Documentary evidence available to the Business Desk of The New Crusading GUIDE courtesy our impeccable sources at the Cairo-based African Export-Import Bank (Afrexim Bank), confirms that Engineers & Planners Company Ltd. finally settled its outstanding indebtedness of $28 million to Merchant Bank on January 31, 2014.
A Swift Advice sighted by this paper a copy of which is published on page 2 of today's edition for the benefit of our readers and the general public, indicates that an amount of $28m had been transfered by Afrexim Bank (Sender) to the off-shore account of Merchant Bank(Beneficiary) via Citi Bank N.A.,New York, N.Y. US.(Receiver).
It would be recalled that the Editor-In-Chief of this paper, Abdul-Malik Kweku Baako as a panelist on Multi TV/Joy Fm's Flagship news analysis program, NEWSFILE , last December read a Utilisation Request from Engineers & Planners dated December 13, 2013 and signed by its Chief Executive Officer(CEO), Mr. Ibrahim Mahama, to the African Export-Import Bank, to the effect that "We wish to borrow a Tranche 1 Loan on the following terms: Proposed Utilisation Date: 20th December, 2013(or, if not a Business Day, the next Business Day); Amount: US$28,000,000 or if less the Available Facility; Interest Period: 48 months".
The same Utilisation Request had directed that "the proceeds of this Tranche1 Loan should be credited to: Merchant Bank Ghana Limited, Citi Bank N.A., 111 Wall Street, New York, ABA No. 021000089, Swift: CITIUS33, Account No. 36056153[Swift MBGHGHAC]. This Utilisation Request is irrevocable".
A close scrutiny of the details of the Swift Advice under reference, shows that the transfer of $28m effected by Afrexim Bank was in strict accordance with the December 13, 2013 Utilisation Request issued by Engineers & Planners except the non-fulfilment of the original proposed utilisation date of December 20, 2013 due to some unforseen circumstances.
The material particulars captured in the Swift Advice are as follows: Sender: AFXMEGCAXXX, AFRICAN EXPORT-IMPORT BANK (HEAD OFFICE), CAIRO, EG; Receiver: CITIUS33XXX, CITIBANK N.A., NEW YORK, NY US.
Transaction Reference Number: LTV124/01/14E; Related Reference: AFREXIMBANK; Value Date:31 January 2014; Currency Code: USD(US DOLLAR); Amount:#28,000,000.#; Sender's Correspondent-Location/36086862; Account With Institution-FI BIC, CITIUS33, CITIBANK N.A., New York, NY US.
Further details are: Beneficiary Institution- FI BIC/36056153/MBGHGHAC, MERCHANT BANK (GHANA) LTD., ACCRA GH.; Sender to Receiver Information/BNF/AFREXIMBANK FACILITY, RE//ENGINEERS AND PLANNERS COMPANY LIMITED among others.
The $28m transfer effected by Afrexim Bank in favour of Merchant Bank on behalf of Engineers & Planners on 31st Janaury 2014, was as a result of US$72,000,000 Secured Mining Services Contract Financing Facility Agreement dated 14th November 2011, as amended by an Amendment Letter dated 16th November 2011, and further amended by a Deed of Amendment dated 27th December 2013. The latter reduced the loan facility from US$72m to US$52.
The Original Lenders captured in both Schedule 1 and Appendix 1of the Execution Version of the Deed of Amendment dated 27th December 2013, are African Export-Import Bank with a commitment amount of US$20m and ECOWAS Bank For Investment & Development also with a commitment amount of US$20m both under Tranche 1 of the Facility Agreement. The third Original Lender, Access Bank (Ghana) Limited's input is US$12m which is classified as Tranche 2. The African Export-Import Bank is the " Arranger, Security Agent, Facility Agent, Confirming Bank and Guarantee Issuing Bank while Access Bank(Ghana) Limited is the" First Loss Guarantor as well as the Local Agent and LOC Issuing Bank"
The Borrower is Engineers & Planners Company Limited with its Chief Executive Officer (CEO), Ibrahim Mahama listed as the "Personal Guarantor".
Engineers & Planners' efforts to secure Afrexim Loan Facility have had a chequered history and trajectory. At the time the company was granted the Merchant Bank/Ghana Commercial Bank USD37m syndicated loan facility in 2007, Engineers & Planners also appointed Merchant Bank to source a Mining Service Facility of US$60m from an International Finance Institution. After various due diligence audits were carried out Merchant Bank was appointed as the Local Administration Agent (LAA).
However, Merchant Bank withdrew from the Facility in October 2010 claiming �it would have been disastrous to the interests of Merchant Bank as an institution which was already distressed if that Agreement had been executed". The Merchant Bank Board Committee on Engineers and Planners chaired by Mr. Seth Dei set out the Bank's reason for withdrawing from the facility in a letter dated 25th March 2011.
