Kalahari Grid Energy — Financial Plan

The basis of preparation, the projected portfolio financials, the path to bankability and why tariff is the hinge, the lender covenants and cover, the returns and the sensitivity and scenario analysis underpinning Kalahari Grid.

Section 7 · Business Plan

Financial Plan

7.1 Basis of preparation

Sponsor anchors preserved; financing structure and returns
independently derived. The portfolio (5 GW mix), the total
capex ($5.3bn), the blended tariff assumption ($0.055/kWh), steady-state
revenue ($616m) and EBITDA ($444m, 72% margin) are the sponsor’s
figures, preserved exactly. The phased revenue ramp (linked to capacity
reaching commercial operation), project-finance debt sizing,
depreciation, taxation (27% SA corporate rate with assessed-loss
carry-forward), the consolidated balance sheet, DSCR and returns are
re-derived from first principles. All figures are USD, consistent with
the USD-linked PPA assumption. The consolidated balance sheet ties in
every projection year. Solar and wind assets are depreciated over a
blended 24-year life; BESS over 12 years with augmentation.

Where the independent derivation departs from the sponsor
— the central finding

The sponsor’s cash-flow snapshot pairs $444m EBITDA with $260m of
debt service for $184m of net cash. But $260m of annual debt service is
inconsistent with 75% gearing on $5.3bn: 75% gearing is roughly $3.98bn
of debt, which at a ~7.5% USD rate over an 18-year amortisation costs
about $410m per year — not $260m. At that true cost, the portfolio DSCR
is only ~1.08x, below any bankable threshold. The sponsor’s own $260m
figure implicitly assumes only ~48% gearing. This is not a rounding
difference; it is the crux of the transaction. A lender will size debt
to a minimum DSCR (typically 1.30x for contracted renewables), which at
$0.055/kWh caps blended gearing near 62% — and even then DSCR peaks at
just 1.29x and equity IRR is only ~7%. The structure becomes properly
bankable only at a higher blended tariff (Section 7.6).

Figure 11

Figure 11 — Capital structure: sponsor target vs bankable structure

7.2 Projected profit and loss (portfolio, $m)

$m	’27	’28	’29	’30	’31	’32	’33	’35	’37
Revenue	37	129	240	351	462	567	616	616	616
EBITDA	23	85	166	246	328	408	444	444	444
EBITDA margin %	62	66	69	70	71	72	72	72	72
Depreciation	(27)	(66)	(106)	(146)	(186)	(221)	(221)	(221)	(221)
Interest	(30)	(74)	(117)	(157)	(195)	(225)	(214)	(186)	(159)
Profit before tax	(33)	(55)	(57)	(57)	(52)	(38)	9	37	64
Taxation	–	–	–	–	–	–	(1)	(2)	(4)
NPAT	(33)	(55)	(57)	(57)	(52)	(38)	9	35	60

Figure 12

Figure 12 — Net profit J-curve: losses through the build, profitable from 2033

The J-curve is intrinsic to a portfolio developer: heavy depreciation
and interest on assets under and newly in construction outrun the
ramping revenue until the portfolio approaches full operation. Net
profit turns positive in 2033 as the final tranches energise and
depreciation and interest stabilise against full-run-rate EBITDA.
Accumulated tax losses shelter cash tax well into the operating
phase.

7.3 Projected cash flow (portfolio, $m)

$m	’27	’28	’29	’30	’31	’32	’33	’35	’37
EBITDA	23	85	166	246	328	408	444	444	444
Δ working capital	(2)	(6)	(7)	(7)	(7)	(6)	(3)	(0)	(0)
Construction capex	(950)	(1,050)	(1,000)	(900)	(700)	–	–	–	–
Debt drawdowns	394	592	592	592	592	526	–	–	–
Equity drawdowns	242	363	363	363	363	322	–	–	–
Interest & principal	(30)	(96)	(172)	(245)	(315)	(378)	(396)	(369)	(341)
Net cash movement	(323)	(112)	(58)	49	260	871	44	73	99

Honest finding — the equity cheque is far larger than a
75:25 split implies

Because a bankable structure requires ~62% gearing rather than 75%,
the equity requirement rises from the sponsor’s implied ~$1.33bn to
roughly $2.0bn across the build-out. This is the real capital ask of the
transaction, and it must be sized and syndicated (sponsor,
infrastructure funds, DFIs, climate finance) before Phase 1 financial
close. Construction-phase bridge financing covers the timing gap between
capital deployment and each tranche’s commercial operation. Presenting
the raise as 25% of $5.3bn would understate the equity commitment by
roughly $0.7bn.

