This section presents the full re-underwritten ten-year financial model. Sponsor revenue and EBITDA are preserved exactly; depreciation, financing, tax, the balance sheet, cash flow, coverage and returns are independently derived, and the full net-profit path, which the sponsor provides only for stabilised Year 10, is built here. The model is fully integrated, the balance sheet reconciles to zero in every year, and denominated in US dollars. For readability, the projection tables are presented in two five-year blocks.
12.1 Key assumptions
|
Assumption |
Basis |
|---|---|
|
Revenue & EBITDA |
Sponsor 10-yr projections preserved ($30m→$1.6bn; 10%→33% margin) |
|
Depreciation |
~13-yr blended life on the process-plant & infrastructure base |
|
Senior debt (DFI + ECA) |
$400m at 8.9%; grace then amortising |
|
Phase-3 expansion debt |
$350m additional (beyond committed stack) — see capital finding |
|
Working-capital facility |
$100m commercial line (sponsor-stated) |
|
Tax |
27% with assessed-loss carry-forward (sponsor used 28%) |
|
Working capital |
DSO 45 / DIO 40 / DPO 38 days |
|
Terminal value |
Exit at 5.5x EBITDA (within sponsor EV range) |
Table 12.1 Principal modelling assumptions.
12.2 Projected income statement
Years 1–5.
|
US$ million |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Revenue |
30 |
75.0 |
160.00 |
280.000 |
420.0000 |
|
Operating costs |
(27) |
(65) |
(131) |
(218) |
(315) |
|
EBITDA |
3 |
10.5 |
28.80 |
61.600 |
105.0000 |
|
Depreciation |
(17) |
(32) |
(46) |
(59) |
(73) |
|
EBIT |
(14) |
(21) |
(17) |
3 |
32 |
|
Net interest |
(9) |
(19) |
(27) |
(32) |
(47) |
|
Profit before tax |
(23) |
(41) |
(44) |
(30) |
(14) |
|
Tax |
(0) |
(0) |
(0) |
(0) |
(0) |
|
Net profit (re-underwritten) |
(23) |
(41) |
(44) |
(30) |
(14) |
Years 6–10.
|
US$ million |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Revenue |
600 |
820.0 |
1,050.00 |
1,300.000 |
1,600.0000 |
|
Operating costs |
(432) |
(574) |
(725) |
(884) |
(1,072) |
|
EBITDA |
168 |
246.0 |
325.50 |
416.000 |
528.0000 |
|
Depreciation |
(84) |
(96) |
(106) |
(116) |
(124) |
|
EBIT |
84 |
150 |
219 |
301 |
405 |
|
Net interest |
(59) |
(63) |
(60) |
(56) |
(47) |
|
Profit before tax |
25 |
87 |
159 |
245 |
358 |
|
Tax |
(0) |
(0) |
(32) |
(66) |
(97) |
|
Net profit (re-underwritten) |
25 |
87 |
127 |
179 |
261 |
Table 12.2 Projected income statement (re-underwritten below EBITDA). Losses in parentheses.
Key findingThe full profit path is re-underwritten — and closely corroborates the sponsor’s Year 10
The sponsor gives a net-profit line only for Year 10 ($254m). Re-underwriting all ten years, applying depreciation on the building plant base, cash interest across senior, Phase-3 and working-capital debt, and 27% tax with loss carry-forward, produces sustained net losses through Years 1–5 (peaking near –$44m), turning to profit from Year 6 and reaching roughly $261m by Year 10.
That $261m closely corroborates the sponsor’s $254m, a reassuring independent check on the stabilised economics. The essential addition is the early-year loss path, which the sponsor’s single-year snapshot omits entirely: these losses, and the cash burn behind them, are the core of what must be financed and underwritten.
12.3 The J-curve & capital adequacy
Unlevered free cash flow is deeply negative through the build (about –$217m, –$181m and –$154m in Years 1–3), and cumulative cash reaches a trough of roughly –$736m around Year 5 before the business turns cash-generative. This is the defining financial feature of the Project, and it drives the central question of capital adequacy.
