VC George J:

Pursuant to a credit facilities agreement of 13 September 1982 and a settlement thereto dated 21 April 1983 the plaintiff provided the 1st defendant with a term loan and a revolving credit facility. There were agreed terms of repayment which included the payment of interest on the amounts advanced to the 1st defendant.

The 2nd, 3rd and 4th defendants by a letter of guarantee dated 13 September 1982 and a supplement thereto dated 21 April 1983 guaranteed the repayment of all amounts payable by the 1st defendant. The 4th defendant's liability was however restricted to 50% of the amount repayable by the 1st defendant.

Pursuant to the agreements various advances were made on both the term and the revolving credit facility to the 1st defendant. The 1st defendant ran into difficulties. By letter dated 12 August 1984 the 1st defendant informed the plaintiff of their problems and ended the letter with an indication that the 1st defendant would be seeking a restructuring of the facility which it was said would possibly involve a deferment of the repayment schedule.

The 4th defendant wrote its letter of 13 September 1984 to the plaintiff referring to the 1st defendant's