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Fabrica – The Deal
Because of the continuing financial and economic difficulties throughout East Asia, with institutional lenders mainly awaiting completion of the extensive fiscal, legal and regulatory reforms Thailand has undertaken since the collapse of the baht in July 1997, we do not believe we could raise local funding for Fabrica any sooner than mid-2000.
We do not believe we can afford to wait a year or perhaps two. The Fabrica opportunity is too remarkable to go much longer unnoticed. Equity funding is the most practical way to finance the project.
8.1 Shares offered and price
To complete funding for construction of our plant, we are therefore offering to an interested institutional or individual investor a 49% interest in Fabrica Co., Ltd. (980,000 “A” shares, par value B 17.50 or $0.50 per share) to be bought at par for a one-time payment of $490,000.
8.2 Guarantees to the investor
To assure the value of this large minority shareholding, we propose the following conditions for these “A” shares:
- Three of the company’s seven directors to be elected by holders of “A” shares only;
- Dividend on founders’ “B” shares and any other classes to be payable only on condition that “A” shares pay at least 10% of par value, and not less than any other class of share;
- Holders of “A” shares to be entitled to elect an absolute majority of directors in the event that pre-tax profit falls below 80% of projection in any year after Year 2.
8.3 Value of the deal
|Net Investor’s Cashflow||(490,000)||557,247||1,033,645||1,676,663||2,842,781|
8.4 Exit strategies
- Private sale of majority interest to textile machinery manufacturer: Any leading machinery producer would benefit enormously from adding the Fabrica service and patents to its assets, particularly where Fabrica customers buy looms from competitors.
- Public offering: our projected performance should leave us in a good position to obtain a listing on the Securities Exchange of Thailand in 2004 or 2005, and market conditions ought to be favorable by then (present P:E’s for healthy manufacturing firms are under 5).
- Leveraged buyout: management would be most interested ‘in this option, but it would be practical only once Thailand’s financial institutions are rehabilitated and credit is readily available.
|Fabrica Co., Ltd.|
|Table of Contents||Appendices|
|0. Executive Summary
5. Marketing Strategy
6. Operations Strategy
7. Financial Plan
8. The Deal
|Sample Production Costs
Glossary of Terms
Sample Order Flow
Yearly Income Statement
Yearly Cash Flow
Yearly Balance Sheet
Monthly & Quarterly
|Proprietary to Fabrica Co., Ltd.|