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David Whitehead sues Agribank, FSI Agricom

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David Whitehead Textiles’ judicial manager, Knowledge Hofisi has approached the High Court seeking cancellation of a $5 million surety agreement between the firm and the Agricultural Bank of Zimbabwe

David Whitehead Textiles’ judicial manager, Knowledge Hofisi has approached the High Court seeking cancellation of a $5 million surety agreement between the firm and the Agricultural Bank of Zimbabwe (Agribank) over a loan advanced to FSI Agricom Cotton.

BY CHARLES LAITON hamilton-200x215

According to court papers, the application by Hofisi was prompted by FSI Agricom’s alleged failure to supply David Whitehead with cotton lint after the latter had provided its Gweru property, stand number 1900 measuring 1,6075 hectares to Agribank, as collateral security for the release of the loan to FSI Agricom.

David Whitehead said its agreement with Agribank and FSI Agricom was entered into sometime in March 2010.

“Pursuant to the agreement, in or about April 2010, the first defendant (Agribank) registered a note of hand over the property referred above in the sum, of $5 million. The value of the immovable property is $400 000,” Hofisi said in his declaration.

“The first defendant advanced the second defendant (FSI Agricom) a loan in the total sum of $5,8 million.

“In breach of the agreement, the second defendant only delivered to the plaintiff cotton lint worth $47 331,83. In view of the failure by second defendant to supply cotton lint to the plaintiff, the plaintiff is entitled to cancel the agreement and withdraw the security of its immovable property.”

However, Agribank denied ever entering into any agreement with David Whitehead for the supply of cotton lint.

The bank said the facility for which the surety was registered as security was one in which FSI Agricom approached it for a $5 million facility to purchase a ginnery and also for working capital.

“Because of the substantial amount to be borrowed under the above facility, it had to be secured, first defendant (Agribank) for security from second defendant (FSI Agricom). Second defendant proposed to secure the facility using plaintiff’s (David Whitehead) title deeds,” the bank said.

“First defendant made it clear that such a proposal would be in agreement between plaintiff and second defendant, which had nothing to do with the bank and all that the first defendant required was security.”

Agribank further said: “To present date, second defendant has not fully serviced the $5 million facility and, therefore, first defendant cannot at law be compelled to cancel the note of hand when it is still owed by second defendant.

“The plaintiff and the second defendant should either provide alternative security of equivalent value or pay the amount outstanding under the facility. That is the only way first defendant will be in a position to cancel the note of hand.” FSI Agricom, however, has not yet filed its response to the application.