AFRICA, Ethiopia: South African Company Sues Habesha Cement for Commission

South African company, Arkadel PTY, has filed suit against Habesha Cement S.C., claiming they failed to pay 27 million Br in brokerage fees. The Eight Bench of the Federal High Court has ordered Habesha to respond to the pauper suit brought on April 5, 2013.

Arkader, which is represented locally by Brook Mamo and in South Africa by Tchanyalew Zewde, reached an agreement with Habesha on May 27, 2009 for the South African firm to receive two percent of the sales value for brokering the deal that sold 47pc of Habesha shares. The shares were sold to South Africa’s Pretoria Portland Cement Company Limited (PPC) and Industrial Development Corporation (IDC). PPC and IDC bought 21 million dollars and 27 million dollars in shares, respectively.

Habesha was pleased with the services that Arkader provided so they revised the fist contract and increased the commission that Arkader received from two percent to seven, according to the statement of claim. However when Arkader asked to be paid Habesha refused saying they had terminated the contract, according to the court documents.

Arkader argued that it was the first contract that was terminated rather than the second; as the latter was an amendment. The statement of claim argues that if the contract were terminated, the terms would have been clearly stipulated in the second agreement that the two companies signed on January 27, 2010.

Arkader claims that the second agreement simply added a five percent increase to their fees, raising their payment amount to 27 millionBr.

Habesha was established in September 2008 with 30 founding shareholders. The company floated 600,000 shares to the public on September 18, 2008 with a value of 1,000 Br each. The sale was closed on August 9, 2009. When the initial public offering was closed Habesha had amassed over 16,000 shareholders, the largest base in a private company in the country.

Pretoria Portland Cement Company (PPC) was established in 1892 as South Africa’s first cement plant on the outskirts of Pretoria. PPC is the leading supplier of cement in southern Africa through eight cement manufacturing facilities and three milling depots in South Africa, Botswana and Zimbabwe which have the capacity of producing around eight million tonnes of cement products each year. PPC also produces aggregates, metallurgical-grade lime, burnt dolomite and limestone.