Investors hunting for outsized returns should seek sectors where capital is scarce. Capital into the precious metals sector is historically the inverse of capital into the technology sector. The current environment is ideal for investment into the precious metals sector.

In recent years, record central bank gold purchases highlight the world moving away from a uni-polar world to a multi-polar world that appreciates gold as a neutral monetary asset. Economic sanctions and geopolitical conflicts in Europe and Middle East have led to the decline of the petro dollar trade; heightening the search for safe alternative assets.

Gold is the ultimate contra cyclical investment hedge against adverse fiscal and monetary policies such as federal debt spending and monetary debasement that impacts long term debt service sustainability and the U.S. dollar as a reserve asset.

The Golden Opportunity – Gold prices are at record high in 2024. Central bank purchases at modern record levels. Conversely precious metals equities are trading at extreme low valuations versus underlying gold asset, versus the S&P 500, versus technology sector, and versus historic NAV levels and reserves in the ground.

Mining equity shares are a much cheaper way to own gold assets. Miners historically have a 3:1 leverage to gold prices and provides positive leverage to gold performance. Gold is set up for an extended cyclical bull run.

NYSE ARCA GOLD BUGS INDEX(HUI)/GOLD PRICE

Allocation Opportunity – Gold is severely under-owned by Western portfolio managers. 71% of money managers have only 0-1% exposure to gold. The Top 15 Precious Metals Stocks make up only 1.49% of the Magnificent 7.

Severe Lack of Capital Flows – In addition, capital flight from the sector has created opportunities to fill the capital void by providing project financing, purchasing development assets at steep discounts to capital spent, providing mezzanine financing, and purchasing publicly traded assets at historically low valuations.

Secret Sauce – This award-winning fund manager has been presented with opportunities to invest in assets on a continual basis through contacts developed over the past 40 years within the precious metals mining industry.

The precious metals industry is a capital-intensive industry that is in constant need of capital. Capital sources can be overwhelmed with opportunities that must be expertly filtered in a disciplined manner. This is where the Sponsor can leverage his experience and deep industry contacts to know which projects will be winners and invest in management teams that are capital creators. The Sponsor’s deep industry expertise provides a competitive advantage to deliver superior returns on investment.

Type of Investments
• Purchase publicly traded precious metals equities from large cap to micro-cap at deep discounts
• Mezzanine financing for pre-IPO companies from exploration, development or production
• Financing as lead investor with preferred terms, such as warrants tied to debt
• Production expansion financing to junior producers
• Development financing to allow companies to add value to projects (feasibility studies and permitting)

Undervalued Public Equities
Opportunistically purchase deep value publicly traded precious metal equities from large cap to micro-cap. The greatest opportunities are in junior miners, and development firms on the verge of cash flow and value creation through the drill bit.

Identify unique circumstances where capital and time are already spent, while being underappreciated by the markets. Targeted returns 100%+ in a precious metals bull market.

Targeted Investment Examples
Provide project financing to a South American gold producer for mill expansion – one year payback, 15% interest rate, 3-year warrants. Outcome – Targeted return 30%+

Take private or major equity interest in a publicly-traded development company with 2 million ounce reserve plus 2 million ounce resource on previously mined site in a mining friendly jurisdiction currently trading at $4 per ounce versus $40 per ounce average for development assets.

Finance feasibility study and permitting. Outcome – package for re-sale after taking up value curve – Targeted return 500%+

Opportunistic asset acquisition
Acquire undervalued producing and development assets that no longer fit in portfolios of major miners due to change in strategy or adjustment in size criteria from rationalizing asset portfolios.

Participate in syndicate or lead investor depending on transaction size and structure. Targeted return 100%+

Investment Process – The Sponsor relies on thorough desktop review, in person meetings with management teams, site visits, industry contacts, and outside consultants for technical reviews once an investment opportunity has been identified to see if it meets the investment criteria for an acceptable rate of return.

Experienced Management Team and Excellent Track Record
The management team has worked together for decades and include 3rd generation of family in the precious metals sector. Other team members have decades of experience in trading and defensive investment strategies.

