The Kenya Commercial Bank (KCB) yesterday resumed the auction of Nyeri’s iconic White Rhino Hotel over a Sh670 million debt after the High Court dismissed an application by managers of the facility seeking to stop the sale.
The 112-year-old facility, located at the heart of Nyeri town, is now set to be sold by Garam Investments Auctioneers on November 30. The hotel was earlier set to go under the hammer on June 2 to recover the bank’s dues but its managers, Cedarwood Hotels and Resorts Investments Company obtained a court injunction temporarily blocking the sale.
The facility's management had argued that the property had been undervalued and that the auction would not be favourable "as that would mean a denudation of the commercial property as an iconic historical hotel".
High Court Judge Florence Muchemi, however, dismissed the application, paving way for KCB to put it back on the market.
She said Cedarwood failed to demonstrate that it will suffer irreparable harm should the intended sale take place.
Justice Muchemi added that undervaluation, if any, is not a good ground to stop the sale of a property used as security of a loan and that a commodity offered as security for a loan facility is understood by both parties to be a commodity for sale in case of default from the time of signing the contract.
"It is not in doubt that the KCB has the capacity to pay any damages in case of any loss due to undervaluation," said the judge.
Another finding was that the firm failed to offer evidence showing that the valuation done by the bank was a complete undervaluation of the suit property or that the valuer, Acumen Valuers Limited, was unqualified.
A valuation report dated August 27, 2021, by Acumen Valuers Ltd, which was hired by the bank, had put the property at a market value of Sh842 million and forced a sale value of Sh631 million. The management firm did its valuation of the suit property and found that the value was Sh1.15 billion with a forced sale value of Sh863 million. It told the court that the figures were over and above those of the bank’s reports.
The once-exclusive club for Europeans is associated with the family of the former Kieni MP Munene Kairu, and was gazetted as a national monument in 2001.
The debt dates back to November 2013 when the suit property was used as security to a loan of Sh295 million.
The bank advanced a further loan facility of Sh175 million in April 2015 owing to the hotel's positive credit score. In 2017 the bank amalgamated all the existing loan facilities into one loan term of Sh520,665,987 according to a letter dated August 10, 2017.