Submission of requirements for documentation of FMO loan.

Mr. Z

Address….

Dear Sir

Re:      Submission of requirements for documentation of FMO loan.

We refer to your letters dated 19 November 2006 14 December 2006 on the above subject.

We have perused the documents submitted by you for fulfilling the requirements for documentation of FMO Loan.

Our comments on the same are as follows:

Document(s)

 Our Comment
Details of Existing Facilities A list of existing facilities has been provided in addition to those which are to be executed simultaneously with FMO loan.
Search Report Search Report Provided
Copy of Accession agreement

Lenders’ Pari Pasu Security Sharing Agreement

 Copy of Accession Agreement dated 28th April 2003 given.

Lender’s Pari pasu agreement given.
Loan Agreements:

Letter of offer of Facility by Bank 1

Loan Agreement with Bank 2

Credit Line Agreement  with International Finance Corporation (“IFC”)

Taka Housing Loan Agreement with Nederlanse Finanacierings-Maatschappij Voor Ontwikkelingslanden N.V. (“FMO”)

Loan Agreement with Bank 3

Under “Securities” of the terms and conditions it is stated: “First registered hypothecation charge over all present and future movable and immovable assets including books of debts on a pari-passu basis with other lender”. So authorisation to share the securities on a pari pasu basis is given.

Under clause 9.1.1 the liabilities of Company 1 to BANK 2 under this Agreement will continue to rank at least equally and rateably (pari passu) in point of priority and security with all its other liabilities except :

a)      liabilities giving rise to liens or rights of set-off in the normal course of trading, the aggregate amount of which is not material; and

b)      liabilities which are preferred solely by law and not by reason of any encumbrance.”

Moreover, according to clause 9.1.2, DBH will not create or permit to exist over all or any part of its business or assets (present or future) any encumbrances without the prior consent of BANK 2.

So although BANK 2’s loan will rank at least equally and rateably (pari passu) with the previous lenders, but as CBC is a new lender, a No Objection Certificate (“NOC”) has to be obtained from BANK 2 regarding the accession to the pari pasu agreement.

There is no clause in this agreement authorising sharing of the securities on a pari pasu basis. As such a NOC has to be obtained from IFC regarding the accession to the pari pasu agreement.

According clause 17.2(v) of this agreement, unless expressly agreed otherwise by FMO, DBH shall not create or permit to exist any Lien on any property, revenues or other assets, present or future of DBH except in the situations contained in sub clauses a to c. As such a NOC has to be obtained from FMO regarding the accession to the pari pasu agreement.

There is no clause in this agreement authorising sharing of the securities on a pari pasu basis. As such a NOC has to be obtained from IFC regarding the accession to the pari pasu agreement.
The following up to date forms filed with RJSC:

a)List of current shareholders (Form XII)

b)      Copy of last annual return (Form X)

c)Copy of particulars of Directors (Form XII)

d)      Notice of situation of Registered Office (Form VI)

a)      given (dated 16 October 2005)

b)      given (dated 16 October 2005)

c)      given (dated 16 October 2005) though a seal stating ILLEGIBLE can be seen over the signature of the company secretary.

d)      “to be provided” later.
BOI Approval for FMO Loan BOI approval dated __/04/2006 approving foreign loan of EUR 6.00 million from FMO given.
Certificate of Incorporation and certified latest copy of Memorandum and Articles of Association of DBH Certificate of Incorporation dated 11 May 1996 – Given;  Certificate of Commencement of Business dated 11 May 1996 – Given; Financial Institution License dated 15.07.1996 issued by Bangladesh Bank-Given.

Certified copy of Memorandum and Articles of Association of DBH – given.
Please refer to loan agreement All 5 Loan agreements given
Confirmation of auditors Auditors report dated 14 September 2006 given.
Account details of remitting bank Given
Who do DBH propose to appoint as process agent for the service of process in the UK? Stated “Under review by FMO”

If you have any further query, please do not hesitate to contact the undersigned.

Thanking you.

Yours faithfully,

………………….

For: “The Lawyers & Jurists”

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