Nigeria’s premier development financing institution The Bank of Industry is facing a ₦4.8 billion case at the federal high court in Lagos. The suit was brought by Reagan Cement Limited, one of the beneficiaries of the bank’s acclaimed lending initiative.
The aggrieved company is seeking compensation for economic losses suffered when the bank allegedly called back the long term loan of ₦2.88 billion it earlier awarded for the building of a Cement Chinke Grinding Mill in Calabar.
The statement of claim filed on behalf of the plaintiff by prominent human rights lawyer Festus Keyamo, SAN averred that by sọ doing BOI breached the terms of the loan agreement and caused the company massive economic setbacks in the process.
The loan was awarded by BOI in November 2012 and was meant to run for 7 years. The bank guarantee was provided by Unity Bank, the company’s main banker. However, BOI unilaterally called back the loan two years later, in 2014. According to Chief Reagan Ufonba, the chief executive officer of Reagan Cement, the industrial lending bank provided no cogent explanation for that action.
In his written statement on oath, Ufonba alleges that his company had fulfilled all the conditions for the disbursement of the loan, including the upfront payment of one year capitalized interest, 1% letter of credit commission, 1% legal fees, 1% processing fees and another 1% in commitment fees.
He claimed that by the time the loan was withdrawn his company already had an agreement with Shangai Minggong Heavy Equipment Company Limited of China HAXMI for the latter to build and manufacture the equipment and machines for the grinding mill. Some of the components had already landed at the site of the cement grinding mill while the rest were awaiting shipment.
But after BOI called back the loan the entire project has come to a standstill due to unavailability of funds to pay the Chinese company, and other contractors, for services rendered.
The plaintiff is therefore seeking an order of court mandating The Bank of Industry to pay the contractors for the building and manufacture of equipment and machinery for the grinding mill, and to pay the balance from the initial loan of ₦2.88 billion to Reagan Cement’s account domiciled with Unity Bank.
It also wants the court to award damages to the tune of ₦2 billion against BOI for the bank charges, loss of business, loss of reputations and loss of profit occasioned by its abrupt withdrawal of the original loan.