TitanCrete Readymix — Funding Structure & Debt

The R420 million funding structure across ordinary equity and senior secured term debt, the gearing, the debt-service profile and the detailed use of proceeds.

Section 17 · Business Plan

Funding Structure & Debt

The R420 million funding structure across ordinary equity and senior secured term debt, the gearing, the debt-service profile and the detailed use of proceeds.

The funding architecture is the part of this plan that does the most
work. Because the business is loss-making during its ramp, the capital
structure is engineered — through conservative opening leverage, a
principal grace period, a funded debt-service reserve and a committed
revolver — to carry the company through the period of sub-1.0×
debt-service coverage without breaching covenants or exhausting
cash.

17.1 The layered capital stack

Equity (R250m). Institutional and founder
ordinary equity absorbs first losses and funds the irreducible core of
the plant build.
Senior term debt (R170m). Eight-year secured
facility at 12.5%, with a Year-1 principal grace (interest-only) to
relieve the ramp, then straight-line amortisation.
Expansion finance (~R225m). Asset-backed
drawdowns funding roughly 60% of growth capex at 12.75%, amortising over
asset life — the reason the true programme exceeds R420m.
Revolving facility (R120m limit). A committed
revolver at 13.25% that maintains a R15m minimum cash balance through
the trough and is repaid as cash generation recovers.
Debt-service reserve (R12m). A funded reserve
sized to cushion debt service during the lowest-coverage
period.

17.2 Debt and coverage profile

The schedule below sets out interest, principal and net debt across
the plan, together with the coverage ratios on which lender covenants
would be set. Debt-service coverage is negative in Year 1 and below 1.0×
in Year 2 — disclosed, not disguised — recovering to 1.24×, 1.36× and
1.94× in Years 3–5. Net debt / EBITDA falls from a 7.5× trough to
roughly 1.0× by Year 5.

Table 28. Debt service and coverage (ZAR millions, ratios as stated)

	Year 1	Year 2	Year 3	Year 4	Year 5
Net finance costs	21	21	29	38	44
Principal repayment	0	24	33	44	55
Total debt service	21	46	58	74	87
Net debt (period-end)	135	212	284	327	272
DSCR (×)	(0.19)	0.65	1.24	1.36	1.94
Interest cover (×)	(0.53)	0.89	2.16	2.88	4.61
Net debt / EBITDA (×)	7.5	4.1	2.7	2.0	1.0

Table 28. Coverage is candidly sub-1.0× in the
ramp and recovers from Year 3; net debt / EBITDA deleverages to ~1.0× by
Year 5.

Figure 16.

Figure 16. Net debt and debt-service-coverage ratio, with the 1.0× covenant threshold marked.

17.3 Security and covenants

Senior debt is secured against the plant assets, with expansion
finance secured against the specific fleet and equipment it funds.
Indicative covenants would include a minimum DSCR (tested from Year 3,
with a holiday through the grace period), a maximum net-debt / EBITDA
ratio stepping down over time, a minimum-liquidity covenant supported by
the revolver and DSRA, and a dividend lock-up until net debt / EBITDA
falls below 2.0×. Drawdowns can be conditioned on plant-commissioning
and framework-contract milestones to align lender risk with
delivery.

ANALYST CALLOUT — The structure is the credit
story

A conventional DSCR-covenanted term loan would default this business
in Year 1. The transaction is financeable only because the structure
anticipates the ramp: grace period, DSRA, revolver, milestone-linked
drawdowns and a Year-3 covenant start. Lenders should price for the ramp
window specifically and take comfort from the rapid deleveraging
thereafter; the structure converts a coverage problem into a timing
problem with defined, funded mitigants.

17.4 Covenant compliance dashboard

The table below sets the indicative covenant package against
projected performance, making explicit where headroom is tight and where
the structural mitigants carry the business. Covenants are deliberately
back-loaded: DSCR is tested only from Year 3 (a grace-period holiday
applies through the ramp), and the leverage covenant steps down as the
business deleverages. Liquidity is protected throughout by the revolver
and DSRA.

Table 29. Indicative covenant compliance dashboard

Covenant	Threshold	Y2	Y3	Y4	Y5
DSCR (from Y3)	≥ 1.10×	n/a	1.24×	1.36×	1.94×
Net debt / EBITDA	step-down	4.1×	2.7×	2.0×	1.0×
Interest cover	≥ 1.50×	0.89×	2.16×	2.88×	4.61×
Minimum liquidity	≥ R15m	Met	Met	Met	Met
Dividend lock-up	until <2.0×	Locked	Locked	Locked	Open

Table 29. Covenants are back-loaded to the
post-ramp period; the grace holiday, DSRA and revolver protect the early
years.

RISK FLAG — Where the covenant package is tight — stated
plainly

Interest cover of 0.89× in Year 2 sits below a conventional 1.5×
test, and DSCR is sub-1.0× until Year 3. A standard covenant package
would trip here. The transaction therefore requires a bespoke structure
— a DSCR holiday through the grace period, a stepped leverage covenant,
and liquidity rather than coverage tests in the ramp — supported by the
DSRA and revolver. Lenders unwilling to offer ramp-aware covenants are
not the right lenders for this credit; those that do are protected by
the rapid post-Year-3 recovery.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of TitanCrete Readymix South Africa (Pty) Ltd.