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.
“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.