...... MONIES OWED FOR STADIUM & MINISTERIAL COMPLEX

Danny Williams & Gen Chen

A high court judge in New York has delivered a massive blow to the Keith Mitchell-led New National Party (NNP) government for close to 60 million E.C dollars owed to the Republic of China (ROC) on Taiwan for loans contracted over a ten year period.

 

The Export-Import Bank of Taiwan brought the court action against the Grenada government in the United States District Court, Southern District of New York for four loans that the NNP regime took and defaulted on payments.

The bank is seeking to recover US$ 21.6 million from the Mitchell government plus interest payments for the loans that were taken to facilitate construction of the first sporting stadium at Queen's Park, the Ministerial Complex at the Botanical Gardens, the agricultural sector, and for road construction projects on Mainland Grenada and the sister isle of Carriacou.

The legal action in New York follows close on the heels of another court action in the U.S against Deputy Prime Minister and Minister of Energy, Gregory Bowen who has been sued along with three Russians by american oil investor, Jack Grynberg for US 500, 000.00 over a deal that went sour.

Ambassador

Grynberg has also filed a multi-million dollar arbitration proceedings against the Mitchell government in Europe over the decision taken in St. George's not to honour its contractual obligations to him.

A source within the local Ministry of Finance told GRENADA TODAY that the ROC bank filed a motion for Summary Judgement against the Grenada government on December 21, 2006 in the New York court.

He said the defense that was put forward by the Mitchell government in the Taiwan case was that it could not make the payments due to "economic hardships" brought on by Hurricanes Ivan in 2004 and Emily in 2005.

The court action is being heard by Judge Harold Baer with the Taiwanese bank being represented by the prestigious law firm of Sullivan & Worchester that is based in Boston, while Grenada's interest in being handled by Donzell Tucker, the wife of Foreign Affairs Minister, Elvin Nimrod.

According to the official who asked not to be named, the defense put forward by the Mitchell administration was rejected by the U.S judge who urged the parties to try and reach an out of court settlement as regards repayment of the loan by Grenada.

The judge was expected to meet with both parties on January 30, 2007 to get an understanding about the settlement offers being made by the Mitchell government in St. George's. "This matter has severe legal, political and embarrassing consequences for all of us in Grenada....", said the Ministry of Finance official.

The Mitchell government broke off diplomatic relations with Taiwan two years ago in favour of Mainland China that bankrolled the rebuilding of the sporting stadium.

GRENADA TODAY was able to gain access to the case that was filed in New York by the bank in Taiwan against the Mitchell government. It is listed as: The Export-Import Bank of the Republic of China v. Grenada - Docket Number: 06 CV 2469 (HB) (AJP).

Following are highlights of the claim made by the bank in Taiwan against the Grenada government:

Ex-Im Bank extended four loans to Grenada between 1990 and 2000, totaling $28,000,00.00

Grenada failed to repay certain installments of principal since April 1, 2004 and to make certain interest payments since April 1, 2004, in violation of the terms of certain of the loan agreements, causing a default on all of the loans pursuant to cross-default provisions.

To date the total outstanding principal amount for the four loans is $20,250,001.00.

The First Loan Agreement

The purpose of the First Loan Agreement was to provide financing to Grenada for its general "commercial use".

Pursuant to the terms and conditions of a certain Loan Agreement (Loan No. 60202116001) dated July 27, 1990, by and between Ex-Im Bank and Grenada, Ex-Im bank agreed to lend up to $10,000,000 to Grenada.

Pursuant to the First Loan Agreement, for value received, Grenada issued a Promissory Note to Ex-Im Bank dated August 8, 1990 by which Grenada promised to pay Ex-Im Bank $10,000,000, with interest as specified therein.

Grenada agreed to repay the principal and interest according to the schedule set forth in the First Note.

The Second Loan Agreement

The purpose of the Second Loan Agreement was to provide financing to Grenada to develop its agricultural economy.

Pursuant to the terms and conditions of a certain Loan Agreement (Loan No. 6020216002) dated April 24, 1997, by and between Ex-Im Bank and Grenada, the "Second Loan Agreement", Ex-Im bank agreed to lend $2,000,000 to Grenada.

