Maravi

Investrust’s loan to Zambian Airways was purely commercial – Ndhlovu

Investrust’s loan to Zambian Airways was purely commercial – Ndhlovu
Written by Joan Chirwa
Monday, May 11, 2009 11:46:08 PM

INVESTRUST Bank's decision to lend money to Zambian Airways was purely a commercial undertaking, managing director Friday Ndhlovu has said.

And Investrust Bank deputy managing director Richard Phiri explained that Zambian Airways was committed to paying back the US $1.3 million loan acquired from the Bank.

During its annual general meeting in Lusaka on Friday, Ndhlovu said the issue surrounding Investrust Bank’s loan to Zambian Airways was partly political and commercial.

He was responding to a question from one of the bank’s shareholders who wondered why Investrust loaned Zambian Airways money even when the airline was in a financial crisis.

“We gave a loan to Zambian Airways after analysing the financial difficulties the airline was in before releasing the loan,” Ndhlovu said. “Banks are there to deal with issues such as financial difficulties. We gave conditions to the airline which were supposed to met; one of issues we agreed on was that Zambian Airways should clean up its balance sheet. Another condition was that the CEO, Mr Mutembo Nchito, should resign. Mr Nchito was in fact in the process of resigning at the time the airline suspended operations in January.”

Ndhlovu indicated that Zambian Airways had started repaying the loan up to the time of suspension of its operations.

And Phiri said it was wrong for people to treat the Zambian Airways loan as non-performing because the airline had started liquidating the debt until the time of suspension of its operations in January.

“All repayments were on schedule - the current exposure is about US $900,000,” said Phiri. “The bank is now awaiting an initial report from the receiver since the airline is under receivership, and after that, we will determine the way forward.”

Zambian Airways, in 2007, acquired a US $5.5 million loan from Investrust, Development Bank of Zambia (DBZ) and Intermarket Banking Corporation, with Investrust being the lead institution that syndicated the loan.

Labels: FRIDAY NDHLOVU, ZAMBIAN AIRWAYS

posted by MrK @ 10:48 PM