NET 1 UEPS TECHNOLOGIES INC: Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits (Form 8 -K)

Section 1.01 Entering into a Material Definitive Agreement.

As previously announced, the October 31, 2021, Network 1 UEPS Technologies, Inc.
(“Net1”), has entered into a Share Sale Agreement (the “Sale Agreement”) with
Net1 Applied Technologies South Africa Proprietary Limited (“Net1 AG“), the Sellers (as defined in the Sales Contract), Cash Connect Management Solutions Proprietary Limited (“CCMS”), Ovobix (RF) Proprietary Limited (“Ovobix”), Luxanio 227 Owner Limited (“Luxanio”) and K2021477132 (South Africa)
Owner Limited (“K2021” and together with CCMS, Ovobix and Luxanio, the “Target Companies”). The closing of the transaction is subject to the conclusion of definitive agreements by Net1 AG for a total of 2.35 billion rand in the form of debt financing to be provided by FirstRand Bank Limited (acting through its Rand Merchant Bank division) (“RMB” or the “Lenders”) and fulfilling the financing conditions precedent, including R1.1 billion relates to the financing agreements described below and 1.25 billion rand related to the financing agreements signed between CCMS and RMB.

At January 24, 2022, the USD/ZAR exchange rate was $1: ZAR15.27.

Fourth Amendment and Restatement Agreement

At January 24, 2022, Net1, via Net1 SA, has entered into a Fourth Amendment and Restatement Agreement, which includes, among other agreements, an Amended and Restated Common Terms Agreement, Senior Credit Agreement G and Senior Credit Agreement H (collectively, the “Loan Documents” ) with RMB and Main Street 1692 (RF) Owner Limited (“Debt Guarantor”), a South African company incorporated for the sole purpose of holding securities for the benefit of lenders and to act as guarantor of debt, and certain other parties. Net1 has agreed to underwrite the obligations of Net1 AG to Lenders. The loan documents will become effective upon the closing of the acquisition transaction of the target companies.

Loan documents contain standard covenants that require Net1 AG to maintain a specified total asset coverage ratio, maintain group cash balances (as defined in loan documents) above R300.0 million, and restrict the capacity of Net1,
Net1 SA, and certain of its subsidiaries to make certain distributions with respect to their share capital, to prepay other debts, to encumber their assets, to incur additional debts, to make investments above specified levels, to engage in certain business combinations and to engage in other corporate activities.

Senior Facility G Agreement

Pursuant to the Senior Facility G Contract, Net1 SA can borrow up to a total of R750.0 million (“Facility G”) for the sole purpose of financing the acquisition of the Targets and paying transaction costs.

Facility G must be repaid on the date which falls 18 months after the first use of Facility G.

Interest on Facility G is payable quarterly in arrears based on the 3-month Johannesburg Interbank Agreed Rate (“JIBAR”) in effect from time to time, plus a margin of (i) 3.00% per annum for the first nine months after the effective date (as defined in the loan documents); then (ii) from the date following the nine-month period in (i), (x) 2.50% per annum if the outstanding balance of Facility G is less than or equal to R250.0 million, or (y) 3.00% per annum if the balance of Facility G is between R250.0 million at R450.0 million, or (z) 3.50% per annum if the balance of Facility G is greater than R450.0 million. The JIBAR rate was 3.89% on January 24, 2022.

Net1 AG will pay a non-refundable transaction creation fee of R11.25 million to the lenders linked to Facility G.

Senior Facility H Convention

In accordance with the Senior Credit Agreement H (“Credit Agreement H”), Net1 AG
can borrow up to a total of R350.0 million (“Facility H”) for the sole purpose of financing the acquisition of the Targets and paying transaction costs.

Facility H must be repaid on the date which falls 18 months after the first use of Facility H.

Interest on Facility H is payable quarterly in arrears based on the JIBAR in effect from time to time, plus a margin of 2.00% per annum and an additional increase of 2.00% per annum in the event of default ( as defined in the Loan Documents).

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The H facility agreement gives the lenders the right to discuss the capitalization of the Net1 group with its management and Value Capital Partners Proprietary Limited (“VCP”) if the market capitalization of Net1 on the NASDAQ Stock Exchange (based on the closing price of the NASDAQ Stock Exchange) any day falls below the USD equivalent of R3.250 billion.

VCP is required to maintain an asset coverage ratio greater than 5.00:1.00, calculated as the total net asset value of the VCP investment fund (as defined in the H facility agreement) divided by the outstanding borrowings of Facility H, measured in March, June, September and December of each year (as applicable) (each a “Measurement Date”). Lenders require Net1 AG issue a compliance certificate obtained from VCP on each applicable Measurement Date, indicating the calculation of the asset coverage ratio.

Net1 SA will pay a non-refundable transaction creation fee of R5.25 million to lenders linked to Facility H.

The foregoing description of the Loan Documents does not purport to be complete and is qualified in its entirety by reference to the full text thereof, copies of which are attached hereto as Exhibits 10.1 through 10.3 and are incorporated herein by reference. .

Item 2.03 Creation of a Direct Financial Obligation or Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information provided in Section 1.01 of this Form 8-K is incorporated by reference.

Section 9.01. Financial statements and supporting documents.

(d) Exhibits

  Exhibit
    No.     Description
   10.1       Fourth Amendment and Restatement Agreement, dated January 24,
            2022, between Net1 Applied Technologies South Africa Proprietary
            Limited (as borrower), with Net 1 UEPS Technologies, Inc. Holdco),
            arranged by FirstRand Bank Limited (acting through its Rand Merchant
            Bank division) (the Arranger), and FirstRand Bank Limited (acting
            through its Rand Merchant Bank division) (as Original Senior
            Lender), with FirstRand Bank Limited (acting through its Rand
            Merchant Bank division) (as facility agent), and Main Street 1692
            (RF) Proprietary Limited (as Debt Guarantor)
   10.2       Senior Facility G Agreement, dated January 24, 2022, R750,000,000
            Senior Term Facility Agreement for Net1 Applied Technologies South
            Africa Proprietary Limited (as borrower), provided by FirstRand Bank
            Limited (acting through its Rand Merchant Bank division) (as
            lender), with FirstRand Bank Limited (acting through its Rand
            Merchant Bank division) (as facility agent)
   10.3       Senior Facility H Agreement, dated January 24, 2022, R350,000,000
            Senior Term Facility Agreement for Net1 Applied Technologies South
            Africa Proprietary Limited (as borrower), provided by FirstRand Bank
            Limited (acting through its Rand Merchant Bank division) (as
            lender), with FirstRand Bank Limited (acting through its Rand
            Merchant Bank division) (as facility agent)
    104     Cover Page Interactive Data File (formatted as Inline XBRL and
            contained in Exhibit 101).

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