The Egyptian Government is offering the Egyptian Ferroalloy Company for sale, which is the sole producer of Ferrosilicon in Egypt with a production capacity of 50,000 MT.

The company started operations in year 1989. It has one factory located in Edfu (near Aswan High Dam) and has three administrative offices in Cairo and Alexandria.

The Holding Company for Metallurgical Industries owns 100% of the company. The paid-in Capital of the company is EGP100 million distributed over 10 million shares. The company is listed in Cairo & Alexandria Stock Exchange.

The company's main financial highlights are as follows:
Figures are in EGP ('000)*

Indicator 2002-2003 2003-2004 2004-2005 1H 2005/06
Sales 179,105 224,343 244,334 105,947
Net Profit 17,014 31,087 34,159 6,555
Net Equity 119,918 127,748 137,339 144,680

* USD: 5.75 EGP

Production and Operations

· Ferrosilicon alloys: The company's main product is Ferrosilicon alloys available different percentage of silicon (45%, 50%, 65%, 70%, 73%,75%). In addition, the company ran a number of pilot production runs for the production of other ferroalloys such as ferrosilicon magnesium & ferrosilicon calcium. Ferroalloys are mixed with steel to give it different characteristics such as being malleable and/or lubricant.

· Silicon fumes: Is produced during the production process and represents around 7% of total sales of the company. Silicon fumes are used in the production of cement, ceramics and fertilizers.

The company has an annual production capacity of 50k tons of ferrosilicon and 20k tons of silicon fumes. The company has been operating near it's full capacity for the last 3 years.

The company's exports in 2004-2005 represented 75% of the total ferrosilicon sales and 80% of silicon fumes sales.

Production Facilities

· Main Production Line: An integrated line for the production of the ferrosilicon alloy.
· Utility units including power plants, transformers, ports, water purification unit and warehouses.
· Purification units and dust collection.

Suppliers

The majority of the raw materials used in the production are locally supplied, 60% of all raw materials are sourced locally through annual contracts.

Main raw materials required for production are:
· Quartz: brought through suppliers from mines located at the east of the factory.
· Coke Coal: supplied by El-Nasr co. for coke production.
· Stone Coal: supplied by Sinai coal co.
· Polyshar coal: Imported due to shortage in the local production (Supplied by El-Coke company).
· Iron oxide: supplied locally through steel companies
· Rod Mould: is used in the formation of the electric spark in the furnaces and is imported from abroad.

In addition to other supplies used in producing rods such as carbon steel (locally produced) and graphite rods (imported).

Labor forces

The company has an average of 1379 employees, the majority of which is production workers (1179 employees). The labor cost represents around 10% of annual sales.

Key Success Factors

· Zero bank debt (assuming high leverage potential).
· The company has succeeded to build a very good reputation in the export markets (specially in Europe), and has established a good relationship with the main traders of the ferrosilicon market.
· Being a high electricity incentive industry, the company has a competitive edge compared to European producers represented in relatively low electricity cost and it's proximity to the High Dam.
· As a result of the above-mentioned factors, the company will be able secure demand for any future expansions.
· The company's furnaces can be adjusted to produce other types of ferroalloys such as ferrosilicon manganese.
· The company has a contact agreement with the Egyptian Government that allows the company to utilize a Quartz mine that is located at the East of the factory.

HSBC Egypt Investment Banking is acting as a sell side advisor for The Egyptian Government for the sale of the company. Submitting bid is possible till 30-November 2006