Vela Footwear — Funding Structure & Sources of Capital
The R331 million funding structure and sources of capital — sponsor and strategic equity, the CTFLGP capital grant, senior commercial term debt, the IDC concessional facility and the revolving facility — with the use of proceeds.
Section 14 · Business Plan
Funding Structure & Sources of Capital
The R331 million funding structure and sources of capital — sponsor and strategic equity, the CTFLGP capital grant, senior commercial term debt, the IDC concessional facility and the revolving facility — with the use of proceeds.
Vela requires R246 million of committed project funding to build and
commission the plant and fund the initial working-capital cycle, plus an
R85 million revolving facility for ongoing working capital — R331
million of total facilities. The structure blends equity, a development
grant and two term-debt tranches, deliberately weighting concessional
and grace-bearing instruments to protect cash through the ramp.
Sources and uses of funds
Sources (R246.0m project funding)
| Source | R’000 | Share |
|---|---|---|
| Ordinary equity (sponsor + strategic investor) | 98,000 | 40% |
| CTFLGP capital grant (the dtic / IDC) | 18,000 | 7% |
| Senior term debt (commercial bank) | 80,000 | 33% |
| IDC concessional term facility | 50,000 | 20% |
| Total project funding | 246,000 | 100% |
Uses (R246.0m)
| Use of funds | R’000 | Share |
|---|---|---|
| Land and factory buildings (12,000 m2) | 52,000 | 21% |
| Plant, machinery and production lines | 88,000 | 36% |
| Material handling, utilities and racking | 11,000 | 4% |
| ERP / PLM / IT infrastructure | 9,000 | 4% |
| Logistics fleet and yard equipment | 8,000 | 3% |
| Pre-operating, training and certification | 7,000 | 3% |
| Debt service reserve account (DSRA) | 9,000 | 4% |
| Initial working capital injection | 62,000 | 25% |
| Total application | 246,000 | 100% |
Rationale for the capital stack
- Equity first-loss of R98 million (40% of project
funding) gives lenders a substantial cushion and aligns sponsor
incentives with the build. - CTFLGP grant of R18 million is treated as a
capital contribution, lowering the effective funding cost without adding
leverage. - Senior term debt of R80 million at 11.75%
provides the bulk of commercial leverage on standard manufacturing
terms, with two years of capital grace. - IDC concessional facility of R50 million at
8.50% reduces blended interest cost and reflects the
development mandate behind the Master Plan. - R85 million revolving facility is undrawn at
close and sized to fund the working-capital build through the
ramp.
Gearing and headroom
At close, term debt of R130 million against equity-plus-grant of R116
million gives initial gearing of roughly 53% debt to total capital —
conservative for an asset-backed manufacturer. Including the revolving
facility at its Year-4 peak, total drawn debt reaches about R142 million
before amortisation reduces it. The structure is sized so that the
business never approaches its facility limits in the base case,
preserving headroom for the downside.
assumed, not yet committed
The funding plan assumes successful award of the R18 million CTFLGP
capital grant and the R50 million IDC concessional facility — together
28% of project funding. While Vela is structured to qualify, these
awards are subject to application, approval and conditions. If
concessional funding were unavailable, the gap would need to be met by
additional equity or commercial debt at higher cost, reducing returns.
Securing in-principle support from the dtic / IDC ahead of close would
materially de-risk the structure.
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 Vela Footwear Manufacturing (Pty) Ltd.