The Sponsor is from a gold mining family that founded and financed a U.S. gold mine from discovery/production to closure, and has over 40 years of experience in the precious metals sector.
He is one the longest tenured portfolio managers in the precious metals sector, and has been recognized as the top precious metals equity manager in the business.

The firm’s five star rated gold fund has the best performance over three, five, and ten-year investment periods. The Sponsor’s extensive experience and proven excellence creates a value opportunity for investors.

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post Top Precious Metals Manager Raising $300MM for Private Special Opportunities Gold Fund first appeared on Oxstones Investment Club™.

Demand for USD Declining

Gold Follows Debt – U.S. public debt is growing exponentially.  Debt servicing is on an unsustainable path.  There are too many political roadblocks for any debt resolutions.  Geopolitical conflict is inflationary.  Inflation and monetary debasement are now an entrench policy.   

Gold 93% Correlation to Federal Debt

Gold vs Gold Miners – Mining equity shares are currently deeply undervalued vs the underlying gold commodity.  Precious metals miners historically have a 3:1 leverage to gold price.  Mining equity shares are a much cheaper way to own gold assets.

Gold Price vs Gold Miners

NYSE Arca Gold BUGS Index/Gold Price

Severe lack of capital flows

Under-Owned by West – Western allocations to Gold are severely depressed with 71% of money Managers have only 0-1% exposure to gold (BoA Fund Manager Survey, 2023).

Allocation Opportunity – Top 15 Precious Metal Stocks make up only 1.49% of Mag 7. 

1999

2024

The post The Golden Ticket in a Once in a Generation Investment Opportunity first appeared on Oxstones Investment Club™.

The company is the world’s 1^st all-in-one solar energy solution; designed for residential, commercial, and industrial applications.   It can provide energy 30% cheaper than the local utility company, and clients are only billed for energy used in long term (25 years) revenue contracts.  The product can seamlessly connect with 100’s of additional solar panels via smart wireless to bring a fully integrated kilowatt-scale or mega-watt utility scale solution.

Competitive Advantage –   1^st patented fully-integrated nanotech smart solar panel that houses the electronics, batteries, smart transformers, converters, and inverters with distributed energy storage.  The plug and play modules provide users with convenient installation for residential, commercial, and industrial markets.   This company provides the most cost-effective, efficient, easiest to install, and most reliable solution to market.

Value Proposition –   The smart hybrid solar and energy storage technology uses a 100-watt DC system which utilizes proprietary hardware and artificial intelligence software to generate a greater than 88% combined output efficiency which is a 18% increase over comparable solar systems (example: Tesla).   In addition, this product also achieved a 30% decrease in system installation costs due to fewer components and easier to install plug and play modules to achieve a lower price point ($3.25) compared to median industry leading solar panel and power wall battery combined systems ($3.75). 

The company’s fully integrated smart solar panel system is able to achieve greater efficiency, faster install times, and lower costs because each smart solar panel runs independently in parallel and is powered by AI for precise usage data control to optimize output and storage.

The Opportunity 

1) Seeking a strategic JV equity partner for $25MM in equity funding (Equity:  6.25mm shares out of the 53mm shares outstanding ‘A’ voting shares issued at $4; valuing the firm at $212MM 11.79% stake).  The company needs to strong strategic JV equity partner to develop manufacturing lines in multiple countries using a leading outsource manufacturing contractor. 

*There’s also an opportunity to invest in a $25MM Convertible Bond offering at 7.5% conversion price at $4, maturity at 12/31/26

2) Seeking a $100MM debt financing partner to support the monetization and commercialization of its breakthrough solar IP portfolio (42 filed nano-optical electronic technology patents in the solar and utility industries), and to commission a fully automated production line of 1mm unit annual capacity (100 mw per line) to meet existing market demand and expand its market share world-wide.  

