UBA Bank puts 6 Kileleshwa plots up for sale in loan row
United Bank of Africa (UBA) is seeking to sell six parcels of land in Kileleshwa for Sh720 million to settle a loan default.
The land is owned by Albright Holdings—a private developer that pledged the property as security for a $4 million (Sh360 million) loan.
The bank has issued a 40-day statutory notice of sale for the six adjoining pieces of land after Rapid Communications—a firm affiliated to Albright Holdings– failed to honour the terms of a deal to repay the loan that the three parties signed in court.
Rapid Communication’s court application seeking to stop the auction last week failed after Justice Francis Gikonyo ruled that the firm had failed to honour the terms of a restructured payment plan that was to see it remit $1.4 million (Sh126 million) in December.
The judge said in his ruling that the deal that Rapid struck with UBA in November provided that if they failed to honour the repayment conditions the bank would be at liberty to sell the properties located near Kenya High School in Kileleshwa.
Rapid has accused UBA of frustrating its efforts to sell the land, which may cost it a buyer that has agreed to buy all the property at a collective Sh700 million.
The judge however argued that Rapid and Albright were being casual in the sale of the land despite being in default of a deal they consented to with UBA, hence did not deserve restraining orders against the auction.
“Rapid and Albright are now saying they cannot deposit a sum of Sh45 million they have been paid (by the prospective buyer). The suit property is a charged property and cannot be sold in a casual manner as is being done without the consent of UBA. The applicants are at fault and cannot elicit any love from a court of equity,” he ruled.
UBA in an earlier application said that it was under no obligation to accept an undertaking from either the two firms or Dubai Bank—their financier. The bank also downplayed Rapid’s claim that it risked being listed as a defaulter.
“The application is unfounded as Rapid has already been listed by other financial institutions and not just UBA,” said Sylvia Magotsi, UBA’s secretary.
The land is cleared for construction of housing units, and its new buyer says it will pay Sh450 million initially, then remit the Sh250 million balance after approval for construction of apartments is completed.
Rapid and Albright have also accused UBA of costing them a deal that was to see another private developer, Erdemann Properties, buy the land for Sh1.4 billion in December.
The two firms hold that an advertisement for auction of the properties in December saw Erdemann pull out of the deal after paying a Sh105 million deposit.
Anwar Hussein, a director in both firms, says that his request to have UBA hold back the advert failed, and consequently botched the deal.
“UBA’s actions were in my honest estimation intended to frustrate Rapid’s efforts to legally discharge its loan with the bank,” he said.