Atlas Development & Support Services Limited, cross listed
at the Nairobi and London bourses, has been granted a 100-year land
lease in Ethiopia to set up a bottling plant.
This
takes forward the company’s plan to venture into the industrial space, a
shift from its traditional logistics business focused on oil and gas
exploration that has recently been performing poorly due to plummeting
crude prices.
Atlas plans to build the bottling
facility 45 kilometres north of Ethiopia’s capital Addis Ababa to take
advantage of the country’s growing consumer sector.
The
company said it had already paid for the first 45 years of the lease.
The area is said to be in close proximity to established infrastructure
and intended mine sites for the materials needed to produce high quality
bottles.
Landmark moment
“The
grant of our land lease and construction licence at our Chancho project
marks a landmark moment in the development of this bottling facility,”
said Atlas’ chief executive officer Carl Esprey in a statement issued to
the Nairobi Securities Exchange.
Atlas is targeting
international beverage companies choosing the Eastern Africa country for
investment to grow its sales for bottles.
Atlas
ventured into the Ethiopia market in November last year with the
acquisition of East Africa Packaging Holdings Limited that was the
original owner of the bottle manufacturing project.
It
is banking on the new industrial division to improve its cash flow whose
challenges have seen it pile up debts to creditors amounting to more
than Sh400 million.
Early this month, it emerged that
some of the creditors had petitioned the government to appoint
independent auditors to probe the state of the company’s finances with
hope that it clears outstanding debts before it exits the local market.
In
December, Atlas closed its three subsidiaries- Ardan Logistics Kenya
Limited, Ardan (Medical Services) Limited, and Ardan (Civil Engineering)
citing poor performance due to reduced contracts from oil and gas
exploration companies.
During the year to June 30 Atlas
reported a net loss of Sh1 billion. The firm incurred Sh147 million in
finance costs while its operating expenses increased to Sh1.2 billion
from Sh262 million incurred during the previous year.
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