Ethiopia: Hibir Sugar Holds Feisty Meeting As Liquidation Looms
Because the meeting shareholders and board of directors of Hibir Sugar conducted was full of chaos, Ayenew Ferede, advisor to the Minister for trade, (the one pointing his finger on the left), who appeared there as an observer had to interfere.
Minalachew Simachew, acting board director (the one pointing a finger on the right) had also to do the same on shareholders who was speaking emotionally without permit. Yewondwosen Bekele (middle) board chairperson chairs the meeting.
The board of directors at Hibir Sugar S.C, which called its shareholders to an ordinary meeting on Saturday, August 31, 2013, failed to map out alternative projects after the company's unsuccessful attempt to fulfill its equity requirements.
Although the meeting was earlier called on August 3, 2013, it could not go ahead as the minimum proportion of shareholders, 25pc, could not attend. Following the failure to convene the meeting on that day, last weeks' gathering, at the premises of the Defense Officers Club in the Torhailoch area, was expected to deliver alternative project ideas. These would help to decide the form and fate of the company.
Out of the eight alternatives proposed by the board of directors, four are still in the sector the company envisions.
Changing the primary aim of the project and establishing a food oil factory, merging with other companies, purchasing another company and liquidation are the remaining alternatives.
Hibir Sugar emerged in 2009 with a business plan of establishing 4,400tns of sugar cane a day. However, it failed to mobilise 30pc of the total estimated cost of the project, which is 2.3 billion Br. Since it managed to collect only 98 million Br over the last four years, its privilege to access loan from the Commercial Bank of Ethiopia (CBE) vanished.
Throughout the whole day, the meeting was totally focused on whether to liquidate or to continue as a share company.
After a long lasting conflict, which involved accusations and insults among the shareholders and the board of directors, the meeting finally held a vote to decide the fate of the company.
The final straw came when attendees, holding 8,177 shares, opted in favour of the continuation, with 7,825 supporting liquidation. The remainder, numbering 436, voted in abstention.
"It may take longer, but the liquidation of the company is still likely as far as I'm concerned," opined an official within the company, who is also one of the major shareholders.
"Although we tried to conduct a feasibility study using external experts, in order to enable us to gain a loan from the Bank, we failed because of financial problems," said Minalachew Simachew, acting director general of the company.
The response from some of the shareholders was harsh and unrelenting and, as such, it challenged the board members.
One among the shareholders accused the board, in front of observers from the Ministry of Trade (MoT) and the CBE, that they had not yet been informed on how nine million Birr has been spent.
"I will not be surprised if it liquidates," Getnet Tesfaye, a lawyer of the company told Fortune, an hour before the result of the vote was announced. "As far as I'm concerned, it is full of sad stories, especially when it comes to the relation among board members and shareholders."
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