Borrowings

12 Months Ended

Jun. 30, 2023

Borrowings [Abstract]

Borrowings

12. 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

On July 21, 2017, Lesaka SA entered into a Common Terms 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 (collectively, the “Lenders”). Since 2017, these agreements have been amended to add additional facilities, including

Facilities G and H, which were obtained to finance the acquisition of Connect (refer to Note 3). Facilities A, B, C, D and F have been

repaid and cancelled. As of June 30, 2023, the only remaining facilities are Facility G and Facility H (as defined below), and Facility

E, an overdraft facility.

Available short-term facility - Facility E

On September 26, 2018, Lesaka SA revised its amended July 2017 Facilities agreement with RMB to include Facility E, an

overdraft facility of up to ZAR

1.5

 billion ($

79.6

 million, translated at exchange rates applicable as of June 30, 2023) to fund the cash

in the Company’s ATMs. The Facility E overdraft facility was subsequently reduced to ZAR

1.2

 billion ($

63.7

 million, translated at

exchange rates applicable as of June 30, 2023) in September 2019. On August 2, 2021, Lesaka SA and RMB entered into a Letter of

Amendment to increase Facility E from ZAR

1.2

 billion to ZAR

1.4

 billion ($

74.3

 million, translated at exchange rates applicable as

of June 30, 2023). Interest on the overdraft facility is payable on the first day of the month following utilization of the facility and on

the final maturity date based on the South African prime rate. 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 within

25 days

. The overdraft facility is secured by a pledge

by Lesaka SA of, among other things, cash and certain bank accounts utilized in the Company’s ATM funding process, the cession of

Lesaka SA’s shareholding in Cell C, the cession of an insurance policy with Senate Transit Underwriters Managers Proprietary

Limited, and any rights and claims Lesaka SA has against Grindrod Bank Limited. As at June 30, 2023, the Company had utilized

approximately ZAR

0.4

 billion ($

23.0

 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 prime rate on

June 30, 2023, was

11.75

%.

12. BORROWINGS (continued)

South Africa (continued)

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

Long-term borrowings - Facility G and Facility H

On March 16, 2023, the Company, through Lesaka SA, entered into a Fifth Amendment and Restatement Agreement, which

includes, among other agreements, an Amended and Restated Common Terms Agreement (“CTA”), an Amended and Restated Senior

Facility G Agreement (“Facility G Agreement”) and an Amended and Restated Senior Facility H Agreement (“Facility H Agreement”)

(collectively, the “Loan Documents”) with RMB. 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 is also a

party to the Loan Documents. Pursuant to the Facility G Agreement, Lesaka SA may borrow up to an aggregate of approximately

ZAR

708.6

 million. Facility G now includes a term loan of ZAR

508.6

 million and a revolving credit facility of up to ZAR

200

 million.

Pursuant to the Facility H Agreement, Lesaka SA may borrow up to an aggregate of approximately ZAR

357.4

 million. 

The Loan Documents contain customary covenants that require Lesaka SA to maintain a specified total asset cover ratio and

restrict the ability of Lesaka, Lesaka 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. The March 16, 2023, amendments to the CTA include an amendment

to the asset cover ratio to change the Covenant Equity Value (as defined in the CTA) definition to include

90

% of the book value of

the Lesaka Financial Service Proprietary Limited (formerly known as Moneyline Financial Service Proprietary Limited) receivables,

and to deduct the net debt (as defined in the CTA) of Cash Connect Management Solutions Proprietary Limited (“CCMS”) and K2021

Proprietary Limited (“K2021”) from the respective CCMS and K2021 valuations. When determining the Covenant Equity Value, the

value of the aggregate of the CCMS Equity Value (as defined in the CTA) and the K2021 Equity Value (as defined in the CTA) must

be at least

50

 per cent of the Covenant Equity Value. To the extent that the value of the aggregate of the CCMS Equity Value and the

K2021 Equity Value is not at least

50

 per cent of the Covenant Equity Value, the Covenant Equity Value will be reduced so that the

aggregate of the CCMS Equity Value and the K2021 Equity Value is

50

 per cent of the Covenant Equity Value. The amendments also

include the removal of a requirement to maintain a minimum group cash balance.

