Lichtenburg Nut Company 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 37

Funding Requirement and Structure

Jump to section

27.1 Uses of funds

Table 60. Uses of funds

Use	Amount	Timing	Comment
Phase 1 capital expenditure	R105.0m	Months 1 to 12	Plant, fit-out, laboratory, utilities and pre-operating cost
Phase 2 capital expenditure	R17.3m	Months 37 to 42	Snack nut line and additional capacity
Phase 3 capital expenditure	R31.3m	Months 73 to 78	De-bottlenecking to 4,800 t
Maintenance capital to Year 6	R7.7m	From Year 3	1.5% of gross property, plant and equipment
Working capital build to Year 5	R41.0m	Months 10 to 60	Principally the seasonal groundnut position
Ramp-up operating losses	R12.8m	Months 1 to 30	Cumulative negative EBITDA before break-even
Net finance cost to Year 5	R39.4m	Months 1 to 60	Interest during construction and through the ramp
Minimum cash reserve	R5.0m to R12.0m	Ongoing	Operating buffer maintained by the revolving facility sweep

Peak funding deployed	R197.0m	Operating Year 6	The maximum of debt plus equity plus grant less cash across the 132 months

27.2 Rationale for the funding mix

The structure is deliberately equity-heavy for an industrial project. Ordinary equity of R96.0 million represents 42% of committed facilities, against a more conventional 30% to 35% for a secured manufacturing investment. There is a specific reason for this.

The asset cannot support conventional leverage during the ramp. EBITDA is negative in Year 1 and marginal in Year 2. At a more typical 65% debt ratio, interest alone would exceed EBITDA until FY2032 and the debt service cover covenant would be breached from the first repayment.
The capital moratorium has been extended to month 60 — four full operating years, precisely so that principal repayment begins only once EBITDA can support it. Even then, cover in the first amortising year is 1.28x against a 1.20x covenant.
The grant is claim-based, not advanced. The dtic Agro-Processing Support Scheme reimburses against approved milestones. The R15.0 million assumed is received in months 16 and 26, well after the capital has been spent, and must therefore be bridged by the senior facility.
The expansion tranche is committed but undrawn until month 74. This avoids paying interest on Phase 3 capital for six years before it is needed, and keeps the Year 1 to 5 interest burden as low as the structure allows.

27.3 Conditions precedent

Table 61. Conditions precedent to financial close

#	Condition	Rationale
1	Executed anchor private label or contract manufacturing agreement for a minimum of 600 tonnes a year with a term of at least 36 months	Without it the Year 1 volume plan and therefore the funding structure fail
2	Signed pre-season contracts with at least ten growers covering a minimum of 1,200 tonnes in shell for the first season	Missing the September to November contracting window delays production by a full year
3	Executed lease over the Lichtenburg premises with a term of at least fifteen years and an option to purchase	Leasehold improvements of R15.6 million require security of tenure
4	dtic APSS application submitted and adjudicated	The grant is 7% of committed funding; an adverse outcome should be known before close
5	Appointment of the Managing Director, Finance Director, Operations Manager and Quality and Food Safety Manager	The plan depends on capability that does not yet exist within the company
6	Fixed-price or capped-price contracts for at least 70% of Phase 1 hard capital cost, with forward cover on imported equipment	Limits the construction overrun modelled at 7% in the downside case
7	Credit approved revolving working capital facility of not less than R40 million, with a documented path to R50 million	Section 26.1 sets out why R40 million is the minimum rather than the prudent level
8	Confirmatory aflatoxin trial results on at least three grower lots processed at pilot scale	The commercial premise should be evidenced, not assumed
9	Insurance placed covering product recall, product liability, business interruption and material damage	The balance sheet cannot absorb an uninsured recall
10	Shareholders’ agreement including reserved matters over capital expenditure, borrowing, related-party transactions and pricing below the board-approved floor	The floor price discipline in Section 11.3 must be enforceable at board level