United Foundries

United Foundries (UCF) is Citadel Capital’s Platform Company in the metallurgy and foundry sectors with a combined production capacity of 54,000 tons of molted metal per year. Originally a part of ASEC Holding, United Foundries was spun off as its own entity in late 2008 and includes Portfolio Company assets Amreya Metal Company (91% stake) and Alexandria Automotive Casting (100%). United is a specialist in the manufacture of grinding media and castings for a full range of industrial applications.

UCF derives more than half of its revenues from export sales and has a production capacity nearly four-times larger than its nearest challenger in the Egyptian market. Today, United Foundries has strategic relationships with major global cement producers including Italcementi, Cemex, Lafarge and Holcim. Citadel Capital and its co-investors have committed more than EGP 103 million to an expansion program that has seen United Foundries expand its production capacity to 30,000 tons per year from 7,000 tons in 2006.

Alexandria Auto Casting was established 2001 as a free zone with the primary objective of producing high performance automotive cast parts. The company is undergoing a capacity increase to reach 30,000 tons per annum by the third quarter of 2011 from the 20,000 tons that are currently being produced. Further expansion projects that require minimal capex are also under study. The company exports 100% of its production to a number of international automotive producers such as BMW, Continental, and Brembo.

Amreya Metal Company was established in 1979 to produce metal casting products with a specialization in the production of grey and ductile iron castings. Within a period of 12 months, the company plans to triple its production capacity to 12,000 tons per annum. The foundry is also engaged in the casting, machining and assembly of automotive parts serving a diversified customer base that includes pump and valve manufacturers as well as local automotive assemblers.

OPERATIONAL UPDATE

UCF signed an EGP 40 million loan agreement to fund a new 15,000-tons-per-annum project that will see the company become the only producer of large castings in Egypt (up to 5 tons per casting). The new project will enable UCF to diversify its product base to include items such as grinding media for vertical cement mills and windmill castings.

Managerial changes took place at both AAC and AMC in 2010 with the appointment of UCF Chief Executive Officer Salwa Abdel-Fattah as managing director of AAC and Group Chief Financial Officer Madani Hozaien as managing director of AMC. The new management team has focused on initiating a strict maintenance plan to ensure that there are minimal stoppages in production. Overall, efforts to improve efficiency and reduce costs have already shown promising results.

More than 60% of United Foundries’ output is for export markets — including 100% of Portfolio Company AAC’s production — leaving management optimistic about the company’s prospects in 2011. Devaluation of the Egyptian pound in 1Q11 will be supportive of the company’s financial performance despite disruptions caused by the Revolution.