Funding & Drawdown Structures
This use case explains how to model funding structures, drawdowns and debt service for capital projects and infrastructure in Model Reef.
You will:
Represent equity, debt and hybrid funding instruments.
Build drawdown profiles linked to capex and project cashflows.
Model interest during construction, term debt and refinancing.
Connect funding structures to project and group level cashflows and valuation.
Model Reef is not a debt administration or covenant monitoring system. It provides planning level funding structures suitable for project and portfolio modelling.
When to use this pattern
Use this pattern when:
Projects require significant external funding.
Drawdowns and repayments are closely tied to capex and project milestones.
Interest during construction is material.
You want to test alternative funding mixes and structures.
It builds on:
Capex Program Modelling
Multi Phase Project Cash Flows
Build a Debt Schedule and Covenants Model
Build a Capital Structure Model
Architecture overview
Define funding instruments and entities
Start by listing the funding instruments you want to model, for example:
Equity injections.
Shareholder loans.
Senior term loan.
Construction facility.
Revolving credit facility.
Create Liability variables for each debt instrument and Equity variables for equity injections. Decide whether:
Funding sits at project branch level, or
Funding is raised at group or holding entity level and then allocated to projects.
Reflect this structure in the branch tree so that debt and equity flows roll up correctly.
Size facilities and equity based on capex and cashflows
Use capex and project cashflow outputs to determine:
Total funding requirement including contingency and working capital.
Minimum equity contribution required.
Maximum facility sizes for construction and term debt.
Create Data Library drivers for:
Facility limits per instrument.
Target gearing or leverage ratios.
Equity percentage or absolute equity amounts.
These drivers will feed into drawdown logic and help you test alternative structures.
Build drawdown rules and timing
For each debt facility, define drawdown rules such as:
Drawdowns equal to a fixed percentage of capex each period.
Drawdowns up to a maximum facility limit.
Use of equity first, then debt, or vice versa where applicable.
Conditions such as no further drawdowns after commissioning.
Implement drawdowns using Liability variables with:
Positive cash inflows when funds are drawn.
Increases in loan balances.
Conditional cessation of drawdowns once limits or dates are reached.
For equity, use Equity variables to represent injections at agreed milestones or in line with funding ratios.
Model interest during construction and capitalisation
For facilities used during construction, specify:
Interest rates and any margins over reference rates.
Whether interest is paid in cash or capitalised during construction.
When interest switches from capitalised to cash paid, for example at commissioning.
Model Reef will compute interest based on opening balances and timing settings. To capitalise interest, either:
Add interest to the loan balance rather than treating it as an immediate cash payment, or
Use a separate Asset variable to represent capitalised interest if you want to track it explicitly.
This ensures that:
Construction period interest is included in funding requirements.
Balance Sheet and P&L treatment is consistent with your policy.
Specify debt service, repayments and refinancing
For each facility, define repayment behaviour:
Amortising schedules with fixed or sculpted instalments.
Interest only periods followed by amortisation.
Bullet repayments at maturity.
Refinancing events where one facility is repaid and replaced by another.
Implement this via Liability variables with:
Scheduled principal repayments per period.
Interest payments based on outstanding balance.
New drawdowns for refinancing facilities where applicable.
Cashflow Statement and Cash Waterfall will then show:
Debt inflows and outflows.
Interest paid as operating cashflow.
Net debt movement per period.
Integrate funding structures with project and group views
At project level, use funding variables together with capex and operational cashflows to see:
Net cash positions and funding gaps.
Peak debt and interest coverage patterns.
Project level equity returns where you choose to compute them.
At group level, consolidate funding flows and balances across projects to analyse:
Total leverage.
Debt service capacity.
Headroom under facility limits.
Capital structure and valuation.
You can also connect this pattern to debt covenant and coverage ratio calculations if required.
Use scenarios for alternative funding mixes and terms
Clone the base model into scenario models to explore:
Different equity or debt proportions.
Alternative facility sizes and tenors.
Changes in interest rates and margins.
Different drawdown rules or sequences.
Alternative refinancing strategies.
In each scenario, adjust:
Facility limits and equity contributions.
Interest rates and capitalisation rules.
Repayment and refinancing assumptions.
Project or portfolio cashflow assumptions for consistency.
Compare scenarios using:
Peak and average leverage.
Debt service and coverage ratios where defined.
Equity and project level IRRs where you choose to calculate them.
Valuation metrics and risk indicators.
Check your work
Troubleshooting
Related guides
Last updated