Sources and Uses – All growth capital will be used to re-invest and scale growth via manufacturing lines.  Equity investment will be used for working capital and research and development.  Debt financing will be used to scale production, purchase materials and inventory, and business development (SG&A). 

Investment to Date: $9.5MM (includes matching $4M government grant)

Pipeline: $500MM in pre-orders, MOUs, and letter of intent + $200MM binding = $700MM pipeline of pre-orders, LOIs, and pending contracts.

Current Status

The company has proven panel technology and has already designed, assembled, and tested 100 panels the past 2 years.    

*The company has recently acquired a $25MM bank loan to set up the 1^st manufacturing line and will be cash flow positive the 1^st year in operation.   

Financial Projections

Projected five-year revenue: $1.25B   EBIT: $574MM   FCF: $417MM   EV: $951MM

Est. IRR: 176.5%   MOIC: 38x

*Estimated numbers did not include the federal rebates and tax incentive benefits for solar and battery manufacturing

** The company can be cash flow positive in the 1^st year of operation and in year 4 achieve a capacity of 1mm solar panels. 

*1^st year manufacturing line = 100k-250k solar panels = 10%-25% of total capacity

The goal is to create multiple manufacturing lines (15 total production lines) to scale in 5 years to $5B in revenues.

Each manufacturing line costs $16MM-$20MM to set-up

$16MM x 15 lines = $240MM to $20MM x 15 lines = $300MM All-In Cost

Potential Market Opportunities

• Solar Market: $223B (targeting 15% of the total US residential market)

*Solar system provider market share is highly fragmented with the top 10 = less than 40% market share

• Digital Ad Market: $31B
• EV Market: $29B
• Vertical Agriculture Farming: $29B (AI nano grow lighting system, AI photosynthesis, and light sensor control system)

Potential Clients – home owners, home builders, commercial real estate owners, factory owners, and utilities

Revenue Mix – direct sales, whole sale, leasing, licensing, direct energy supply (power purchase agreements- long term revenue and batteries long life (twenty-five years), EV charging stations, emergency and disaster zone power, tax credits to investors, renewable energy credit, manufacturing credit, end user benefit, and carbon credit offsets

U.S. Government Policies Create Favorable Long Term Business Environment for Renewable Energy Investment

In 2018, U.S. placed a 30% tariff on imported solar panels and cells which led to solar companies moving operations and manufacturing solar panels to the US. 

The Inflation Reduction Act 2022 is a mega trend driver for the entire solar industry.  There’s a 30% tax credit for purchasers on demand side and a 40% tax credit for manufacturers on supply side.  The investment tax credit runs to 2032.  There’s also a production tax incentive if production begins before 1/1/2025. 

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post A Disruptor in the Global Solar Industry first appeared on Oxstones Investment Club™.

This is a newly built eight-story sixty-six key branded hotel available for sale at cost ($24.4MM).  The hotel is flagged with one of the top hotel companies in the world and therefore will generate consistent cash flows.  The hotel brand is ranked in the top tier of NYC hotels for travelers by hotel ranking sites.  

This hotel will operate under a 20-year franchise agreement with a 3%-5% annual franchise fee for the use of the global hotel brand.  The hotel will be completed in June 2024 and features a restaurant, roof top bar/lounge, an athletic studio, a business center, and a market pantry.   There is also an off-site parking garage.                                  

The hotel is situated in a prime corner of one of the fasting growing neighborhoods in NYC.  The hotel rooms have high quality air and light amenities and overlook one of the top artistic communities in NYC.  It’s surrounded by restaurants, fitness clubs, supermarkets, hip bars and cafes; providing guests convenient access to entertainment and amenities.  The property is conveniently located a few blocks away from multiple transit stations for easy access (10 minutes) to midtown Manhattan.            

Hotel guests and investors alike will mutually benefit from the property’s close proximity to multiple luxury residential condo complexes which adds new residents and draws new retailers to the community.  The hotel is within walking distance to a museum and waterfront park providing incredible views of NYC and outdoor recreational activities. 

