Ayka Addis to fetch 2 bln birr in foreclosure
The ill-fated Ayka Addis Textile and Investment Group, a textile manufacturer which went bankrupt, is said to be foreclosed next month with close to two billion birr, in an effort to recover loans the manufacturer received from the embattled the Development Bank of Ethiopia (DBE). The company used to owe some 2.3 billion birr, The Reporter has learnt.
Once a highly regarded foreign company, Ayka Addis has been forced to close shop and end its operations in Ethiopia after more than a decade long presence in the manufacturing business.
Accordingly, the state policy bank had taken over Ayka Addis since last year and was managing it under Ethio Capital Investment Share Company, a subsidiary firm, when the previous failed to service the 2.3 billion birr debt it owed to DBE.
In fact, since 2006, DBE extended a total of 2.87 billion birr to the textile manufacturer. The textile plant which entered into operation in 2010 with a total investment of USD 240 million at Alemgena, some 20km west of Addis Ababa stretching on a 205,000sqm land, used to have a capacity of making 70,000 pieces of readymade clothing and various types of garments.
The new foreclosure notice advertised in media outlets indicated that the plant alone is valued at 1.85 billion birr. Bulks of apparel that included kids’ clothes to various types of jackets, leggings, tops, duvet sets, bed sheets, and covers, pajamas and the likes stored in the plant will be auctioned at an initial price of 130 million birr in total. However, DBE allotted three separate lots for the stored garments.
Ayka Addis was once considered to be an anchor investment that Ethiopia succeeded to attract. However, it did not take long for the company to face the dreadful realities of shortages in raw materials mostly cotton, lack of skilled labor and power outages. The political crisis also contributed to the malfunctioning of Ayka Addis. At first, Ayka Addis seemed to be doing well but failed to sustain the momentum and since 2014, it was operating on a loss until it declared bankruptcy in 2017. The company is believed to have created 7,000 jobs.
According to information The Reporter has received from DBE, the first lot will be auctioned on July 9, 2019 and the plant is set to be sold on July 23.
DBE currently is grappling with 40 percent non-performing loans (NPL) and suffering a loss of 1.7 billion birr much of it owing to the enormous credit it has been advancing to the likes of commercial farms and factories.