Sireletso Protective Group Business Plan — Transaction and Funding Summary
The transaction on offer: R11.95m equity at 45%, a R14.61m senior term loan at 55%, and an invoice discounting facility of up to R12.00m.
Transaction and Funding Summary
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- Overview & contents
- i. Important Notice
- 1. Executive Summary
- 2. Transaction and Funding Summary
- 3. Business Overview
- 4. Market Analysis
- 5. SWOT and Competitive Position
- 6. Service Offering and Revenue Model
- 7. Operations
- 8. Regulatory and Compliance Framework
- 9. Business Development and Client Acquisition
- 10. Management and Organisation
- 11. Financial Projections
- 12. Working Capital: The Central Finding
- 13. Funding Structure and Debt Service
- 14. Break-Even
- 15. Sensitivity and Scenarios
- 16. Risk Management
- 17. Implementation Roadmap
- 18. Investment Returns
- 19. Key Performance Indicators
- 20. Key Assumptions
- 21. Conclusion
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Application and Sources of Funds
- C. Appendix C: Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 2.1 Application of funds
- 2.2 Sources of funding
- 2.3 Key transaction terms
2.1 Application of funds
The Company requires R26.56 million at financial close. Unlike a capital-intensive business, a substantial proportion of that requirement — 28 per cent — is a working capital reserve rather than an investment in productive assets, and a further 10 per cent is pre-opening and accreditation cost that is consumed rather than capitalised.
|
Application of funds |
R’000 |
Share |
|---|---|---|
|
Protective fleet: 6 x mid-size SUV |
4 680 |
17.6% |
|
Executive sedans (2) |
1 380 |
5.2% |
|
B4 armoured SUV (1) |
2 450 |
9.2% |
|
Response and logistics vehicles (2) |
840 |
3.2% |
|
Firearms, safes, ballistic protection and medical |
1 850 |
7.0% |
|
24/7 operations control room build and technology |
1 620 |
6.1% |
|
Vehicle tracking, communications and radio network |
640 |
2.4% |
|
Training academy fit-out and simulation |
1 180 |
4.4% |
|
IT systems, CRM, rostering and payroll platform |
890 |
3.4% |
|
Office and armoury fit-out |
960 |
3.6% |
|
Total fixed assets |
16 490 |
62.1% |
|
PSIRA company and officer registrations |
285 |
1.1% |
|
Firearm licence applications, section 20 |
240 |
0.9% |
|
SASSETA academy accreditation |
310 |
1.2% |
|
Recruitment, vetting and psychometrics |
520 |
2.0% |
|
Founding cadre training and certification |
640 |
2.4% |
|
Legal, formation and insurance placement |
295 |
1.1% |
|
Launch business development |
380 |
1.4% |
|
Total pre-opening and accreditation |
2 670 |
10.1% |
|
Working capital reserve |
7 400 |
27.9% |
|
Total funding requirement |
26 560 |
100.0% |
2.2 Sources of funding
|
Source |
R’000 |
Share |
Terms |
|---|---|---|---|
|
Equity subscription |
11 952 |
45.0% |
Ordinary shares, fully subscribed at financial close |
|
Senior term loan |
14 608 |
55.0% |
13.75% (prime 10.50% plus 325bps), 84 months, 18-month capital moratorium |
|
Total at financial close |
26 560 |
100.0% |
|
|
Invoice discounting facility |
up to 12 000 |
— |
15.0%, revolving, 65% advance against eligible debtors |
The invoice discounting facility is not an optional working capital convenience. It is a condition of the plan’s viability, and Section 12 quantifies what happens without it. A lender or investor evaluating this transaction should treat the term loan and the debtor facility as a single financing package; approving one without the other funds a business that cannot pay its people.
The 45:55 equity-to-debt split reflects the modest asset backing available. Term debt of R14.61 million is secured against R16.49 million of fleet, firearms, control room and academy assets, of which the fleet is the only readily realisable component. A lender should expect recovery on default to be substantially below book value, and the structure is priced accordingly at 325 basis points over prime.
2.3 Key transaction terms
|
Term |
Detail |
|---|---|
|
Borrower |
Sireletso Protective Group (Pty) Ltd, incorporated in South Africa |
|
Security |
General notarial bond over movables; special notarial bond over fleet; cession of trade debtors to the invoice discounter; cession of insurance proceeds; limited suretyship from the founders |
|
Financial covenants |
Term debt service coverage ratio at or above 1.30x tested annually from Year 2; debtor days at or below 75 tested quarterly; PSIRA registration maintained as an event of default if lapsed |
|
Distribution lock-up |
No distributions until coverage exceeds 2.00x for two consecutive tests and the debtor facility is drawn below 70% of its limit |
|
Insurance |
Public and products liability, professional indemnity, motor fleet, firearms, and personal accident cover for deployed personnel, ceded to the lender |
|
Reporting |
Monthly management accounts within 15 business days including a debtor age analysis; quarterly PSIRA compliance certificate |
|
Exit assumption |
Trade sale at 5x EBITDA at the end of Year 5, consistent with observed multiples for specialist security services with contracted annuity revenue |