Firm Slams N4.9b Suit on Bank of Industry

By Dipo Olowookere

The Bank of Industry (BoI) has been accused by Reagan Cement Limited of breaching terms of the loan agreement both parties signed.

The company said this alleged action of the nation’s premier development financing institution has caused it massive economic setbacks.

As a result, the firm is begging the Federal High Court in Lagos to order the BoI to pay the sum of N4.88 billion as compensation.

Reagan Cement claimed the bank called back the long term loan of N2.88 billion it earlier awarded for the building of a Cement Chinke Grinding Mill in Calabar, Cross River State.

The statement of claim filed on behalf of the plaintiff by prominent human rights lawyer, Mr Festus Keyamo (SAN), averred that by so doing, BOI breached the terms of the loan agreement.

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 Mr 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, Mr Ufonba alleged that his company had fulfilled all the conditions for the disbursement of the loan, including the upfront payment of one year capitalized interest, one percent letter of credit commission, one percent legal fees, one percent processing fees and another one percent 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He claimed that by the time the loan was withdrawn his company already had an agreement with Shangai Minggong Heavy Equipment Company Limited of China HAXMI for the latter to build and manufacture the equipment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 N2.88 billion to Reagan Cement’s account domiciled with

Unity Bank.

It also wants the court to award damages to the tune of N2 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.