8-K: Lesaka Technologies Secures Over ZAR 3.8 Billion in New Loan Facilities to Refinance Debt and Support Growth

Lesaka Technologies has entered into a Common Terms Agreement to secure over ZAR 3.8 billion in loan facilities to refinance existing debt and for general corporate purposes.

Summary

• Lesaka Technologies, Inc. has secured new loan facilities totaling over ZAR 3.8 billion through a Common Terms Agreement (CTA) with FirstRand Bank Limited (RMB and WesBank), Investec Bank Limited, and Bowwood and Main No 408 (RF) Proprietary Limited.
• The facilities include a term loan (Facility A) of up to ZAR 2,155,739,382, an amortizing loan (Facility B) of up to ZAR 1.0 billion, and a general banking facility (GBF) from RMB of up to ZAR 700,901,000.
• Lesaka SA utilized Facility A in full on February 28, 2025, to settle a portion of its existing facilities with RMB and to settle all of CCMS' existing facilities with RMB, as well as to pay certain transaction costs.
• Lesaka SA utilized Facility B in full on February 28, 2025, to repay a portion of its existing facilities as well as to settle a portion of its existing general banking facility.
• The facilities are guaranteed by Lesaka, Lesaka SA, and most of Lesaka SA's subsidiaries.
• The CTA includes customary covenants, such as maintaining specific Net Debt to EBITDA and Interest Cover Ratios.
• Lesaka SA paid non-refundable debt structuring fees of ZAR 10.0 million to the Lenders on February 27, 2025.
• Facility A is required to be repaid in full on February 28, 2029.
• Facility B is required to be repaid in four annual installments from February 28, 2026, to February 28, 2029.
• The GBF is available for utilization from February 28, 2025, and is subject to annual review by RMB.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as the company has secured significant financing, but there are also restrictive covenants and debt obligations to consider.

Positives

• The new loan facilities provide Lesaka Technologies with the capital to refinance existing debt, potentially improving its financial flexibility.
• The facilities can be used for general corporate purposes, including capital expenditure and working capital, supporting future growth.
• The interest rate margin on Facility A and Facility B can decrease if the Net Debt to EBITDA Ratio improves, incentivizing debt management.

Negatives

• Lesaka SA paid non-refundable debt structuring fees of ZAR 10.0 million to the Lenders on February 27, 2025.
• The CTA includes covenants that restrict Lesaka SA's ability to make distributions, prepay debt, encumber assets, incur additional debt, and engage in certain business combinations.
• The facilities are subject to mandatory prepayment terms, which could require Lesaka to allocate funds to debt repayment sooner than anticipated.

Risks

• Lesaka SA must maintain specified Net Debt to EBITDA and Interest Cover Ratios, and failure to do so could trigger covenant breaches.
• Fluctuations in the Johannesburg Interbank Agreed Rate (JIBAR) could impact the interest expense on Facility A and Facility B.
• The GBF is subject to annual review by RMB, which could result in changes to the facility's terms or availability.

Future Outlook

The new loan facilities are expected to support Lesaka's refinancing efforts and provide capital for general corporate purposes, including capital expenditure and working capital.

Industry Context

In the financial technology sector, securing substantial loan facilities is a common strategy for companies looking to refinance existing debt, fund growth initiatives, or manage working capital. Lesaka's move aligns with industry trends of leveraging debt financing to optimize capital structure and support expansion.

Comparison to Industry Standards

• Comparable companies in the fintech space, such as Adyen and Block, often utilize a mix of debt and equity financing to fuel growth.
• The interest rates and covenants associated with Lesaka's facilities are likely benchmarked against similar loan agreements in the South African market.
• The Net Debt to EBITDA ratio covenant is a standard metric used by lenders to assess a company's ability to service its debt, and Lesaka's specific targets would be compared to industry averages for similar businesses.

Stakeholder Impact

• Shareholders may benefit from the improved financial flexibility and potential growth opportunities resulting from the new loan facilities.
• Employees may benefit from the company's ability to invest in growth and maintain operations.
• Creditors are secured by the guarantees provided by Lesaka and its subsidiaries.

Next Steps

• Lesaka SA will need to manage its Net Debt to EBITDA and Interest Cover Ratios to comply with the CTA covenants.
• Lesaka SA will make quarterly interest payments on Facility A and Facility B, with the first payments due on June 30, 2025.
• Lesaka SA will make monthly interest payments on the GBF, with the first payment due on March 31, 2025.
• Lesaka SA will need to repay Facility B in four annual installments from February 28, 2026, to February 28, 2029.
• Lesaka SA will need to repay Facility A in full on February 28, 2029.
• The GBF is subject to annual review by RMB.

Key Dates