Karoo Meridian — Funding Structure
The R245 million funding structure across DFI senior debt and equity, the Land Bank revolving facility and the use of funds underpinning Karoo Meridian.
Section 13 · Business Plan
Funding Structure
The R245 million funding structure across DFI senior debt and equity, the Land Bank revolving facility and the use of funds underpinning Karoo Meridian.
| Source | R m | Instrument | Status |
|---|---|---|---|
| IDC | 95.0 | Senior term facility, 12-yr, 2-yr grace | Targeted — mandate-aligned |
| DBSA | 60.0 | Development loan, 10-yr, 1-yr grace | Targeted — mandate-aligned |
| Equity investors | 70.0 | Ordinary shares | In structuring |
| Unallocated gap | 20.0 | To be determined | Open |
| Total requirement | 245.0 | ||
| Land Bank (additional) | ≥35.0 | Revolving production credit | Required — see Section 12.3 |
short
The sponsor’s proposed capital stack totals R225 million against the
stated R245 million requirement. Closing options, in order of
preference: (i) upsizing the equity tranche to R90 million, which also
funds the interest service reserve; (ii) an IDC facility upsize to R115
million, at the cost of deeper ramp-period DSCR strain; (iii) vendor
finance on a portion of the land consideration; or (iv) a phased land
acquisition deferring ±R20 million of Phase 1 capex. This Memorandum
models option (i) — the gap bridged as equity at close — and all ratios
reflect that assumption.
Proposed covenant package: minimum DSCR of 1.20x tested from Year 4
(covenant holiday Years 1–3 against the funded interest reserve); net
debt/EBITDA ceiling of 3.5x from Year 3; negative pledge over land and
biological assets; quarterly flock verification; restrictions on
distributions until DSCR exceeds 1.5x on a trailing basis.
13.2 Indicative term sheet framework
To accelerate credit-committee engagement, the Company proposes the
following framework, incorporating every structural remedy identified by
the independent analysis in Section 12.
| Term | Proposal |
|---|---|
| Borrower | Karoo Meridian Wool & Livestock (Pty) Ltd |
| Facilities | IDC R95m senior term (12y, 2y principal grace); DBSA R60m (10y, 1y grace); Land Bank revolving production credit ≥R35m |
| Equity | R90m ordinary shares at close (R70m committed tranche + R20m gap tranche), of which R30m funds an escrowed interest service reserve for Years 1–2 |
| Security | First bond over land and fixed improvements; general notarial covering bond over livestock and wool; cession of offtake contracts, insurance and receivables |
| Covenants | DSCR ≥1.20x tested from Year 4 (holiday Years 1–3 against the funded reserve); net debt/EBITDA ≤3.5x from Year 3; distributions locked until trailing DSCR >1.5x |
| Drawdown | Five milestone tranches against QS/owner’s-engineer certification; livestock tranche split over ≥6 purchase lots |
| Reporting | Monthly management accounts (10 business days); quarterly covenant certificates; annual audited AFS; annual independent flock verification |
| Conditions precedent | Water-use licence; contracted CEO/CFO/Ops Director; Land Bank revolver committed; R20m gap tranche subscribed; insurance programme bound |
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 Karoo Meridian Wool & Livestock (Pty) Ltd.