Bloomhouse Florals — Funding Structure, Debt & Covenants

The R12.0 million funding structure across equity and debt, the gearing, the debt-service profile, the covenants and the detailed use of proceeds.

Bloomhouse Florals Business PlanSection 15 › Funding Structure, Debt & Covenants

Section 15 · Business Plan

Funding Structure, Debt & Covenants

The R12.0 million funding structure across equity and debt, the gearing, the debt-service profile, the covenants and the detailed use of proceeds.

The R12.0 million raise is structured to balance cost of capital
against early-stage resilience: a majority-equity capital structure, a
senior term loan with a capital grace period, asset finance secured on
the fleet and cold chain, a funded debt-service reserve and a committed
but undrawn revolving facility. The structure is designed to be
financeable by a combination of equity investors, a commercial lender
and, potentially, a development-finance institution.

15.1 Sources and uses

Sources of funds R’m Share
Equity — sponsor 3.6 30.0%
Equity — investor 3.0 25.0%
Senior term loan 3.6 30.0%
Asset finance 1.8 15.0%
Total sources 12.0 100%

Table 26. Sources of funds. The structure is 55%
equity / 45% debt.

Uses of funds R’m Share
Initial capital expenditure 8.8 73.3%
Opening liquidity buffer (working capital) 3.2 26.7%
Debt-service reserve account 0.25 2.1%
Total uses 12.25 ≈100%

Table 27. Uses of funds. The balance of the
raise after capex is held as working-capital buffer and a funded
debt-service reserve.

Figure 16.
Figure 16. Sources and uses of funds, shown side by side.

15.2 Debt terms

The senior term loan of R3.6m is priced at 13.75% with a 24-month
capital grace period, so only interest is payable while the business
ramps, after which capital amortises. The asset-finance facility of
R1.8m, priced at 13%, is secured on the refrigerated fleet and
cold-chain equipment and amortises from Year 1. A committed revolving
facility of R1.5m at 14.5% is available for contingency and is undrawn
in the base case.

15.3 Debt-service schedule

R’ millions Year 1 Year 2 Year 3 Year 4 Year 5
Opening debt R5.40m R5.04m R4.68m R3.72m R2.76m
Interest R0.73m R0.68m R0.64m R0.51m R0.38m
Principal repaid R0.36m R0.36m R0.96m R0.96m R0.96m
Total debt service R1.09m R1.04m R1.60m R1.47m R1.34m
Closing debt R5.04m R4.68m R3.72m R2.76m R1.80m

Table 28. Debt-service schedule. The 24-month
grace on senior capital is visible in the Year-1–2 principal line; total
debt amortises from R5.4m to R1.8m.

Figure 17.
Figure 17. Debt amortisation profile, showing senior and asset-finance balances declining across the plan.

15.4 Coverage and covenants

Debt-service cover builds quickly once the grace period and ramp are
behind the business. On an EBITDA basis cover rises from interest-only
cover in Year 1 to comfortably above a typical 1.25x covenant from Year
2 onward; on a stricter cash-flow-available-for-debt-service (CFADS)
basis the same pattern holds. The chart and table below set out the
coverage profile.

Coverage metric Year 1 Year 2 Year 3 Year 4 Year 5
DSCR (EBITDA basis) 0.09x 1.31x 1.93x 3.61x 5.92x
DSCR (CFADS basis) 0.09x 1.02x 1.92x 2.59x 4.64x
Interest cover (EBIT basis) -2.26x -0.63x 1.38x 6.44x 15.37x

Table 29. Coverage ratios. Year-1 cover is below
1.0x by design during the grace period and ramp; cover builds rapidly
thereafter.

Figure 18.
Figure 18. Debt-service cover ratio by year (EBITDA and CFADS bases) against a 1.25x covenant reference line.
ANALYST CALLOUT Covenants should be sized to the
post-grace profile

Because debt-service cover is intentionally below 1.0x in Year 1
during the capital grace period, a conventional 1.25x DSCR covenant
should apply from Year 2, supported by a minimum-cash covenant of R0.4m
and the funded debt-service reserve. This structure gives the lender
meaningful protection while allowing the business the room it needs to
establish itself. The undrawn revolver and the reserve together provide
more than R1.7m of contingent liquidity.

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 Bloomhouse Florals (Pty) Ltd.