GlassWorks

GlassWorks is a platform for glass investments in the Middle East and Africa. GlassWorks currently owns a 33% stake in Misr Glass Manufacturing S.A.E. (MGM), a leading manufacturer and exporter of glass containers in the Middle East and North Africa, and a 51% stake in Sphinx Glass, a state-of-the-art, EGP 1.1 billion (US$ 200 million) greenfield float glass facility in Egypt.

The investment in glass manufacturing capitalizes on Egypt’s low energy costs, abundance of high-quality raw materials and large supply of labor, all of which are key elements in the production of both float and container glass products. GlassWorks’ subsidiaries will supply both domestic and export markets for float and container glass. With a manufacturing base in Egypt and a geographic location that easily supports exports, GlassWorks is perfectly suited to become one of the region’s largest producers and exporters of glass products.

OPERATIONAL UPDATE

MGM was a state-owned company that was acquired by El-Zayat Group in 2004. In the years since, the company has emerged as Egypt’s leading manufacturer of glass containers and has, to date, invested approximately US$ 76 million to upgrade its technology base and expand capacity. New operational improvements and investments combined with the unique expertise the management team at MGM have resulted in an increase in production capacity from 36,000 tons in 2004 to 104,000 tons in 2011.

Sphinx Glass, a 600-ton-per-day, 220,000-square-meter float glass production facility located in Sadat City, within close proximity to Egypt’s two largest cities, Cairo and Alexandria, began full operations in April 2010. The new factory was designed by world-renowned float glass technology provider PPG Industries and built by leading Italian contractor Ianua S.p.A., one of the world’s top contractors and service providers in the float glass industry. With a production capacity of 200,000 tons of glass per annum, Sphinx Glass is one of the most technologically advanced facilities of its kind in Egypt. The factory has been designed to produce clear, tinted and coated glass. The plant targets both domestic demand and high value exports, capitalizing on Egypt’s abundant raw materials and competitive skilled-labor and energy pricing. Natural gas, the plant’s main source of energy, is locally secured with an on-site hydrogen and nitrogen supply plant.

In 2011-12, Sphinx Glass expects to invert its sales mix from 70% domestic, 30% export to 40% domestic, 60% export. In seeking export markets, Sphinx Glass will look beyond Europe, which is largely saturated with both domestic capacity and Chinese exports, in favor of new markets in Africa and Latin America.

In 2010, revenues and EBITDA at GlassWorks grew by 11.5% and 11.1% respectively from the previous year despite the tough economic climate in which the business has been operating. Furthermore, the company maintained strong EBITDA and net income margins of 48% and 24% respectively in 2010.