Interest on Facility G and Facility H (together, the “Facilities”) is based on the 3-month Johannesburg Interbank Agreed Rate

(“JIBAR”) in effect from time to time plus a margin, as a result of the amendment, from January 1, 2023 of: (i)

5.50

% for as long as

the aggregate balance under the Facilities is greater than ZAR

800

 million; (ii)

4.25

% if the aggregate balance under the Facilities is

equal to or less than ZAR

800

 million, but greater than ZAR

350

 million; or (iii)

2.50

% if the aggregate balance under the Facilities is

less than ZAR

350

 million. Interest on the Facilities may be capitalized to each of the facilities, and will be repaid on the maturity

date, provided that the sum of the outstanding facility (including interest and fees) plus any accrued interest does not exceed

1.2

 times

of the Facilities outstanding balance. Any interest that exceeds this cap must be settled in full on a quarterly basis. The JIBAR rate

was

8.5

% on June 30, 2023.

Lesaka SA will pay a quarterly commitment fee computed at a rate of

35

% of the Applicable Margin (as defined in the CTA) on

the amount of the revolving credit facility outstanding and such commitment fee will also be capitalized, subject to the cap discussed

above.

The Facilities are repayable in full on or before December 31, 2025.

The then available amounts available under the Facilities were utilized, in full, on April 14, 2022, primarily to part fund the

acquisition of Connect. In April 2022, Lesaka SA paid non-refundable deal origination fees of ZAR

11.25

 million and ZAR

5.25

million to the Lenders related to Facility G and Facility H, respectively.

The Facility H Agreement provides the Lenders with a right to discuss the capitalization of the Lesaka group with its management

and Value Capital Partners Proprietary Limited (“VCP”) if Lesaka’s market capitalization on the NASDAQ Stock Market (based on

the closing price on the NASDAQ Stock Market) on any day falls below the USD equivalent of ZAR

3.250

 billion. VCP is required

to maintain an asset cover ratio above

5.00

:1.00, calculated as the total VCP investment fund net asset value (as defined in the Facility

H agreement) divided by the Facility H borrowings outstanding, measured as of March, June, September and December each year (as

applicable) (each a “Measurement Date”). The Lenders require Lesaka SA to deliver a compliance certificate procured from VCP as

of each applicable Measurement Date, which shows the computation of the asset cover ratio. 

12. BORROWINGS (continued)

South Africa (continued)

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

On March 22, 2023, the Company, through CCMS, entered into a First Amendment and Restatement Agreement, which includes,

among other agreements, an Amended and Restated Facilities Agreement (“CCMS Facilities Agreement”) with RMB. The CCMS

Facilities Agreement was amended to increase the Facility B available under the CCMS Facilities Agreement by ZAR

200.0

 million

to ZAR

550.0

 million. The final maturity date has been extended to December 31, 2027, and scheduled principal repayments have

been amended, with the first scheduled repayment commencing from March 31, 2026.

As of June 30, 2023, the Connect Facilities include (i) an overdraft facility (general banking facility) of ZAR

205.0

 million (of

which ZAR

170.0

 million has been utilized); (ii) Facility A of ZAR

700.0

 million; (iii) Facility B of ZAR

550.0

 million (both fully

utilized); and (iv) an asset-backed facility of ZAR

200.0

 million (of which ZAR

149.1

 million has been utilized).

In February 2023, the Company, through CCMS, obtained a ZAR

175.0

 million temporary increase in its overdraft facility for a

period of

four months

 to specifically fund the purchase of prepaid airtime vouchers. This temporary increase was repayable in

four

equal monthly instalments of ZAR

43.8

 million and which commenced in March 2023. In May 2023, the Company, through CCMS,

obtained a ZAR

155.0

 million temporary increase in its overdraft facility for a period of

one month

 to specifically fund the purchase

of prepaid airtime vouchers. This temporary increase was repaid in full in June 2023. Interest at the South Africa prime rate less

0.1

%

was payable on a monthly basis on both of these temporary facilities.

CCMS paid a non-refundable structuring fee of approximately ZAR

5.5

 million during the year ended June 30, 2022. Interest on

Facility A and Facility B is payable quarterly in arrears based on JIBAR in effect from time to time plus a margin. Interest on the asset-

backed facility is payable quarterly in arrears based on prime in effect from time to time plus a margin.

Borrowings under the CCMS Facilities Agreement are secured by a pledge by CCMS of, among other things, all of its equity

shares, its entire equity interests in equity securities it owns and any claims outstanding. The CCMS Facilities Agreement contains

customary covenants that require CCMS to maintain specified debt service, interest cover and leverage ratios.

CCC Revolving Credit Facility, comprising long-term borrowings

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 “CCC 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 CCC 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 CCC Loan Document, CCC may borrow up to an aggregate of ZAR

300.0

 million (“CCC 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. Certain merchant finance loans receivable have been pledged as security for the revolving credit facility

obtained from RMB. CCMS also provided RMB with an unsecured limited guarantee (“the guarantee”) in respect of the revolving

credit facility entered into between K2020 and RMB. The guarantee is limited to a maximum aggregate amount of ZAR

10.0

 million

and will become due and payable should there be any default on any of K2020’s payment obligations to RMB.

