Restructuring the funding plan for a three-phase integrated steel build

The situation

A brownfield integrated steel complex being revived in three phases. Phase 1 — a 0.36 MTPA rolling mill — had been commissioned and then idled under force majeure, waiting on in-house billet supply that didn't exist yet. Phase 2 required revamping a 1.44 MTPA pellet plant and a 1.0 MTPA DRI and steelmaking facility at USD 147.7m over roughly 18 months. Phase 3 added a second DRI line, a new steel melting shop, upgraded utilities, a rail spur to the plant gate, a 100 TPD oxygen plant, and a 1.0 MTPA structural mill at USD 215.5m over 21–24 months, taking the complex to approximately 1.84 MTPA.

The sponsor came to us with what looked like an equity problem. At a 70/30 target on USD 366m of remaining capex, the arithmetic said another USD 151.65m of equity. They wanted to know how to avoid writing that cheque.

The constraint

The arithmetic was answering the wrong question. The sponsor had already funded a USD 187m acquisition at 100% equity. Measured against the full USD 553m project cost, the project was already 33.8% equity — over-equitised against its own target. Nobody had asked the lenders to give credit for equity that was already in the ground.

That reframing was the entire mandate. Not "how much more equity," but "how do we get the capital structure to recognise what's already been contributed."

What Zenith built

An integrated three-phase capacity build-up model: production ramp by phase, in-house billet substitution, and the interaction between Phase 2 commissioning and Phase 1 restart.

Debt sizing and sculpting to DSCR across each phase, with the sculpted profile tested against commodity price and production scenarios rather than a single base case.

Covenant modelling — DSCR, LLCR, and lock-up tests — built so the sponsor could see which scenario broke which covenant, and by how much.

A treatment of the pre-spent acquisition equity as qualifying sponsor contribution, with the supporting analysis lenders would need to accept it.

A financing route map across senior, subordinated and mezzanine debt, vendor financing on imported equipment, and export credit agency cover.

Quantification of available government support: viability gap funding and applicable tax incentives, modelled rather than asserted.

Where it landed

The restructured plan showed the remaining USD 318.5m of construction cost could be substantially funded through debt instruments and vendor arrangements without a further equity call — a materially different answer from the one the original ratio arithmetic produced.

The transferable point

At this scale, the model isn't a deliverable. It's the argument. Every number in it is something a lender will test, and the sponsor's negotiating position is only as good as the analysis underneath it.