Ethiopia okays NSE-listed Atlas’s glass factory plans

Nairobi Securities Exchange (NSE) listed Atlas Development & Support Services (ADSS) says it has acquired a licence to build a glass manufacturing plant in Ethiopia.

The company, which is dual-listed on the London Stock Exchange (LSE), said the Ethiopian government has granted it a 13.5-acre land lease for 100 years.

ADSS said it plans to supply Ethiopia’s growing beverage industry that currently imports substantial quantities of glass bottles.

“The grant of our land lease and construction licence at our Chancho project marks a landmark moment in the development of this state-of-the-art bottling facility, which will cement our diversification into the highly prospective industrial space,” said CEO Carl Esprey in a statement.

The glass plant will be one of its first operating units after the company closed its Kenyan subsidiaries that are now set for liquidation.

The closure of its Kenyan support services subsidiaries Ardan Logistics, Ardan Medical Services and Ardan Civil Engineering led to the retrenchment of some 750 employees.

Kenyan creditors who are owed hundreds of millions of shillings have asked for government help to recover their funds from the UK company.

ADSS took the drastic action following the downturn in the oil prospecting sector on which it relied on, offering services to clients like Tullow Oil.

The company’s net losses widened to $9.6 million (Sh980 million) in the year ended June 2015 compared to $5.8 million (Sh591 million) a year earlier as operating expenses grew faster than revenues.

READ: Atlas creditors issued with one month notice to lodge claims

ADSS says international beverage companies have invested more than $500 million (Sh51 billion) in Ethiopia over the past five years, attracted by its fast economic growth rate. They include Heineken, Diageo and Bavaria.

ADSS plans to supply glass bottles to the beverage firms, saying local production has a price advantage compared to importation.

“The demand for glass bottles is largely unmet by local production and is at present mainly satisfied by expensive imports. There is strong demand for locally produced glass bottles in Ethiopia which Atlas aims to meet, through the development of the Chancho project,” the company said.

ADSS says the plant is expected to have a capacity to produce 105 million 330ml bottles per annum and is scheduled to start full production in early 2019.

The firm estimates the factory to cost $42 million (Sh4.2 billion), with the funds to be raised from a mix of debt and equity transactions.

Shareholders of ADSS at its December AGM voted to allow for the issuance of up to 500 million shares, a move that is expected to raise funds at the cost of diluting existing shareholders.

“We believe that it is now an opportune time to request your approval to authorise the directors to raise new equity and accordingly dis-apply pre-emption rights on the issue of up to 500,000 new ordinary shares for cash,” the firm’s chairman Ian Mann wrote to shareholders ahead of the meeting.

The company currently has 392.3 million on the LSE and 40.7 million on the Nairobi bourse, bringing the total to 433 million.

Its share price has lost 85 per cent over the past one year to trade at the current range of Sh1.8 apiece.