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Breach of contract: N4.8 billion suit slammed on Bank of Industry

Aug 06, 2018
A limited liability company Reagan Cement Limited alleged to have suffered economic misfortune as a result of breach of contract occasioned by Bank of Industry limited, has renewed its N2.8 billion legal battle against the bank.
In an amended statement of claims accompanied by written statement on oath sworn to by the Chief Executive officer of the company, Chief Reagan Ufomba and filed before a Federal High Court in Lagos by a Human Right Lawyer, Festus Keyamo SAN on behalf of Reagan Cement Limited, Chief Ufomba alleged that by a letter dated 1st of November 2012, Bank of Industry Limited offered his company a long term loan of N2,875,583,735 for the purchase of equipment and machinery for the building of Cement Chinke Grinding Mill in Calabar.
In line with conditions precedent to the disbursement of the loan, the company submitted a bank guarantee from the Unity Bank Plc as receiving bank as part of the condition for the disbursement of the said loan.
However, from the total sum of N2,875,583,735 only the sum of N316,314,210.85 was capitalized interest and paid upfront to Bank of Industry and the balance of the loan facility in the sum of N2,559,269,514.15 was transferred into the company’s account domicile with Unity Bank Plc. The capitalized interest represents the interest on the loan facility for one year.
The company has been paying interest on the facility to the bank between January and May 2014. The duration of the loan was for seven years.
When the loan was still subsisting and no breach whatsoever on the part of the company, the bank called back the whole sum of the loan, a total sum of N2,875,583,735 via transfer out of the account of the company with Unity Bank Plc on the 5th of august 2014 in favour of Bank of Industry.
Chief Ufomba averred further that on the premise of the said loan, Shangai Minggong Heavy Equipment Company Limited of China HAXMI engineers was contracted to build and manufacture the various equipment and machine for the grinding mill, saying some of the equipment and machine are already in Calabar for installation while others have been manufactured but yet to be shipped into Nigeria.
The bank demanded for 1% letter of credit commission to be paid upfront before the equipment can be paid for,1% legal, 1% processing fees and another 1% commitment fees. Meeting all the obligations set by the bank and terms of the loan agreement still subsisting, the bank called back the loan through the company’s bank guarantee, Unity Bank Plc without informing the company.
He said the grinding mill project in Calabar is on a stand still as contractors are calling for their money and the remaining equipment set for shipment but yet to be paid for because the funds have been withdrawn by the bank.
According to him, when the company noticed that Bank of Industry had called back the loan after paying the sum of N885,282,452 as fees to the bank for services, it wrote to the bank querying its action, as they acknowledged the letter but never responded to the plea of the company
He said the loan was for seven years and that the company was still enjoying a two year moratorium and interest paid as when due but the breach of the bank has caused huge damages to the project which was ongoing as monies owed by contractors could not be paid due to the frustrations of the said facility by the bank.
Consequently, the company claims against the bank are as follows:
-A declaration that the called back of the loan facility by the bank was a breach of contract between the company and Bank of Industry Ltd.
-An order of the court mandating the bank to reimburse the account of the company domicile with the bank with the balance from the loan sum of N2,875,735 after payment for the cost of production and manufacturing of the equipment and machine for the grinding mill has been deducted and paid to the contractor.
-An order that the sum of N2 billion be paid to the plaintiff as damages for the bank charges, loss of business, loss of reputations and loss of profit.
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