…Build it to pay Spar at least N$250 000 monthly
Oshikango Build It has pushed through a settlement agreement with the Spar Group in a matter in which the Group had approached the courts to have the northern building supplies retailer liquidated over debt of approximately N$27 million.
Earlier this year, Business Express also reported that the Spar Group Limited had lodged an application with the High Court in which it claimed that Insignia Retail (Pty) Limited trading as Rehoboth Build It had defaulted on their supply agreement and was indebted to the Group to the tune of N$92 million which it was being compelled to pay.
The settlement agreement seen by Business Express shows that on 16 September 2022, Spar Group launched an application for the liquidation of Build It Oshikango.
Subsequently, the latter initially filed a notice of intention to oppose in respect of the liquidation application but later approached Spar with a settlement offer.
BUNDLED DEBT
Documents seen by Business Express show that Build It Oshikango was indebted to Spar Group for goods, stock, services and ancillary items historically sold and delivered to it in the amount of N$ 27,486,091.57 together with interest thereon at the prime rate of the Spar Group’s bankers plus 5%, from 9 September 2022 to date of payment.
Furthermore, Eenhana CC under the same ownership as Oshikango Build It was indebted to Spar Group for the goods, stock, services and ancillary items historically sold and delivered to it in the amount of N$2,998,837.80 together with interest plus 5%.
This led to debt bundling as the parties agreed that the Eenhana Debt be allocated to the Oshikango Build It’s account, causing the Build It to become Iiable to the Spar Group for the Eenhana Debt in addition to the Oshikango Debt.
THE SETTLEMENT AGREEMENT
In the settlement agreement Build It Oshikango was to make a payment of N$2,500,000 to the Spar Group, with the funds reflecting in the Group’s account on or before Tuesday, 27 September 2022.
Furthermore, Build It was to return, by no later than Thursday, 29 September 2022, certain stock which belongs to the Group which the Group would credit the Build It’s account with the invoice value of the identified Stock to reduce the debt.
Apart from this the settlement includes making payment of the balance of the debt by way of consecutive monthly instalments of no less than N$250,000 each, subject to an annual increment at the rate of 7.5% with effect from 1 November 2022, provided that the monthly increment over the payment period will be capped at N$500,000 per month as a maximum limit.
“The parties agree that the applicant shall allocate any payments received in terms of this agreement first to interest, then to costs and charges associated with this agreement, and then to the debt.
“To enable the respondent to make the payment envisaged above and to operate its bank account in the normal course of its business, the applicant undertakes to, on signature of this agreement, instruct the deputy-sheriff to immediately instruct FNB to uplift the restriction of the funds in the bank account/s of the respondent,” read part of the settlement agreement.
As part of the deal, Build It shall procure that, within 14 business days of signature of the agreement, the parties shall execute guarantee and indemnity agreements in terms of which each of them shall bind themselves as guarantors for the debt in favour of the applicant:
“The respondent undertakes to execute, within 14 business days of signature of this Agreement, all and any documents required in order for the applicant to register a further GNB to the value of N$ 7,500,000 over the respondent’s movable assets,” the agreement notes.
Respondent also undertook to execute, within 14 (fourteen) business days of being requested to do so by the applicant’s attorneys, all and any documents required in order for the applicant to register continuing covering mortgage bonds (CCMB) over immovable properties including a a second CCMB over Erf 1861 Oshikango for an amount of N$ 7,500,000 and a first CCMB over Erf 1613 Eenhana for an amount to be determined by the applicant in its sole discretion.
Further respondents shall procure that Erf 1615 CC shall execute, within 14 (fourteen) business days of being requested to do so by the applicant’s attorneys, all and any documents required in order for the applicant to register a CCMB over the following immovable including a first CCMB over Erf 1615 Eenhana for an amount to be determined by the applicant in its sole discretion.
On top of that a CCMB over Erf 1083 Elisenheim for an amount to be determined by the applicant in its sole discretion, but subject to existing rights of any commercial bank has also been made part of the agreement package
“The Parties record that the respondent’s current credit facility with the applicant has been suspended and agree that it will remain suspended, which means the respondent will have to conduct its business with the applicant on a cash-only basis, until such time as the applicant in its sole discretion extends credit to the respondent again,” further reads the agreement.
COSTS
To seal the deal, Business Express understands that the costs incidental to the liquidation application, the perfection application, and the negotiation, preparation and finalisation of this Agreement shall be borne by Oshikango Build It. In this regard, Oshikango Build It undertakes to make a contribution of N$300,000 towards the applicant’s legal costs, which shall be added to the debt and repaid as part of the debt in terms of the agreement.
“The costs incidental to the registration of the GNB and the CCMBs, including stamp duties, shall be borne by the respondent and Dias, jointly and severally, which shall be added to the debt and repaid as part of the debt in terms of this agreement.
“In the event of default, the applicant shall be entitled to recover its legal costs for recovery of the Debt (or outstanding balance thereof, as the case may be) from the respondents, jointly and severally, on a party and party scale including costs of two counsel. This Agreement may be executed in two or more counterparts all of which, when read together, shall constitute one and the same instrument. This Agreement shall be made an order of Court,” concludes the agreement.