UPDATE 1-Egyptian GB Auto eyeing bonds to fund expansion

(Adds analyst comment)

By Sherine El Madany

CAIRO Oct 12 (Reuters) - GB Auto (AUTO.CA) is considering issuing five-year bonds worth one billion Egyptian pounds ($183 million) to fund regional expansion and new service centres in Egypt, the company said on Monday.

GB Auto, Egypt's biggest listed automobile maker and assembler, operates six after-sales service centres in Egypt and plans to have 25 by the end of 2011.

"We need capital to finance our expansions," investor relations director Bassem El-Shawy told Reuters. "We previously announced that we were looking for an acquisition, and we need to have the capital ready when the opportunity arises."

Menatalla Sadek, a consumer goods analyst at Beltone Financial, said the company was not highly leveraged and had a strong balance sheet.

"Total debt to total capitalization stood at 38 percent on June 30, which means that if the bonds are executed, the company's balance sheet can support this increase in debt," she said.

GB's Shawy said the firm was looking to issue bonds because banks have been reluctant to lend to automotive firms since the credit crisis. "We've been applying for loans since March, but banks did not lend to any automotive companies, so we resorted to issuing bonds," he said.

GB Auto manufactures, assembles, imports and distributes vehicles for Hyundai, Volvo, Mistubishi and Bajaj. The company has a 27 percent share of Egypt's automotive sector, Shawy said. (Reporting by Sherine El Madany; Editing by Dan Lalor) ($1 = 5.4768 Egyptian pounds)