The fee itself was $87 mil, but they have also raised $50 mil...

The fee itself was $87 mil, but they have also raised $50 mil from shareholders to meet the costs. In addition to the $130 mil repaid and $20 mil paid from the bank, IMO this new 'capital management exercise' costs $287 mil.

In December the previous corporate facility of $120 mil was refinanced by this one, when they paid $40 mil (inc. $10 mil from cash reserves) to pay out the remaining $40 mil CVI Convertible Notes. The purpose was to wipe out the coupon expense of the Notes which would accrue later. The interest rate of 15% seemed high, but I defended it at the time as being the only available option. The annual interest cost was $22.5 mil. If it had been 10% it would have been $15 mil. If 12% it would have been $18 mil. - very little consequence considering the $ this company burns through. It was 'unsecured' funding (ie: taking a Charge over the company, its subsidiaries and its shares only) and IMO it was an acceptable deal. The exit penalty was another matter and was predicated on the 30 day VWAP at the time of repayment divided by the 30 day VWAP at the time of entry multiplied by $25 mil. They had better hope the SP goes to the moon because if it falls they are going to look like turkeys.

Corporate Facility
Zip has executed an agreement for $150.0m to refinance its existing corporate debt with funds
managed by Ares Management Corporation (“Ares”), a global alternative investment manager,
providing corporate funding certainty, diversification and duration to the Company. Proceeds from
the facility will be used to repay Zip’s existing corporate facility, fund the cash component of the
incentivised conversion of the outstanding CVI Notes, and provide additional liquidity to support
growth. The term of the facility will be four years, with the option at Zip’s discretion to refinance or
repay the facility prior to maturity.

The cash impact to Zip’s corporate interest expense as a result of the above changes to the Group’s
capital structure is expected to be immaterial. Zip reiterates its expectation to achieve a positive
Group cash EBTDA result for 2H24 and a positive Group cash EBTDA result for FY24.

Now they have to spend $87 mil plus $50 mil costs to save $19.5 mil per annum for 3 years and 5 months?

Key terms of the Corporate Facility:

Item Description

Borrower zip Money Payments Pty Ltd a wholly-owned subsidiary of Zip Co Limited

Lender Funds managed by Ares Management Corporation or any of itsaffiliates

Type of facility Loan note facility

Face value A$150.0m

Use of proceeds Repayment of existing Senior Convertible Notes and existing working capital facility, and general working capital requirements of the Zip Group

Interest rate 15.0% per annum subject to adjustment after 30 June 2024 based on financial performance, paid quarterly

Maturity 22 December 2027 (four years). The Borrower may elect torepay earlier, in which case a premium may be payable to the Lender

Security First-ranking security over the Borrower, Zip Co Limited and its Australian and New Zealand subsidiaries and the shares in Zip Co US Inc

Covenants Customary covenants, representations and events of default for a secured corporate facility, including customary financial covenants comprising cash EBTDA, liquidity and portfolio performance

Exit fee On full repayment of the facility, the Company to pay an exit fee calculated as A$25.0m×A/B. “A” is the 30-day
volume-weighted average price of Zip Co Limited ordinary shares (Zip VWAP) on the date of repayment of the facility,
subject to customary adjustments. “B” is the 30-day Zip VWAP on the date of entry into the facility