11 January 2013

Zimbabwe: Riozim to Settle Debt With Capital Bank

LISTED mining firm RioZim Limited is to settle its US$3 025 963,21 debt to Capital Bank Corporation Limited, formerly Renaissance Merchant Bank (RMB), by March this year, a deed of settlement seen by The Financial Gazette's Companies & Markets this week indicated.

The two parties negotiated and agreed to settle the matter out of court and reduced it into a deed of settlement.

The agreement was registered as a court order by the High court on December 5, 2012 under case number HC12709/11.

Justice Mutema signed the consent order.

A consent order refers to a legal document which provides information about an agreement mutually reached by parties involved in a legal case.

Capital Bank was represented by C. Nhemwa & Associates while RioZim was represented by Dube, Manikai & Hwacha legal practitioners.

Under the deal, the parties agreed that the amount due to Capital Bank as at October 31, 2012 comprised of the principal and interest amounting to US$2 899 985,20.

RioZim is to pay interest on the capital amount from November 1, 2012 at the rate of 15 percent plus a margin rate of 2,5 percent per annum.

In addition, the mining concern was also required to submit monthly management accounts by the 14th day of the succeeding month.

It was also agreed that RioZim would make payments through C. Nhemwa and Associates.

When contacted for comment this week, Capital Bank's Managing Director, Lawrence Tamayi, said: "As you may be aware, banks operate under very strict confidentiality. I cannot give you the details about any arrangements with our client to become public information." To C4

Efforts to get comment from RioZim's Chief Executive Officer, Ashton Ndlovu, were fruitless as he was said to be in a meeting.

However, an impeccable source who requested anonymity confirmed that RioZim has since paid its November and December installments of US$650 000.

"Yes, they are up to date with their new monthly payments," said the source.

The mining firm is expected to make further monthly payments of US$575 321,07 from this month to March 2013.

This deed of settlement comes two years after RioZim failed to repay the loan facility advanced by RMB.

Renaissance in 2011 claimed $2 931 154,34 basing on the acknowledgement of debt executed by RioZim represented by former managing director Josphat Sachikonye.

RioZim was supposed to pay the liability in full and final settlement on October 31, 2011, including costs at an attorney-client scale and collection commission in terms of the Law Society's by-laws.

"We the undersigned RioZim Limited do hereby acknowledge that we shall be truly and lawfully indebted to Renaissance Merchant Bank Limited (now Capital Bank Corporation) in the sum of $2 931 154,34 on October 31, 2011 inclusive of capital and interest," reads part of the acknowledgement of debt dated September 23, 2011.

However RioZim breached the terms of the deal by failing to pay the sum of money promised as of October 31, 2011.

This led to Renaissance issuing summons which RioZim opposed.

On October 24, 2011, RioZim's company secretary Regis Taruvinga wrote to Renaissance notifying it that RioZim was no longer in a position to meet its obligation.

Part of the letter reads: "Due to delays in the consummation of the capital raise exercise incorporating a debt restructure and a rights issue, we will not be able to repay the outstanding loan on or before October 31 2011.

Please note that the proposed transaction is still underway and discussions between and amongst the various stakeholders are ongoing".

RMB was placed under curatorship in August 2011 but the Reserve Bank of Zimbabwe lifted the curatorship in March 2012 following a financial bailout by the National Social Security Authority (NSSA).

NSSA invested US$24million into the bank and gained an 84 percent stake in the financial institution which it reinvented it into Capital Bank Corporation.

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