Highveld Detailing Business Plan — Funding Requirement and Structure

The funding requirement, how each tranche is applied and the terms on which it is drawn.

Section 28 of 38

Funding Requirement and Structure

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The business requires R31.4m at its deepest point, in month 38. R41.5m is committed. The R10.1m of apparent headroom is not surplus: the downside case needs R17.8m more than the entire stack.

Sources and uses of funds
Figure 1. Sources and uses of funds

Sources of funds

Table 50. Sources of funds

Source

Amount

Share

Terms and rationale

Ordinary equity — Tranche A

R15.0m

36%

Subscribed at month 1. Funds the flagship studio, the academy, the first mobile units and the initial dealer pilots.

Ordinary equity — Tranche B

R9.0m

22%

Subscribed at month 15, subject to the milestone gate in Section 4. Funds the second studio and accelerated dealer mobilisation.

Development-finance term loan

R9.0m

22%

10.50% over 84 months with a 36-month capital moratorium. Priced on the employment and skills profile in Section 19.

Asset finance facility

R4.5m

11%

12.25% over 48 months, secured on vehicles and equipment. Matches asset life to funding tenor.

Working-capital revolving facility

R4.0m

10%

13.75%, drawn as required against the debtor book. Covers the dealer settlement lag.

Total committed capital

R41.5m

100%

Use of funds

Table 51. Use of funds

Application

Amount

Share

Comment

Flagship studio — fit-out, plant & energy

5.93

14%

Irreversible; committed before revenue

Second studio — fit-out, plant & energy

6.23

15%

Milestone-gated at month 15

In-dealership unit equipment (31 units)

11.16

27%

Scales with proven demand; redeployable

Mobile fleet units (6 vehicles)

3.91

9%

Asset-financed; readily resaleable

Pre-operating: brand, academy, recruitment, first fill

1.90

5%

Largely expensed as incurred

Transaction, legal and structuring costs

1.10

3%

Arrangement fees and legal work at close

Operating losses to EBITDA break-even

5.69

14%

Cumulative losses to month 13

Working-capital investment

3.11

7%

Debtor book net of supplier credit

Liquidity headroom / contingency

2.46

6%

Partial buffer only; see the note below

Total application of funds

41.50

100%

Sources equal uses exactly

Why this structure rather than another

  • Equity carries the pre-revenue risk, as it must. R24.0m of equity against R13.5m of term and asset debt gives a gearing at close that no commercial lender would exceed for a business with no trading history. The equity funds the losses; the debt funds assets with resale value.
  • The moratorium is structural, not cosmetic. The 36-month capital moratorium exists because the business cannot service amortising debt in FY2029 or FY2030. Without it, the plan fails on liquidity in year two regardless of operating performance. This is the single most important term in the debt package.
  • Asset finance is matched to asset life. Vehicles and equipment are financed over terms approximating their useful lives, and are realisable if the plan stops. This is the portion of the capital structure with genuine recovery value in a wind-down.
  • The revolver addresses a specific, identified mismatch. Dealer settlement at 52 days against 32-day supplier terms creates a structural gap that widens as the dealer channel grows. The revolver funds that gap rather than funding losses.