Pursuant to the Second Loan Agreement, for value received, Grenada issued a Promissory Note, to Ex-Im Bank dated April 29, 1997 by which Grenada promised to pay Ex-Im Bank $2,000,000, with interest as specified therein.

Grenada agreed to repay the principal and interest according to the schedule set forth in the Second Note.

The Third Loan Agreement

The purpose of the Third Loan Agreement was to provide financing to Grenada to construct a "National Stadium in Queen's Park of Grenada" and to rehabilitate the secondary roads in the islands of Grenada and Carriacou."

Pursuant to the terms and conditions of a certain Loan Agreement (Loan No. 6020216003) dated October 1, 1997 by and between Ex-Im Bank and Grenada, Ex-Im Bank agreed to lend $6,000,00 to Grenada.

Pursuant to the Third Loan Agreement, for value received, Grenada issued a Promissory Note to Ex-Im Bank dated November 17, 1997 by which Grenada promised to pay Ex-Im Bank $6,000,000, with interest as specified therein.

Grenada agreed to repay the principal and interest according to the schedule set forth in the Third Note.

The Fourth Loan Agreement

The purpose of the Fourth Loan Agreement was to provide financing for Grenada to construct the "National Stadium" and the "Ministerial Complex" in Grenada.

Pursuant to the terms and conditions of a certain Loan Agreement (Loan No. 6020216004) dated January 21, 2000 by and between Ex-Im Bank and Grenada, Ex-Im Bank agreed to lend $10,000,000 to Grenada.

Pursuant to the Fourth Loan Agreement, for value received, Grenada issued a Promissory Note to Ex-Im Bank dated November 15, 2000 by which Grenada promised to pay Ex-Im Bank $10,000,000, with interest as specified therein.

Grenada agreed to repay the principal and interest according to the schedule set forth in the Fourth Note.

TERMS OF THE LOAN AGREEMENTS

The First, Second, Third and Fourth Loan Agreements (the "Loan Agreements") contain the following common terms:

The Loan Agreements require that all disbursements of money from Ex-Im Bank to Grenada and all repayments of the loans from Grenada to Ex-Im Bank be paid in United States Dollars and be made at their respective bank accounts located in New York City, New York.

For the term of each loan, interest accrues on each advance under the loan on the basis of the number of days actually elapsed over a 360-day year at the following rates and shall be payable semi-annually:


Loan                 Term in Years (Approx.)    Interest Rate (per annum)
First Loan Agreement:         20                2%
Second Loan Agreement:    15                4.5%
Third Loan Agreement:         15                4.5%
Fourth Loan Agreement:       20                4.5%

The Loan Agreements each have a provision for "default interest" of 10 percent in the event Grenada fails to make an interest or principal payment on a timely basis.

Under the First Loan Agreement ($10 million U.S), default interest accrues on "the principal, interest, fees and other amounts which are overdue" from and including the date of such default.

Under the Second ($2 Million U.S), Third ($6 million U.S) and Fourth Loan ($10 million U.S) Agreements, default interest accrues on "each installment payment of the principal amount of the loan which is overdue, for and including the date dueŠ"

On acceleration, the balance of the principal is immediately due: hence, default interest then accrues on the entire principal balance.
The Loan Agreements provide for the repayment of principal in approximately equal semi-annual installments.

The Loan Agreements provide, in substance, that Grenada must pay all reasonable expenses incurred by the Lender in connection with its enforcement of the Loan Agreements and the Notes. Under the Loan Agreements, Grenada represented and warranted, in summary, that the Loan Agreements were binding, lawful, duly executed, and not in conflict with any laws or in breach of any agreements.

Grenada further warranted that is obligations to the Ex-Im Bank will at all times rank at least parl passu with its other External indebtedness (debt denominated in a currency other than Grenada's and payable to a nonresident of Grenada).

Grenada further warranted that its borrowing under the Loan Agreements constitutes a private "commercial act" and irrevocably disclaimed any right of immunity, sovereign or otherwise, from suit, jurisdiction of any court, pre-judgment attachment, post-judgment attachment, set-off, or other legal process.