The property is ideal for long term investors who value the stability of branded income producing commercial assets in trendy NYC neighborhoods that still have plenty of upside potential. Hotel assets are terrific tax shelters and an alternative inflation hedge.   

The hotel is appraised at $26.3MM, $398.5K per Key when stabilized

*The owner is willing to sell this hotel at around $24.4MM (Cost Approach).   

Projected total annual revenue = $6.2MM, net annual income = $1.6MM / ADR = $232 / RevPAR = $186

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post New Eight-Story Sixty-Six Key Branded Hotel Available ($24.4MM), Prime Corner in Heart of NYC Artistic Community first appeared on Oxstones Investment Club™.

The site’s flexible zoning and prime location makes it suitable for various potential developments including boutique hotel, luxury condominium, retail, and office.  After evaluating various development options, we concluded that the best use for the site is to build a mixed-use twenty-five story boutique hotel and residential condo tower with an award-winning restaurant in the two-level retail space along with a sublevel wine bar / lounge in the cellar.

This is a once-in-a-lifetime opportunity because the property is owned and controlled by a long-term owner.  The long-term holder is willing to sell at $15MM in return for a quick close and potential participation in back-end equity on the future development potential for the site.  The owner has already conducted due diligence – appraisal, architect designs, and zoning analysis.  A developer will be able to quickly build an iconic mixed-use property strategically located in one of the most exclusive areas in all of midtown Manhattan. 

The site will be delivered vacant at closing.

Current Land Valuations: The property was appraised as-of-right between $15.5MM to $18.8MM (41.9K sf, $370sf to $449sf).  Comps: Recent land purchases in the area were all above $2,500 psf +

Project Valuations: Can acquire land (off-market) at $15MM / Hard costs $30.4MM / Soft costs $6.1MM / Total all-in costs: $62.7MM, $1,497gsf / $1,567zsf / $1,793nsf  

Using current market comps. we project the following: Hotel projections: 80 keys (275sf/room) (55% of asset mix), 80% occupancy, $350 ADR, $280 RevPar, operating expenses 65% = GI $8.2MM / NOI $2.9MM,

Exit Cap Rate 7% = $40MM MV (positioned as boutique hotel $320-380 ADR)

Residential condo sell-out projections: $3,100/nsf (26% of asset mix) = GI $27.7MM / NI $26MM
 
Retail projections: 7k sf restaurant / wine bar / spa lounge: $200/sf (19% of Asset Mix) = NOI $945K, Exit Cap Rate 6.5% = $14.2MM MV

Projected Hotel & Retail Net Income $3.8MM / 8% annualized yield to cost / $431k cost per key
Investor ERM: 2.2x, IRR: 38%  (Assumption: $15MM equity needed, asset mix 55% hotel, 26% condos, 19% retail) *before depreciation tax shield

*This asset is a high quality off-market investment opportunity in the plaza district and next to a transit station

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post Plaza District Boutique Hotel & Residential Condo Development Opportunity NYC first appeared on Oxstones Investment Club™.

This is a $25MM Series A funding raise for a start-up in the property technology and asset optimizer business led by an experienced team of serial entrepreneurs.

This start-up is also considered a SaaS (Space as a Service & Software as a Service) business too.

The software has already been developed, product tested, and is now available for download in Apple store and Android store. The start-up launched in select USA cities in June 2023 and will also be available in select international gateway cities soon.

The start-up is looking for $25MM equity funding in Series A round.

The co-founders have personally invested $1MM to date.

A similar comparable start-up firm overseas has been valued at close to $400MM-$500MM in IPO preparations.

If you are interested in direct private equity / venture capital investing in the start-up firm mentioned above please get in contact. We would like to hear from you. Thank you for your time and consideration!

Oxstones Real Estate, www.Oxstones.com CRE@Oxstones.com

The post $25MM Funding Raise for Start-Up in Property Technology & Asset Optimizer Sector first appeared on Oxstones Investment Club™.

