KONKOLA Copper Mines (KCM) Plc’s provisional liquidator Milingo Lungu’s claim that Copperbelt Energy Corporation (CEC) Plc agreed to have the mining company’s debt paid following a pending sale is misleading, says the power utility’s chief legal counsel Julia Chaila.
Reacting to Milingo’s argument that KCM and CEC agreed to have the embattled mine’s US $144 million debt paid after a pending sale of the company, Chaila disclosed that the actual position was that KCM agreed to pay its electricity bill against all issued invoices as and when they fell due.
“According to the agreement he (Milingo) signed, it stated that all the invoices that will be issued will be paid on the due date, now what does due date mean? Each time when they are due, he would pay. Does that sound like an agreement to pay in the future? A due date means when the invoice is issued,” Chaila told News Diggers! in an exclusive interview.
“Something also of concern; he could have actually said under the Corporate Insolvency Act, yes, he could have said that not this wrong interpretation he was trying to give the public, like I said that, ‘I will pay at the end,’ no! In the agreement, he said that the debts that have been going from the date of his (May, 2019) appointment, all ongoing supplies and any accumulative date from the past, he would treat that as preferential debt. Now, for us, the preferential debt is that debt must not fill up. We did agree that at some point we would meet up and come up with a payment schedule. So, despite the fact that the company was under liquidation, he did agree that he would treat the debt as an ongoing obligation during the time of liquidation. And then he even says, ‘he will use his best endeavours to make sure that the obligations under the Supplementary Agreement were achieved’ because why sign an agreement with all these terms and conditions and talk about paying as and when due when you are talking about paying in the future? We might as well have waited.”
She insisted that Milingo created the wrong impression about the actual payment of KCM’s electricity debt still owed to CEC.
“So, an agreement is an agreement. As far as I am concerned, everything he said in the paper is useless today! The least, it’s lies; it’s misconstrued at law; it’s misleading; it’s meant to give the wrong interpretation of the facts, and to be honest, it’s actually misconduct on his part as a legal practitioner if he goes to the public and allege things, which are not there when he has a written agreement, which he is signed up to. He can’t say he is not aware of it, we have disputed this position he has taken before in the court,” said Chaila.
According to the Supplementary Agreement (SA) dated July 18, 2019, whose signatories included KCM chief executive officer Chris Sheppard, CEC managing director Owen Silavwe and Milingo acting as KCM provisional liquidator, the SA revealed that during the transition period from the time of Milingo’s appointment, CEC would continue to supply power and that KCM would continue to pay any actual energy and capacity charges and any late payment charges that became payable.
“The SA records that during the transition period, CEC would continue to supply power and KCM would continue to pay any actual energy and capacity charges and any late payment charges that became payable. KCM would settle the Total Overdue Amount and such other subsequent amounts as would become payable to CEC by KCM going forward,” reads the Agreement seen by Diggers!
The Agreement equally detailed Milingo’s acknowledgement and commitment, on behalf of KCM, to pay the mining company’s debt during the period of transition.
“The SA records KCM’s acknowledgement of the amount due and payable to CEC existing at the date of execution of the Agreement (“the Execution Date”) as being the Total Overdue Amount of US $57,330,457, of which US $10,451,083 were at that time current obligations (the “June Invoice’). KCM agreed in the SA that following the Execution Date it would make the following payments in respect of the current and ongoing obligations: (a) Pay to CEC the June Invoice in full by 30th July, 2019. (b) Pay to CEC from July, 2019, and continuing thereafter pay all invoices in full, on the respective due date of each invoice.”
“The SA records insofar as the Corporate Insolvency Act the following position: (a) That all monies due for power supplied by CEC to KCM from the date of appointment of the Provisional Liquidator for ongoing supplies of electricity and any accumulated debt arising therefrom shall be deemed to be Preferential Debt. The SA records that the Provisional Liquidator’s confirmation to use his best endeavours to secure the fulfilment by KCM of its obligations under the SA. The SA states that none of the terms in the SA would in any way amend or vary KCM’s obligations to pay for continuing supplies of electricity supplied by CEC on the due date of each invoice in accordance with the PSA whether the same was formally demanded or not.”
According to the SA, which recorded that a meeting was held between the Provisional Liquidator, KCM and CEC on May 28, 2019, at CEC, headquarters in Kitwe, the document was supplemental to the already existing Power Supply Agreement (PSA) and was not a replacement of the PSA.
On Wednesday, Milingo said that the KCM entered into an agreement with CEC to ensure that its US $144 million debt owed to the power utility would fully be settled from the proceeds of a sale.
“Firstly, with CEC, when the liquidation process started we entered into an agreement where it was agreed between ourselves and CEC that the bill will accrue until the mine is sold, and then when the mine is sold, they will be paid from the proceeds of the sale. And CEC only asked to say, ‘if that is the case, can you pay us the arrears, which accrued by the time we had taken over the mine in May, which was about US $46 million and we did settle that amount in October. So, in terms of not paying them, it was by way of agreement because by definition, if a mine is operating the way we are operating, we can’t pay all bills as and when they fall due. So, there was an arrangement in place, it’s not like we simply ignored to pay them from day one,” Milingo said in an interview earlier this week.