FUNDING USD 10m FOR CNC TECHNOLOGY FOR AFRICANS

Current Financial Structure
HUFRA has invested about US$1.8 million in its project to date. This has been invested in the acquisition of plant & equipment, leasing of premises and working capital. The investment was financed by an equity capital of US$1.4 million and a debt component of US$0.4 million. Thus as at the balance sheet date December 31 2007, the company’s debt to equity ratio was 1:3 in favour of equity. The debt was secured through a loan facility from the Stanbic Bank Ghana Ltd. The loan facility is euro-denominated and has a 2-year tenor and attracts an interest rate of 21% per annum.

Expansion Plans
HUFRA intends to embark on an expansion plan that will involve the acquisition of machining plant and equipment to augment the existing ones and thus enable the Company meet the demanding machining requirements of industries such as aerospace, medical, oil and gas. The expansion plan will enhance the machining capabilities of HUFRA as it will extend its activities to cover both horizontal and vertical machining activities. The company will in the process set up a mill-turn machining centre, milling machining centre and a lathe turning centre. It will also invest in a CMM capability, which will enhance the company’s inspection capabilities.

Objectives of the Expansion Plans
· Invest in the highest specification equipment in order to produce the latest tooling equipment.
· minimise component production cost by minimising or eliminating manual intervention.
· position the company to maximize the opportunities inherent in its status as a first-mover company by meeting anticipated huge orders from Ghana and other West African countries.
· position HUFRA as a one-stop precision machining centre providing a wide-range of machining services to meet clients’ needs.
· attract an institutional investor to assist in designing good control environment and control systems, as well as good work environment.
· reconstitute board and management to improve board and executive functions.

Investment Needs
The total cost of the project expansion is estimated @ GB£5.116 Million (US$10 Million) with the following breakdown:

Fixed Assets
£4.009 Million (US$7.843 Million)
Stock
£0.936 Million (US$1.831 Million)
Working Capital
£0.171 Million (US$0.334 Million)
Grand Total
£5.116 Million (US$10 Million)

HUFRA estimates that it will require US$10 million in additional funding to meet its investment needs under the expansion plans.
HUFRA has already expended an amount of US$1.8 million in the acquisition of some of the plant and equipment, leasing of factory and administrative premises and initial working capital. The amount of US$10 million itemised in the table above as the investment needs is exclusive of the US$1.8 million already invested in the company. Thus when the amount required for the investment is fully committed, it will bring to US$11.8 million the total amount of money spent on the Company.

Financing Plan
Financing of Project Expansion through Equity.
The above project expansion is expected to be financed through the floating of Ordinary Shares
@ US$1 : 1(one) Ordinary Share.
10,000,000 (ten million) Ordinary Share expected to be floated with a corresponding amount of US$10 million, an equivalent of GB£5.116 million (Rate GB£1: US$1.9546) in return of 41% total ordinary shares.
In return for any equity investment on this, HCT are offering investors negotiable percentage of the company’s issued ordinary shares with full voting rights. Investors can expect to exit the company at the end of year 5 either through a trade sale or share buy-back that should realise 6 folds for investors.