The protracted privatization process of Awash Winery came to a conclusion after the Ministry of Public Enterprises (MPE) fully transferred shares to – Blue Nile Investment.
After several failed auctions, the winery was transferred to Blue Nile Investment in July 2013, at a price of around 460 million Br. The transfer includes 517ha of vineyard located in Merti Jirsu and another 42ha vineyard in Zeway.
However, the shares were not fully transferd.
Blue Nile Investment, was formed through a partnership between 8 Miles, a UK based equity firm and Mulugeta Tesfakiros. Mulugeta is the owner of several companies under Muller Industries, including Muller Real Estate and Langano Bekele Molla Hotels. 8 miles owns 51pc of the shares of the winery while Mulugeta owns 49pc.
In such dealings, the ministry obliges foreign companies with no prior experience in Ethiopia to make advance payments in foreign currency. Local companies and foreign companies that have previously worked in Ethiopia are allowed to make payments in instalments. Foreign companies with prior investments are required to complete payment within three years while local companies have to complete payment in five years. The foreign partner, 8 Miles, transferred 13 million dollars to the Agency prior to the conclusion of the contract. Mulugeta paid 79 million Br, 35 pc of his total required payment of 225 million Br, to the Ministry in 2013.
The remaining 146 million Br was expected to be paid within five years in equal annual instalments until 2018.
However, the agreed payments were not made and the transfer of the shares to Blue Nile was delayed. The ministry transferred the assets and management of the winery to Blue Nile, but refused to transfer the shares until the full payment was made by Mulugeta. Established by an Italian investor in 1943, Awash is a vanguard wine producer in the Ethiopia. It was nationalized in 1974 and remained in the hands of the state until 2013.
Awash winery, which is under expansion, is known for producing wine under 12 brands including Gouder, Kemila, Axumite and Awash. Expanding at the cost of 200 million Br, its production capacity has expanded from seven million liters to 10 million liters, annualy.
Mulugeta and the Ministry have now struck a deal that the payment will be paid in the agreed period. The Commercial Bank of Ethiopia guaranteed the payment of the remaining money to the ministry.
After the finalization of the transfer, the company arranged a new memorandum of association with the new ownership structure.
A new board of directors for the company has also been assigned.
Source : Fortune