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Lesaka Technologies Inc. (NASDAQ:LSAK), a $371.58 million market cap company specializing in banking-related functions, has entered into significant financial agreements, as detailed in a recent 8-K filing with the Securities and Exchange Commission. According to InvestingPro analysis, the company currently shows a Fair Value that suggests slight undervaluation, despite facing profitability challenges with a negative earnings yield of -4% over the last twelve months.
On February 27, 2025, Lesaka Technologies, along with its subsidiary Lesaka Technologies Proprietary Limited and other subsidiaries, signed a Common Terms Agreement (CTA) with FirstRand Bank Limited and Investec (LON:INVP) Bank Limited. This agreement includes two loan facilities: a term loan (Facility A) for approximately 2.16 billion South African Rand (ZAR), and an amortizing loan (Facility B) up to ZAR 1 billion, alongside a general banking facility of up to ZAR 700.9 million. The new debt arrangements come as InvestingPro data shows the company’s debt-to-equity ratio at 1.08, with an Altman Z-Score of 6.37 indicating relatively stable financial health despite current challenges.
The CTA imposes standard covenants on Lesaka, requiring the maintenance of specific net debt to EBITDA and interest coverage ratios. It also limits Lesaka’s ability to engage in certain financial and corporate activities without lender consent.
Facility A, fully utilized on February 28, 2025, is aimed at refinancing existing debts and covering transaction costs. It carries an interest rate based on the Johannesburg Interbank Agreed Rate (JIBAR) plus a margin that adjusts based on Lesaka’s debt to EBITDA ratio.
Facility B, also fully drawn on February 28, is structured with a repayment schedule spanning four annual installments, starting in February 2026. Similar to Facility A, its interest rate is pegged to JIBAR with a margin that varies with the company’s leverage ratio.
The general banking facility, renewed under the GBF Agreement, provides Lesaka with working capital and corporate expenditure support, subject to annual review by the lender.
Alongside these facilities, Lesaka entered into a Pledge and Cession Agreement, pledging equity interests and banking account interests as collateral for its guarantee obligations. A Subordination Agreement was also signed, prioritizing the repayment of the new facilities over certain intercompany claims.
These financial arrangements reflect Lesaka’s strategic financial restructuring and provide the company with capital for its ongoing operations and corporate activities. The information for this article is based on a press release statement. With revenue of $576.6 million in the last twelve months and a gross profit margin of 24.93%, the company faces some operational challenges. For deeper insights into Lesaka’s financial health and growth potential, including additional ProTips and comprehensive analysis, investors can access the full company research report on InvestingPro.
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