Three income producing one-story warehouses / storage facilities available for sale ($4.46MM) in an industrial complex, Miami, FL. The properties are already fully leased (current owner occupied by seller).  The three warehouse sales can be a sale lease back and is ideal for investors looking for stable monthly income.

Warehouse Suite #6 is 5,396 sf x $280 = $1,510,880

Warehouse Suite #7 is 5,418 sf x $280 = $1,517,040

 Warehouse Suite #28 is 5,115 sf x $280 = $1,432,200

$4.46MM Total

Warehouse Suite #6 and Warehouse Suite #7 are next door to each other and can be combined together to form a larger 10,814 sf warehouse.  Warehouse #28 is adjacent to the other two warehouses.

The warehouses are strategically located near Miami airport (10 min) and port of Miami (25 min).  The warehouses are also conveniently located near multiple major highways (Palmetto Expressway, Dolphin Expressway, Okeechokee – US27).  

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post Three Income Producing One-Story Warehouses for Sale ($4.46MM), Miami, FL first appeared on Oxstones Investment Club™.

Requirements: Seller would have to initially provide the location of the hallmarked gold bullions for sale, quantity available for sale, procedures (most likely Swiss or LBMA), and pricing.  Pricing will be negotiated between the buying and selling bullion officers.  Buyer is looking for a gross 10%-12% discount to market.

We prefer direct access but if you’re an intermediary and also have access within your global network to large size gold bullion supplies or a seller’s mandate please get in contact. We would like to hear from you.

Please see below the commodity specifications and the procedures in order to execute the deal.  Thank you!

Acceptable Gold Specifications

24 Karat Swiss Gold (Swiss hallmark), Secondhand Precious Metal, LBMA Good Delivery Bars (GDB)

Quantity: First Trial and Total

Current Location of Gold: (…) Bank Repository: Bank Vault

Gold Origin

Purity: Purity Over 99% to 999.9 Parts Per 1,000 or better

Gold Spike (production date (..) and every five years the bank does maintenance, the last maintenance was in (..)

Size: Bar Size One Kilogram (1KG) and / or 12.5 Kilogram Bars (12.5 KG)

Hallmark: Internationally Accepted Hallmark (Less than 5 Years)

Discount: The price will be based on the daily London Spot Price shown on the final assay report with a negotiated 10% Gross discount 7% NET discount to Buyer.

Fees: 1.5% Seller Side and 1.5% Buyer Side

Assaying Amount of gold for sale (..) with R&E that is under BANK CONTROL, under FULL BANK RESPONSIBILITY, with hallmarks valid for at least six months.

Type of Payment: Wire Transfer to Seller’s Bank

Currency: Equivalent AUD / USD / EURO

Deal Procedures and Conditions

Buyer issues Letter of Intent (“LOI”) for the above-mentioned gold

Seller Mandate is (…….)

LOI to be addressed to (……)

Seller and buyer sign contracts in order to schedule appointment at the Sellers bank

Table top meeting to be held at Sellers bank.  Traveling to (…)  to meet with the bank to review all papers, documents, and certificates related to the commodity (GOLD) and signing the Purchase Contract in the bank according to the procedures followed.)

Seller will SKR at table top meeting post POF done bank officer to bank officer

The Buyer is obligated to provide (”POF”) Proof of Funds and financial ability against the quantity to be purchased to be verified (Due Diligence) seller bank according to the above-mentioned specification.

WHEREAS, the Buyer confirms with full corporate authority and legal responsibility that the Buyer is Ready, Willing, and Able (‘RWA’) to purchase the LBMA Good Delivery Bars (which will be newly certified / newly assayed) in the Currency of the European Union (EUR) or USD which are good, clean, clear, authenticated as genuine, unencumbered, and from non-criminal origin for the delivery of this Commodity to the refinery or secured warehouse location nominated by the Buyer and approved by the Seller.

The Seller / gold owner will provide FCO-Full Cooperate Offer including the exact deal procedure

WHEREAS, the Seller has the full authority and legal right to export this off-market secondhand Precious Metal (SPM) for sale as LBMA Good Delivery Bars and to enter into a Purchase and Sell Agreement (PSA).

