|
Unlike previous auctions of shares of banks, an
attempt to sell 555,000 Br worth of shares of Nib
International Bank (NIB) by the Commercial Bank of
Ethiopia (CBE) was cancelled on Thursday, November
1, 2011, for lack of sufficient interest.
The shares were put up for auction as part of a
process by the CBE to recoup 35.6 million Br that it
had loaned to Mam Trading Plc. A previous auction,
in September, of 173 shares of NIB, for a similar
purpose, fetched a total of 200,000 Br, 131pc more
than their par value of 500 Br.
Although this was the second of such attempt, the
price that the shares fetched was the highest for
the industry. In a financial environment where
secondary markets are not allowed, determining the
value of shares through auctions has become a recent
phenomenon.
The first of such attempts was the auction of
153,753 unpaid shares of United Bank after they had
been subscribed to a little over a year before. Some
of these shares fetched 60pc more than their 100 Br
par value, totalling 13.3 million Br.
However, only one bidder showed up in the latest
attempt to auction shares, prompting the CBE to
cancel the auction, as a minimum of two bidders is
required for the process to go on.
Auctions Result of Shares Offered So Far
The CBE’s attemted auction of these shares followed
a decision by the Federal High Court Ninth Civil
Bench in February 2011, that Mam Trading Plc was
liable, for 43.6 million Br in loans it had
defaulted on. The court had ordered Mam to pay back
all of the money with interest calculated from June
2010, the date the suit was filed.
The state-owned bank and Mam Trading, which was
established in 2001 to export oilseeds and pulses,
with a registered capital of 2.2 million Br, had
been in the legal battle for around nine months
before the court ruling. The CBE had sued the
company and Musema Aman, director general of the
company, along with his wife Munaja Temam, who had
signed the loan contract.
After finding Mam liable, Habtamu Worku, the
presiding judge, ordered the confiscation of its
properties. The properties included shares in Mabruk
Plastic Project Plc, Beza Construction Plc, Zac Plc,
and NIB, as well as commodities at the Ethiopia
Commodity Exchange (ECX).
An export package processing facility, office
building, and warehouse located in Akaki Kality
District as well as a flower farm located in
Northern Shoa, Oromia Regional State, and six
trailer trucks were some of the other properties.
The court had ruled that all of the property was to
be sold to pay back the money owed to the bank. The
CBE had applied for a judgement execution at the
Federal High Court Eighth Civil Bench on March 31,
2011, to start selling the properties.
However, in the midst of doing that, Zac Plc had
sued Musema, alleging a loss of 9.6 million Br,
which it incurred while he was working as its
general manager. It applied to the Supreme Court in
July, requesting a cease order on the auction,
claiming that it has rights over properties of Mam
Trading.
However, the appeal was rejected by the court, which
ruled that the CBE could go ahead with selling the
properties and deposit the amount claimed by Zac Plc
in a blocked account while the court deliberates on
whether both had equal interest in the properties.
It was after this decision that the CBE auctioned
the first batch of shares of NIB, successfully. Not
having the same luck in the latest attempt, the bank
has to go back to the court to re-authorise the sale
of the remaining 1,110 shares. |
