The Development Bank of Ethiopia (DBE), the state policy bank, repossessed the textile plant of Ayka Addis Textile & Investment Group from its defaulted Turkish owners .

The decision was made by the Bank’s management and subsequently approved by its board.

The decision also involved the Ministry of Trade & Industry and Textile Industries & Development Institute, and notification of the Bank's decision was communicated to company's labour union.

"The owners are either unwilling to raise the necessary capital or equity," said a source close to the case, "the action is taken to impart a lesson to other companies."

As of October 31, 2018, Ayka has failed to service its 2.87 billion Br debt secured from the Bank since 2006.

Ethio Capital Investment S.C, established by the Bank to manage and administer the assets of foreclosed factories and companies, has taken over the plant and restarted its operations beginning mid-week this month. Ethio Capital will operate Ayka Addis until it is transferred to private ownership.

Ayka Addis was established in June 2006 by three Turkish individuals and an authorised capital of one billion Birr, of which 679 million Br has been paid. During the establishment, the owners have borrowed 813 million Br from the Development Bank.

The company became operational in 2010 in Alemgena, 20Km west of Addis Abeba, spinning, knitting and dying garments, and initiating one of the few textile operations in the country that adopted an end-to-end production chain. The factory exported its products to Germany, Spain, the United States, Japan, France and Canada.

Germany, where one of the former shareholders is based is a major destination for the products of the company, had consumed more than one - third of its capital.

The company operated with 7,000 employees and has been reporting losses. In 2014, it reported a loss of 615.29 million and registered a loss of 312.8 million Br the following year. The company has accumulated losses that totaled 1.86 billion Br to date.

Costs of production, sales, distribution and administration have contributed to the losses registered by the company, according to its financial statement. The company was also scaling down its operation that led to declines in revenues.

The former owners of the company claim that the factory has generated 400 million dollars from export since it became operational. They also state that they have lost close to 50 million euros due to the widespread unrest across the country that occurred three years ago, and have submitted new applications for additional loans from the Bank.