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Published On  Dec 04,  2011
   
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Nib Intíl Bank Shares Attract Only One Bidder for CBE

CBE cancels auction of 11.1 million Br in shares confiscated from Mam Trading Plc for lack of interest

 

 

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 CBEís 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.

 

By EDEN SAHLE
FORTUNE STAFF WRITER

 
 
 

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