Nyeri’s iconic White Rhino Hotel has appealed a High Court decision that allowed KCB Bank to auction it over a Sh670 million debt.
In a notice of appeal presented to the court, its managers, Cedarwood Hotels and Resorts Investments Company, said they were dissatisfied with Justice Florence Muchemi’s ruling.
“Take notice that the applicant in the suit, Cedarwood Hotels and Resorts, intends to move to the Court of Appeal on the ruling delivered by this court on November 10,” the managers said in court documents.
The appeal is the managers’ second attempt to stop the auction, which was first slated for June 2 but was stopped temporarily when a court issued injunction orders.
Following Justice Muchemi’s decision, it was once again put under the hammer by Garam Auctioneers, with the sale set for November 30.
In the managers’ application seeking to stop the sale, they told the court that the property was undervalued and that the auction would not be favourable "as that would mean a denudation of the commercial property as an iconic historical hotel".
An August 27, 2021 valuation report from Acumen Valuers Ltd, which was hired by KCB, said the property was worth Sh842 million and suggested a forced sale value of Sh631 million.
But the hotel managers’ valuation was Sh1.15 billion, with a forced sale value of Sh863 million.
Justice Muchemi dismissed the managers’ application, saying that undervaluation, if any, was not a good ground to stop the sale of a property used as security for a loan and that a commodity offered as security for a loan is understood by both parties to be a commodity for sale in the event of a default when the contract is signed.
"It is not in doubt that KCB has the capacity to pay any damages in case of any loss due to undervaluation," said the judge, adding that the debt dates back to November 2013 when the property was used as security for a Sh295 million loan.
Court documents show that KCB advanced a further loan of Sh175 million in April 2015 owing to the hotel's positive credit score.
In 2017, the bank amalgamated all the existing loans into one amounting to Sh520,665,987, according to an August 10, 2017 letter.
Another court finding was that Cedarwood Hotels and Resorts did not offer evidence showing that the bank’s valuation was a complete undervaluation of the property or that Acumen Valuers was unqualified to do the work.
Cedarwood also failed to demonstrate that it would suffer irreparable harm if the intended sale took place, ruled Justice Muchemi.
The 112-year-old hotel was started in 1910 by three Europeans – Berkely Cole, Lord Cranworth and Sandy Herd. It got its name after a rhino was shot and killed at the site during a visit by white settlers.
At the time, it was the place to be for the settlers and it had an exclusive club for Europeans, who kept guard dogs to scare away Africans.
When Kenya gained independence from Britain in the early 1960s, the hotel was sold to Asian businessman Ramnic Bhadrese.
But Mr Bhadrese sold it to Amos Wamuyu in 1970. When he renovated the hotel, Mr Wamuyu pulled down a ‘whites-only’ sign that hung at the entrance.
Sixteen years later, the hotel changed hands to its current owner, the family of former Kieni MP David Munene Kairu.