The bank accepts the offer from the first flower farm owner after the second party fails to show up for negotiations.
Development Bank of Ethiopia (DBE) has finally sold Menahem Tizazu Flower Farm to Eyasu Sirak (PhD), owner and managing director of Shine Pay Flower and Vegetable Farm Input Supply Agents, for 17 million Br through negotiations after pervious tenders it had floated to auction the farm failed to fetch bidders.
During the last tender floated by the bank, only one bidder, Eyasu, showed up with an offer to pay the minimum of 14.3 million Br without having to pay the 10pc down payment required, on August 11, 2010.
DBE, unhappy with the offer and the low turnout of bidders, decided to sell the 10ht farm located in Bishoftu (Debre Zeit), Oromia Regional State, 47km south of Addis Abeba, through negotiations. Eyasu and another company, Blue Point Real Estate, showed interest in acquiring the farm through negotiations.
The date DBE had set for negotiations, September 16, 2010, was postponed until September 22, as only Eyasu made an appearance with his offer. As representatives for Blue Point Real Estate also failed to show up on the postponed date, DBE presented the proposal made by Eyasu to its management board for approval.
The bank’s approval of Eyasu’s 17 million Br final offer was communicated in a letter sent to him on Thursday, September 30.
“I am happy that DBE accepted my offer of 17 million Br,” Eyasu, who expects to sign the contract this week, told Fortune.
Having conducted research into the farm prior to putting in his offer, Eyasu anticipates his expenses to reach around 20 million Br, including plans he has to replace the polyethylene plastic cover of the green house.
“The cover will cost me around 1.6 million Br and the purchase of chemicals around 350,000 Br,” Eyasu told Fortune.
The sale of Menahem Tizazu Flower Farm, which was established with an initial capital of 1.3 million Br in 2004, is the fifth flower farm the DBE has foreclosed and sold to third parties. A sixth one, Menagesha Flower Farm, covering 32ht in Oromia Regional State, has been foreclosed by DBE and tendered twice for a minimum bid of 12.1 million Br, without attracting any bidders.
Tenders floated by DBE two weeks ago for two properties it had foreclosed also failed to attract bidders.
A lack of bidders during the auction phase of properties, worth more than five million Birr, has become very common as the 10pc to 25pc down payment requirement intimidates most potential buyers, according to a DBE official.
The price of a property becomes inflated during auctions, many believe, and they prefer to wait until it is offered for sale through negotiations.
A tender was floated for the fourth time last week for the auction of Green Star Food Complex Plc, located on a 0.9ht plot of land in Bishoftu, Oromia Regional State, with a minimum bid of 43.7 million Br. The property will be offered for sale through negotiations, according to DBE’s procedure.
Yet, the tender for a second property which was floated last week, a pasta factory owned by Fantaye Yimamu (PhD) and located in Misrak Shewa Zone, Oromia Regional State, which was for sale through negotiations, also failed to attract any bidders.