The Loan Agreements provide that a failure to make a principal or interest payment in a timely manner constitutes an "Event of Default."

If an Event of Default occurs under the Loan Agreements, the Ex-Im Bank has the right to accelerate the loan on written notice to Grenada, making the entire unpaid balance of loan and any other sums payable immediately due and payable, presentment, demand and protest being waived.

The Loan Agreements contain, among the miscellaneous terms, a choice of law and forum selection clause, which dictate that the Loan Agreements and the Notes are governed by the internal laws of the State of New York.

Grenada is further required to maintain an irrevocable agent for process in New York, and irrevocably consented to the non-exclusive jurisdiction of any State or Federal Court in New York, New York; to waive any objection to that venue on any ground; and to accept service of process by registered or certified mail to the notice address provided in the agreement.

COUNT ONE UNDER THE FIRST LOAN AGREEMENT (6020216001)

Grenada has failed to make required payments and is default under the First Loan Agreement and the First Note.

Grenada has failed to make the following required installments of interests (a) $43,814.87 on July 27, 2004, (b) $40,888.95 on January 27, 2005, and (c) for the period January 27, 2005 to July 1, 2005, additional accrued interest was $31,574.13.

The total accrued but unpaid interest at the scheduled rate of 2% as of the date of acceleration was $116,277.95. These amounts assume, contrary to fact, that the scheduled payments of principal was made.

Grenada has also failed to make the following required repayments of principal: (a) $333,333.00 on July 27,2004 and (b) $333,333.00 on January 27,2005.

On June 15, 2005, Ex-Im Bank gave written "Notice of Default and Acceleration"to Grenada, effective July 1, 2005, that certain events of default had occurred under the terms of the First, Second, Third, and Fourth Loan Agreements, and the entire unpaid balance and all other sums payable under the Loan Agreements and Notes were immediately due and payable.

No payment on the First Loan Agreement has been received to date in response to this notice. Under the First Loan Agreement, Section 202, default interest accrues at the rate of 10% on all amounts overdue, interest and principal included.

Because Grenada failed to pay the scheduled principal and interest payments of $333,333.00 and $43,814.87 on July 27, 2004, it incurred default interest of $35,514.76 on the sum of $377,147.87 for the period July 27, 2004 to July 1, 2005.

Similarly, because Grenada failed to pay the scheduled principal and interest payments of $333,333.00 and $40,888.95 for the period January 27, 2005 to July 1, 2005, the total default interest as of the date of acceleration was $51,627.10.

As of July 1, 2005, Grenada owed Ex-Im Bank the principal of $4, 333, 339.00 accrued but unpaid schedule interest of $116,277.95 and default interest of $51,627.10, for a total of $4, 501,244.05.

 From July 1, 2005 to the date of judgement, default interest continues to accrue at a rate of 10% per annum on the entire unpaid balance of the First Note at the per diem rate of $1,250.35.

COUNT TWO UNDER THE SECOND LOAN AGREEMENT (6020216002)

Grenada has failed to make required payments and is in default under the Second Loan Agreement and the Second Note.

Grenada has failed to make the following required installments of interest: (a) $32,406.14 on April 24, 2004: (b) $30,499.88 on October 24, 2004, and © $28,437.36 on April 24, 2005.

These amounts assume, contrary to fact, that the scheduled payments of principal were made. Grenada has failed to make the following required repayments of principal (a) $83,334.00 on April 24, 2004; (b) $83,334.00 on October 24, 2004, and © $83,334.00 on April 24, 2005.

On June 15, 2005, Ex-Im Bank gave written "Notice of Default and Acceleration" to Grenada, effective July 1, 2005, that certain events of default had occurred under the terms of the First, Second, Third, and Fourth Loan Agreements, and that the entire unpaid balance and all other sums payable under the Loan Agreements and Notes were immediately due and payable.

No payments on the Second Loan Agreement has been received to date in response to this notice Under the Second Loan Agreement, Section 2.03 (b), default interest accrues at the rate of 10% on unpaid principal.

