City architect Peter Kamya, who is the proprietor of Simbamanyo Estates, has chickened out on his fight to rescue the building called Simbamanyo House, which houses the Ministry of Gender, Labour and Social Development.
The building was a few days ago bought by tycoon Sudhir Ruparelia’s Meera Investments Limited, at USD5m, about Shs18.5Bn, after it was attached and auctioned by Equity Bank Uganda, which extended Simbanayo Estates a loan facility of USD8.1M about Shs30Bn in 2017 but they failed to service it.
After Equity Bank auctioning the building to Meera Investments Ltd, Simbamanyo Estate petitioned the court of Appeal in a bid to rescue Simbamanyo House and other properties under the estate that have since been distressed by the Bank.
However, after realising that they would lose the case and end up paying double than what they have to lose now, Simbamanyo Estates, through their lawyer Robert Friday Kagoro, decided to withdraw the matter which had come up before Justice Christopher Madrama for hearing, citing that the case had been overtaken by events and that his clients no longer had interest in pursuing the matter.
In his ruling, Justice Madrama accepted the withdrawal and dismissed the matter with orders that Simbamanyo Estates bear the costs of the suit.
In their petition to the Court of Appeal, Simbamanyo Estates was seeking to halt execution of a High Court Order requiring them to pay 30% of the outstanding loan balance totaling to Shs12Bn, arguing that it was exorbitant compared to the loan facility they had acquired.
They also argued that they questioned documents presented in court regarding their loan facility, wondering how they had been drafted into a loan agreement between Simbamanyo Estate, Equity Bank Uganda and Equity Bank Kenya (which provided bridge financing ) yet Simbamanyo Estate had never applied for a loan from Equity Bank Kenya.
They thus accused Equity Bank Uganda of conniving with Equity Bank Kenya to carry out business in Uganda where the latter bank had no jurisdiction, hence was operating in Uganda illegally.
However, on realising that they were going to shoot themselves in the foot if they pursued the matter to its logical end, Simbamanyo Estates were advised by their lawyer Kagoro to coil tail and walk out of the fight when they still could.
This is because according to documents submitted in court, Equity Bank Uganda and Equity Bank Kenya both pooled money totaling to USD8.1M to lend to Simbamanyo expand his estate by constructing a hotel and apartments in Mutungo, and the Estate mortgaged Simbamanyo House as collateral security in 2017.
However, a few years later, the Estate failed to service the loan, which prompted the Bank to distress the property and later auctioned it Meera Investments Ltd on October 8th, 2020.
Simbamanyo claimed they had started servicing the loan but required more financing, which culminated in two additional facilities granted by Equity Bank Uganda of USD1.2m (about Sh4.3Bn) for the completion of the construction of a hotel at Mutungo, a Kampala suburb, and to take over a prior facility from Shelter Afrique hotel.
In addition, the Estate noted that Equity Bank Uganda and Equity Bank Kenya brokered a new deal with Bank One, a Mauritius-based bank, to lend the Estate USD10m (Sh36Bn)so as to offset the old loan with both banks.
In fear of the impending adverse actions at the time, Simbamanyo says it accepted the Bank One loan offer, which was extended to the Estate on November 16, 2017, to bridge USD10m, for purposes of refinancing the existing loans for a period of 24 months.
“Following the Mauritian loan, Equity Bank made a corresponding but fictitious bi-party loan offer for the same amount and tenure to the plaintiff,” one of the court document reads in part, adding that “the fictitious loan amounted to fraudulent misrepresentation by Equity Bank.”
However, this claim was later quashed by court after it proved that indeed Simbamanyo Estate agreed to the Bank One deal.
So on realising that the Estate proprietors had started playing monkey tricks, Equity Bank Uganda on August 7 and 11 this year, advertised the sale of Simbamanyo House and Afrique Hotel in Mutungo by way of public auction. The advert for sale of the mortgaged properties intended to enforce the disputed credit facility advanced on November 30, 2017.
After considering all the potential buyers, Equity Bank sold the property to the highest bidder, Meera Investments Limited, at USD5 million, about Shs18.5Bn, so as to recover some of the Bank’s unpaid loan amounting to about USD8.1M, about Shs30Bn.