AgriFeed Holdings — Capital Structure & Funding Request
The ZAR 550 million Phase 1 capital structure across senior debt, mezzanine and equity, the use of proceeds, the Phase 2 follow-on, and the DSCR and coverage profile.
Section 15 · Business Plan
Capital Structure & Funding Request
The ZAR 550 million Phase 1 capital structure across senior debt, mezzanine and equity, the use of proceeds, the Phase 2 follow-on, and the DSCR and coverage profile.
AgriFeed Holdings is raising R550 million in Phase 1 capital to fund
the design, construction and commissioning of a 30-tonne-per-hour
compound feed manufacturing facility in eMalahleni, Mpumalanga, together
with associated working capital, market activation and contingency
reserves. A subsequent Phase 2 raise of R200 million is planned for Year
4 to fund capacity expansion to 55 t/h, premix capability and a
satellite distribution hub serving the Western Cape. This section sets
out the proposed capital stack, instrument terms, drawdown schedule,
security package, governance rights and the conditions precedent that
will govern disbursement.
15.1 Phase 1 Capital Stack — R550 Million
The capital stack has been engineered to balance founder alignment,
strategic value-add, development finance support and prudent senior
leverage. The blended cost of capital is approximately 13.4%,
comfortably below the project’s unlevered IRR of 24.6%, generating
meaningful equity uplift. Mezzanine debt is sized at the lower end of
the typical range to preserve early-year cash flow flexibility during
ramp-up.
| Tranche | Instrument | Amount (R m) | % of Stack | Pricing / Coupon | Tenor |
|---|---|---|---|---|---|
| A | Founders & Management Equity | 66 | 12.0% | Ordinary equity | Permanent |
| B | Strategic Equity (industry partner) | 121 | 22.0% | Ordinary equity | Permanent |
| C | DFI Equity (IDC / DBSA / IFC) | 88 | 16.0% | Pref equity, 8% PIK | 8 yrs |
| D | Senior Secured Term Loan | 209 | 38.0% | JIBAR + 4.25% | 8 yrs, 2 yr grace |
| E | Mezzanine / Sub Debt | 66 | 12.0% | Fixed 14.5% + warrants | 7 yrs, bullet |
| TOTAL | 550 | 100.0% | Blended ~13.4% |
15.2 Use of Proceeds — Disciplined Allocation
Every rand of Phase 1 capital is allocated against ring-fenced budget
lines with project-management oversight, independent quantity surveying
and milestone-linked drawdowns. Approximately 72% of proceeds fund
tangible CAPEX (mill, civils, silos, lab, fleet), with the balance
allocated to working capital, pre-operating costs and contingency. The
8% contingency line is industry-standard for greenfield feed mill
construction in Southern Africa and reflects appropriate risk buffering
for civils, FX-exposed equipment and commissioning.
| Use of Proceeds Category | Amount (R m) | % Total | Description |
|---|---|---|---|
| Mill equipment & installation | 215 | 39.1% | Bühler/Andritz 30 t/h line, hammermill, mixer, pellet press, cooler, bagging |
| Civils, structures & utilities | 115 | 20.9% | Mill building, silo foundations, MV substation, water reticulation, ETP |
| Raw material storage & handling | 65 | 11.8% | 8 × 1,500-ton flat-bottom silos, intake pit, conveyors, weighbridge |
| Laboratory, QC & ICT | 22 | 4.0% | NIR, wet-chem lab, mycotoxin equipment, ERP, MES, SCADA |
| Logistics fleet & loading | 28 | 5.1% | 6 bulk feed tankers, 4 curtain-side trucks, satellite tracking |
| Working capital | 60 | 10.9% | Maize procurement, soybean meal stocks, debtor book funding |
| Pre-operating & launch costs | 20 | 3.6% | Recruitment, training, accreditations, brand launch, customer trials |
| Contingency (8%) | 25 | 4.5% | Civils overrun, FX adjustment, equipment commissioning surprises |
| TOTAL | 550 | 100.0% |
15.3 Drawdown Schedule
Capital drawdowns are sequenced to minimise carrying cost while
maintaining contractor liquidity. Equity tranches are committed up-front
and called as required; senior and mezzanine debt are drawn against
quantity-surveyor-certified milestones. The full R550 million is
expected to be deployed over 22 months, with first drawdown at financial
close (Month 0) and final commissioning drawdown at Month 22.
| Quarter | Equity Drawn | Debt Drawn | Cumulative Total | Key Milestone |
|---|---|---|---|---|
| Close (M0) | R 80m | R 0m | R 80m | Financial close, EPC signed, deposits |
| Q1 Y1 | R 60m | R 25m | R 165m | Site mobilisation, civils start |
| Q2 Y1 | R 50m | R 55m | R 270m | Equipment manufacture, foundations |
| Q3 Y1 | R 45m | R 60m | R 375m | Steelwork, silo erection |
| Q4 Y1 | R 30m | R 60m | R 465m | Mechanical installation |
| Q1 Y2 | R 10m | R 50m | R 525m | Commissioning, FAT/SAT |
| Q2 Y2 | R 0m | R 25m | R 550m | Production ramp, working capital |
15.4 Security Package
Senior lenders will benefit from a comprehensive security package
consistent with project-finance market practice for industrial assets in
Southern Africa. The security package is designed to provide robust
downside protection while not over-constraining operational
flexibility.
