Equity Bank has threatened to auction properties located along Kampala’s Lumumba avenue over failure by the owner, Simbamanyo Estates to service a loan agreement.
Equity Bank yesterday issued a legal notice warning the property firm that it had until October 7 to pay at least 30 per cent (Ksh. 339M) of the amount or face auction.
“All potential buyers, tenants and occupants of the properties contained on Lumumba Avenue and Mutungo-Luzira are informed that if Simbamanyo does not pay to the bank the 30 per cent as ordered by the court, public auction of the mortgaged properties will take place on October 8,” read the notice.
Simbamanyo had taken the matter to court disputing the amount claimed by equity and challenging the legality of loans drawn from Equity Bank Kenya.
Uganda’s High Court had earlier, on Monday, granted Simbamanyo’s prayer to stay the sale of the properties by Equity Bank but added that in order to uphold the decision, the property firm must make the 30 per cent payment.
The dispute stems from an agreement by Equity Bank Kenya and Equity Bank Uganda to advance about Ksh. 600 million to Simbamanyo Estates in August 2012, with at least Ksh. 350 million drawn from Equity Bank Kenya and Ksh. 250 million from Equity Bank Uganda.
According to court documents, the consolidated sum of the loan including interest and fees would come to a total of Ksh. 810 million. However, the real estate firm challenged the figure, claiming it was only aware of Ksh. 719 million.
Among other accusations, Simbamanyo has accused Equity Bank Uganda of providing Equity Bank Kenya with an illegal cover to conduct business in Uganda where it has no jurisdiction.
The real estate company raised an issue on the inclusion of Equity Bank Kenya and Bank One of Mauritius (which provided a bridge facility of $10M) in the loan document despite the fact that it had never applied to the two banks and had no bank accounts with them.
However Equity Bank refuted the claim, stating that Bank One was drafted into the transaction at the request of Simbamanyo who acting through NISK capital had sought to restructure the loan in 2017, with a Ksh. 1 billion Standby Letter of Credit from Bank One.
The bank argued that the real estate company was aware of all the parties involved in the transaction and had benefited from it.
Simbamanyo has also accused the bank of absolute contempt of court for advertising the properties for sale before the expiry of a 30 day period given to pay the 30 percent.
“We find it irregular to find that lawyers for the bank [Equity] are publishing a response to the caveat emptor and giving our client 30 days to clear 30 per cent and before this time elapses they have advertised the same properties for sale,” the firm’s lawyers told the Daily Monitor.
Simbamanyo had sought the funds for the construction of a hotel property in Mutungo, Luzira north-east of Kampala and facilitate the takeover of a prior facility advanced to Simbamanyo by Shelter Afrique.