M’membe, Mutembo Nchito DBZ Debt Rises to K34 Billion THE Development Bank of Zambia (DBZ) has accused Director of Public Prosecutions (DPP) Mutembo Nchito of continuing to neglect or refusing to execute personal guarantee in the K14 billion syndication loan agreements which he obtained together with JCN Holdings and Post Newspapers in 2007 and has now risen to K33.5 billion at 20 per cent interest. The bank says similarly JCN Holdings and Post Newspapers have failed, refused or neglected to pay the sum owed or any sum at all. In its amended statement of claim filed in the Lusaka High Court dated June 3, 2014, the DBZ says by mid-2008 it was clear that in spite of the injection of US$5.5 million in the now defunct Zambian Airways, the airline was facing serious liquidity problems and was in arrears in the repayment of both interest and principal on the loan. The bank says by clause 8.6 of the Syndication Loan Agreement executed by the bank, Mr Nchito was to give a personal guarantee for the repayment of the loan facility for the full value of US$5.5 million. “Mr Nchito executed the said Syndication Loan Agreement on behalf of the company but did not and continues to neglect or refuse to execute the personal guarantee under the agreement aforesaid,” says the claim The bank says by reason of Mr Nchito’s failure to execute the guarantee, DBZ suffered and continues to suffer a diminution in the security offered by the company for the repayment of the loan. Subsequent to the Syndication Loan Agreement and at the instance of JCN Holdings, Post Newspapers and Mr Nchito, the parties executed a debt equity conversion agreement on October 6, 2008. In the same claim the bank now wants the JCN Holdings and Post Newspapers to buy back the stock equity from DBZ in the sum of K14 billion at 16 per cent per annum plus 8 percent margin of a floor rate of 20 per cent per annum whichever is higher from the date of the disbursement of the loan. The bank is also claiming interest as provided for in the terms of the equity buyback agreement and as undertaken by JCN Holdings and Post Newspapers and as determined by DBZ “The bank is entitled to call upon Mr Mutembo Nchito to execute the guarantee as agreed by the parties,” the claim says The bank is also claiming for an order for specific performance that Mr Nchito executes a guarantee as envisaged and provided for under clause 8.6 of the Syndication Loan Agreement as a result of their frustration of the debt equity swap agreement by their decision to cease the company’s operations and or damages for misrepresentations. The statement explains that “desirous of expanding its operations, by inter alia, the acquisition of new equipment, the airline in 2007 approached Investrust to syndicate a loan facility in the sum of US$5.5 million to be secured against certain assets of the company.” Investrust as the lead bank put together a consortium of banks comprising itself, Intermarket and DBZ who together as joint lenders agreed to provide banking facilities up to the sum secured. DBZ’s portion of the loan was US$3 million, equivalent to K14 billion which sum was duly drawn and utilized by Zambian Airways. JCN Holdings is an investment company and at the material time a shareholder in Mine Air Services Limited trading as Zambian Airways while the Post Newspaper is a company engaged in business of newspaper publishing and held shares in Zambian Airways at the material time. zambiareports/2014/09/30/mmembe-mutembo-nchito-dbz-debt-rises-k34-billion/
Posted on: Tue, 30 Sep 2014 08:03:16 +0000
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