- First-ranking general notarial bond over all
moveable plant, equipment, vehicles, stocks and receivables of AgriFeed
Manufacturing (Pty) Ltd. - First-ranking continuing covering mortgage bond
over the freehold land at Erf 2847 eMalahleni Industrial Park (12.4
ha). - Cession of all material contracts including
offtake agreements, EPC contract, insurance policies and intellectual
property. - Pledge of 100% of shares in AgriFeed
Manufacturing (Pty) Ltd held by AgriFeed Holdings (Pty) Ltd. - Debt service reserve account equivalent to 6
months of senior debt P&I, funded at first commercial
production. - Project completion guarantee from the EPC
contractor with liquidated damages of R250,000 per day for late
commissioning. - Sponsor support undertaking from strategic
equity partner covering cost overruns up to R30 million.
15.5 Financial Covenants & Reporting
Senior lenders will benefit from a customary covenant package, tested
quarterly from the start of commercial operations. Headroom assumptions
have been stress-tested against the downside scenario and remain
compliant in all but the most severe stress cases.
| Covenant | Threshold | Test Frequency | Curing Mechanism |
|---|---|---|---|
| Debt Service Coverage Ratio | ≥ 1.30x | Quarterly, rolling 12m | Equity injection or cash sweep |
| Net Debt / EBITDA | ≤ 4.5x → 3.0x by Y4 | Quarterly | Capex deferral, working-cap release |
| Interest Coverage Ratio | ≥ 2.50x | Quarterly | Equity cure |
| Minimum tangible net worth | ≥ R200m | Annual | Equity injection |
| Capex without consent | ≤ R20m p.a. | Annual | Lender approval required |
| Distribution lockup | DSCR < 1.50x | Continuous | Cash trapped to DSRA |
15.6 Investor Governance & Rights
AgriFeed Holdings is committed to robust governance from inception.
The board will comprise nine directors, with composition that ensures
both investor protection and effective oversight. Reserved matters and
information rights are set out in the Shareholders’ Agreement and align
with institutional investor norms in South Africa.
| Board Composition | Seats | Selected By |
|---|---|---|
| Independent Non-Executive Chair | 1 | Joint board nomination |
| Independent Non-Executive Directors | 2 | Nominations committee |
| Founders / Executives | 2 | CEO + CFO ex officio |
| Strategic Equity Partner | 2 | Tranche B holder |
| DFI Equity Partner | 1 | Tranche C holder |
| Senior Lender Observer | 1 (non-voting) | Tranche D agent bank |
| TOTAL | 9 + 1 observer |
Reserved Matters Requiring Investor Consent
- Annual budget and business plan approval, including capex above
R10 million. - Material acquisitions, disposals or joint ventures exceeding R25
million. - Dividend declarations, share buybacks and capital
returns. - Appointment / removal of CEO, CFO and statutory
auditors. - Material amendments to offtake or supply contracts above R50
million annual value. - New debt facilities or refinancing of senior debt above stated
thresholds. - Issuance of new equity, options or convertible
instruments. - Material litigation settlements or related-party transactions
above R5 million. - Changes to constitutional documents and related-party
policies.
15.7 Conditions Precedent to First Drawdown
First drawdown of senior debt is subject to standard project-finance
conditions precedent, expected to be satisfied by Month 0. The
conditions precedent process has been structured to permit a 90-day
signing-to-drawdown timetable, consistent with typical Southern African
project-finance precedent.
- Execution of all transaction documents (term sheet, facility
agreement, security package, ISA, SHA). - Independent legal opinions from sponsor and lender counsel on
enforceability. - Board and shareholder resolutions of all transaction
parties. - Certified copies of corporate documents, KYC and AML
clearances. - Equity contribution evidenced (escrow or paid-in).
- EPC contract signed with reputable contractor and bonded
performance guarantees. - Environmental authorisation under NEMA, NEMA:WA, NEMA:AQA in
place. - Initial offtake heads-of-terms with at least three Tier 1 / Tier
2 customers covering ≥ 60% of Year 2 budgeted volume. - Insurance binders for CAR, marine cargo, business interruption
and product liability. - Independent technical advisor (ITA), market consultant and
lender’s engineer reports satisfactory. - Hedging strategy for FX exposure on imported equipment in
place.
15.8 Phase 2 Capital — R200 Million (Year 4)
The Phase 2 capital raise of R200 million is anchored to the
achievement of the Phase 1 base-case operating plan and is expected to
fund: (i) addition of a second pellet line raising rated capacity from
30 t/h to 55 t/h; (ii) construction of an integrated premix plant for
vitamins, minerals and feed additives; (iii) satellite distribution hub
in the Western Cape (40,000 t/yr); and (iv) selective backward
integration into key raw materials. Phase 2 capital is expected to be
raised through a combination of strategic equity follow-on, retained
earnings and senior debt refinancing, with no incremental founder
dilution required.
through Y3; (ii) capacity utilisation > 78%; (iii) DSCR > 1.65x;
(iv) at least two long-term offtake agreements signed.
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 AgriFeed Holdings (Pty) Ltd.