The Development Bank of Ethiopia (DBE) has agreed to give a loan of 495.8 million Br to Velocity Dairy Plc in a contract signed on July 5, 2013. This company was established in Ethiopia, in June 2010, seeking involvement in the dairy and juice business in Ethiopia. Its facilities will be located in Chancho Town, Sululta Wereda, 268km north of Addis Abeba. It required a capital of 1.1 billion Br for this, says Samuel Tesfaye, managing director of the company. They applied for a 684 million Br loan from the DBE, in November 2011.
"Their investment is in a sector identified as a priority by the DBE, so we did not hesitate to avail them the loan," Esayas Bahre, President of the DBE, told Fortune. "However, we found some costs to be unnecessary. Thus, our estimated project cost was lower than their request."
The company had earlier, in June, approved another loan of 199.07 million Br from the World Bank's International Finance Corporation (IFC), although this loan is yet to be signed, according to the IFC's website. Samuel says that with the 205 million Br (11 million dollars) the company has raised as equity in the Netherlands, it has been able to secure the 1.1 billion Br it required to set up its business.
Samuel has declined to give any details, but says that the company is contacting machinery suppliers. They will also soon begin looking for contractors for the construction of the plant building.
While the DBE availed the loan on the grounds of priority, the IFC says that it approved the loan, yet to be signed, on the grounds that the company is to source its milk from 5,000 farmers around Chancho. Velocity says it plans to produce 70,000 litres of milk a day and pack it with up to a nine year shelf life.
Velocity Dairy plc's story seems to be a tale of descent or renaissance. It was briefly a major petroleum refining company in Europe, sold by Velocity's owners for hundreds of millions of dollars. It went bankrupt shortly afterwards.
This man behind it all, according to information garnered on the web, is Willem Willemstein. He bought Petroplus International BV in a management buyout, in partnership with another Dutchman, Marcel Van Poecke.
The Reuters news agency described the company, in a 2012 timeline it wrote on them, as: "Swiss based Petroplus, once Europe's largest independent oil refiner, crumbled as its mountain of debt became impossible to manage, as its refining margins dived."
Established in 1993, the company bought a refinery in Switzerland from Royal Dutch Shell for 131 million dollars, in 2000, and another refinery in the UK for 110 million dollars. It then sold out to private equity firms for 689 million dollars, in 2005. The company's glory days would be over by 2008, at its debt climbed to as high as 1.88 billion dollars and its lenders froze credit facilities promised to it.
Willem Willemstein went on to establish Velocity Capital BV, which, according to a website, the Netherlands African Business council (NABC), is an investment company in the Netherlands. This company then established another, called Velocity Africa Holding, which, in turn, established the dairy business in Ethiopia.
Velocity Capital has shares in a web-based brokerage company, called Tradeking, but few details could be found on the web.
The Ethiopian business was registered in June 2010, with a project capital of 764 million Br. It will start settling its debt to the DBE after eight years, at an interest rate of 8.5pc.