Key findingCapital adequacy is the central question — the full build needs ~$1.2bn, not $750m
The base-case $750m, and even the $850m committed stack, fund Phases 1–2. Two independent signals show the full build needs far more. First, the cumulative-cash trough exceeds –$730m, and funding it plus the Phase-3 complex requires roughly $1.2 billion of total capital, modelled here as the committed stack plus a $350m Phase-3 debt tranche, and squarely at the top of the sponsor’s own stated $500m–$1.2bn envelope. Second, the sponsor’s own Year-10 depreciation (~$110m) implies an asset base far larger than $750m, consistent with total capex of roughly $1.6bn once the integrated complex is built.
The honest reading: this is a ~$1.2–1.6bn programme presented with a $750m base case. The committed stack initiates it; the full integrated complex requires a substantial further capital plan. Lenders and investors should size committed and standby funding to a stress-case trough and treat the $1.6bn revenue trajectory as contingent on that additional capital. This is the single most important structuring issue in the transaction.
12.4 Projected balance sheet
Years 1–5.
|
US$ million |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Net PP&E |
203 |
362.8 |
499.50 |
614.600 |
718.3000 |
|
Inventory |
3 |
7.1 |
14.40 |
23.900 |
34.5000 |
|
Receivables |
4 |
9.2 |
19.70 |
34.500 |
51.8000 |
|
Cash |
131 |
166.1 |
126.40 |
25.000 |
25.0000 |
|
Total assets |
341 |
545.2 |
660.00 |
698.000 |
829.6000 |
|
Senior debt (DFI+ECA) |
200 |
320.0 |
400.00 |
366.700 |
333.4000 |
|
Phase-3 expansion debt |
0 |
0.0 |
0.00 |
0.000 |
120.0000 |
|
Working-capital facility |
0 |
0.0 |
0.00 |
89.500 |
135.6000 |
|
Payables |
3 |
6.7 |
13.70 |
22.700 |
32.8000 |
|
Deferred tax |
1 |
2.0 |
3.80 |
6.200 |
9.1000 |
|
Equity |
137 |
217 |
243 |
213 |
199 |
|
Total equity & liabilities |
341 |
545.2 |
660.00 |
698.000 |
829.6000 |
|
Balance check |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Years 6–10.
|
US$ million |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Net PP&E |
783 |
839.7 |
869.20 |
873.200 |
853.7000 |
|
Inventory |
47 |
62.9 |
79.40 |
96.900 |
117.5000 |
|
Receivables |
74 |
101.1 |
129.50 |
160.300 |
197.3000 |
|
Cash |
25 |
25.0 |
25.00 |
25.000 |
66.3000 |
|
Total assets |
930 |
1,028.7 |
1,103.10 |
1,155.400 |
1,234.8000 |
|
Senior debt (DFI+ECA) |
300 |
266.8 |
233.50 |
200.200 |
166.9000 |
|
Phase-3 expansion debt |
230 |
310.0 |
306.20 |
262.400 |
218.6000 |
|
Working-capital facility |
118 |
64.7 |
67.70 |
50.700 |
0.0000 |
|
Payables |
45 |
59.8 |
75.40 |
92.000 |
111.6000 |
|
Deferred tax |
13 |
16.3 |
20.60 |
25.200 |
30.1000 |
|
Equity |
224 |
311 |
400 |
525 |
708 |
|
Total equity & liabilities |
930 |
1,028.7 |
1,103.10 |
1,155.400 |
1,234.8000 |
|
Balance check |
0.00 |
0.00 |
0.00 |
0.00 |
0.00 |
Table 12.3 Projected balance sheet. The balance-check row confirms the model ties to zero every year.
12.5 Projected cash-flow statement
Years 1–5.
|
US$ million |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Operating cash flow |
(9) |
(13) |
(7) |
17 |
44 |
|
Investing cash flow |
(220) |
(191) |
(182) |
(174) |
(176) |
|
Financing cash flow |
360 |
240 |
150 |
56 |
133 |
|
Net change in cash |
131 |
36 |
(40) |
(101) |
0 |
|
Unlevered FCF |
(217) |
(181) |
(154) |
(113) |
(71) |
|
Cumulative FCF |
(217) |
(398) |
(552) |
(664) |
(736) |
Years 6–10.
|
US$ million |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Operating cash flow |
90 |
159 |
208 |
267 |
351 |
|
Investing cash flow |
(149) |
(152) |
(136) |
(120) |
(104) |
|
Financing cash flow |
59 |
(7) |
(72) |
(148) |
(206) |
|
Net change in cash |
0 |
0 |
0 |
0 |
41 |
|
Unlevered FCF |
19 |
94 |
157 |
230 |
327 |
|
Cumulative FCF |
(717) |
(623) |
(466) |
(235) |
92 |
Table 12.4 Projected cash-flow statement. The cumulative-FCF row traces the deep J-curve.
