Dairibord in dispute with distributor over unpaid bill

ZIMBABWE Stock Exchange 9ZSE) listed dairy and beverage company Dairibord Zimbabwe is in a dispute with local distributor, Masters, over the non-payment of inventory supplied under a US$40 000 credit facility.
It is understood that Masters approached Dairibord in March this year seeking a partnership to distribute the latter’s products using its three-wheeler cycles.
The deal involved using Masters’ 10 Dairibord branded tricycles for the exclusive distribution of the dairy company’s products. A third party was then contracted by Dairibord to brand the tricycles.
Correspondence shows that on 13 May 2024, Masters wrote to Dairibord requesting a US$20 000 “revolving credit facility”, and offered 15 tricycles valued at US$60 000 as security.
Masters proposed that the facility would be paid off within 72 hours of drawdown and that failure to adhere to the payment terms would result in the withdrawal of the facility, which Dairibord agreed.
On June 7, 2024, Master’s requested an increase of the facility to US$40 000, citing that “this (initial) limit is insufficient to enable smooth operations,” which Dairibord approved.
This, Masters cliamed, would enable it to maintain at least a three-day inventory cover and increase sales volume.
Masters further requested an increase in the settlement period from three days to five working days.
After trading under the arrangement for a while, Masters defaulted on its account and was engaged for a payment plan at the end of August.
On September 21, Dairibord notified Masters that the account had been blocked for invoicing due to the outstanding amount.
On October 8, a letter of demand was subsequently sent to Masters, demanding payment of US$34 698.
In response, Masters, while acknowledging owing Dairibord US$34 698, on October 21 2024, raised two invoices to Dairibord valued at US$69 333, purportedly for advertising on its tricycles. The company claimed that it cost US$1 000 per month for each of the 10 tricycles.
Masters argued that by branding its tricycles, Dairibord benefited from increased advertising and exposure.
However, Dairbord argues the claims are baseless.
In the same letter of demand, Masters also claimed US$ 5000 for “the hire” of its five motor cycles that were exhibited at a State function.
According to Dairibord, the arrangement to exhibit the tricycles was “purely mutual” based on a formal letter of request dated May 21 2024 and there was no agreement on payment for their use.
Masters is also demanding the release of 10 registration books of the 10 cycles, which Dairibord asserts it has the right to hold onto as collateral for the credit facility.
Masters and Dairibord signed a Special Notarial General Covering Bond under which Masters bound the tricycles as security for “capital, interest, and all other sums due to Dairibord”. It was within Dairibord’s rights, as set out in the SNGCB, to hold on to the 10 tricycles registration books in its custody as security for the US$34 698 owed.
“Despite our efforts to engage with Masters through our established channels, it has become clear that these allegations are being used as a pretext to evade payment of the outstanding US$34 695 owed to Dairibord,” said the company.
“The last letter we wrote to Masters on October 25, 2024, demanding immediate settlement of the outstanding amount has not been responded to. We are instituting legal action to recover our money.”

herald

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