Defunct Fly Africa Zimbabwe (FZW, Harare International) and its chairman Cassidy Mugwagwa are being sued by Mauritian company Blossom View Holdings for failing to settle a USD4 million loan facility extended last year, Zimbabwean media reports.
The Herald reported Blossom View Holdings, through its Harare lawyers Masiya-Sheshe and Associates, had issued a summons against Nu Aero trading as Fly Africa Zimbabwe and Mugwagwa, seeking confirmation of cancellation of the loan facility and settling of the debt.
Fly Africa Zimbabwe was a low-cost carrier that suspended operations in late 2015 when its AOC was suspended. It was acquired by Mugwagwa Holdings in 2017. It was reportedly undergoing recertification after a planned relaunch in 2018 did not materialise. At the time it had relied on a B737-500 wet-leased from Africa Charter Airline (FSK, Johannesburg O.R. Tambo). Mugwagwa in an email to ch-aviation in October 2020 claimed to still plan the resumption of operations with 29.09-year-old B737-500 ZS-PKU (msn 25249) stored at Johannesburg O.R. Tambo and formerly operated by the defunct carriers, Nationwide Airlines (Johannesburg O.R. Tambo) and Mat Airways (Skopje).
According to the summons, Blossom View Holdings and Nu Aero/Fly Africa Zimbabwe entered into an agreement on November 8, 2019, under which terms the airline would repay amounts drawn down quarterly after a grace period of 60 days. Nu Aero/Fly Africa Zimbabwe also agreed to 10% per month interest on the loan. By August 2020, the defendants owed USD2.9 million, having drawn USD1.7 million in capital and accumulating interest of USD1.2 million. Blossom View charged that Nu Aero/Fly Africa had only repaid the equivalent of USD42,265 in South African rands by January 10, 2020. The money was used to reduce the interest on the loan facility. However, when the defendants made no further repayments, the plaintiff cancelled the loan facility, court papers read.
The plaintiff was seeking a court order confirming the cancellation of the loan facility agreement between the parties and repayment of the USD2.9 million debt, plus payment of interest on the total sum owing, calculated from the date of the claim to the date of full and final payment, plus legal costs, The Herald reported.
Meanwhile, The Financial Gazette in Zimbabwe reported that Blossom View Holdings, in an affidavit to the Harare High Court, also accused Mugwagwa’s firms Nu Aero and Lowcost Enterprises of failing to transfer shares to the Mauritian investor as per a November 2019 agreement. Blossom View Holding has accused Lowcost Enterprises of failing to pay capital gains tax or obtain tax clearances. It had asked for the Sheriff of Zimbabwe to attach movable and immovable property in the event that the respondent fails to pay assessed capital gains tax, including penalties that may be levied by the Zimbabwe Revenue Authority.
