15 January 2013

Tanzania: Arusha ARV Plant Sued Over 8bn/ - Debt

BARCLAYS Bank Tanzania Limited has filed a suit against the Tanzania Pharmaceutical Industries Limited and three other individuals, including the company's Managing Director, Ramadhani Madabida, demanding repayment of over 8bn/- loan.

Madabida is also CCM's Dar es Salaam Regional Chairman.Other defendants in the suit that has been set for mention before Judge Kassim Nyangarika of the High Court's Commercial Division on February 12, this year, are Salum Shamte and Zarina Madabida, who are alleged to have guaranteed the company to secure the loan.

According to the plaint of the suit lodged by the bank through Kesaria and Company Advocates, the company, as principal borrower has failed to repay the loan by their due dates or at all.According to the document of claims, as of November 8, 2012, the debt stood at US dollars 4,551,492.86 (the term loan), US dollars 74,294.86 (outstanding letter of credit) and unauthorized overdraft of 10,501,993/-.

The document further indicates that the debt also includes US dollars 307,825.49 in interest accrued up to November 8, 2012 and another US dollars 45,631.254 being an outstanding default interest. "Despite previous demands and reminders for repayment of the indebtedness (agreement on debt) the defendants have failed and, or neglected to honour their obligations to the plaintiff," the plaint of the suit further reads.

On diverse dates between 2002 and 2008, the bank allegedly availed credit facilities to the company for different amounts in the form of overdrafts, performance bonds, letters of credit, bank guarantees and indemnities and term loans.Subsequently, the plaint of the suit states, in 2009, 2010 and 2011, the facilities were varied on, or amended as agreed by the parties.

The bank alleges that Tanzania Pharmaceutical Industries Limited is liable for payment of the amount as principal borrower while other three defendants are jointly and severely answerable to Barclays bank with the company pursuant to their obligations under their respective personal guarantees.

It is, therefore, requesting the court to enter judgment in its favour on the claims, interest on the amount accruing at the rate of 12 per cent from November 8, 2012 until judgment or sooner payment and other interest on the decretal sum at the rate of seven per cent per annum post-judgment.

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