TROUBLED HIBER SUGAR DIRECTORS PROPOSE INVESTMENT SWITCH

The embattled Hiber Sugar Share Company eyes new investment opportunities in the agriculture sector, proposing to get involved in rice and avocado oil production following its inability to produce sugar on a sizeable plot of land granted by the Amhara Regional State.

Authorities in the regional state reclaimed the land leased to the company after the latter failed to make any progress, leaving its shareholders, who have not yet had the chance to receive dividends, disappointed.

Hiber Sugar was established 12 years ago, to develop a private sugar estate on a 6,183ht land obtained in the Amhara Regional State. Raising equity from 5,500 shareholders, the company has little to show for it after more than a decade. Hiber has mobilised a paid-up capital of 81.1 million Br, not enough to pay for a tenth of the amount required to erect the smallest sugar plant. However, its net total assets stand at 16.1 million Br.

This may not be sufficient to let the company pursue its dream, but making a partnership with foreign investors can be a way forward, according to Mengistu Tilaye, CEO of Hiber Sugar.

"We had once signed a memorandum of understanding with an Iranian investor, but this failed as the authorities repossessed the land while we were attempting to take the deal to the next step," Mengistu told Fortune. "Alternative business ideas, however, will be considered if we fail to reclaim the land from the Amhara Region."

In a bid to shift to a new line of business, Hiber's directors have solicited proposals for investments presented during the eighth general assembly of the company, held on April 24, 2021. The Board of Directors, chaired by Aero Belete, has shortlisted seven proposals from a list of 200 ideas.

However, the general assembly was not held due to failures to achieve a quorum requiring at least a quarter of the shareholders in attendance. Despite being unable to hold the general assembly, seven directors continued their fourth urgent meeting and decided to shift to another line of business after agreeing that the current approach is bound to jeopardise the company's future.

Hiber and the Rural Land Administration & Use Bureau in the Amhara Regional State have been locked in a perpetual dispute for the last five years. While Hiber struggled to reclaim its land, the Bureau revoked the lease twice, claiming lack of progress and failure to start production on time on plots the regional state made available in Awi Zone and South Achefer of West Gojjam Zone. Thus far, the company has spent 18.4 million Br on lease payments and clearing the land to be ready it for installations of the plant, according to its latest audit report. Out of its total operational expenses, salary-related expenses and board allowance accounted for 13 million Br, while it has invested in 1.05 million Br buying shares in Amhara Bank, which is under formation with a paid-up capital of almost six billion Birr.