After receiving bank approval, all parties need to sign the Non-Competing Non-Disclosure Agreement (NCNDA) and Irrevocable Master Fee Protection Agreement (IMFPA) between the buyer and financial company which is the mandate and responsible for completing the deal

Gold verified

Buyer pays seller

Ownership transferred – Title of ownership of the commodity will be transferred to the Buyer upon confirmation by the Seller’s bank of clean and clear full payment by the Buyer to the Seller.

Transaction complete

Part of Due Diligence

Buyer would receive a copy of the following documents related to the commodity from the Seller:

• No liquidation or debts on the gold
• The bank’s right to export gold outside current location of gold held
• The age and last date of weighing the gold
• Hallmark gold issuance certificate – Internationally Recognized Acceptable Refiner’s stamp
• Gold weights and purity
• Final export certificate
• An international certificate stating that the gold is free from criminal possession
• Transfer the final ownership of gold

Price Settlement and Payment

The price will be based on the daily London Spot Price shown on the assay report with a negotiated NET discount to the Buyer.  Settlement of the payment will be based on the delivery quantity and assay report.  Cash ledger transfer payment for each delivered shipment’s price is to be in United States Dollars / Euro to the Seller’s Bank Account.  Alternatively, Price can be based on the 2^nd London fix on the London Bullion Market Association (LBMA) for London Good Delivery Bars on the date of Final Assay acceptance by the Buyer.

After payment is received by the Seller, the Seller shall transfer all “Original Documents” and ownership of the Gold to the Buyer.

1. Commercial Invoice SKR
2. Certificate of Origin
3. Assay Report (Certificate of Purity)
4. Certificate of Ownership
5. Export Certificate
6. Packing List
7. Certificate of Movement: Declaration that the product is free and clear and of non-criminal origin, unencumbered and free of any Liens, transferrable and exportable

Delivery

Parties shall hereto agree that the entire amount of (…) Gold SELLER BANK TRANSPORTS THE QUANTITY OF GOLD TO THE BUYER BANK, after the buyer will pay in full (…)

Cost, Insurance, and Freight will be paid by the Seller, along with (where applicable) import taxes, and transport and delivery costs.

Example – The commodity will be delivered on a CIF basis to the Free Trade Zone, Zurich International airport, Switzerland. Onward delivery can be arranged to the Buyer nominated and mutually agreed secure delivery facility.

Taxes

The Seller and Buyer shall be responsible for their own income taxes.   Negotiable – Either Buyer is responsible for assaying cost if they want to have the gold re-assayed or Seller will pay for the Final Assay to be conducted by the Buyer’s nominated and mutually agreed assayer.  

Confidentiality

The Parties hereto shall agree to maintain and keep confidential all information pertaining to the identity of the Buyers, Sellers Facilitators, Agents and Intermediaries, Agencies or Individuals, with whom negotiations or contracts have been negotiated or entered into. 

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post Institutional Buyer Looking to Acquire Large-Size Physical Gold Bullions first appeared on Oxstones Investment Club™.

Oxstones Real Estate, www.Oxstones.com  CRE@Oxstones.com

The post Commercial Warehouse for Sale – Free Trade Zone, Cartagena Colombia ($10MM) first appeared on Oxstones Investment Club™.

After the death of the founder, long-term client contracts were mis-priced in the covid inflationary environment. In addition, SG& A expenses were extremely bloated by family salaries. These issues can be easily remedied with new management re-pricing client contracts to transfer direct raw material costs to clients in order to re-establish historical average gross margins. A simple adjustment to cost controls for direct raw materials and better expense controls with the removal of legacy family salaries will immediately lead to the return of positive EBITDA.

