TEMA, Ghana, May 09 — Merchant Bank Ghana Limited and its subsidiary, Merban Investment Holdings Limited are jointly locked in legal battle against Tropical Metallic Construction Company (TMCC) at a Tema High Court over various credit facilities totalling more than 850 million cedis they advanced to the company .
The Bank is also claiming interest on the amount. The amount represents 388.1 million cedis credit, an Industrial Sector Adjustment Credit (ISAC) of 12.4 million cedis and a matured commercial paper of 460 million cedis that TMCC took in 1994 to build storage tanks for the Tema Oil Refinery (TOR).
The case has dragged on for the past five years with TMCC also filing counter claims at the court accusing the plaintiffs of failing to provide proper and adequate professional services as agreed and is, therefore, seeking damages for breach of agreement and financial losses suffered.
TMCC is further seeking an order from the court for the re-opening of the loan transactions between it and the plaintiffs in order to ascertain whether interests charged are proper and equitable.
In their statement of claim the Bank said in July 1995, it approved a 50 million cedis over draft, a revolving guarantee of 164 million cedis and an ISAC loan of guarantee of 37.2 million cedis all to expire on May 9, 1996 to TMCC.
To secure the credit facilities, TMCC created a legal mortgage over its factory premises in favour of the Bank by way of a debenture and as at November 1996, the company was in debt to the Bank to the tune of 388.1 million cedis.
It said in July 1994, the second plaintiff, Merban Investments agreed to market TMCC’s Commercial paper of 300 million cedis for six months to enable the company re-construct the storage tanks, which were tilted.
However, on December 8, 1994, prior to the expiry of the commercial paper, Merban informed TMCC of the withdrawal of funds by TOR, which purchased the Commercial paper and in its place secured in second investor.
The plaintiffs said on January 6, 1995, TMCC wrote requesting for a roll over of the Commercial paper for a further period of six months in view of unforeseen shortfalls in its cash-flow projections and this request was accepted by Merban to mature on June 24, 1995.
Then on June 23, the same year, TMCC again requested for a further roll over of the commercial paper which at its maturity date stood 360 million cedis for another six months.
Merban turned down this request and directed the defendant to liquidate the outstanding amount by October 15, 1995. Despite several discussions and reminders to TMCC, the commercial paper has not been retired and as at November 1996 the outstanding was 450 million cedis.
TMCC claimed in its defence that the case has arisen out of the unwarranted punitive measures adopted by the plaintiffs and their failure to handle the company’s financial matters with due and proper attention.
TMCC explained that in April 1992, it entered into a contract with TOR to build and install five oil storage tanks.
TOR engineers supervised the construction and TMCC weas paid upon certificates issued by them.
Later, TOR’s engineers alleged that the tanks were tilted and recommended a complete strip-down of the tanks for re-building at another cost of 300 million cedis.
Following discussions, it was agreed that Merchant Bank and TOR would place adequate funds with Merban to enable Merban grant a loan of 300 million cedis to TMCC in the form of a commercial paper.
TMCC said it was also agreed that as it would not be able to retire the commercial paper in six months.
It was further agreed that TOR’s deposit would remain with Merban to enable the commercial paper to be rolled over until TMCC retires it or arrangements are finalised for converting it into a medium-term loan.
However, on the contrary, the plaintiffs changed their attitude and rather became hostile to TMCC and allowed TOR to withdraw its deposit from Merban contrary to the agreement concerning the commercial paper.
The court presided over by Mrs Felicity Amoah has adjourned the case sine die.
Source: GhanaWeb
