Fly Africa Zimbabwe In Loan Repayment Default
FLY AFRICA ZIMBABWE has been slapped with a USD2.9 Million lawsuit following a default on its loan repayment terms with its Mauritian lender, Blossom View Holdings Limited.
Blossom extended a loan facility of up to US$4 million according to a loan term sheet signed between Blossom and Fly Africa on 8 November 2019.
Fly Africa made its first drawdown 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. All drawdowns were at the specific written request and instance of Fly Africa represented by its Executive Chairman, Mr Hopalong Cassidy Mugwagwa.
According to court papers, FlyAfrica only managed a single interest repayment in the sum of ZAR1 906 000 which translated to US$42 265 on January 10, 2020. Since then and despite Blossom’s demand for repayment, FlyAfrica has refused, neglected or failed to repay both the capital sum and the interest, the Court papers read.
Through its lawyers, Masiya-Sheshe and Associates, Blossom also sued Hopalong Cassidy Chitariso Mugwagwa who stood as surety for the loan. Nu Aero and Mugwagwa are yet to file a response to the litigation and the matter is pending.
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.
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 a reduction of interest.
In breach of the agreement, Nu Aero and Mugwagwa have since failed to repay the interest quarterly as agreed adding that both Mugwagwa and his grounded airline had become 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 Court papers said.
When it was launched, FlyAfrica was a low-cost carrier based at the Robert Mugabe International Airport until its operations were suspended. The suspension followed a spate of shareholder disputes. Since the Mugwagwa led management took over, the airline remains grounded owing to financial challenges hence its solicitation for financial resources.
At one point, the airline was saddled with legacy debts in 2015, and the airline encountered financial distress. FlyAfrica Zimbabwe encountered a wave of accusations of “dumping” passengers after leaving them stranded and refusing to refund money arguing that the latter had “accepted their terms”.
You May Also Want To read: