Ethiopia: PTA Bank Advances 90 Million Dollars in Ethiopian Airlines, Habesha Cement
Two local companies, Ethiopian Airlines and Habesha Cement SC, have become beneficiaries of a 90 million dollar loan from the Eastern & Southern Africa Trade & Development Bank, known as the PTA.
Habesha Cement will be borrowing 50 million dollars, to be paid over seven years, but with a short term repayment portfolio option, Fortune learnt. This means that if Habesha can get a more attractive financing agreement with another bank, it has the option of paying back the PTA within two years and ending the contract. Ethiopian's 40 million dollars is also a long term loan to be paid in around 12 years, according to Admassu Taddese, the president of the PTA Bank.
Although the interest rate for both loans was not disclosed, the CEOs of Ethiopian and Habesha described it as being very attractive. Mesfin Abi, the CEO of Habesha, revealed that it is much lower than the interest rate of local banks.
Admassu announced the loan approval for the two companies on Tuesday morning, September 10, 2013, at the launch of the Bank's 29th annual conference. This was being held in Addis Abeba throughout last week.
During the event at Capital Hotel & SPA, Tewolde G. Mariam, CEO of Ethiopian, and Admassu signed a loan agreement. This will see the PTA disbursing 22 million dollars of the 40 million dollars approved. The deal with Habesha was finalised earlier, on August 22, according to Mesfin from Habesha.
"We backed Ethiopian, because its reach is not limited to the country," Admassu announced during the signing. "We had the opportunity to affect the regional aviation industry with this investment."
The PTA - the financial arm of the Common Market for Eastern & Sothern Africa (COMESA) - has previously only advanced loans to a handful of Ethiopian companies. These include Ethiopian Airlines, for the purchase of aircraft, as well as others involved in the leather and coffee industry.
But it plans to increase its commitments toEthiopia, with the intent to disburse 300 million dollars over the next two years. This is aside from the 90 million dollars it leant to the two companies. The bank is already in negotiations with three local companies. These include state owned enterprises in the transport, trade and coffee sectors.
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