Tarlton Beetroot Business Plan — Funding Requirement and Structure

The R4.60m seed and R30.94m Series A, what each buys, and the terms on which each is drawn.

Section 27 of 37

Funding Requirement and Structure

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R42.4 million in total, of which R35.5 million is the equity and term debt package and R7.5 million is a working capital facility that is a condition precedent, not an option.

Figure 1. Sources and uses of funds across both tranches.

Table 42 Sources of funds

Source	R million	Timing	Terms
Founder equity	1.10	Month 1	Ordinary shares
Seed equity	2.85	Month 1	Ordinary shares; 46.3 per cent post-money
Asset finance, Tranche A	0.65	Month 1	60 months at prime + 2.25%
Tranche A subtotal	4.60
Series A equity	20.50	Months 24 and 30	62 per cent first call, 38 per cent second call; 73.2 per cent post-money
Mortgage bond	5.94	Month 27	180 months at prime + 1.50%, 12 months interest-only; first-ranking over the property
Asset finance, Tranche B	4.50	Months 30 to 32	60 months at prime + 2.25%
Tranche B subtotal	30.94
Committed package	35.54
Working capital facility (required, not arranged)	7.50	Before month 30	Revolving, secured against land and receivables; condition precedent to the second call
Total capital requirement	43.04

Table 43 Use of funds

Application	Tranche A	Tranche B	Comment
Land and transfer costs	—	10.62	85 ha including transfer duty and due diligence
Irrigation and land preparation	0.65	7.44	Bulk plus in-field for 54 ha across two stages
Packhouse, cold chain and solar	—	4.95	Commissioned month 34
Plant, vehicles and equipment	1.28	3.04	Tractors, implements, refrigerated truck, seeder
Site infrastructure and systems	0.46	1.32	Fencing, housing, roads, workshop, ERP, certification
Contingency	0.19	1.88	8 per cent Tranche A, 7 per cent Tranche B
Working capital and operating deficit	2.02	1.69	Funds the negative EBITDA period
Total	4.60	30.94

Series A release milestones

The Series A subscription is drawn in two calls against verifiable conditions rather than in a single tranche. This is the principal downside control available to the Series A investor and it materially reduces the capital at risk if the Phase 2 thesis proves unsound.

Table 44 Series A drawdown conditions

Call	R million	Conditions precedent
First, month 24	12.71	Independent verification of a lawful water use entitlement of not less than 55 irrigated hectares; signed sale agreement within the R9.9 million land budget; soil suitability confirmed; GLOBALG.A.P. audit scheduled; Phase 1 achieving not less than 44 tonnes per hectare-cycle.
Second, month 30	7.79	Transfer registered and bond drawn; bulk irrigation commissioned; at least one paid retail trial completed with a documented buyer assessment; committed R7.5 million working capital facility in place; Production Manager appointed.

If the second call conditions are not met, the Series A investor retains the ability to decline the second call. The consequence is a materially smaller operation, and the returns in Section 29 would not apply.

Table 45 Capitalisation table

Shareholder	At inception	Post seed	Post Series A
Founders	100.0%	53.7%	14.4%
Seed investor	—	46.3%	12.4%
Series A investor	—	—	73.2%
Total	100.0%	100.0%	100.0%

Seed post-money valuation R6.15 million. Series A pre-money R7.50 million, post-money R28.00 million. Founder dilution to 14.4 per cent is severe and reflects the capital intensity of the land acquisition relative to what Phase 1 can be worth.