12.6 Funding structure
The $850m committed stack is 41% equity ($200m infrastructure equity + $150m strategic/JV), with $300m of DFI senior debt, $100m of export-credit project finance and a $100m commercial working-capital facility. This is a genuinely robust equity base for a green-field process-industry build, the equity is sized to absorb the sustained early losses that a deep J-curve produces.
StrengthThe equity base is a real strength — the quantum is the question, not the mix
NEC is not under-equitised: at 41%, the committed equity is well-sized to absorb several years of losses before the business turns, which materially de-risks the early period for lenders and is a genuine credit strength. The caveat is not the equity ratio but the total quantum of capital: the committed stack is calibrated to Phases 1–2, so while the mix is right, the total must grow, with a matching equity contribution, to fund the full integrated complex.
12.7 Debt profile & coverage
Years 1–5.
|
Metric |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
CFADS (US$ m) |
3 |
9 |
26 |
57 |
99 |
|
Debt service (US$ m) |
9 |
23.1 |
32.00 |
68.900 |
71.4000 |
|
DSCR |
0.29x |
0.41x |
0.82x |
0.83x |
1.38x |
|
Gross debt / EBITDA |
66.67x |
30.48x |
13.89x |
7.41x |
5.61x |
|
Gearing (%) |
59.3% |
59.6% |
62.3% |
68.2% |
74.8% |
Years 6–10.
|
Metric |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
CFADS (US$ m) |
159 |
234 |
277 |
330 |
407 |
|
Debt service (US$ m) |
79 |
85.0 |
131.30 |
126.200 |
119.2000 |
|
DSCR |
2.01x |
2.75x |
2.11x |
2.62x |
3.42x |
|
Gross debt / EBITDA |
3.86x |
2.61x |
1.87x |
1.23x |
0.73x |
|
Gearing (%) |
74.3% |
67.3% |
60.3% |
49.4% |
35.3% |
Table 12.5 Coverage and leverage. Senior debt carries a multi-year construction grace.
Key findingCoverage is thin through the build, then strong — reserves and grace are essential
Through the construction and ramp years, coverage is very thin, early DSCR sits well below 1.0x because EBITDA is small while the asset base and debt build. This is inherent to a deep-J-curve process build: early debt service must be met from the debt-service reserve, capitalised interest and the equity buffer, not from operations. Structuring this explicitly, multi-year grace, a funded DSRA and interest-during-construction provisions, is essential.
From around Year 5–6 onward, as EBITDA scales past $100m, coverage strengthens rapidly, with DSCR rising above 2x and gross debt/EBITDA de-levering below 1.0x by Year 10. The credit profile transforms from reserve-supported in the build to strongly self-supporting at maturity, provided the ramp and the chemical-margin build arrive as planned.
12.8 Break-even & scenarios
|
Scenario |
Y10 revenue |
Y10 EBITDA |
Assessment |
|---|---|---|---|
|
Upside |
$1.76bn |
$616m |
Faster ramp, stronger chemical mix & spreads |
|
Base case |
$1.60bn |
$528m |
Sponsor plan preserved |
|
Downside |
$1.28bn |
$359m |
–20% revenue, –5pp margin |
Table 12.6 Scenario summary (Year 10).
12.9 Project returns & valuation
|
Return metric |
Base case |
Conservative |
Sponsor |
|---|---|---|---|
|
Project IRR |
24.7% |
22.3% |
18–22% |
|
Project NPV @ 11% (US$ m) |
780 |
594 |
— |
|
Exit enterprise value (US$ m) |
2,904 |
— |
2,800–3,600 |
|
Exit equity value (US$ m) |
2,585 |
— |
2,100–2,800 |
|
Payback (cumulative FCF) |
~Year 10 |
~Year 10 |
~8 years |
Table 12.7 Project returns and valuation. Terminal at 5.5x Year-10 EBITDA (within the sponsor’s implied EV range).