The Target Company The target company is one of the largest suppliers ($110MM annual revenues and historical EBITDA margins of 5%-9%) of metal parts and assemblies with 400+ employees working in 12 facilities spread over 700k sf. A leader in contract manufacturing with decades of experience and a one stop metal works shop (e-coating, stamping, forming, laser cutting, welding, assembling, and casting, etc.) that provides flexible customized proprietary services to clients in autos, buses, military vehicles, construction and farming equipment. The facilities are also strategically located in close proximity to the major proprietary cluster for U.S. auto parts industry.

The target company is critical to the auto parts supply chain for several global top tier auto makers. The secret sauce to the target company’s competitive advantage is from the proprietary tools, dyes, and intellectual property provided by clients that are critical to the auto makers production process thereby making this a very sticky business with long term client relationships. The proprietary customized services provide the company with a sustainable economic moat and a huge barrier to entry for competitors.

The Acquirer The acquirer is a family-run global business with a successful 40-year track record in the auto parts industry. The firm has global operations (100 + employees) across southeast USA and South America, and exports to over 43 countries. It’s one of the top distributors for several global auto giants, and generated $40MM in 2022 revenues with a very profitable 15% EBITDA margin.

The Current Situation The acquirer has received the stamp of approval from target company’s top client to acquire the business due to its long-term relationship with target company’s top client. Acquirer has a binding LOI, and also signed a management agreement to operate their daily operations. The acquirer is already consulting with the firm to restructure and reduce inefficiencies in their operations.

The Investment Opportunity The acquirer is looking for $17.5MM in acquisition financing (leverage buy-out) or equity JV partnership to acquire the legacy asset. The target business has a very healthy balance sheet and will have zero debt at closing because intracompany debts that will be forgiven by the founder’s family. In addition, the top client has also agreed with the acquirer to forgive the $20MM debt owed to the automaker that was originally injected into the vendor (target company) in order to save the business. The acquirer has the unique opportunity to acquire the target business at an extremely low valuation – below liquidation value.

Liquidation Value / EBITDA = $25MM / $8.8MM = 2.8x

Liquidation Value / Sales = $25MM/$110MM = .22

A conservative discount of the following assets:

1)Existing accounts receivables from 1^st tier global auto makers = $14MM @ 80% = $11.2MM

2)Appraised value for plant, property, and equipment is (at forced liquidation $10.5MM to orderly liquidation value = $14MM and FMV = $18MM) @50% = $9MM

3)Inventory = $6.5MM @80% = $5.24MM

A conservative estimate of current and long-term fixed assets available for financing is $25.44MM

The acquirer is willing to inject $5MM in new equity capital for this asset purchase.

There is also a potential second transaction in the acquisition of the land (appraised for $20MM) by the acquirer from the family of the target company. This may require an additional $7.5MM-$9MM debt; assuming LTV of 50% for land and a small negotiated discounted purchase price to appraised value.

The Combined New Company The combined business will generate roughly $150MM in revenues and $15MM in EBITDA in the 1^st year.

Within 5-years, the firm expects to generate $233MM in revenues and achieve average gross margins of 17%, and average EBITDA margins between 11%-13%. This will lead to a conservative estimate of $30MM in EBITDA.

Total Debt / EBITDA = $25MM/$15MM = 1.66x

EBITDA / Interest Expense = $15MM/$2.5MM = 6x

The Macroeconomic Environment and Mega Trends The southeast accounts for the majority of the U.S. auto parts industry, and top global automakers continue to migrate operations to the southeast in order to lower labor costs from non-union workforce and lower state taxes. The strong dollar, high commodities, and high transportation costs have caused global firms to re-establish manufacturing within the US, and benefit from close proximity to their end-user customer base. Current geopolitical storms in US-China and EU-China relations make it a corporate priority to regain control of supply chains and onshore manufacturing in safe haven jurisdiction.

Near-shoring manufacturing operations in the USA now will also provide the benefit of riding the eventual start of a decade long weak dollar trend in the near future.

Oxstones Real Estate, www.Oxstones.com CRE@Oxstones.com

The post Acquisition Financing ($17.5MM-$26MM) or Equity JV Opportunity in a Metal Fabrication Company, South East USA first appeared on Oxstones Investment Club™.