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The Commercial Bank of Ethiopia (CBE) is to auction
Mina Building, located off Ethio-China Friendship
Avenue, in its bid to recover loans it has advanced
to Tis Abay Plc a decade ago, according to reliable
sources.
The huge blue glass structure erected on a 3,000sqm
plot was built in 1999; it houses offices such as
the Japan International Cooperation Agency (JICA)
and HST, an audit firm, among others. While under
construction, the 11-storey building was put as
collateral to secure a 31 million Br merchandise
loan, half of what Tis Abay had taken from the Bank
in 1997. The company used the money to procure sugar
auctioned at the time by state sugar factories,
sources disclosed to Fortune.
Tis Abay, owned by Abebaw Desta and Minwuyelet
Atnafu, is also a sister company to the owner of the
building it drew its name from, Mina Trading Plc,
another company in the long list of subsidiaries the
two businessmen and their spouses created in the
early and mid-1990s. These companies were
restructured in 2003, each registering a 20.5
million Br capital, shared equally between the two
businessmen who also own Star Business Group and
Tana Transport Plc. The companies were heavily
involved in bulk transactions of stationery items,
timber, steel and sugar.
Tis Abay and Mina were rated in 2001 as “corporate
customer” by CBE management and have been closely
working with the Bank, able to service their debts
regularly. The two companies found themselves at
odds after Mina Trading took a 40 million Br
merchandise loan from CBE, putting more than 200
trucks owned by Tana Transport as collateral in the
same year, increasing the total loan portfolio of
the group to 115 million Br.
The detention of Abebaw and Minwuyelet in May 2001,
accused of involvement in grand corruption, charges
they were acquitted from after five years in jail,
changed the companies’ course of direction. Both
began defaulting on their loans while under the
management of a caretaker team - Receivership
Committee for Restrained Property - appointed by the
Federal High Court, along with six other companies.
The revenues of all the companies under the
committee were made to be deposited in a blocked
account opened at CBE. Although general managers
were appointed by the Court to each company after
consensus was reached by all parties concerned,
including the detainees, it was under the watch of
this committee that the two companies were made to
sell over 100,000qt of sugar in their stocks at 100
Br per quintal, a value less than the 600 Br they
were bought for, Abebaw claims.
“This was the main reason why Tis Abay and Mina
Trading suffered a combined loss of about 150
million Br,” Abebaw told Fortune. “Above all,
many of the 212 trucks that were giving full
services for the companies and had been able to
generate revenues were grounded or operate under
their capacities.”
Both companies were indebted 180 million Br to CBE
upon their release from jail in 2006. The Bank
served the companies a 30-day foreclosure notice in
March 2007, although the process was on hold
following negotiations with the owners. The latter
made a first proposal to pay the principal loans in
three instalments within 15 years; 15pc in five
years, 35pc in the subsequent five years and the
remaining 50pc in the final five years. They have
also asked CBE’s management to write-off the
interest and penalties, and for an additional loan
as working capital.
CBE’s management found the request for write-off
beyond its mandate, and thus advised the businessmen
to redirect their appeal to its Board or the
government. Nevertheless, the Bank said it would be
ready to consider the requests within the context of
the proposition made by the companies so long as the
cumulated interests have been serviced first,
sources revealed.
The businessmen thus appealed both to the Prime
Minister’s Office and to the Board of Directors,
although no response came from either party. The two
businessmen have since submitted yet a second
repayment plan, agreeing to pay both the principal
and the interest, provided that the repayment period
is extended to 20 years.
The Bank, however, issued on May 7, 2007, a
one-month notice threatening to auction all
collateralised assets held by the two companies. In
October 2007, the Bank further notified the Federal
Transport Authority (FTA) to instruct members of the
traffic police in all regions to apprehend all the
trucks put on collateral, wherever they might have
been.
Although Abebaw, general manager of Mina Trading,
persuaded CBE managers to hold on their move up
until November 17, 2007, the Bank’s Recovery
Department surrendered all the 212 trucks held for
collateral last week, sources at CBE disclosed. The
Bank has also auctioned five residential villas held
as collateral, including Abebaw’s, located around
Old Airport area.
Unable to recover its money from the trucks it
seized and villas it sold, CBE now eyes Mina
Building that cost 31 million Br to build. Asset
valuation experts from the Bank’s Recovery
Department inspected the building last week and made
an engineering estimation. The result of their
valuation will be finalised perhaps in two weeks,
according to a senior manager at CBE.
“We have cooperated with the engineers who came to
take measurements of the edifice,” Abebaw told
Fortune, sober and composed.
Abebaw, 45, concedes that the prospective auction
will be a blow to Tis Abay and Mina. Together, the
two companies employ over 2,500 workers. As the
drive by CBE to auction their properties proved
certain at this point in time, both companies are
preparing compensation schemes for their respective
employees, sources disclosed.
But Abebaw told Fortune he and his partner
are determined to bounce back.
“I am young, able to achieve my objectives,” he told
Fortune. “In five years, we will be back -
with a new spirit and shape - to where we were.” |
