Sources and uses
|
Uses |
R m |
Sources |
R m |
|---|---|---|---|
|
Manufacturing facility |
8.0 |
Equity (65%) |
18.2 |
|
Production equipment |
5.0 |
Term debt (35%) |
9.8 |
|
Fleet & cold-chain logistics |
2.5 |
||
|
Flagship retail store |
2.5 |
||
|
Working capital |
5.5 |
||
|
Marketing & brand launch |
1.5 |
||
|
Technology & ERP systems |
1.2 |
||
|
Contingency |
1.8 |
||
|
Total |
28.0 |
Total |
28.0 |
Capital structure and debt service
The R28 million is structured as R18.2 million of equity (65%) and R9.8 million of term debt (35%), a conservative gearing for a startup, secured against the facility, equipment and fleet. The term loan carries a Year-1 capital grace (interest-only during the build) followed by equal principal repayments, pricing at roughly prime plus 300 basis points. Debt-service cover strengthens from approximately 1.0× in Year 1 to comfortably above 3× from Year 3 as EBITDA scales and the loan amortises.
Analyst flagYear-1 coverage is thin — build in headroom
In Year 1 operating cash flow barely covers interest (DSCR ≈ 1.0×) because the business is still ramping while carrying the full debt. The Year-1 capital grace and the R1.8 million contingency absorb this, but a committed working-capital facility (overdraft) is recommended to cover seasonality and any ramp slippage, and the tranche of equity must be committed and callable at close rather than merely pledged.
Term-loan amortisation schedule
|
R millions |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
|
Opening balance |
9.8 |
9.8 |
7.8 |
5.9 |
3.9 |
|
Interest (13.5%) |
1.3 |
1.3 |
1.1 |
0.8 |
0.5 |
|
Principal repaid |
0.0 |
2.0 |
2.0 |
2.0 |
2.0 |
|
Closing balance |
9.8 |
7.8 |
5.9 |
3.9 |
2.0 |
|
DSCR (×) |
1.01× |
1.56× |
3.56× |
6.99× |
12.65× |
The loan draws in full at close, runs interest-only through the Year-1 build, then amortises in equal principal instalments, retiring the facility over the medium term. Because the business is in a net-cash position from Year 3, refinancing risk is low and the Company retains the option to prepay from surplus cash flow. A committed overdraft alongside the term facility is recommended to manage intra-year working-capital swings without disturbing the amortisation profile.