DigiAsia Corp. Announces Execution of Definitive Agreements for a Convertible Note Financing with Helena Partners

Rhea-AI Summary

DigiAsia Corp. (NASDAQ: FAAS) has entered into a definitive Securities Purchase Agreement (SPA) with Helena Special Opportunities to secure over $3 million in funding through Senior Unsecured Convertible Notes. These notes can be converted into Class A common shares and bear an annual interest of 12%, payable quarterly, maturing in one year. Additionally, DigiAsia incorporates $5.2 million of Class B Convertible Notes from debt inherited via its recent merger with StoneBridge Acquisition The proceeds will be used to repay existing debt and for general corporate purposes, including growth capital investment. The CEO, Prashant Gokarn, expressed optimism about the funding, emphasizing its importance in executing the company's long-term growth strategy. EF Hutton acted as the exclusive placement agent, and Winston & Strawn LLP served as the legal advisor for the transaction.

Positive

• Secured over $3 million in funding through Senior Unsecured Convertible Notes.
• Incorporated $5.2 million of Class B Convertible Notes from recent merger.
• Funds will be used for debt repayment and growth capital investment.
• 12% annual interest on notes payable quarterly.
• Strong endorsement from Helena Special Opportunities

Negative

• Notes mature in one year, creating short-term financial pressure.
• High-interest rate of 12% per annum increases financial burden.

Insights

Financial Analyst

DigiAsia Corp. securing over $3 million in funding through senior unsecured convertible notes is a significant move. This type of financing can be attractive due to its flexibility, as the debt can be converted into equity under certain conditions. The 12% interest rate on these notes is relatively high, indicating that DigiAsia may be seen as a higher-risk investment by Helena Partners. However, the option for conversion into common stock could provide Helena Partners with substantial upside if DigiAsia's stock performs well.

Repaying existing debt and supporting general corporate purposes with this funding shows a balanced approach to using the proceeds. Reducing inherited debt from the StoneBridge Acquisition Corporation deal is prudent, potentially improving the company's balance sheet and making it more attractive to future investors.

It's worth noting that such financing can result in share dilution, which may affect existing shareholders. However, if the funds are effectively used to drive growth, the long-term benefits could outweigh the short-term dilution. Investors should monitor how the company utilizes this capital and whether it translates into improved financial performance and market position.

Market Research Analyst

From a market perspective, DigiAsia's strategic move to secure financing shortly after going public is commendable. This quick access to capital can provide the necessary resources to execute their growth strategy in the highly competitive finance as a service (FaaS) sector in Southeast Asia. The infusion of $3 million and an additional $5.2 million in convertible notes reflect confidence from a notable investor, which can positively impact market perception and investor sentiment.

The focus on using funds to promote financial inclusion in Indonesia is aligned with regional economic trends, where digital finance solutions are gaining traction. Investors should watch for how DigiAsia leverages this capital to enhance their offerings and market penetration, particularly among underserved SMEs and underbanked populations. Effective deployment of these funds could significantly bolster their market share and drive long-term revenue growth.

NEW YORK, June 21, 2024 (GLOBE NEWSWIRE) -- DigiAsia Corp. (NASDAQ: FAAS) (“DigiAsia” or the “Company”), a leading Finance as a Service (“FaaS”) ecosystem provider for the enterprise (across Southeast Asia) in Indonesia, today announced it has entered into a definitive Securities Purchase Agreement (“SPA”) with Helena Special Opportunities LLC, an affiliate of Helena Partners Inc. (“Helena”), pursuant to which the Company will receive in excess of $3 million in funding through the issuance of Senior Unsecured Convertible Notes (the “Notes”), convertible into Class A common shares of the Company. Additionally, the transaction includes $5.2 million of Class B Convertible Notes of existing debt inherited from the business combination with StoneBridge Acquisition Corporation which closed in April 2024.

DigiAsia will use the aggregate proceeds for the repayment of existing debt and general corporate purposes as growth capital investment.

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.

Prashant Gokarn, CEO of DigiAsia, commented, “We are gratified by the support of Helena Partners and encouraged by the confidence this investment signals in DigiAsia’s business and growth opportunity. With our strong management team securing a capital commitment in less three months following our public listing, we recognize this as the launching pad of our growth strategy in coordination with impactful strategic partners as the leading finance as a service resource that empowers SMEs in Indonesia and leads the transformation to a digital finance economy in region. This financing reinforces our ability to execute on our long-term growth strategy that will ultimately increase economic growth in Indonesia, permit financial inclusion of the region’s underbanked population and deliver continued high growth, attractive margin business that will generate long-term value to our supportive anchor shareholders."

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 recent funding has DigiAsia Corp. secured?

DigiAsia Corp. has secured over $3 million through Senior Unsecured Convertible Notes.

What is the interest rate on DigiAsia's new convertible notes?

The convertible notes bear an annual interest rate of 12%, payable quarterly.

When do the new convertible notes issued by DigiAsia mature?

The new convertible notes mature one year from the issuance date.

What is the purpose of the funds raised by DigiAsia Corp.?

The funds will be used to repay existing debt and for general corporate purposes, including growth capital investment.

How much existing debt has DigiAsia Corp. incorporated from its recent merger?

DigiAsia Corp. has incorporated $5.2 million of Class B Convertible Notes from its recent merger with StoneBridge Acquisition