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.

As of June 30, 2023, the amount of the CCC Revolving Credit Facility was ZAR

300.0

 million (of which ZAR

222.3

 million has

been utilized).

12. BORROWINGS (continued)

South Africa (continued

RMB facility, comprising indirect facilities

As of June 30, 2023, the aggregate amount of the Company’s short-term South African indirect credit facility with RMB was

ZAR

135.0

 million ($

7.2

 million), which includes facilities for guarantees, letters of credit and forward exchange contracts. As of June

30, 2023 and June 30, 2022, the Company had utilized approximately ZAR

33.1

 million ($

1.8

 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 22).

Nedbank facility, comprising short-term facilities

As of June 30, 2023, the aggregate amount of the Company’s short-term South African credit facility with Nedbank Limited was

ZAR

156.6

 million ($

8.3

 million). The credit facility represents an indirect and derivative facilities of up to ZAR

156.6

 million ($

8.3

million), which include guarantees, letters of credit and forward exchange contracts.

On November 2, 2020, the Company amended its short-term South African credit facility with Nedbank Limited to increase the

indirect and derivative facilities component of the facility from ZAR

150.0

 million to ZAR

159.0

 million. On June 1, 2021, the

Company further amended its short-term South African credit facility with Nedbank Limited to reduce the indirect and derivative

facilities component of the facility from ZAR

159.0

 million to ZAR

157.0

 million, and to cancel its ZAR

50

 million general banking

facility. During the year ended June 30, 2022, the Company cancelled its overdraft facility of up to ZAR

251.0

 million ($

13.0

 million),

which was used to fund mobile ATMs as it no longer operates a mobile ATM service.

The Company has entered into cession and pledge agreements with Nedbank related to certain of its Nedbank credit facilities

(the general banking facility and a portion of the indirect facility) and the Company has ceded and pledged certain bank accounts to

Nedbank and also provided a cession of Lesaka SA’s shareholding in Cell C. The funds included in these bank accounts are restricted

as they may not be withdrawn without the express permission of Nedbank.

The short-term facility provided 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, 2023, these facilities were no longer available. 

As of June 30, 2023 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 22).

On June 30, 2022, the Company’s ZAR

60.0

 million bank guarantee issued by Nedbank to a third party expired and on July 1,

2022, it was replaced with a ZAR

28.0

 million bank guarantee issued by RMB to the same third party. In July 2022, the Company was

able to release ZAR

60.0

 million in cash held in a pledged bank account with Nedbank which was held as security against the bank

guarantee issued by Nedbank, and the ZAR

28.0

 million bank guarantee did not require a cash underpin. 

12. BORROWINGS (continued)

Movement in short-term credit facilities

Summarized below are the Company’s short-term facilities as of June 30, 2023, and the movement in the Company’s short-term

facilities from as of June 30, 2022 to as of June 30, 2023:

RMB

RMB

RMB

Nedbank

Facility E

Indirect

Connect

Facilities

Total

Short-term facilities available as of June

30, 2023

$

74,319

$

7,167

$

10,882

$

8,311

$

100,679

Overdraft 

-

-

10,882

-

10,882

Overdraft restricted as to use for ATM

funding only

74,319

-

-

-

74,319

Indirect and derivative facilities 

-

7,167

-

8,311

15,478

Movement in utilized overdraft facilities: 

Balance as of June 30, 2021

14,245

-

-

-

14,245

Facilities acquired in transaction

-

-

16,903

-

16,903

Utilized 

563,588

-

5,929

1,345

570,862

Repaid

(517,948)

-

(6,189)

(1,322)

(525,459)

Foreign currency adjustment

(1)

(8,547)

-

(1,763)

(23)

(10,333)

Balance as of June 30, 2022

51,338

-

14,880

-

66,218

Restricted as to use for ATM

funding only

51,338

-

-

-

51,338

No restrictions as to use 

-

-

14,880

-

14,880

Utilized 

501,603

-

18,462

-

520,065

Repaid

(524,766)

-

(22,505)

-

(547,271)

Foreign currency adjustment

(1)

(5,154)

-

(1,812)

-

(6,966)

Balance as of June 30, 2023

23,021

-

9,025

-

32,046

Restricted as to use for ATM

funding only

23,021

-

-

-

23,021

No restrictions as to use 

-

-

9,025

-

9,025

Interest rate as of June 30, 2023 (%)

