Lominat Beverage offers 3.6 billion Br to acquire the company
The state liquor manufacture, National Alcohol & Liquor Factory (NALF), has received one of the highest offers in the government’s recent attempt at privatising the company.
Lominat Beverage Plc, a local company which is constructing a beverage bottling company in Modjo town, offered the highest price of 3.6 billion Br to buy the company. Lominat vied with two other local companies that submitted offers out of 97 bidders that purchased the bid document. The second highest bidder, Pure Beverages Plc offered 1.7 billion Br while Metadel Manufacturing Plc proposed to buy the company for 1.5 billion Br. The trio had proposed to pay 35pc of the bid price up front and to settle the remaining amount with a five-year instalment payment plan.
Among one of the companies privatised so far, NALF is ranked third in obtaining the highest offers. National Tobacco Enterprise, privatised for half a billion dollars to Japan’s Tobacco International (JTI) is ranked first, while Meta Abo Breweries S.C, sold to Diageo Plc for 225 million dollars comes second. Recently, Assela Malt was privatised to Oromia Agricultural Cooperative Federation (OACF) for 1.4 billion Br.
Though the three bidding companies showed keen interest to acquire NALF, the government is in a row with Berhane Gebremedhin, the company’s former owner. The 111-year-old factory used to be owned by Berhane, who has acquired it from its founder Elias Papasinos. The company was nationalised from Berhane by kelate, an official’s oral or written order, during the Dergue regime. Dergue nationalised the four plants of the company located in Mexico Square, Elber Alcohol Factory in Aqaqi, Sebeta Alcohol Factory in Sebeta and a warehouse in Mekanisa.
After EPRDF took power in 1995, it was declared that properties nationalised by means of kelatewould be returned to their former owners. But the factory was not returned to Berhane as the former Privatization & Public Enterprises Supervising Agency refused to do so claiming fear of monopoly in the market and offered compensation for the Ethio-American claimant Brehane. He refused compensation to cease his ownership, wrote various letters to government officials demanding the return of the company.
“This time again, I have sent all my documents to Prime Minister Abiy Ahmed (PhD) for a final decision,” Berhane told Fortunerecently.
The tender to privatise the company was announced in April amidst this controversy among the two parties. The bid was initially scheduled to be opened by the beginning of June but was postponed to last week. The company, which was up for sale, has an annual production capacity of 30,000lt of liquor. The factor’s profit spiked to 607 million Br last year. In the given period, its paid-up capital bumped to 222 million Br.
“We had postponed the final opening of the bids following bidders’ request who required additional days tp prepare,” to said Dawit Tefera, director of Investment Administration & Privatization at the Ministry of Public Enterprises (MoPE).
During the bid opening held on June 19, 2018, Lominat, a company established during the bid opening held on June 19 2018, Lominata, a company established by two individuals, Brook Worke and Binyam Berhanu placed the highest offer. Brook worked for Coca Cola Company in the USA and other African countries. Binyam has been exclusively importing Stolichnaya Vodka for more than two decades. Lominat is currently constructing a beverage plant in Modjo on a 45,000sqm plot of land.
The founders of Lominat claim that they were interested in acquiring the company with the aim import substitution of liquor products into the country.
“The plant and the brand deserves a good chunk of money,” Brook told Fortune explaining his company’s rationale for the offer. “We made a prior assessment.”
Zewdu Abebe, who served the former privatisation agency for a decade or more at top management level, believes that private owners could make the company more profitable than the government.
“The demand for the company’s products is very high,” Zewdu told Fortune, “the current owners of the company didn’t satisfy this demand.”
Mesfin Abate, the deputy CEO of NALF, also shares Zewdu’s view.
“The privatisation is for the better of the factory,” he said, “it will be profitable and effecient under the new ownership.”
The winner will be announced within a weeks time, according to Dawit.