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By:
BRIAN WASUNA | |||||||||
| Posted:
Sep,14-2016 15:44:59
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National Bank of Kenya has been given the greenlight to auction the Sh1.2 billion Milele Beach Hotel in Mombasa to recover a Sh727 million loan balance from the Presbyterian Church that owns the luxury resort.
High Court Judge Anne Omollo has dismissed an application by a firm owned by the men's fellowship within the church--Presbeta Investment Limited--intended to stop the auction.
Presbeta is owned by the Presbyterian Men Fellowship Association and is a vehicle for investing in real estate projects.
Presbeta had agreed to buy the hotel from its parent, the Presbyterian Foundation, for Sh1.2 billion in December last year.
The deal was to see Presbeta take over the loan owed by the Presbyterian Foundation to National Bank. Presbeta was to pay a Sh150 million deposit and then take over the loan and occupy Milele Beach Hotel.
NBK put the hotel up for sale when Presbeta failed to pay the deposit. Presbeta now says a dispute between it, the Presbyterian Foundation and National Bank is set to be determined by an arbitrator hence allowing the auction to proceed would interfere with its planned purchase of the hotel.
The bank says it was not a party to the sale agreement between Presbeta and the Presbyterian Foundation hence it will not take part in the arbitration proceedings.
Recover outstanding loan balance
This, the lender says, makes it unfair to stop the auction as it has to recover the outstanding loan balance of Sh727 million.
Justice Omollo ruled that it is not yet clear whether NBK will be a party to arbitration proceedings between Presbyterian Foundation and Presbeta Investment hence there are no grounds to stop the lender from recovering its dues.
"At this stage it is not appropriate for this court to make a finding whether National Bank will be a party to the intended arbitration proceedings or not.
In my view, that is an issue that the arbitrator will have to determine once the arbitration proceedings are commenced as per the purchase agreement." "I am not convinced that the plaintiffs have established special circumstances that favour the Presbyterian Foundation to warrant the granting of the orders sought. In the result, I find no merit in the application and proceed to dismiss it with (legal) costs to National Bank," Justice Omollo ruled.
Presbeta had sued NBK and the Presbyterian Foundation in a bid to block the planned auction.
The Presbyterian Foundation borrowed Sh811 million from NBK in 2007 to finance the acquisition of Milele Beach but has since repaid only Sh84 million.
The church and NBK have been tussling over auctioning the hotel since 2014.
The Presbyterian Foundation, in its response, said Presbeta owes it Sh120 million in penalties for failing to complete the acquisition of the resort. The penalty was provided for in the sale agreement between Presbeta and the Presbyterian Foundation.
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