27 October 2013

Ethiopia: New Winemakers Secure Br147 Million Loan From Awash Bank

Blue Nile, the private company that acquired Awash Winery SC from the government, is getting a 147 million Br loan from Awash International Bank (AIB) to pay off the balance owed on the 458.4 million Br deal it signed with the Privatization & Public Enterprises Supervising Agency (PPESA).

The PPESA was able to eventually sell the sole winemaker currently in the market in Ethiopia, on its seventh attempt on February 22, 2013. The buyer, Blue Nile Investment Plc, was declared the winner on September 5, 2013, in a tender that required a shorter payment plan.

Blue Nile was established by Mulugeta Tesfakiros, shareholder of Muller Real Estate and Langano Bekele Molla Hotels, and 8 Miles Plc, an equity firm chaired by Robert "Bob" Geldof, the Irish singer-songwriter and political activist linked to aid activities in Africa.

Blue Nile, which initially paid PPESA 312.9 million Br, will sign the loan agreement with AIB over the coming week to cover the remaining payment, according to an official from the Bank, who requested anonymity.

Ethiopia imported 10,637hl of wine in the 2011/12 fiscal year, at a cost of 27.8 million dollars, according to Ethiopian Revenue & Customs Authority (ERCA). The volume and value of imported wine showed 10.5pc and 12pc increases, respectively, compared with the previous year.

However, according to 2011 figures from Data Monitor, a market research firm, demand for wine in Ethiopia is estimated at 50,687hl.

The Winery, whose factory is located in Lideta district, has a 500ha farm in Merti Jirsu, which was previously owned by the Upper Awash Agro Industry, and a 42ha plot in Zeway, about 163kms south of Addis Abeba. Only 80ha out of the 500ha is currently being put to use, according to Mulugeta who is a 49pc shareholder in Blue Nile.

The Winery will focus on developing a vineyard and improving spare parts in the coming year, says Mulugeta. It also plans to invest five million dollars on its farms and acquire an additional 100ha farm to provide grapes for the factory.

Awash Winery has been in production since 1943. It produces 12 brands, including Awash, Axumite and Gouder.

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