Editorial | Mar 20,2021
No bidder showed up to buy shares registered under Tewodros Tewolde with Zagol Petroleum Plc, during an auction held last week.
The assets up on the auction bloc included 90 shares in Zagol Petroleum Plc at a par value of 100,000 Br and a real estate property in Nifas Silk Lafto District up for a threshold price of 961,000 Br. The auction took place on September 2, by the High Court's Judgment Execution Directorate on Ras Mekonnen Avenue.
The property was put up for auction following a legal battle between the Ethiopian Petroleum Supply Enterprise and Tewodros, a businessman born in Humera and involved in the oil market. The Enterprise took the case to the civil bench of the High Court late last year, demanding 454 million Br in accounts receivable due on petroleum products oil companies associate with Tewodros received three years ago. Judges at the High Court ruled in favour of the Enterprise and ordered the seizure and auctioning of the real estate property and the shares.
Tewodros settled 86 million Br of the payment, in the form of a 16 million Br in guarantee from Lion Bank in March 2017; another 40 million Br guarantee from the Bank of Abyssinia issued the following year; and 30 million Br in payments from Tiliksew Gedamu, a businesswoman who acquired a gas station associated with Tewodros.
An additional 19 million Br in accounts receivable is expected from the sale of fuel trucks to the businesswoman, who has provided a guarantee worth a similar amount in case of default.
Though the Enterprise hoped to recoup a portion of the 370 million Br remaining in receivables, the only offer made was for the real estate property, barely putting a dent in the balance. After vying with five bidders, an individual, Si'ele Shiferaw, offered eight million Birr for the 160sqm real estate property. The runner-up submitted a seven million Birr offer for the property.
Although the Enterprise will secure the offered amount if the winning bidder deposits the money within the next two weeks, it will certainly have to wait longer to recoup the balance in uncollected payments from the businessman.
The shares should have attracted buyers considering the suspension on the issuance of new licenses to petroleum companies, according to Ephrem Tesfaye, board member of the Petroleum Dealers' Association. He attributed the no-show to a lack of publicity and the freeze the central bank recently imposed on collateralised loans.
The number of shares up for auction comprise a minority stake in the company, thus are unattractive to buyers, says Ephrem.
“People want to have a controlling interest when making an acquisition,” he said.
Tewodros was pleased with the outcome.
"The offer for the house is a good one," he said, speaking on the phone from overseas.
Executives of the Enterprise hope to see more interest from bidders when the Directorate re-floats the auction, according to Tigist Nigussie, head of legal services at the Enterprise.
"We'll wait until the shares are sold," said Tigist.
According to experts, if no bidder appears interested, judges may rule to transfer the shares to the plaintiff.
“The state enterprise may not be interested in continuing as a shareholder,” said Yohannes Woldegebriel, a legal expert who believes the Court has little choice but to transfer the shares to the plaintiff.
PUBLISHED ON Sep 04,2021 [ VOL 22 , NO 1114]
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