StrengthReturns clear the cost of capital and corroborate the sponsor’s valuation
On the re-underwritten cash flows, the base-case project IRR of ~25% (and ~22% on a conservative terminal) clears the 11% cost of capital and meets or exceeds the sponsor’s 18–22% target, while the exit enterprise value (~$2.9bn) and equity value (~$2.6bn) sit within the sponsor’s stated ranges. The important qualification is capital: these returns assume the $1.6bn trajectory is reached, which depends on the additional Phase-3 capital. Financed for the full build, the economics are genuinely attractive for patient, infrastructure-grade capital; under-financed, the ramp, and hence the returns, is at risk.
12.10 Base-case KPI dashboard
Years 1–5.
|
KPI |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Revenue growth |
— |
150% |
113% |
75% |
50% |
|
EBITDA margin |
10% |
14% |
18% |
22% |
25% |
|
Net margin |
-76.3% |
-54.1% |
-27.5% |
-10.6% |
-3.4% |
|
Utilisation (%) |
25% |
35% |
45% |
55% |
63% |
|
DSCR |
0.29x |
0.41x |
0.82x |
0.83x |
1.38x |
|
Gross debt / EBITDA |
66.67x |
30.48x |
13.89x |
7.41x |
5.61x |
|
Cumulative FCF (US$ m) |
(217) |
(398) |
(552) |
(664) |
(736) |
Years 6–10.
|
KPI |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
|---|---|---|---|---|---|
|
Revenue growth |
43% |
37% |
28% |
24% |
23% |
|
EBITDA margin |
28% |
30% |
31% |
32% |
33% |
|
Net margin |
4.2% |
10.6% |
12.0% |
13.8% |
16.3% |
|
Utilisation (%) |
70% |
76% |
82% |
88% |
92% |
|
DSCR |
2.01x |
2.75x |
2.11x |
2.62x |
3.42x |
|
Gross debt / EBITDA |
3.86x |
2.61x |
1.87x |
1.23x |
0.73x |
|
Cumulative FCF (US$ m) |
(717) |
(623) |
(466) |
(235) |
92 |
Table 12.8 Base-case key performance indicators.
12.11 Covenant & lender-protection framework
The financing is structured to protect a multi-source consortium through a deep J-curve and to give DFIs, ECAs and commercial lenders the monitorable controls appropriate to a long-dated, capital-intensive process-industry build.
|
Protection |
Proposed structure |
|---|---|
|
Construction grace |
Multi-year interest-only / interest-during-construction on senior debt |
|
Debt-service reserve |
DSRA funded to ~45m (forward debt service) |
|
Minimum DSCR covenant |
≥ 1.30x, tested from stabilisation (post-grace) |
|
Inter-creditor agreement |
Ranking & security-sharing across DFIs, ECAs & banks |
|
Milestone drawdowns |
Capital released against verified commissioning milestones |
|
Standby / contingent capital |
Committed facilities sized to a stress-case trough |
|
Feedstock & offtake conditions |
Secured gas supply and anchor offtake as drawdown conditions |
|
Security |
Plants, terminals, inventory, receivables, share pledges, cessions |
|
Distribution lock-up |
No distributions until stabilised, de-levered and reserves met |
Table 12.9 Proposed covenant and lender-protection framework.
StrengthThe structure must be built around the J-curve, the feedstock and the capital plan
The right framework for NEC focuses on the build: multi-year grace and a funded debt-service reserve carry the deep early years; feedstock-supply and anchor-offtake conditions gate drawdowns on the things that actually de-risk the plant; an inter-creditor agreement coordinates the multi-source consortium; and, most importantly, committed standby capital sized to a stress-case trough closes the adequacy gap the base case exposes. With the substantial tangible-plant security and strong stabilised cash flows, a facility structured this way is well-protected; the key is to structure explicitly for the deep J-curve and the full capital requirement, not the Year-10 snapshot.