(2)

11.7500

-

11.6500

-

Movement in utilized indirect and

derivative facilities:

Balance as of June 30, 2021

-

-

-

5,398

5,398

Utilized 

-

-

-

4,009

4,009

Foreign currency adjustment

(1)

-

-

-

1,540

1,540

Balance as of June 30, 2022

-

313

-

5,654

10,947

Guarantees cancelled

(3)

-

-

-

(5,017)

(5,017)

Utilized 

-

1,561

-

-

1,561

Foreign currency adjustment

(1)

-

(117)

-

(525)

(642)

Balance as of June 30, 2023

$

-

$

1,757

$

-

$

112

$

6,849

(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

%.

(3) Represents the cancellation of the guarantee with supplier amounting to ZAR

90

 million ($

5.0

 million) which is no longer

required due the reduction in the volume and value of transactions processed.

12. BORROWINGS (continued)

Movement in long-term borrowings

Summarized below is the movement in the Company’s long-term borrowing from as of June 30, 2022, to as of June 30, 2023:

Facilities

G & H

A&B

CCC/ K2020

Asset backed

Total

Opening balance as of June 30, 2021

$

-

$

-

$

-

$

-

$

-

Facilities acquired in transaction

-

72,318

9,772

4,870

86,960

Facilities utilized

77,069

-

472

1,310

78,851

Facilities repaid

(4,492)

-

(933)

(156)

(5,581)

Non-refundable fees paid

(1,307)

-

-

-

(1,307)

Non-refundable fees amortized

196

18

37

-

251

Foreign currency adjustment

(1)

(8,112)

(7,864)

(1,002)

(550)

(17,528)

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

-

10,947

7,377

6,031

24,355

Facilities repaid

(10,543)

(2,151)

(2,149)

(2,669)

(17,512)

Non-refundable fees paid

(500)

-

(100)

-

(600)

Non-refundable fees amortized

762

57

44

-

863

Capitalized interest

5,078

-

-

-

5,078

Capitalized interest repaid

(514)

-

-

-

(514)

Foreign currency adjustment

(1)

(8,672)

(8,889)

(1,716)

(921)

(20,198)

Closing balance as of June 30, 2023

48,965

64,436

11,802

7,915

133,118

Included in current

-

-

-

3,663

3,663

Included in long-term

48,965

64,436

11,802

4,252

129,455

Unamortized fees

(598)

(223)

(65)

-

(886)

Due within 2 years

-

-

-

3,005

3,005

Due within 3 years

49,563

3,317

11,867

1,149

65,896

Due within 4 years

-

7,300

-

98

7,398

Due within 5 years

$

-

$

54,042

$

-

$

-

$

54,042

Interest rates as of June 30, 2023 (%):

14.00

12.25

12.70

12.50

Base rate (%)

8.50

8.50

11.75

11.75

Margin (%)

5.50

3.75

0.95

0.75

Footnote number

(2)(3)(4)

(5)

(6)

(7)

(

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

(2) Prior to the amendment in March 2023, interest on Facility G was 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) Prior to the amendment in March 2023, 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 G and Facility H is calculated based on the 3-month JIBAR in effect from time to time plus a margin of, from

January 1, 2023: (i)

5.50

% for as long as the aggregate balance under the Facilities is greater than ZAR

800

 million; (ii)

4.25

% if the aggregate

balance under the Facilities is equal to or less than ZAR

800

 million, but greater than ZAR

350

 million; or (iii)

2.50

% if the aggregate balance

under the Facilities is less than ZAR

350

 million

(5) Interest on Facility A and Facility B is calculated based on JIBAR plus a margin, of

3.75

%, in effect from time to time.

(6) Interest is charged at prime plus

0.95

% per annum on the utilized balance.

(7) Interest is charged at prime plus

0.75

% 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 consolidated statement of operations during the years ended June 30, 2023 and 2022, was $

13.1

 million and $

2.3

 million,

respectively. There was

no

 interest expense incurred during the year ended June 30, 2021. Prepaid facility fees amortized included in

interest expense during the years ended June 30, 2023 and 2022, was $

0.8

 million and $

0.2

 million, respectively. There was

no

 prepaid

facility fee amortization during the year ended June 30, 2021. Interest expense incurred under the Company’s CCC/K2020 facility

relates to borrowings utilized to fund a portion of the Company’s merchant finance loans receivable and interest expense of $

1.4

million and $

0.2

 million is included in the caption cost of goods sold, IT processing, servicing and support on the consolidated

statement of operations for the years ended June 30, 2023 and 2022, respectively.