GROUNDED low-cost airline, Fly Africa Zimbabwe, has been dragged to the High Court by a Mauritius registered company, Blossom View Holdings (Pvt) Ltd, following a botched US$4 million loan facility agreement.
Fly Africa Zimbabwe was a low-cost carrier based at the Robert Mugabe International Airport operating under a joint venture between Fly Africa Zimbabwe and Nu Aero (Pvt) Ltd.
Through its local lawyers, Masiya-Sheshe and Associates, Blossom View recently issued summons against Nu Aero t/a Fly Africa Zimbabwe and Hopalong Cassidy Chitariso Mugwagwa, seeking confirmation of cancellation of a loan facility and payment of the owed cash.
According to the court papers gleaned by the Zimbabwe Independent, Blossom View is a foreign corporate entity registered in accordance with the laws of Mauritius, but entered and signed a loan facility agreement with Fly Africa Zimbabwe on November 8, 2019.
The Mauritius company said on the date in question it entered into an agreement with Nu Aero in terms of which it extended a loan facility in the sum of US$4 million upon a written request by Mugwagwa’s company.
“It was a material term of the agreement that all disbursements under the said term sheet were at the sole and absolute discretion of the plaintiff (Blossom View Holdings). In terms of the signed term sheet for the loan facility, the first defendant (Nu Aero) undertook to repay the amount drawn down quarterly after the grace period of 60 days. The first defendant also agreed and signed that any interest on the loan advanced would be at 10% per month,” the lawyers said. “The first defendant made its first drawdown request on November 10, 2019. Further requests of drawdowns were made resulting in the defendants drawing down US$1 710 622 by July 3, 2020, and accumulating an interest of US$1 204 355 bringing the total inclusive of loan and interest to US$2 914 978.”
According to the lawyers however, after securing the said loan facility, Nu Aero only made a single payment of ZAR1 906 000 which translated to US$42 265 on January 10, 2020, which amount was apportioned towards reduction of interest.
The lawyers further said, in material breach of the agreement, Nu Aero and Mugwagwa have since failed to repay the interest quarterly as agreed adding both Mugwagwa and his airline are therefore indebted to the Mauritius firm in the sum of US$2 914 978 being capital and interest on money drawn down by Nu Aero from the loan facility as at August 31, 2020.
“The first and second defendants (Nu Aero and Mugwagwa) have not made any further payments towards liquidating the debt prompting the plaintiff to cancel the loan facility extended to the defendants. Despite demand, the defendants have failed, refused or neglected to pay the whole amount owing and they remain in mora,” the lawyers said.
“Wherefore plaintiff claims an order confirming cancellation of the loan facility agreement between the parties against the first and second defendants jointly and severally with one paying the other to be absolved. That is, payment of US$1 710 622 being the capital debt; payment of US$1 204 355 being interest on money drawn down by the defendant from the loan facility as at August 31, 2020, and payment of interest on the total sum owing at the prescribed rate calculated from date of claim to date of full and final payment plus costs on an attorney and client scale.”
Nu Aero and Mugwagwa are yet to file a response to the lawsuit and the matter is pending.