The airline was formed after bringing in Lonhro’s aviation wing, Fly540 into a new company that then created but the London newspaper reports that Donald Smith – the founder of Fly540 - alleges the London-listed carrier has failed to honour a deal to repay $6.78m of debts that he guaranteed with Chase Bank in Kenya.
Smith claims that to facilitate the deal he agreed to guarantee debts held by the Kenyan business that was financing other Lonhro Aviation operations in Africa, particularly in Tanzania. He alleges Lonrho Aviation undertook to repay those debts.|
He is now claiming he is still owed the money and, as a result, the sale of the Kenyan airline has not been completed.
According to the Daily Telegraph, Smith’s lawyers wrote to Lonhro Aviation two weeks ago giving the company 14 days to repay the money or face legal action to recover it. The dispute is the latest to hit FastJet's Kenyan operation, which last year became embroiled in a row with two suppliers over an alleged $1.5m of unpaid bills.
However, FastJet are denying the claims. A spokesman said: “Don Smith and his partners have been paid all amounts due to them, a total sum of $6.75m. Mr Smith certified in a document signed by him on 24 July 2012 that, other than specified liabilities as set out in the document, there is no other liability or indebtedness due to him or any entity controlled by him. The purchase was and has been fully consummated.”
Lawyers representing the Fly540 company issued the following statement this morning: Five Forty Aviation Ltd (“the Company”) confirms that it has instructed its lawyers to recover an acknowledged debt of $6.8m from Lonrho Aviation (B.V.I) Ltd.
On 9 January 2013, lawyers representing Five Forty Aviation Ltd wrote to Lonrho Aviation (B.V.I) Ltd to recover $6,783,551.67 for the acknowledged debt owed to the Company. The debt relates primarily to the financial support given to Fly540 Tanzania as well as branches in Angola, Ghana and elsewhere operated by Lonrho Aviation (B.V.I) Ltd. This debt does not relate to monies owed to individuals or any executive of Five Forty Aviation Ltd.
Lonrho Aviation (B.V.I) Ltd acknowledged this debt in a letter, dated 22 March 2012, to PricewaterhouseCoopers Ltd.
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