A four-star hotel in Kisumu owned by William Osewe of the popular Ranalo Food chain has been saved from auction over a Sh328 million bank loan.
Court of Appeal Judges Hannah Okwengu, Patrick Kiage and Jamila Mohammed stopped Guaranty Trust Bank (Kenya) Ltd from auctioning the Blue Waters Hotel and a block of apartments in South C, Nairobi pending determination of a suit by Osewe and his wife Stella Mutheu Osewe.
The judges however ordered the couple to pay the bank Sh25 million as security pending their decision on February 5 2021.
“An interim order is issued restraining the bank, its agents or servants from disposing or selling the hotel land in Kisumu and the apartments in South C. The appellants shall however pay the deposit within 45 days failure to which the court shall lift the orders,” ruled the judges.
The dispute dates back to 2014 when the businessman who owns Ranalo Foods (K’Osewe eatery) in Nairobi’s Central Business District took the loan from Guaranty Trust Bank to expand his businesses.
He defaulted repayment in 2018 and the bank issued a notice of intention to auction the hotel in Kisumu and the apartments in South C which were used as securities but Osewe and his wife moved to court to stop the auction.
However, in October, High Court Judge Thripsisa Cherere lifted the orders that had stopped the bank from auctioning the couple’s hotel in Kisumu and the apartments in South C to recover its money.
The couple in their appeal filed through lawyer Jackson Awele argued that the auction of their properties which was scheduled for January 22 2021 would occasion them massive losses given that the properties are valued four times more than the loan.
According to the couple, Blue Waters Hotel is a prime beachfront hotel with 150 rooms while the property in South C comprises of 20 two-bedroom apartments.
Awele told the Appellate Court that the bank is determined to dispose of the properties and not willing to listen to proposals the businessman had tabled on the way forward to settle the loan.
“They learnt that the bank had taken over the Kisumu Hotel and restrained any efforts and interventions including valuations by financiers to facilitate a possible redemption by way of a refinance,” said Awele.
He argued that the couple had secured the loan using several other properties as securities including a corporate guarantee of Sh220 million from Ranalo Foods Ltd, rent from the couple’s apartments and personal guarantees which made it illegal for the bank to only chose the hotel for auction.
Osewe in his affidavit to support the appeal swore that the bank has treated them unfairly in seeking to recover the loan they took in 2014 by refusing to accept other securities they offered and that their multi-billion shilling investments will go to waste if sold through auction.
“My wife and I have sacrificed sweat and blood over several years to actualize development of the properties to their current level. It will be unfair and unreasonable to see what we have struggled to build being auctioned,” said Osewe.
Osewe swore that they have already found a partnership with Marriot Hotels for financing to complete construction of the Blue Waters Hotel and that the bank should not be in hurry to auction it.
He said they have continued to service the loan to the greatest extent possible under the prevailing business environment occasioned by Covid-19 and that the court should save him by giving him a chance to find alternative sources to service the loan.
“The Kisumu hotel is located in a prime beach front that overlooks Lake Victoria. Vacant properties in the same locality are not readily available and are quite expensive. The court should strive to safeguard the investment so that it is not auctioned at a loss,” said Osewe.