Kyalami Surface Business Plan — Funding Requirement and Structure

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

Section 25 of 31

Funding Requirement and Structure

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R16.6m of committed capital, of which R4.0m is released only on performance.

Table 35. Use of funds

Application	Amount	Timing	Comment
Kyalami studio capital expenditure	R5.60m	Month 1	Fit-out, equipment, vehicles, technology
Cape Town studio capital expenditure	R3.90m	Month 22	Contingent on tranche 2 release
Working capital	R2.90m	Months 1–24	Principally imported film inventory
Pre-operating costs and ramp-up losses	R3.70m	Months 1–20	Recruitment, certification, brand, trading losses to break-even
Contingency and maintenance capital	R0.50m	Ongoing
Total funding requirement	R16.60m

Table 36. Sources of funds

Instrument	Amount	Terms	Rationale
Institutional equity — tranche 1	R7.50m	38% of issued share capital, month 1	Funds the first studio and the ramp; the capital genuinely at risk
Institutional equity — tranche 2	R4.00m	Further 14%, month 21, performance-gated	Funds Cape Town only if the model has been proven
Founder equity	R1.50m	48% post tranche 2, month 1	Alignment and skin in the game
Term loan	R2.20m	Prime + 3.00%, 60 months, six-month capital holiday	Matches long-lived leasehold improvements
Asset finance	R1.40m	Prime + 2.25%, 60 months, secured on equipment	Self-securing against realisable equipment
Revolving credit facility	R2.50m	Prime + 2.50%, committed, undrawn in base case	Seasonal working capital and contingency headroom
Total committed capital	R19.10m	R16.60m drawn in base case

The capital structure is deliberately equity-weighted. A start-up with no trading history, a discretionary revenue base and an unhedgeable input cost is not a candidate for aggressive gearing. Debt is confined to the portion of the asset base that a lender can realise: leasehold improvements against a term loan, and equipment against asset finance. The revolving facility is sized for seasonality and contingency and is not drawn in the base case at any point.

Debt serviceability

Figure 1. Debt service cover is tightest in FY29 at 1.59x

A 1.25x covenant would be met in every year of the base case, but with limited headroom in FY29.

Table 37. Debt service metrics, base case

Metric		FY28	FY29	FY30	FY31	FY32
Total debt		3.2	2.6	1.8	1.0	0.0
Net debt / (net cash)		1.4	0.5	(1.3)	(6.4)	(11.3)
EBITDA		(4.6)	1.7	2.9	7.8	8.6
Net debt / EBITDA		n/m	0.31x	-0.46x	-0.82x	-1.31x
Interest cover (EBIT / finance costs)		n/m	1.44x	3.98x	33.06x	99.94x
Debt service cover ratio		n/m	1.59x	2.69x	7.18x	6.36x
	The FY29 covenant position should be negotiated, not assumed Debt service cover of 1.59x in FY29 clears a conventional 1.25x covenant, but by a margin that a single quarter of weak trading would erase. Management’s intention is to negotiate either a 1.15x covenant for the first two years stepping to 1.25x thereafter, or a twelve-month covenant holiday. A lender unwilling to provide either should be assumed to be unwilling to fund the transaction.