Court bailiffs have started the process of selling Aya Hotel located on the leafy Nakasero Hill in Kampala owned by businessman Muhammed Hamid, 47.
The property is a 5-star hotel situated at an altitude of 1240 metres above mean sea level, making it one of the highest points with a 360 degrees view of Kampala City.
The hotel spans 32,000 square metres and comprises 23 floors, 296 rooms, 37 suites, 2 restaurants, 3 bars, 9 meeting rooms, 15th floor executive lounges and a business centre with all top class 5 star amenities.
In a public notice published in Ugandan newspapers on Monday, September 25, Armstrong Limited, governmentCourt Bailiffs, auctioneers, and debt collectors on orders of M/S MMAKS Advocates and ENSafrica Advocates representing Industrial Development Corporation of South Africa Ltd said the hotel will be up for public auction on October 26, 2023 unless the hotel “pays to us the entire outstanding decretal sum (including interest) and our fees and costs before the fall of the hammer at the auction.”
The auctioneers intend to recover a Shs 611 billion debt which Aya Investments owes to the South African lender. The money is part of the financing contract signed between AYA and the South African entity to finance the construction of the hotel in 2007.
AYA had argued in court that the lender made it hard for them because it would delay the availability of the money, which delayed the project completion.
Hamid also cited disputes with Uganda Revenue Authority on what taxes to pay but also admitted that it was going to be tough completing the construction in time, especially due to Uganda’s landlocked nature.
Court battle
However the Court of Appeal recently ruled that the struggling businessman could not appeal the decision, reasoning that courts of law cannot meddle in lawful arbitration processes.
The ruling meant that Aya Investment Limited was restricted from appealing to any higher Court in the matter where the commercial court endorsed the payment of Shs 611b arbitral award to IDC of South Africa Limited.
The Bruce Collins QC Tribunal of South Africa on September 11, 2021, ordered Aya to pay the amount to IDC as an arbitral award.
It comprises a Shs 305b unpaid principal sum that the South African firm passed to the Ugandan businessman 10 years ago according to available documents.
Documents on the court record show that the IDC had applied to the Commercial Court to have the award registered as a decree of the High Court in Uganda.
The development was allowed by Justice Stephen Mubiru, locking the Ugandan businessman in the dispute with the South African company.
Hamid’s efforts to use local courts to frustrate the South African lender are yet to bear fruit as his hotel business continued to collapse.
In 2017, AYA signed a management deal with a Belgium-based hotel company, Carlson Rezidor Hotel Group (now Radisson Hospitality) in January 2017.
However, this was short-lived as Radisson withdrew six months later. It was replaced in September of the same year by a South African hotel brand, Sovereign Hotels on a short-term basis to oversee the opening the following month.
American group, Wyndham Hotels, and Resorts, then was hired by Hamid in 2018 to run the hotel, but this was also short-lived. It has been trading as WIN 5 Hotel & Spa since February this year.
The branding has since changed from Pearl of Africa to Win 5, amidst reports that the Libyan foreign investment firm, LAICO has taken the majority holding of the hotel.