The INCAT Group is a civil engineering, logistics and oil field
construction contractor with an extensive history of operations
primarily in Sub-Saharan Africa.
Summary of Statement by INCAT Group:
The INCAT Group (“INCAT”) wishes to clarify its position with regard to
its ongoing dispute with Luba Freeport Ltd (“Luba”) (a subsidiary of
Lonrho plc) regarding unpaid invoices and other costs.
This clarification is required due to the recent public statements made
by Lonrho regarding the proximity and terms of a settlement of this
Whilst we do not refute that privileged without prejudice discussions
were underway, no agreement had been reached, and the unilateral
dissemination of the terms under discussion, plus the pace of
negotiations and the terms thereof has rendered INCATs ability to gain
stakeholder support for the settlement impossible.
Consequently INCAT have no option but to pursue their claims in their
The claims against Luba total over USD 21 million.
Full Statement from John Haden M.B.E. Chief Executive
“From 1999, INCAT and associated companies founded and developed Luba
Freeport in Equatorial Guinea.
In 2006 Lonrho PLC made an offer to buy Luba Freeport. The transaction
involved Lonrho repaying a loan of US$11.3 million to a third party and
paying INCAT US$2 million dollars for its shareholding in Luba Freeport
At the point of the transaction there were invoices due to the INCAT
Group and associated companies and individuals which INCAT, in good
faith, and agreed by way of a side letter, to defer settlement until an
“imminent” refinancing of Lonrho debts made settlement possible.
Lonrho did not, in fact, refinance in the manner proposed and used this
change of plan as a reason to avoid settlement of the invoices due to
the INCAT Group. In August 2008, the Royal Courts of Jersey ruled that
Lonrho’s reliance on the side letter as a means to avoid payment became
invalid after three years, and therefore from May 2009 INCAT were free
from impediments to seek settlement of the invoices.
Since this point Luba Freeport have failed to make a single payment and
have, some three years after the initial transaction, sought to question
the validity and provenance of the invoices and indeed the integrity of
INCAT and associated companies, and in some cases, individuals.
In 2007, at the suggestion of INCAT, a professional mediator was
introduced to broker a settlement figure. A settlement was proposed but
Lonrho refused to settle on this basis.
It is the opinion of INCAT that Luba Freeport is seeking to avoid
settlement of the invoices due by engaging in a campaign of litigation
led attrition designed to weaken the negotiation position of INCAT or
indeed force the company out of business.
This protracted affair has had a material impact on the INCAT Group’s
ability to prosecute its normal business to the extent that a fresh
approach was made to Luba Freeport in August 2009.
Advisors acting on behalf of INCAT reached an “in principle” agreement
on a settlement that whilst unpalatable, may have been required to
ensure the survival of INCAT.
Since speed and certainty were of paramount importance INCAT lawyers
agreed to submit the first draft of formal documentation. The first
draft of this was issued on 14th of October 2009 and was
marked clearly “Without Prejudice” and “Subject to Contract”.
It was several weeks before lawyers acting for the Lonrho responded and
their proposed payment terms and the surety thereof were fundamentally
unsatisfactory to INCAT and would have done nothing to help stabilize
the INCAT business.
In the context of the unsatisfactory form and timeliness of settlement
negotiations, let alone the basis of the documentation, Lonrho,
reportedly advised by their legal team and NOMAD advisor, proceeded to
make an announcement on 9 November 2009 reflecting their likely
“exceptional gain” from this transaction.
It is the opinion of INCAT, that this announcement was irresponsible, a
breach of confidentiality and misrepresentative of the state of
certainty of the proposed transaction.
It is the opinion of INCAT that the fact that the announcement was made
without any prior communication with INCAT is not only disrespectful but
caused material harm by way of a destabilisation of INCAT’s long term
In light of the above INCAT wishes to clarify that it had not and will
not agree to the terms of the proposed settlement announced by Lonrho on
behalf of its subsidiary Luba Freeport.
INCAT has resigned itself to the fact that all attempts to expedite a
settlement are futile given the approach of the counterparty and
therefore will pursue all sums due to the fullest extent.
INCAT considers that the total sums due (as of July 2009) to INCAT and
associated parties and individuals are in excess of $21 million USD.”
John Haden M.B.E. Chief Executive
““We sold Lonrho a well established port facility that delivered them
revenue and benefit from day 1. Additionally INCAT and its partner IPS
sought to work with Luba Freeport to bring significant Rig Refurbishment
contracts to the port which would have generated significant additional
revenue for Luba Freeport, for reasons we could never understand this
was rejected and we had to redirect the work to Gabon.”
“They have used every opportunity to avoid any payment of invoices that
are due to INCAT. Even when circumstances compelled us to seek a
compromise settlement a reasonable outcome could not be reached. We will
now seek full satisfaction through every route available to us in every
Source: Business Wire