Sunday, May 19, 2024
BusinessProminent Dutch-Ethiopian food factory up for auction

Prominent Dutch-Ethiopian food factory up for auction

Ed Stelar is up for foreclosure for 114.9 million birr

Ed Stelar, a joint venture of Ethiopian and Dutch investors, is now up for foreclosure after struggling to stay afloat for over two years. Until July 2021, the company was employing 200 people and producing 59,000 food items a day at its plant, which sits on 5,000 sqm of land in Sendafa, 35 km north of the capital, according to its managers. In the last 12 months, however, it has been utilizing around 6.6 percent of the company’s production capacity.

The Commercial Bank of Ethiopia (CBE) foreclosed on the factory for a floor price of 114.9 million birr, with the auction set to be opened on November 17, 2022. This comes after the company became unable to repay its loan for over a year, and due to its failure to use the grace period provided by the giant bank, said an executive who spoke to The Reporter on the condition of anonymity.

One of the shareholders of the company, Eshetu Belay, who also owns Ed Stelar Broadcasting, which possesses Ahadu Radio & Television, linked the foreclosure with the food processing factory’s inability to cover production costs. “We are yet to generate a profit using the loan we borrowed from the bank. The money only covers our cost of production. “

ED Stelar was established 4 years ago as a joint venture between Esehetu and Dutch investor Hans Wasmoeth. It claims to be the first locally certified industrial production facility for semi-processed meat products. The company’s managers say the plant will be operational in 2020 with a total investment of 400 million birr at Sendafa-Beke City.

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Esehtu says the company took only a 43 million birr loan, despite being up for foreclosure at 114.9 million birr. CBE is not only foreclosing on the manufacturing facility of the company but also on its G+2 building, warehouse, and other facilities. “The bank extended the repayment period only once, though they claim they have done that six times. We still have time to repay the loan until the opening of the auction. “

Ed Stelar was supposed to pay off 10 million of its loan every month. “With the situation we are in now and while declaring a loss as we are producing way below our production capacity, we cannot do that. And in August, we were asked to pay 23 million birr. While we were in a rush to do what the bank asked, I saw the foreclosure being announced in newspapers,” said Eshetu.

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