ETHIOPIA – Blue Nile Investment Plc, owner of Awash Winery S.C., has been ordered by the Federal High Court to pay a one year delayed payment sum of 115 million Br.
The sum is a delayed first installment payment of 43.6 million Br plus 65 million Br dividend collected before the winery transferred to Ministry of Public Enterprises.
According to a written statement the defendant issued on December 3rd 2015, Blue Nile admitted the bilateral sale deal and pleaded for a reduced penalty sum. They failed, however, to convince the judge presiding on Bench seven, Yohannes Nigus.
According to the ruling, the grounds the plaintiff used to defend itself was that the title was not transferred from the owner, and so it was unable to use this as collateral to get a bank loan in order to liquidate the payment.
The plaintiff also said that it has already paid 20 million Br.
“Unsettled technical issues on how to transfer full ownership of a share company to a private limited company kept us from settling full payment,” said Mulugeta Tesfatsion, major stakeholder in the transaction explained the deeper rationale for the delayed payment to Fortune.
Upon hearing both sides, the court, on December 3rd, 2015, ordered Blue Nile Investment PLc to pay 43.6 million Br plus 13pc of 29 million Br – a one-year sales payment – until April 8, 2016. That works out as five years for the defendant to conclude the payment.
In the same time frame, the court also ruled that the defendant must pay 71.5 million Br, plus nine per cent interest of 65 million Br of government shares. Each year, a nine per cent interest should also be added to the corresponding year’s payment.
The company formed in partnership with the London-based equity firm, 8miles, chaired by Bob Geldof and Mulugeta Tesfakiros, took ownership at the end of 2013, after offering close to 460 million Br and paying 35pc on the spot.
The remainder was promised within five years, but has failed at the very first round.
The court passed the decision on March 15th, 2016 – a month before Meqelle University gave Bob Geldof an honorary degree on April 25th, 2016.
His honour comes not particularly for his investments in the country, but for his “outstanding humanitarian work and time tested friendship”, according to the release on the University’s website.
Bob Geldof’s footprints of aid and humanitarian workshifted when he brought 8 miles to the investment arena, two years ago. This came upon securing 51pc of the partnership with Mulugeta Tesfakiros – the real estate mogul, engaged in many other sectors, including hotel and resorts and Logistics services.
Mulugeta had tried to bid for winery in Ziway, 163km south of the capital more than once before – alone and with other partners.
Awash was one of those state-owned enterprises that failed to attract bidders able to offer the bottom seal of the price. Mulugeta was one of them.
After two failed attempts, his third shot in 2013, in partnership with 8miles, as Nile investment Plc, hit the jackpot, offering 460 million Br.
The Awash Winery, known for making the country’s wine industry a state-monopoly for at least 70 years, had several times been turned down by both local and foreign investors when the then privetization agency tabled it for auction and negotiations, until it got handed over at the fifth attempt in November 2012.
As an incentive, the Privatisation Agency, this time around, included a 500ha farm in Merti Jirsru – formerly belonging to the Upper Awash Agro Industry. This farm, along with another 42ha plot in Ziway, previously supplied grapes to the winery.
Currently, the winery is producing seven million litres of wine annually, under 12 brands, including the well-known Axumite, Gouder and Awash.
Mulugeta has stayed true to his words. Two years ago, he told Fortune that the priority would be expanding the farm, and shareholders would not get any profit until 2017. The Ministry, however, does not seem to be on the same page, having claimed dividend and succeeded in obtaining it.
Blue Nile Investment, while the case was pending started settling the dividend claim and paid close to 50 million Br until the end of March.
“ Filing a court case was unnecessary and rushed decision” a source close to the situation told Fortune. “ Blue Nile investment owners and the new management of the Ministry have decided to amicably sort out the issue, and almost reached a consensus,” he added.