Local company eyes Wonji, Metehara
Floats shares worth 3bln birr
The newly established Ethio-Sugar Manufacturing Share Company has started negotiations to acquire both Wonji-Shoa and Metehara Sugar Plants, pioneering state-owned sugar crushers established by the Netherlands HVA Company some 70 years ago.
Board of Directors of the new Share Company has briefed reporters on Thursday regarding the acquisition process that began since October last year.According to the Board, the company started the negotiations immediately after it gained legal status, and the process is still ongoing.
According to Lemma Gurmu (Eng.), president, and ErssidoLenebo (PhD), vice president of the company,Ethio-Sugar is determined to acquire those factories and so far about six rounds of negotiations have been conducted with the authorities starting from the Ethiopian Sugar Corporation all way to the Office of the Prime Minister.
“So far, the outlook is positive,”BitewAlemu, general manager of Ethio-Sugar, told The Reporter.He noted, the government is generally receptive to the proposals the company has submitted, but the process is yet to be completed. In addition to that, the recently announced privatization of all the 13 state-owned sugar factories is a step in the right direction, Bitew thinks, and that he is hopeful the government will approve the acquisition proposal Ethio-Sugar has submitted six month ago.
Ethio-Sugar is also implementing a bold strategy to attract close to 40,000 shareholders from within the communities where these factories are located. Hence, according to Erssido, 11,000 farmers, mostly involved in sugarcane out-grower schemes, 20,000 factory workers and 10,000 civil servants around the vicinities of the factories will have shares valued at 800,000,000 birr.
These groups of shareholders will have the opportunity to pay the par values within five years. Ethio-Sugar has agreed with Awash Bank, Oromia Cooperative Bank and United Bank to arrange a personal loan payable within five years at a 10/90 percent ratio.Erssidoalso says the modality is specifically designed to include farmers and workers to share the benefits of the project, instead of being marginalized.
The next group of shareholders will constitute 20,000 individual and corporate investors. Accordingly, the diaspora community, civil servants and the likes will have the opportunity to buy a minimum of 10 shares at a par value of 1,000 birr per share. The maximum limit of shares is set at 50,000. Totally, three million shares, valued at three billion birr have been floated and for the past three months the company has been selling shares.
According to Bitew,the founding members will retain 35 percent of the overall shares, while HVA Netherlands, the original owners of the two sugar crushers, will have a 39 percent majority in the two plants, if the deal managed to go through. The remaining 25 percent of the shares are allotted to individual shareholders. The government will also have a one percent stake in the company, Bitew said.
Previously, some 11 billion birr was offered to purchase the two sugar factories, reports indicate. However, Bitew says the price doesn’t necessarily reflect the actual value of the two factories; “It is an estimate. We are still negotiating and nothing has been finalized yet. The 11 billion birr is just a rough estimate,” he said. Ethio-Sugar says it will be able to finalize the acquisition process by the end of June, 2020.