, or $0.1 million, including value added taxation, to the Lenders on closing.

8.Borrowings (continued)

 

South Africa (continued)

 

RMB facility, comprising indirect facilities

 

As of December 31, 2022, the aggregate amount of the Company’s short-term South African indirect credit facility with RMB was ZAR 135.0 million ($7.9 million), which includes facilities for guarantees, letters of credit and forward exchange contracts. As of December 31, 2022 and June 30, 2022, the Company had utilized approximately ZAR 33.1 million ($1.9 million) and ZAR 5.1 million ($0.3 million), respectively, of its indirect and derivative facilities of ZAR 135.0 million (June 30, 2022: ZAR 135.0 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 19).

 

Nedbank facility, comprising short-term facilities

 

As of December 31, 2022, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited was ZAR 156.6 million ($9.2 million). The credit facility represents indirect and derivative facilities of up to ZAR 156.6 million ($9.2 million), which include guarantees, letters of credit and forward exchange contracts.

 

As of December 31, 2022 and June 30, 2022, the Company had utilized approximately ZAR 2.1 million ($0.1 million) and ZAR 92.1 million ($5.7 million), respectively, of its indirect and derivative facilities of ZAR 156.6 million (June 30, 2022: ZAR 156.6 million) to enable the bank to issue guarantees, letters of credit and forward exchange contracts (refer to Note 19).

 

Movement in short-term credit facilities

 

Summarized below are the Company’s short-term facilities as of December 31, 2022, and the movement in the Company’s short-term facilities from as of June 30, 2022 to as of December 31, 2022:

 

 

 

 

 

 

RMB

 

RMB

 

RMB

 

Nedbank

 

 

 

 

 

 

 

 

 

Facility E

 

Indirect

 

Connect

 

Facilities

 

Total

 

Short-term facilities available as of December 31, 2022

$

82,251

 

$

7,931

 

$

12,044

 

$

9,198

 

$

111,424

 

 

Overdraft

 

-

 

 

-

 

 

12,044

 

 

-

 

 

12,044

 

 

Overdraft restricted as to use for ATM funding only

 

82,251

 

 

-

 

 

-

 

 

-

 

 

82,251

 

 

Indirect and derivative facilities

 

-

 

 

7,931

 

 

-

 

 

9,198

 

 

17,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Movement in utilized overdraft facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted as to use for ATM funding only

 

51,338

 

 

-

 

 

-

 

 

-

 

 

51,338

 

 

No restrictions as to use

 

-

 

 

-

 

 

14,880

 

 

-

 

 

14,880

 

 

 

Balance as of June 30, 2022

 

51,338

 

 

-

 

 

14,880

 

 

-

 

 

66,218

 

 

 

 

Utilized

 

312,721

 

 

-

 

 

571

 

 

-

 

 

313,292

 

 

 

 

Repaid

 

(308,064)

 

 

-

 

 

(4,238)

 

 

-

 

 

(312,302)

 

 

 

 

Foreign currency adjustment(1)

 

(1,745)

 

 

-

 

 

(638)

 

 

-

 

 

(2,383)

 

 

Balance as of December 31, 2022

 

54,250

 

 

-

 

 

10,575

 

 

-

 

 

64,825

 

 

 

 

Restricted as to use for ATM funding only

 

54,250

 

 

-

 

 

-

 

 

-

 

 

54,250

 

 

 

 

No restrictions as to use

$

-

 

$

-

 

$

10,575

 

$

-

 

$

10,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate as of December 31, 2022 (%)(2)

 

10.50

 

 

 

 

 

10.40

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Movement in utilized indirect and derivative facilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of June 30, 2022

$

-

 

$

313

 

$

-

 

$

5,654

 

$

5,967

 

 

 

Guarantees cancelled

 

-

 

 

-

 

 

-

 

 

(5,218)

 

 

(5,218)

 

 

 

Utilized

 

-

 

 

1,623

 

 

-

 

 

-

 

 

1,623

 

 

 

Foreign currency adjustment(1)

 

-

 

 

9

 

 

-

 

 

(312)

 

 

(303)

 

 

Balance as of December 31, 2022

$

-

 

$

1,945

 

$

-

 

$

124

 

$

2,069

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

(2) Facility E interest set at prime and the Connect facility at prime less 0.10%.

