Nigussie Hailu forfeits bottling company shares after court ruling

Ethiopian businessman Nigussie Hailu has lost his shares in the East African Bottling Share Company (EABSC) following a ruling by Ethiopia’s Federal High Court.

The EABSC is Coca-Cola’s bottlers in Ethiopia. Hailu, who has been the only indigenous stakeholder since 2017, owned roughly 32,624 shares.

The court froze his stake years ago and aimed to sell it off at a floor price of 58.2 million Birr ($1.4 million). The price was computed on the basis of a single share price of 1,784 Birr ($42.98), according to The Reporter Ethiopia.

Background

Nigussie Hailu is one of several Ethiopian partners who bought the state-owned EABSC in 1995 from the former Ethiopian Privatization Agency. The others included Abinet Gebremesqel, Munir Duri, Dereje Yesuworq, Shadia Nadim and Hussein Abedella.

The five partners teamed up with the South African Bottling Company (SABCO) to buy the enterprise and then formed a private limited company, which was later transformed into a joint venture in 1999 under the name EABSC.

However, Gebremesqel, Duri and Yesuworq became embroiled in a dispute with the company’s major shareholder over issues such as dividend payouts and their exclusion from the board. They further accused SABCO of mismanaging roughly 600 million Br ($14.46 million at current value).

The case, which was filed with Ethiopia’s high and supreme courts, ruled in favor of SABCO. However, the parties decided to negotiate out of court and agreed to a share buyout.

In 2018, SABCO bought the shares belonging to Gebremesqel, Duri and Yesuworq for 1 billion Birr ($37 million). The former shareholders remitted $200 million Br ($4.82 million) to the government for taxes. Gebremesqel took home $400 million Br ($9.64 million), while Duri and Yesuworq split the remaining funds.

In a statement, Gebremesqel said they decided to sell their shares due to the dispute, Food Business Africa reported. “We sold our shares after negotiating with the company, preserving our benefits and advantages,” Gebremesqel noted.

Hailu remained the only Ethiopian shareholder with a stake in EABSC since 2017. He has been fighting court battles for more than two decades on corruption charges involving then-Prime Minister Tamrat Layne.

The Supreme Court convicted Nigussie, Shadia, and Hussein of squandering and sharing $16 million borrowed from Mohammed Ali Al-Amoudi (Sheikh)*, illegally exporting 1,000 tons of coffee on Tamrat’s orders through a company owned by Shadia and manipulating the state to make purchases in a manner that went against the public interest.

The parties were imprisoned in 2000 for criminal liability and ordered to pay $4.2 million to the government to recover the coffee losses and $16 million to Al-Amoudi.

*Mohammed Ali Al-Amoudi (Sheikh) is an Ethiopian billionaire and Saudi citizen. He was Ethiopia’s richest person with a net worth a $8.1 billion in 2017, based on Forbes estimates. He was regarded as the second wealthiest Saudi Arabian in the world and the second richest person of African descent. In 2017, Crown Prince Mohammad Bin Salman of Saudi Arabia ordered his arrest on allegations of corruption, Gulf News reported. He was arrested alongside a group of princes and ministers and released after 14 months.