DigiAsia Corp. Announces Completion of Convertible Note Financing with Helena Partners and Extinguishes Outstanding Debt

Rhea-AI Summary

DigiAsia Corp. (NASDAQ: FAAS) announced the completion of a convertible note financing with Helena Partners, resulting in net proceeds of $3.0 million. The company issued $5.2 million in Senior Unsecured Convertible Notes to extinguish all inherited debt from its business combination with StoneBridge Acquisition The Notes bear a 12% annual interest rate, payable quarterly, and mature in one year. Helena has the option to convert the principal and accrued interest into DigiAsia common stock. The remaining funds will be used for general corporate purposes and growth capital investment.

Positive

• Completion of convertible note financing raised $3.0 million net proceeds.
• Extinguished all inherited debt from the business combination with StoneBridge Acquisition
• Remaining proceeds will be used for growth capital and general corporate purposes.

Negative

• The issued Notes bear a high interest rate of 12% annually, increasing financial obligations.
• Notes mature in one year, adding pressure on DigiAsia's financial planning.

Insights

Financial Analyst

DigiAsia Corp.'s recent completion of a $3.0 million Convertible Note Financing indicates a strategic move towards financial stability and growth. Effectively, the company has extinguished its inherited debt from the business combination with StoneBridge Acquisition Corporation. This is a significant step towards financial health as it reduces the burden of outstanding liabilities and showcases the company's commitment to maintaining a sound capital structure.

Key Insights:

• Convertible Notes: The choice of issuing convertible notes, instead of traditional debt, allows investors to convert debt into equity. This arrangement can be attractive to investors, providing potential upside if the company’s stock performs well. For DigiAsia, it minimizes immediate cash outflow for debt repayment, aligning with their objective to prioritize growth capital investment.
• Interest Rate and Maturity: The 12% annual interest rate on the convertible notes is fairly high, reflecting a higher risk profile or a cost of capital that investors are demanding. The one-year maturity period suggests that the company may need to secure additional funding or generate sufficient cash flow within a short period to manage these obligations.

Retail investors should note that while the extinguishment of debt is a positive move, the high interest rate and short maturity period introduce elements of financial risk. Monitoring the company's financial performance and cash flow in the upcoming quarters is important to assess how effectively they can manage these new financial obligations.

Market Research Analyst

Market Positioning and Potential Impact: DigiAsia Corp. operates within the rapidly growing Fintech as a Service (FaaS) ecosystem. This sector is characterized by its innovation and potential for significant market disruption, offering scalable financial technology solutions to businesses. The strategic move to extinguish debt enhances DigiAsia's financial flexibility, potentially allowing more aggressive investments in technology and market expansion.

Growth Capital: Utilization of the remaining proceeds for growth capital investment signals a forward-looking strategy, vital in a competitive market. This can include expanding product offerings, enhancing technology infrastructure, or entering new markets. Investors should be optimistic about the company's intent to strengthen its market position. However, effective execution of these plans is important for realizing the anticipated growth.

For retail investors, understanding the market's demand for innovative fintech solutions can provide insights into DigiAsia's potential for long-term growth. Evaluating the company's strategic initiatives and market expansion efforts will be important to gauge future performance.

~ Prompt Extinguishment of Debt Following Recent Listing as a Public Company Prioritizes Financial Responsibility with a Healthy Capital Structure ~

NEW YORK, July 02, 2024 (GLOBE NEWSWIRE) -- DigiAsia Corp. (NASDAQ: FAAS) (“DigiAsia” or the “Company”), a leading Fintech as a Service (“FaaS”) ecosystem provider, today announced it has received net proceeds of $3.0 million as a result of the previously announced Securities Purchase Agreement (“SPA”) with Helena Special Opportunities LLC, an affiliate of Helena Partners Inc. (“Helena”). In addition, through the issuance of Senior Unsecured Convertible Notes (the “Notes”), convertible into Class A common shares of the Company, and $5.2 million of Class B Convertible Notes, DigiAsia has extinguished all debt inherited from its business combination with StoneBridge Acquisition Corporation. The remainder of proceeds will be utilized for general corporate purposes as growth capital investment.

As announced on June 21, 2024, the Notes bear interest at a rate of 12% per annum, payable quarterly, and mature one year from the issuance of the note. Helena, pursuant to its note, has the option, on or prior to the maturity date, to convert the entire principal amount and all accrued but unpaid interest on the notes into shares of DigiAsia common stock.

EF Hutton LLC acted as the exclusive placement agent for the offering. Winston & Strawn LLP acted as legal advisor to DigiAsia.

Forward-Looking Statements:

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe”, “expect”, “anticipate”, “project”, “targets”, “optimistic”, “confident that”, “continue to”, “predict”, “intend”, “aim”, “will” or similar expressions are intended to identify forward-looking statements. All statements other than statements of historical fact are statements that may be deemed forward-looking statements. These forward-looking statements including, but not limited to, statements concerning DigiAsia and the Company’s operations, financial performance and condition are based on current expectations, beliefs and assumptions which are subject to change at any time. DigiAsia cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors such as government and stock exchange regulations, competition, political, economic and social conditions around the world including those discussed in DigiAsia’s Form 20-F under the headings “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business Overview” and other reports filed with the Securities and Exchange Commission from time to time. All forward-looking statements are applicable only as of the date it is made and DigiAsia specifically disclaims any obligation to maintain or update the forward-looking information, whether of the nature contained in this release or otherwise, in the future.

DigiAsia Company Contact:

Subir Lohani

Chief Financial Officer and Chief Strategy Officer

646-480-0142

Investor Contact:

MZ North America

Email: FAAS@mzgroup.us

FAQ

What is the latest financing update for DigiAsia Corp. (FAAS)?

DigiAsia Corp. completed a convertible note financing with Helena Partners, raising $3.0 million net proceeds.

How much debt did DigiAsia Corp. extinguish with the recent financing?

DigiAsia Corp. extinguished all inherited debt, totaling $5.2 million, from its business combination with StoneBridge Acquisition

What are the details of DigiAsia Corp.'s convertible notes?

The convertible notes bear a 12% annual interest rate, payable quarterly, and mature one year from issuance with an option for Helena to convert into DigiAsia common stock.

What will DigiAsia Corp. use the remaining proceeds from the financing for?

The remaining proceeds will be used for general corporate purposes and as growth capital investment.