DEBT

9 Months Ended

Sep. 30, 2024

DEBT

DEBT

NOTE 12 – DEBT

On October 28, 2021, Payoneer Early Payments Inc. (“PEPI”), a wholly-owned second tier subsidiary of the Company and its subsidiary (the “Borrower”) entered into a Receivables and Loan Security Agreement (the “Warehouse Facility”) with Viola Credit VI, L.P. (currently known as Viola Credit ALF II, L.P.), Viola Credit Alternative Lending FNX SPV, L.P. (the “Lenders”) and Viola Credit Alternative Lending Management 2018 L.P. (collectively, the “Parties”) for the purpose of external financing of Capital Advance activity. The Company notes that the Lenders are related parties through the Company’s Board of Directors’ chairman’s ownership interest in the Lenders. Refer to Note 21 for further information regarding related party considerations.

In accordance with the Warehouse Facility, the Lenders will make available to the Company an initial committed amount of $25,000, which may be increased at the request of the Company, and with the consent of the Lenders, in $25,000 increments up to $100,000. The associated borrowings will be secured by the assets of the Borrower, which consist primarily of capital advance receivables as well as a pledge of the equity of the Borrower. The recourse under the Warehouse Facility is limited to Borrower's assets, and no other Payoneer entity guarantees repayment by the Borrower.

The Warehouse Facility stipulates a borrowing base calculated at an advance rate of 80% out of the eligible portfolio outstanding receivables balance.

As of July 1, 2023, the Warehouse Facility bears interest at the sum of the Daily Simple SOFR and 0.26161% plus:

● 9.00% per annum if the commitment amount is $25,000;

● 7.75% per annum if the commitment amount is $50,000;

● 7.50% per annum if the commitment amount is $75,000;

● 7.00% per annum if the commitment amount is $100,000.

Prior to July 1, 2023, interest on the facility was calculated as the greater of 0.25% or LIBOR plus the additional percentage amounts per annum based on commitment amount noted above.

On June 8, 2022, the Warehouse Facility was amended to create a condition that the total interest rate, calculated as the sum per above, shall not exceed 10.5% per annum for all outstanding balances.

The revolving period of the facility is 36 months from the closing date and the maturity date is 42 months from the date the Warehouse Facility was entered into. The Warehouse Facility reached its scheduled revolving period termination date on October 28, 2024, and the Company will repay all outstanding Warehouse Facility borrowings in accordance with the Warehouse Facility by the Facility Maturity Date of April 28, 2025.

The Company recorded expenses, included in transaction costs, in the total amount of $401 and $437 for the three months ended September 30, 2024 and 2023, respectively, and $1,213 and $1,294 for the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024, the outstanding associated balance was $13,219, included within short-term debt on the consolidated balance sheets, with $128 of accrued expenses included in Other payables. The outstanding balance was reclassified from long-term to short-term debt during the three months ended June 30, 2024 as the facility and all related borrowings became due within one year as of June 30, 2024. As of December 31, 2023, the outstanding associated balance was $18,411, included within long-term debt on the consolidated balance sheets, with $168 of accrued expenses included in Other payables.

The Warehouse Facility includes certain affirmative and negative covenants that must be maintained by the Company and includes certain financial measures such as minimum tangible equity and minimum unrestricted cash at the Company level. As of September 30, 2024 and December 31, 2023, the Company was in compliance with all applicable covenants.

As of September 30, 2024 and December 31, 2023, the fair value of the debt approximates the book value due to the short time span between initiation and balance sheet date with the outstanding balance classified as Level 3 in the fair value leveling hierarchy as the inputs into the valuation are not observable.