7.4 Projected balance sheet (portfolio, $m)

$m	’27	’28	’29	’30	’31	’32	’33	’35	’37
Operational PPE (net)	610	1,497	2,345	3,154	3,922	4,549	4,328	3,887	3,445
Construction in progress	1,014	1,110	1,156	1,102	848	–	–	–	–
Working capital + cash	2	8	14	21	28	34	68	200	384
Total assets	1,626	2,615	3,516	4,277	4,798	4,583	4,396	4,087	3,830
Equity	594	938	1,261	1,546	1,760	1,722	1,731	1,787	1,895
Project & bridge debt	1,032	1,677	2,255	2,730	3,038	2,861	2,665	2,300	1,935
Total equity & liabilities	1,626	2,615	3,516	4,277	4,798	4,583	4,396	4,087	3,830
Balance check	0	0	0	0	0	0	0	0	0

Figure 13

Figure 13 — Total asset composition: the shift from CWIP to operational PPE

Figure 14

Figure 14 — Portfolio gearing through the build-out

7.5 Debt structure and service cover

Parameter	Assumption
Structure	Non-recourse project finance in ring-fenced SPVs
Blended gearing (bankable case)	62% debt / 38% equity
Debt rate (USD blended)	7.5%
Amortisation	18-year mortgage-style, against 20-year PPAs
Debt-service reserve	6-month DSRA per SPV (funded at COD)
Minimum DSCR covenant	1.30x (lock-up below)

Figure 15

Figure 15 — Portfolio DSCR at $0.055/kWh — below 1.30x throughout

Figure 16

Figure 16 — Project-finance debt balance and annual debt service

7.6 The path to bankability — tariff is the hinge

At the sponsor’s $0.055/kWh blended tariff the portfolio is,
at best, marginally bankable: DSCR peaks at 1.29x and the
portfolio equity IRR is approximately 7.1% — below the mid-teens
infrastructure-equity hurdle. Raising the blended tariff to about
$0.070/kWh — achievable by weighting the offtake mix toward corporate
PPAs and wheeling to mining and industrial customers rather than pure
REIPPPP solar — lifts steady-state revenue to roughly $784m and EBITDA
to about $565m, clears a 1.35x+ DSCR from first full operation, and
raises the equity IRR to approximately 15.3%.

Figure 17

Figure 17 — The tariff is the hinge: DSCR at $0.055 vs $0.070/kWh blended

Metric	Base ($0.055/kWh)	Bankable path ($0.070/kWh)
Steady-state revenue ($m)	616	784
Steady-state EBITDA ($m)	444	565
Peak DSCR (x)	1.29	1.65
Min DSCR once fully operational (x)	~1.11	~1.35
Portfolio equity IRR (%)	7.1	15.3
Bankable at 1.30x DSCR?	No	Yes

The investment conclusion

The 5 GW portfolio is not bankable at a blended $0.055/kWh under
prudent gearing — it is a low-single-digit-return, sub-covenant
structure. It becomes a mid-teens-return, comfortably-covered
infrastructure investment if the Company achieves a blended tariff
around $0.070/kWh through a corporate-PPA-weighted offtake mix, and if
it secures the grid capacity to build. The diligence questions that
matter are therefore not about the capex or the technology — both are
well understood — but about two things only: can the Company secure grid
connection at scale, and can it originate enough premium corporate
offtake to lift the blended tariff into bankable territory. Everything
else in this plan is downstream of those two questions.

7.7 Returns and sensitivity

Base-case returns. At $0.055/kWh, the 12-year
unlevered project IRR is 6.7% and equity IRR 7.1%, assuming an
infrastructure-fund exit at 11x EBITDA in 2037. The sensitivity below
shows returns are dominated by the tariff/EBITDA level and the exit
multiple — the levers that a corporate-PPA-weighted strategy and a
de-risked operating platform respectively move.

Figure 18

Figure 18 — Equity IRR sensitivity (base case)

Sensitivity	Equity IRR
Base case ($0.055/kWh, 11x exit)	7.1%
Exit multiple 9x	2.4%
Exit multiple 13x	10.4%
EBITDA −10%	3.4%
EBITDA +10%	10.3%
Bankable path ($0.070/kWh)	15.3%

Figure 19

Figure 19 — Scenario analysis: portfolio revenue paths

7.8 Lender covenant and coverage dashboard

The table sets out the covenant package a project-finance lender
would require and the portfolio’s projected position against it. The
candid point is that at $0.055/kWh the DSCR covenant is not met on a
sustained basis, triggering distribution lock-up until the tariff mix
improves — which is precisely why the plan targets the bankable-path
tariff and a funded reserve.

Covenant / metric	Threshold	Base $0.055	Bankable $0.070
Minimum DSCR	≥ 1.30x	peaks 1.29x (fails)	≥ 1.35x (met)
Loan life cover ratio (LLCR)	≥ 1.40x	~1.25x	~1.55x
Gearing at COD	≤ 75%	62%	62%
Debt-service reserve	6 months	Funded	Funded
Distribution lock-up	DSCR < 1.30x	Locked (most years)	Unlocked
Tail (PPA years beyond debt)	≥ 2 years	2 years	2 years

A lender reading this dashboard would decline the base-case structure
and approve the bankable-path structure — which is the intended message.
The financing plan is therefore explicitly conditional on the offtake
strategy delivering the higher blended tariff, with DFI concessional
tranches and a robust reserve bridging the interim. This is disclosed
here rather than buried so that the financing can be structured around
the true position from the outset.

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 Kalahari Grid Energy (Pty) Ltd.