Zimbabwe: Zitac Lease Cancelled

Source from:  The Herald 03/15/2011

BOKA Investments has cancelled its lease agreement with the Zimbabwe Tobacco Auction Floors because it alleges the company has committed acts of insolvency, resulting in its placement under provisional liquidation. Zitac and Boka had a 15-year lease agreement, due to lapse in 2016. The agreement states that if the lessor is placed under liquidation, the lesser shall be entitled to cancel the agreement without any further notice. The cancellation has also forced the liquidator to vacate the premises. According to sources familiar with the developments, the liquidator has since vacated the premises with assets taken to Ruby Auctions for safe-keeping. Earlier, Boka Investments had instructed its lawyers, Scanlen and Holderness to advise the liquidator to vacate the premises. "It is now clear that Zitac committed acts of insolvency resulting in its placing under the provisional liquidation," wrote Boka Investments. "While other issues are pending regarding our claims, please may you give the eviction priority. "Kindly advise the office of the Master of High Court as to our position on this matter." Matters came to a head when the Boka family sought, to no avail, to recover rent arrears for the period 2004-2009 from Zitac. The dispute subsequently spilled into the courts. Boka Investments claims that it is owed more than US$2 million in rentals. Zitac's problems seem to have been compounded by the firm's failure to secure a licence from the Tobacco Industry and Marketing Board for the current tobacco-selling season. Apart from the more than US$2 million Zitac owes to Boka for commissions and rent arrears, the firm also owes US$200 000 to TIMB for levies and commissions from last season. The companies also owes US$350 000 to the Mashonaland Tobacco Company. It is also understood that Zitac has a US$820 000 debt obligation to a number of banks, including the Zimbabwe Allied Banking Group and the Metropolitan Bank. The money was reportedly not secured. Zitac had secured the funding on the understanding that it would pay it back this season. Moreover, the Reserve Bank of Zimbabwe and Zimra have a US$500 000 and US$1 million claim on the firm, respectively. Herald Business is reliably informed that the assets, excluding vehicles, have been valued at about US$206 000. Zitac was once a vibrant tobacco merchant turning over US$54 million a year. Enditem