TechPrecision’s (TPCS.OB) stock has been on a tear over the past several months on the news of increased backlog and a new Chinese subsidiary. The new investor presentation outlines the incredible growth opportunities the company has in nuclear, alternative energy, and high-tech medical device manufacturing.
The press release announces the purchase and expansion of the company’s manufacturing facility. From the press release:
On December 30, 2010, Ranor received $6.2 million in tax exempt bond financing through the Massachusetts Development Finance Authority to purchase the property and complete an 18,000 sq. ft. facility expansion in calendar year 2011. Additionally, the bond funding will also be used to finance one of the largest CNC (Computer Numeric Control) horizontal gantry mills in North America, which Ranor requires for production of new orders and to more aggressively participate in its Nuclear, Defense and Medical businesses.
The terms of the bond offering seem very attractive for TechPrecision with an average interest rate fixed at 4% for the next 7-10 years.
The original lease agreement was under a related entity controlled by one of the company’s directors, Alex Levy, at a higher interest rate (6.85%).
As an outside investor, related entity transactions make me nervous so this new deal should much simplify the reporting and capital structure for TechPrecision.
According to the company’s CEO, the new gantry mill will allow TechPrecision to process projects 35% faster than existing toolsets. It will also save approximately $200k per year in cash flow, a significant contribution based on the company’s current run rate. Full details of the agreement are due in the company’s next earnings release.
Since the company’s main competitive advantage is its high-tech manufacturing capabilities, this looks like another positive development for TPCS.
Disclosure: Author is long TPCS