Pearl of Africa Hotel closed, to be auctioned after Aya loses again in court

BY URN

Aya Investment Limited, which owns Pearl of Africa Hotel Kampala has again lost a bid to stay the execution of an order to auction the hotel for non-payment of loans amounting to over US$ 300 million.

Three Court of Appeal judges; Fredrick Egonda-Ntende, Monica Mugenyi, and Oscar Kihika ruled that a reference filed by Aya against his financiers Industrial Development Corporation Of South Africa Limited to stay the orders of the Court of Appeal judge Christopher Gashirabake allowing the execution orders became untanable when Aya withdrew the substantive appeal on, which the stay of execution application was based.

“We therefore find that following the withdrawal of Miscellaneous Application No. 271 of 2023, the application upon which the single judge decision referred to this Court was premised, this Reference is misconceived and improperly before this Court. We would therefore dismiss this Reference with costs to the Respondent,” the judges ruled.

According to court records, Aya Investments Limited which belongs to businessman Muhammad Hamid between 2007 and 2017, and Industrial Development Corporation of South Africa executed various Financial Credit Agreements as well as Security Agreements, to finance the construction of the Pearl of Africa hotel.  Following a breakdown in the business relationship between the parties and the supposed default by Aya on its financial obligations, his financiers instituted foreclosure proceedings under the Ugandan legal regime as provided under the Security Agreements.

Aya objected to these proceedings instead opting for arbitration as provided in the loan agreements they had signed. He also obtained restraining orders against the foreclosure proceedings until the arbitration process plays out in South Africa. He also went ahead and instituted Civil suit No. 937 of 2017 that was grounded in contempt of court and breach of contract; to which his financiers responded by filing an application that sought to refer all the matters in the said suit to arbitration.

The arbitration process ended in the favour of the financiers, who also sought orders from the High Court to execute them. This prompted Aya to file an application challenging the high court decision to allow the execution of the arbitral orders that included the closure of the hotel.  He lost the application, which was heard by a single judge of the Court of Appeal; Gasharibake hence prompting him to file a reference seeking the matter to be heard by three judges of the court.

When the matter came up for hearing in court, the lawyers representing the Industrial Development Corporation raised a preliminary point of law that the application for leave to appeal upon which the stay of execution was premised had been withdrawn, there was no legal basis for the reference. It is this objection that the court upheld.

If not appealed in the Supreme Court, this ruling means that Pearl of Africa Hotel that is located on Nakasero Hill on the land that previously belonged to the Uganda Broadcasting Corporation, the national broadcaster will indeed go up for action in order to clear the debts that its owner has accrued over the years. Hamid has already called for help from President Yoweri Museveni against what he called mafiosi aimed at dispossessing him. Museveni has not yet weighed in at least publicly on the matter.

Previously, he has bailed out businessmen stressed by loans the latest being Patrick Bitature, the owner of Protea Hotel who was also on the verge of collapse after another financier from South Africa demanded more than US$ 30 million in principal and in interest accruing from a loan that had been granted to him and failed to honor.