 

 

8.Borrowings (continued)

 

Movement in long-term borrowings

 

Summarized below is the movement in the Company’s long-term borrowing from as of as of June 30, 2022 to as of December 31, 2022:

 

 

 

 

 

Facilities

 

 

 

 

 

 

 

 

G & H

 

A&B

 

K2020

 

Asset backed

 

Total

 

Included in current

$

-

 

$

4,604

 

$

-

 

$

2,200

 

$

6,804

 

Included in long-term

 

63,354

 

 

59,868

 

 

8,346

 

 

3,274

 

 

134,842

 

Opening balance as of June 30, 2022

 

63,354

 

 

64,472

 

 

8,346

 

 

5,474

 

 

141,646

 

 

Facilities utilized

 

-

 

 

-

 

 

7,377

 

 

2,765

 

 

10,142

 

 

Facilities repaid

 

-

 

 

(2,151)

 

 

-

 

 

(1,117)

 

 

(3,268)

 

 

Non-refundable fees paid

 

-

 

 

-

 

 

(100)

 

 

-

 

 

(100)

 

 

Non-refundable fees amortized

 

393

 

 

31

 

 

20

 

 

-

 

 

444

 

 

Foreign currency adjustment(1)

 

(2,713)

 

 

(2,818)

 

 

(257)

 

 

(211)

 

 

(5,999)

 

 

 

Closing balance as of December 31, 2022

 

61,034

 

 

59,534

 

 

15,386

 

 

6,911

 

 

142,865

 

 

 

Included in current

 

-

 

 

4,406

 

 

-

 

 

3,019

 

 

7,425

 

 

 

Included in long-term

 

61,034

 

 

55,128

 

 

15,386

 

 

3,892

 

 

135,440

 

 

 

 

Unamortized fees

 

(535)

 

 

(276)

 

 

(97)

 

 

-

 

 

(908)

 

 

 

 

Due within 2 years

 

-

 

 

5,141

 

 

15,483

 

 

2,464

 

 

23,088

 

 

 

 

Due within 3 years

 

61,569

 

 

6,609

 

 

-

 

 

1,360

 

 

69,538

 

 

 

 

Due within 4 years

 

-

 

 

5,876

 

 

-

 

 

68

 

 

5,944

 

 

 

 

Due within 5 years

$

-

 

$

37,778

 

$

-

 

$

-

 

$

37,778

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rates as of December 31, 2022 (%):

 

9.3 - 10.3

 

 

11.01

 

 

11.45

 

 

11.25

 

 

 

 

 

Base rate (%)

 

7.26

 

 

7.26

 

 

10.50

 

 

10.50

 

 

 

 

 

Margin (%)

 

Varies

 

 

3.75

 

 

0.95

 

 

0.75

 

 

 

 

Footnote number

 

(2)(3)

 

 

(4)

 

 

(5)

 

 

(6)

 

 

 

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

(2) Interest on Facility G is calculated based on the 3-month JIBAR in effect from time to time plus a margin of (i) 3.00% per annum until January 13, 2023; and then (ii) from January 14, 2023, (x) 2.50% per annum if the Facility G balance outstanding is less than or equal to ZAR 250.0 million, or (y) 3.00% per annum if the Facility G balance is between ZAR 250.0 million to ZAR 450.0 million, or (z) 3.50% per annum if the Facility G balance is greater than ZAR 450.0 million. The interest rate shall increase by a further 2.00% per annum in the event of default (as defined in the Loan Documents).

(3) Interest on Facility H is calculated based on JIBAR in effect from time to time plus a margin of 2.00% per annum which increases by a further 2.00% per annum in the event of default (as defined in the Loan Documents).

(4) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, of 3.75%, in effect from time to time.

(5) Interest is charged at prime plus 1.25% per annum on the utilized balance.

(6) Interest is charged at prime plus 1.00% per annum on the utilized balance.

 

Interest expense incurred under the Company’s South African long-term borrowings and included in the caption interest expense on the condensed consolidated statement of operations during the three and six months ended December 31, 2022, was $3.0 million and $5.7 million, respectively. There was no interest expense incurred during the three and six months ended December 31, 2021. Prepaid facility fees amortized included in interest expense during the three and six months ended December 31, 2022, were $0.2 million and $0.4 million, respectively. There was no prepaid facility fee amortization during the three and six months ended December 31, 2021. Interest expense incurred under the Company’s K2020 and CCC facilities relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and this interest expense of $0.3 million and $0.5 million, respectively, is included in the caption cost of goods sold, IT processing, servicing and support on the condensed consolidated statement of operations for the three and six months ended December 31, 2022.