Development Bank of Ethiopia has floated the first auction to sell the giant Ayka Addis textile after it was decided to be managed by the development bank. The banking system has also stated that the once giant company will come back to operation in short period of time.
In total the Turkish company which was floated on auction for the sixth time, had failed to repay its loan from the bank and as a result it has also failed to attract bidders. An Integrated Textile Factory building, machineries, Equipment & furniture, vehicles, Auxiliary tools, various spare parts, Raw Materials/ inputs, Work-in progress, finished products /fabrics, and some other related items are set to be auctioned with close to 1.82 billion birr with negotiation.
As officials form development bank said, the bank took over the factory coercionary. However, the process of making the factory operational is finished and will be operational in short period of time. The officials explained that administering the factory to make it operational will help the factory to attract buyers. Therefore, the group A once projected thriving textile company that became bankrupt is set to make a comeback.
As from the last fiscal year, the state-owned bank had ratified the annual budget to manage some companies that failed to attract buyers, including Ayka Addis.
Apart from Ayka Addis, DBE also is in attempts to the auction four companies in total that failed to repay their loan from the bank. The four companies which significantly the state policy bank seeks billions of birr from are: Ayka Addis textile group, Omo valley corporation, Alsi Addis industrial group and Angeles cotton and textile production. The four companies were put up for sale by the DBE for failing to pay their debts.
The company, Ayka Addis Textile and Investment Group was established in May 2012 with a total capital of 1 billion and a paid up capital of 679 million birr by Turkish investment groups. The factory has been out of business for more than a year and has been paying its 4500 staff for free work due to lack of operation.
Due to the inability of the company to repay the 3.2 billion birr loan that was provided by the Development Bank of Ethiopia, the development bank had made attempts to auction it. The loan was provided at the onset of 2008 with the expected loan repayment time provided till 2013, which of course was unsuccessful.
Ayka Addis Textile & Investment Group is the first company to be auctioned, and it failed to attract bidders who can offer 1.8 billion birr. The company failed to attract bidders primarily because of the high price set by the development bank as well as its competitiveness with regards to its marketing.
Ayka Addis Textile Factory is located on a 20.1 hectares piece of land with 4,500 workers and it is said to have the capacity to employ more than 10,000 workers.
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 at the time.
A month ago, officials from the Ministry of Trade and Industry, officials from the Development Bank of Ethiopia and the Confederation of Trade Unions visited the factory to discuss issues that will enable it to start operations soon.
“In the future, short, medium and long term plans will be prepared and the workers will be able to return to work and the factory will be operational in a short period of time,” stated Melaku Alebel, Minister of Trade and Industry.