Sunday, May 26, 2024
BusinessRedstar saves BMET Cables from foreclosure

Redstar saves BMET Cables from foreclosure

Ayka Addis also inches towards finding a buyer

BMET cables, a Turkish factory which has been listed in the Development Bank of Ethiopia’s (DBE) Non Performing Loans (NPL), shook off its long overdue loans and is currently being transferred to a new owner, The Reporter learnt.

Redstar International Trading, a successful local company engaged in automotive assembly in Dire Dawa, ventured with the Turkish investors to clear BMET’s mounting loan interests of 700 million birr.  

BMET, which owes DBE 2.6 billion birr, could not pay its debt for the past ten years. The loan has been rescheduled and loan interest has been recapitalized.

Yohannes Ayalew (PhD), President of DBE who took over the ailing bank just last year, has been hunting down DBE’s unpaid debts, and offered three options to BMET.

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“DBE has been extending the life of BMET without receiving cash from the company. We gave the company three options. These are: paying the loan, finding a partner that can inject finance and foreclosure. It could not pay because the NPL piled-up for ten years. The second option bore fruit. BMET was almost becoming bankrupt. But now, it has turned from an NPL to a healthy loan,” said Yohannes.

BMET uses a sophisticated technology and was initially inaugurated with huge plans to export to African markets. But high local demands from state power and telecom enterprises led the company to focus on import substitution. However, the company is not currently operational.  

“There were LC problems among many challenges. But currently, we are preparing the factory to resume production with renewed energy under new owner. The local demand is high and we also plan to tap on to exports. This time, we will work with other companies that export and generate their own foreign currency, apart from government supports to solve LC problems,” said Tewabe Tarekegn, marketing officer at BMET Cables.

While the partnership agreement is being reached between BMET and Redstar, the cable factory is currently finalizing international arrangements, transferring the management to Redstar. The cable factory, which is located around Sebeta town, was looted during the popular unrest that occurred in Ethiopia three years ago.

In a similar move, DBE is also in negotiations to strike another deal with local investors who approached the bank to buy Ayka Addis. The Turkish textile factory failed to fetch bidders after repetitive bids were floated. The company failed to pay close to 2 billion birr owed to the policy bank.

“We have been considering a number of options for Ayka Addis. But after potential buyers, who are local investors, approached us to buy the factory, we have come close to finding a lasting solution. There will definitely be a major change this year,” said Yohannes.

Out of some eight options DBE’s management considered to end the Ayka Addis saga, selling the company in segments or turning the factory into an Industrial Park were just two. 

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