Ubumwe Grande Hotel could be auctioned or placed under receivership in the coming months on grounds of the unpaid loan owed to KCB Bank Rwanda.
So what could be ailing this iconic establishment, which is based in Kigali?
According to sources, Ubumwe Grande Hotel is jointly owned by Alykhan Karmali of Mukwano Group, Rwandan businessman Robert Bafakulera and Multi-National Chaudhary Group (CG Corp Global) from Nepal.
Robert Bafakulera, the current Chairperson of the Private Sector Federation, has multiple investments across sectors, including real estate and the hospitality sectors.
Karmali heads Mukwano Group, which has interest across the East African region in logistics, manufacturing, real estate, finance and agriculture, among others.
CG Global is a multi-national conglomerate company headquartered in Nepal with interests in five continents in sectors such as financial services, fast-moving consumer goods, education, hospitality and energy, among others.
L-R: Robert Bafakulera, Alykhan Karmali, and Binod Chaudhary. / Internet photo
The firm also runs Zinc Hotels in over 40 cities.
However, Ubumwe Grande Hotel could go under the hammer as the financier claims million in unpaid loans.
On September 18, this year, RDB received the notification from KCB Rwanda of intention to foreclose Ubumwe Grande Hotel for an unpaid loan of over $18 million.
Sources told The New Times that trouble began with the breach of an agreement that CG Corp would manage the property through its ‘The Zinc’ brand.
However, it is alleged that the two partners unilaterally terminated the management agreement about three months prior to the launch of the hotel.
Last year’s reports that Hilton Group would take over the management of the facility escalated the conflict among the shareholders.
Hilton Group intended to operate the facility under the DoubleTree brand, beginning the first quarter of this year.
Sources told The New Times that CG Corp had moved to arbitration in Dubai International Financial Centre (DIFC) whereby the arbitral award went in their favour on the basis that Zinc Brand running the hotel would make it more profitable.
However, the source said that the arbitration has not been upheld with the management agreement still terminated which is believed to have been leading to losses.
In regards to the loans that could lead to the auction, the same source revealed of a meeting between CG Corp and the bank’s credit committee to seeking resolution through a buy/sell agreement at mutually acceptable terms.
It is still unclear how the move ended. It is also unclear if other shareholders have expressed interest in buying the hotel.
Rwanda Development Board (RDB) confirmed receiving a notice of intention to foreclose Ubumwe Grande Hotel and said that they are waiting for the bank’s decision on the expiry on the notice period.
Experts say that there are two possible options going forward; to appoint auctioneers to value and advertise the property or to appoint a receiver manager to run the business till the debts are paid back.
However, in either case, a receiver would be appointed.
“As per the mortgage law, it is the right of the bank to choose which option (remedy) they will use either to sell or to manage. Right now RDB is waiting for the option they will choose after the expiry of the notice period. In either case, a receiver will be appointed. If they go for sale of the asset, the appointed receiver will value the asset to know the guiding market price,” RDB Head, Communications and Marketing Sunny Ntayombya, told The New Times.
He, however, said that the office of the Registrar General is not involved in any dispute resolution among the parties.
In an interview with The New Times, KCB Rwanda Managing Director George Odhiambo said that there had been several efforts between the shareholders among themselves as well as the bank to find an amicable solution which had not been fruitful so far.
He, however, said that the bank was still open to efforts to reach a viable solution.
“Those efforts are still welcome by the bank. Unfortunately, we have not been able to reach a solution to date,” he said.
Failure to find a solution, he said, a receiver will advise on the way forward choosing between Administration and an auction.
When contacted for comment, the CG Corp Communications Office shared a statement noting that there had been numerous false news across the East African region with unfounded reports.
“Stories have recently been published in various media outlets in East Africa regarding the Chaudhary Group’s (CG Corp Global) investment in the Ubumwe Grande Hotel in Rwanda. CG vigorously rejects the unfounded assertions contained in the stories and confirms that the journalists who wrote the stories did not approach CG for comment,” the statement reads in part.
The firm, however, said that they were not in the position to respond to some of the assertions made in the media as they would be in breach of confidentiality obligations.
“Regrettably, due to confidentiality obligations, CG is unable to respond in any detail to the stories. CG is considering all its legal options, including defamation (lawsuit), and will be commencing the appropriate legal action in the relevant jurisdictions,” the statement adds.
When contacted for comment on the issue, Bapfakulera said he preferred not to comment, while Alykhan Karmali had not responded by press time despite numerous efforts to reach him.