President Museveni Stops Auction of Pearl of Africa Hotel
President Museveni has temporarily stopped the sale of Pearl of Africa Hotel (formerly Aya) which owes Shs647billlions to a South African lender, Industrial Development Corporation of South Africa In a letter to the Industrial Development Corporation of South Africa
The Pearl of Africa Hotel (previously Aya), which owes Shs647 billion to the Industrial Development Corporation of South Africa, a South African lender, has had its sale temporarily halted by President Museveni.
Mr. Museveni wrote to the Industrial Development Corporation of South Africa stating that the sale must be stopped in order for him to meet with the South Africans.
“I have been approached by Mohammed of Aya Investment (U) Ltd Group regarding the imminent sale of his hotel due to his indebtedness to Industrial Development Corporation, South Africa. I have been informed that the sale has been sanctioned by the court having decided several cases in your favour,” Mr. Museveni states in his letter.
He added: “However, given that Pearl of Africa Hotel is a strategic investment that was supported by the government through land allocation and other benefits, the government wishes to intervene so that the debt is paid instead of auctioning the hotel. I’m, therefore, directing that the auctioneer halts the sale of the hotel pending my meeting with you. By copy of this letter, I am directing my principal private secretary to organize the meeting this month.”
Armstrong Limited, the appointed bailiffs, was set to auction the 23-floor hotel on behalf of the lender and law firms M/S MMAKS Advocates and ENSafrica.
The current Shs647b debt against Aya Investment ballooned from about Shs316b that was borrowed over the years.
From August 13, 2007, to April 21, 2017, Aya Investments (U) Limited and the Industrial Development Corporation of South Africa engaged in multiple Financial Credit Agreements aimed at funding the development of the Pearl of Africa Hotel on Nakasero Hill in Kampala.
The aggregate principal amount disbursed across 20 instances under six Financial Credit Agreements totaled $81,765,318 (Shs305.6b).
A rift developed between Aya Investments and the South African lender due to the former’s failure to adhere to the terms of the Financial Credit Agreements.
There have since been several legal battles that ended with the hotel being put under auction.