�After review of the Afrexim Facility Agreement, the Bank reached the conclusion that the Agreement as it stood was inimical to the interest of Merchant Bank. This was grounded on sound principles and reasoning. If Merchant Bank had signed the Agreement it would have worsened the plight of the Bank. It would have been in further breach of the Bank of Ghana "Single Obligor Limit".
Simply put, why should a creditor guarantee (as first loss guarantor) a loan being sourced by its debtor with a poor repayment record? No responsible Board of Directors would sanction that", rationalised Merchant Bank Board in its 24th September, 2012 Response to the Secretary to the President(Mr. J.K. Bebaako-Mensah) following the latter's transmission of Engineers & Planners' July 4, 2012 Petition to the National Security Advisor, to the Merchant Bank Board for its attention and reaction.
Engineers & Planners on their part, had accused Merchant Bank of engaging in "plain foot-dragging" and "deliberate sabotage" of the process to access the Afrexim Bank Loan Facility.
"In a step which almost seemed calculated to undermine the Afrexim Facility, Merchant Bank suddenly decided to withdraw as Lead Administrative Agent for Afrexim at a crucial point, leaving E & P no option but look for another bank to start the process all over again. Thankfully Access Bank, formerly Intercontinental Bank, agreed to act, and was appointed by Afrexim as the Local Administrative Agent", contended E & P in its July 4, 2012 Petition addressed to the National Security Advisor, The Castle, Osu.
Hence by mid 2011 Intercontinental Bank was formally appointed as the new Local Administrative Agent (LAA) for the Afrexim Bank Facility and the process to access the loan facility began anew.
Intercontinental Bank then granted E & P a facility of US$21m in August 2010 to continue its operations. By June 2011, less than a year E & P had repaid that facility.
All the necessary due diligence exercises had to be carried out again. By the close of December 2011, almost all the conditions precedent (CPs) had been fulfilled awaiting draw down of US$72m, from which Merchant Bank would have been re-financed. However, all of a sudden Access Bank acquired Intercontinental Bank and the process stalled again due to the change of name and owners of the previous LAA, Intercontinental Bank. The Board of Access had to give their approval once again. That process took another period of not less than four months to get the approval from Access Bank Board.
Approval was finally given in September 2013 and the various stages of the due diligence once again had to be carried out. Fortunately, this time around it took a shorter period and by close of work November 19, 2013 most of the conditions precedent had been honoured and draw down had been assured by December 15, 2013 from which Merchant Bank was to be fully paid. However, things didn�t go as anticipated leading to a review of re-payment schedules, timelines and deadlines relative to amendments proposed by some of the Original Lenders and their Financial and Legal Representatives.
The Original Facility Agreement dated November 14, 2011(as amended by a Deed of Amendment dated December 27, 2013) is supported by the "Guarantee and Debunture Agreement" and the "Offshore Account Charge" both of which constitute the "Security Documents". The former dated November 16, 2011 was entered into amongst the Borrower, Engineers & Planners(as "Chargor"), the First Loss Guarantor(Intercontinental Bank now Access Bank),Ibrahim Mahama(as "Personal Guarantor") and the Security Agent( Afrexim Bank) while the latter(Offshore Account Charge) dated November 16, 2011 was entered into between the Borrower(as "Chargor") and the Security Agent.
Other significant supporting documentation/records sighted by The New Crusading GUIDE include the Funding Agreement dated November 16, 2011 entered into between African Export-Import Bank and ECOWAS Bank for Investment and Development, the Certificate of Incorporation of the First Loss Guarantor dated October 15, 2008,a copy of an extract of minutes, dated August 29, 2013 of the First Loss Guarantor's Board of Directors meeting held on August 28,2013 approving the transaction( the "First Loss Guarantor Resolution"); a letter from the High Court, Accra dated January 6, 2014 indicating that there are no suits pending in respect of the Borrower at the Commercial Division of the High Court;
A letter from the Fast Track High Court dated December 12, 2013 indicating that there are no suits pending in respect of the Borrower at the Fast Track High Court; a copy of E & P's Board Certification and Mandatory Signatories to Bank Account; a copy of Utilisation Request for disbursement of the Tranche 2 Facility of US$12m and copies of receipts covering payment of in excess of US$2m in government stamp duties; taxes, notarisations, filings and registrations of the Security and Finance Documents with the relevant Public Registries of Ghana in addition to other fees to Afrexim Bank as conditions precedent to disbursement. Many of those conditions precedent were fulfilled in January 2012.
Also available to our Business Desk are copies of Swift Advices confirming E & P's settlement of its outstanding indebtedness to Guaranty Trust Bank (US$930,000) and UT bank Ltd (US$7m). Both re-payments were effected on January 31, 2014 via the same US$52m Afrexim Bank Facility from which the US$28m Merchant Bank debt was settled.
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