Negotiations between CBE and Amalgamated fails

Company terminates employees contracts, liquidates

By Tamiru Geda

A series of negotiations and discussions undertaken between the Commercial bank of Ethiopia [CBE] and Ethiopian Amalgamated Limited [EAL], to look for solutions designed to rescue the company from financial bankruptcy has failed.
According to close sources EAL is said to have decided not to accept the requirements put forward by CBE. Meetings were held more than three times among the main stakeholders of the company like the Ethiopian Employers Federation, the Confederation of the Ethiopian Trade Unions, CBE’s president and its legal team and Amalgamated management staff.
CBE had proposed that Amalgamated that owes it over Birr 140 million, pay 25% of the total debt, in order to save its head office building from the auction block (estimated price of Birr 8 million) and its four factories in Beklobet and Kaliti areas (estimated at Birr 14 million).
So far, there are two offers for the head office, while no buyer has shown up for the factories, said informed source of auction process.
However, considering the good will of EAL and its role in the import of fertilizers and other agricultural inputs for the peasant farmers, CBE had finally agreed to concede the first requirement to a lesser amount of Birr 10 million only and work together to find a solution that would allow Amalgamated to re-enter the business.
Last week however, EAL gave its response, that stated that the company can not afford to pay the bank more than Birr 2.5 million at once. According to one of the participants of the meeting, the decision came from Ato Gebreyes Begna, owner and CEO of the company through his representatives. Ato Gebreyes has not returned to the country since he left for the United States a few years ago.
The amount proposed does not exceed the monthly interest payment of the debt owed to the bank. CBE and the mediators finally reached the agreement aborting negotiations on the matter and foreclosing the company.
Capital learned that Amalgamated has issued a notice for its some 250 employees informing them the termination of their contracts as of March 29, 2004 and assuring them of their compensation and other benefits.
Ethiopian Amalgamated Limited is recognized as one of the leading local companies, which contributed significantly to the growth of private business in Ethiopia, even during the Derg regime.
Speaking to Capital over the telephone from the US, Gebreyes said that his company is “under government de facto expropriation.” “We negotiated with the Commercial Bank of Ethiopia in good faith to pay our debts, but there was no official reaction to our offer and it is up to the bank to respond , said Gebryus added . In his view Amalgamated is in bad situation not liquidated and that good times would return to Amalgamated and its employees.
Capital also asked Gebryus how he reached the final decision to terminate the contracts of his employees who served the company for so many years. He reacted by saying that it a question of the right of the individual amalgamated employees to work in every corner of the country. “ “Measures taken against my staff and my company are immoral and unlawful. We believe in solving our problems and we have the potential for extensive investments in Ethiopia, if there is rule of law. But in order to pay the debt or to do business there must be a trustworthy regime “concluded Gebrayes.