Item 1.01 Entry into a Material Definitive Agreement.
Amendment and Restatement of Blue Label Telecoms Limited
Subscription Agreement and Extension of RMB Guarantee
As previously disclosed, on October 4, 2016, Net 1 UEPS
Technologies, Inc. (‘Net1”), through one of its subsidiaries, Net1 Applied
Technologies South Africa Proprietary Limited (“Net1 SA”), entered into a
Subscription Agreement (the “Blue Label Subscription Agreement”) with Blue Label
Telecoms Limited (“Blue Label”), a JSE-listed company which is a leading
provider of prepaid electricity and airtime in South Africa. Pursuant to the
Blue Label Subscription Agreement, Net1 SA will subscribe for approximately
117.9 million ordinary shares of Blue Label at a price of ZAR 16.96 per share,
for an aggregate price of ZAR 2.0 billion.
As previously disclosed, on October 20, 2016, Net1 SA and Blue
Label signed an addendum to the Blue Label Subscription Agreement which, among
other things, established the subscription date and required FirstRand Bank
Limited (acting through its Rand Merchant Bank division) (“RMB”) to issue a
guarantee to Blue Label for the purchase price of the Blue Label shares to be
purchased by Net1 SA (the “Guarantee”). On that date, Net1 SA also entered into
a Common Terms Agreement (the “CTA”), a Senior Facility A Agreement, Senior
Facility B Agreement, Senior Facility C Agreement, Subordination Agreement,
Security Cession & Pledge and certain ancillary loan documents with RMB,
pursuant to which, among other things, Net1 SA may borrow up to an aggregate of
ZAR 1.4 billion to finance a portion of its investment in Blue Label. The
amounts available under these loans and an escrow deposit of ZAR 600 million
made by Net1 SA serve as security for the Guarantee. Net1 agreed to guarantee
the obligations of Net1 SA to RMB and subordinate any claims it may have against
Net1 SA and certain of its subsidiaries to RMB’s claims against such persons.
On November 16, 2016, Net1 SA and Blue Label entered into an
Amended and Restated Subscription Agreement (the “A&R Agreement”) which,
among other things, extended the subscription date to a date, to be specified by
Blue Label, during the period between January 23, 2017 to February 28, 2017
(inclusive).
On November 15, 2016, RMB, Net1, Net1 SA and certain of their
respective affiliates entered into a letter agreement (the “Guarantee Letter”)
amending the CTA to extend the term of the Guarantee, as referenced therein, to
February 28, 2017.
On November 15, 2016, RMB issued a new guarantee in favor of
Blue Label for the purchase price of the Blue Label shares to be purchased by
Net1 SA (the “New Guarantee”). In accordance with the terms of the Guarantee
Letter, the New Guarantee will expire on February 28, 2017. Upon closing under
the A&R Agreement, Net1 SA expects Blue Label to deliver the New Guarantee
to RMB for payment of the subscription price of the Blue Label shares.
Amendments to N2 Partners and Draper Gain Stock Purchase
Agreements
As previously disclosed, on October 6, 2016, Net1 entered into
Stock Purchase Agreements (collectively, the “Purchase Agreements”) with N2
Partners Ltd. (the “N2 Investor”) and Draper Gain Investments Ltd. (the “DG
Investor” and together with the N2 Investor, the “Investors”). Under the
Purchase Agreements, each of the Investors will purchase 2,500,000 shares of the
Net1’s common stock, par value $0.001 per share, at a price of $9.00 per share,
for gross proceeds to Net1 of $45.0 million. On November 3, 2016, the
parties amended the Purchase Agreements to extend the closing dates until
December 12, 2016. The sale of the shares will be registered under the
Securities Act of 1933, as amended, pursuant to Net1’s shelf registration
statement on Form S-3. Each of the Investors will be contractually restricted
from selling or otherwise disposing of the purchased shares for a period of six
months after the date of issuance.
On November 16, 2016, the parties further amended each Purchase
Agreement to have the closing date occur on the earlier of (i) a date to be
specified by Net1 in writing to the respective Investor which date shall be no
earlier than January 23, 2017, and no later than February 28, 2017; provided
however, that such date must be at least five business days after such notice is
delivered; and (ii) a date to be specified by the respective Investor in writing
to Net1 which date shall be no earlier than January 23, 2017, and no later than
February 28, 2017; provided however, that such date must be at least five
business days after such notice is delivered.
The foregoing descriptions of the A&R Agreement, the
Guarantee Letter, the Guarantee and the amendments to the Purchase Agreements,
and the descriptions of the Guarantee Letter and the Guarantee contained in Item
2.03 below, do not purport to be complete and are qualified in its entirety by
reference to the full text thereof, copies of which are attached hereto as
Exhibits 10.45 through 10.49 and are incorporated herein by reference.
On November 16, 2016, the USD/ZAR exchange rate was $1.00/ZAR
14.2478.