MECE factories now become property of Jordan Commercial Bank

AMMAN — Factories belonging to the Middle East Complex Engineering Electronics and Heavy Industries (MECE) are now the property of Jordan Commercial Bank (JCB).

MECE, a company registered to produce, trade, distribute, and export electronic and electric home appliances in collaboration with other electronic companies, informed the Jordan Securities Commission (JSC) last month that, based on a court ruling, the factories were registered in the bank’s name on June 18, 2015.

In its disclosure to the JSC, the company said JCB was among 28 banks that agreed and signed a memorandum of understanding for settling MECE’s indebtedness since 2010 when troubles began.

“Terms and privileges obtained by JCB were much better than those given to other creditor banks, with their consent, because JCB held hypothecations in its favour,” the disclosure added.

Noting that JCB was a member of MECE’s board of directors from September 6, 2011, until September 3, 2013, the company stressed that the bank was fully aware all along of the developments and stages of progress with other bank creditors to arrive at a settlement to MECE’s indebtedness.

According to MECE, the bank was also knowledgeable about the restructuring programme slated for implementation in an integrated entirety that guarantees the interest of all stakeholders.

JCB Vice Chairman Ayman Majali told The Jordan Times that for five years, MECE’s management was untrustworthy and unable to deliver despite repeated promises.

“We tried to help the company in various ways but to no avail because the situation was one of indecisiveness and unreliability,” he said, emphasising that the bank was not in the business of seizing and selling properties.

“JCB is now trying to find serious investors who are willing to restart operations because the factories have been idled for months,” Majali added, attributing the company’s troubles to mismanagement.

He noted that MECE’s administration was not focused on the industrial production and the strength of the company which was crippled by over JD100 million of debt. 

MECE said the bank initiated the process to publicly auction the factories on August 21, 2013, while still member of its board of directors and even after the company repaid certain amounts agreed on in a memorandum of understanding.

“Because JCB had a hypothecation in its favour, it unilaterally went to court to initiate the auctioning process and was the only bidder,” MECE added in the disclosure.

Majali said the bank took possession of the factories with a JD23 million bid because, under Jordanian law, it could not exceed 50 per cent of the collateral’s value which was estimated at JD46 million. 

JCB’s vice chairman noted that the cost to the bank was JD25 million when various fees and taxes were taken into consideration.

“JCB continued expropriating the company’s factories and equipment [for a meager amount though within the prevailing law] in settlement of its individual credits instead of cooperating and joining for a group solution comprising all banks as sought,” MECE said.

It added: “Since the crisis started in 2010, there was and still is an actual, practical, moral and legal consensus and common objective among all  the 28 creditor banks that the solution to the crisis be collective.”

The company mentioned in the disclosure that to safeguard all stakeholders, whether shareholders, workers, banks, creditors, investors  (Jordanians, Arab or others), and  public funds, no bank was to act alone against the interests of the company, its assets and progress.

MECE indicated that, within several attempts and meetings with JCB to arrive at an amicable settlement, a written offer was made on May 27, 2015 that was better than all what was previously proposed, discussed or even signed with the bank or agreed on with the other creditor banks.

According to the disclosure, JCB was repaid a certain amount in April 2013, based on a memorandum of understanding dated March 14, 2013, when it impounded specified plots of land, other than those of the factories, because the bank had a priority and an immediate implementation for repayment over others.

Even after this repayment, the company said, JCB unilaterally recovered more funds by debiting MECE’s accounts at subsidiaries without the customary legal procedures, like asking the original borrower or notifying the guarantor.

In the disclosure, MECE Chairman Ayman “Mohammad Ali” Al Khalili described the JCB measures and actions as arbitrary in terms of exercising authority, and unjust to the rights of others.

Al Khalili blamed the JCB for causing considerable harm to the rights of shareholders and damages to the company, its continuity and the workers.

“[JCB conduct] was the main cause behind delaying and obstructing MECE’s restructuring programme and settling its indebtedness to the remaining creditor banks,” he wrote.

The chairman held JCB responsible for harming Arab investment, particularly the Kuwaiti, in Jordan and assured shareholders that MECE will not save any effort to regain its full rights. 

Preliminary data show that MECE generated JD0.4 million operational earnings last year, sharply down from JD2.5 million in 2013.

The loss in 2014 amounted to JD4.1 million compared to JD6.6 million in the previous year.