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To enhance the offering, the Holding Company intends to make certain balance sheet adjustments as part of the offering. These may include asset adjustments such as land and reduction of debt service obligations, which will result in an adjusted book value. This adjusted book value will be used to price the new shares to be offered. The bases for the adjustments are generally as follows:

Land and other assets not needed for the business will be transferred from the Company.

For balance sheet adjustment purposes, remaining land will be valued according to the price of land at the nearest new industrial zone, which is considerably less than the price of land in this prime industrial area.

If requested, the HC will entertain proposals to purchase and lease back to the Company land necessary for the business at 5% p.a. of the new book value of the land.

Debt will be reduced in an amount necessary to reduce total liabilities to equity ratio to equal one to one following the injection of new capital. Proposals by potential investors for alternative capital structures will be considered.

With such adjustments, based on the most recent approved financial statements dated June 30th 2003, pro-forma calculations indicate that a new issue totaling LE 26.1 million would provide the purchaser with 51% ownership of the Company with total assets of LE 102.3 million (including LE 26.1 million of cash for expansion) and total liabilities of LE 51.1 million.

Different balance sheet (and therefore pricing) scenarios are possible depending on the investor’s plans, whether land is leased or owned, and as noted above the level of debt retained. In order to assist in turning around this under-performing company, the HC will also consider assisting the investor to assure the efficient employment of labor. More detailed information about the offer will be made available to investors interested in participating in this competitive public tender.

With such an attractive offer, the government of Egypt is seeking serious local and international investors who can demonstrate the ability to manage the transformation of the Company to a center of excellence while increasing its contribution to the Egyptian economy. Investors will be chosen mainly according to this criterion.

Investment Highlights

NEEASAE is Egypt’s largest producer of a wide range of electric lamps, including regular glass lamps or “GLS”, fluorescent lamps (tubular lamps, or “TL”) and energy-saving fluorescent lamps (energy-saving tubular lamps, “TLD”). The Company is considered a pioneer in Egyptian industry, and its products enjoy strong brand recognition.
NEEASAE’s specialized glass factory is one of the largest in Egypt, possessing technologically advanced facilities that use computerized machinery, particularly in the glass melting process.
With the recent float and devaluation of the Egyptian pound, the use of integrated production lines utilizing components manufactured or sourced domestically gives the Company a potentially strong advantage over international competitors.
The Company’s site in Alexandria is strategically placed for transportation and commercial activities throughout the Middle East, Africa, and Europe.
NEEASAE was the first Egyptian public sector company to acquire ISO 9002 certification in January 1994, which combined with its service and maintenance workshops makes the Company unique in Egypt. The Company in acquiring the CE and TÜV designations for quality has been recognized by the European Union and Germany, respectively. In July 2000, NEEASAE was granted ISO 14001 certification on meeting strict environmental protection requirements.
NEEASAE expects to substantially increase sales revenues through its new market segmentation approach to sales, which involves three distinct brand names, and an expansion of its distribution network through 10 major wholesalers, and 90 distributors.
The lamp manufacturing industry in Egypt will enjoy a competitive advantage over its international competitors, who were recently (in September 2002) subjected to a five-year antidumping levy of up to 342% of the import price.

During recent years, unfair offshore competition caused NEEASAE to lose market share and resulted in significant unutilized capacity. To eliminate unfair competition the Government passed anti-dumping legislation. This legislation combined with the recent float and devaluation of the Egyptian pound provides an excellent opportunity for the Company to significantly expand its production and sales (including exports), especially into lower-priced market segments with a new NEEASAE. Furthermore, approximately 60% of the value of the Company’s components are currently imported. With a more competitive currency, the opportunity exists to expand the business to provide for import substitution as well as exporting complete lamps.

Egypt’s recent decision to float the Egyptian pound along with Egypt’s beneficial trade agreements offer new opportunities for Egyptian companies, like NEEASAE, to compete successfully as a regional production center, particularly for the Middle East and Africa, where its location is advantageous. Egypt has free trade agreements with Tunisia and Morocco, and preferential agreements with Libya, Syria, Lebanon, Jordan and Iraq. Egypt is also a signatory to the Common Market for East and South Africa (COMESA) and is one of nine signatories, which have achieved a 100% reduction on tariffs on imports from other member countries. In 2001, Egypt also signed a partnership agreement with the European Union under which a Free Trade Agreement would be established over a 12-year transition period. The EU Agreement aims at increasing the flow of foreign capital, expertise and technology to Egypt, and Egyptian exports of manufactured goods to the EU will be exempted from tariffs once the Agreement enters into force. EU exports of manufactured goods to Egypt shall be tariff-exempted according to the lists and timeframe specified in the Agreement.

Other investment strategies could be formulated by knowledgeable investors.
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