 The following chart summarizes the amounts due under the Second Loan Agreement and Second Note through the date of acceleration.

As the Chart demonstrates, as of July 1, 2005, the unpaid principal on the Second Loan Agreement and Note was $1,416,662; accrued interest at the contract rate of 4.5% on the scheduled principal payments was $101,259,99 and default interest at the default rate of 10% on the unpaid scheduled principal payments was $17,384.40.
The total amount due as of July 1, 2005 was $1,535,306.39. From July 1, 2005 to the date of the judgment, additional per diem interest of $393.52 accrues on the unpaid principal balance of the Second Note.

COUNT THREE UNDER THE THIRD LOAN AGREEMENT (6020216003)

Grenada has failed to make required payments and is in default under the Third Loan Agreement and Third Note.

Grenada has failed to make the following required installments of interest: (a) $102,937.50 on April 1, 2004, (b) $97,218.75 on October 1, 2004, and © $91,000 on April 1, 2005.

These amounts assume, contrary to fact, that the scheduled payments of principal were made. Grenada had failed to make the following required repayments of principal: (a) $250,000 on April 1, 2004, (b) $250,000 on October 1, 2004, and © $250,000 on April 1, 2005.
On June 15, 2005, Ex-Im Bank gave written "Notice of Default and Acceleration" to Grenada that certain events of default had occurred under the terms of the First, Second, Third and Fourth loan agreements and that the entire unpaid balance and all other sums payable under the loan agreements and notes were immediately due and payable.

No payment on the Third Loan Agreement has been received to date in response to this notice. Under the Third Loan Agreement, section 2.03 (b), default interest accrues at the rate of 10% on unpaid principal.

The following chart summarizes the amounts due under the Third Loan Agreement and Third Note through the date of acceleration.

As the Chart demonstrates, as of July 1, 2005, the unpaid principal on the Third Loan Agreement and Note was $4,500,000; accrued interest at the contract rate of 45% on the scheduled principal payments was $333,812.50; and default interest at the default rate of 10% on the unpaid scheduled principal payments was $56,9444.44.

The total amount due as of July 1, 2005 was $4,890,756.94. From July 1, 2005 to the date of judgment, additional per diem interest of $1,250 accrues on the unpaid principal balance of the Third Note.

COUNT FOUR UNDER THE FOURTH LOAN AGREEMENT (6020216004)

Grenada has failed to make required payments and is in default under the Fourth Loan Agreement and the Fourth Note. Grenada has failed to make the following required installments of interest: (a) $227,500.00 on July 21, 2004 and (b) $230,000.00 January 21, 2005.

On June 15, 2005, Ex-Im Bank gave written "Notice of Default and Acceleration" to Grenada that certain events of default had occurred under the terms of the First, Second, Third, and Fourth Loan Agreements, and that the entire unpaid balance and all other sums payable under the Loan Agreements and Notes were immediately due and payable.

 No payment on the Fourth Loan Agreement has been received to date in response to this notice. The principal balance owing under the Fourth Loan Agreement and the Fourth Note is $10,000,000.

Under the Fourth Loan Agreement, Section 2.04 (b), default interest accrues at the rate of 10% on unpaid principal. The following chart summarizes the amounts due under the Fourth Loan Agreement and Note through the date of acceleration.

As the Chart demonstrates, as of July 1, 2005, the unpaid principal on the Fourth Loan Agreement and Note was $10,000,000; accrued interest at the contract rate of 4.5% on the scheduled principal payments was $658,750.
The total amount due as of July 1, 2005 was $10,658,750. From July 1, 2005 to the date of judgment, additional per diem interest of $2,777,78 accrues on the unpaid principal balance of the Fourth Note.

Wherefore, Ex-IM Bank demands judgment in its favor as follows:

(a) the sum of $21, 586,057.38, plus prejudgment interest at the contract default rate (I.e 10 percent) on unpaid principal from July 1, 2005 to the date of the judgment of $5,671.65 per diem, plus expenses and attorneys' fees incurred by EX-IM Bank in connection with enforcement of the Loan Agreements;

(b) taxable disbursements and court costs; and

(C) such other and further relief as this Court deems just and proper.