Ghion Hotel, Four Others Fail to Find Suitors


High indicative prices may be the culprit in discouraging interest, questionnaire finds




Ghion Hotel and another four state-owned companies put up for sale by the Privatization and Public Enterprises Supervising Agency (PPESA) have failed to get a single bidder by the tender’s closing date on Tuesday, October 22, 2013.

The other four floated companies were Weyra Transport S.C, Transport Construction Design S.C, Agricultural Mechanization Service Enterprise and Artistic Printing Enterprise. All companies, except Weyra, have been floated previously as part of the government’s privatisation drive.

“The tender, which was floated on August 21, 2013, stayed open for 43 days, and was then extended for an additional 14 days,” said Asebe Kebede, deputy communication head at PPESA.

On the opening day of the tender box, the tender committee found nothing inside which was expected, according to Asebe.

“Not even a single bidder bought the bid document from us,” he said.

By the end of the previous budget year, PPESA had sold a total of 312 companies including their branches, and is currently left with 45 companies under its holding, including the above-mentioned five.

Ghion Hotel, which was established in 1958, lies on 123,000sqm of land and plans to attain five-star status by 2015 from its current four stars. The hotel, with 507 employees, has 191 rooms and seven different halls with seating capacities ranging from 70 up to 500.

It was put up for a joint venture auction in 2010, and a German company called Dnknesh Vermogenveravltung (DV) GMBH, represented by Aklileberhan Mekonnen, who claimed to be a member of the last Ethiopian royal family, signed a Memorandum of Understanding (MoU) with PPESA in August 2010. That MoU, which would leave the PPESA with 20pc share, was supposed to be a project worth a total of 8.3 billion Br, including expansions that involved new buildings, but it did not work out.

However, PPESA decided to refloat the hotel for full private ownership in June 2012, after DV not only failed to submit the 3.5 billion Br down payment on time, but its representative failed to show up on the signing date of the contract in November 2010. The 2012 bid, however, also failed to find a buyer despite the fact the price was reduced.

To understand the lack of interest, the Agency has conducted a questionnaire-based research to find out why investors were uninterested in these enterprises, according to the deputy communication head.

“Most of them replied that the indicator prices for the companies were too high,” said Asebe, stating that the Agency bases its indicator prices on the market and does not think them to be too high.

Though the indicative prices were unavailable for this round of tenders, previously, Ghion Hotel was listed at 150 million dollars, while Artistic, which was floated numerous times as well, was at 241 million Br.

Artistic was established in 1931 with a capital of 1.2 million Br, which has now grown to over two million Birr. It has slightly over 400 employees, according to the official website of the Enterprise.

Transport Construction, established in 1994 with a capital of 19.2 million Br, currently employs 623 workers, while the Agricultural Mechanization Service Enterprise started with a capital of 20.6 million Br in 1986 and has 293 workers.

The fate of the companies will be decided by the Agency’s board, which is chaired by Aster Mamo, according to sources.  There is a possibility the enterprises will be sold through negotiations rather than the current bid system.



By YOSEPH MEKONNEN
FORTUNE STAFF WRITER

Published on October 27, 2013 [ Vol 14 ,No 704]


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