Ugandan tycoon Mohammed Hamid to lose 5-star hotel due to $160 million debt

by MMC
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Mohammed Hamid, the influential Ugandan billionaire, is set to lose his iconic Aya Hotel due to a mounting debt of $160 million. Nestled atop the picturesque Nakasero Hill in Kampala, this 5-star property offers unparalleled 360-degree views of the capital, thanks to its elevation of 1,240 meters above sea level.

The sprawling hotel spans 32,000 square meters and includes 23 floors, 296 rooms, a choice of 37 luxury suites, as well as a mix of upscale restaurants and bars and an assortment of business-oriented amenities.

On September 25, a public notice, issued by Armstrong Limited – bailiffs and debt collectors, under the instructions of lawyers M/S MMAKS and ENSafrica (representing the Industrial Development Corporation of South Africa Ltd), said that unless all monies owed were settled by October 26, 2023, the hotel would be put up for public auction.

The auction aims to recover a hefty debt of 611 billion shillings ($160 million), which dates back to a financing agreement signed in 2007 between Aya Investments and the South African financial institution for the construction of the hotel. Hamid’s Aya Investments challenged the deal, saying the delay in funds had prevented the hotel from being completed. The tycoon further highlighted tax disputes with the Uganda Revenue Authority and logistical challenges related to Uganda’s geographical constraints.

Legal wrangling has enveloped the property. Recent Court of Appeal judgments have upheld the legitimacy of the arbitration processes, thwarting attempts by Aya Investment Limited to appeal the Sh611 billion payment decree to South Africa Limited’s IDC. This follows Bruce Collins QC’s court order last year requiring payment.

Records indicate that ten years ago, the South African lender handed over a substantial Sh305 billion to the businessman, which remains unpaid. This debt has been a source of contention and Justice Stephen Mubiru approved IDC’s application to consolidate the award as a decree of the High Court of Uganda, further complicating matters for Hamid.

The business mogul’s attempts to obtain a reprieve from the local court system have so far been unsuccessful. The hotel’s management history has been equally tumultuous. Initially a partner of the Belgian hotel group Carlson Rezidor in 2017, the alliance dissolved within six months, replaced briefly by the South African group Sovereign Hotels. In 2018, the American giant Wyndham Hotels and Resorts took over, but this too would be short-lived. The hotel, previously named “Pearl of Africa”, has been operating since the beginning of this year under the name WIN 5 Hotel & Spa, and rumors suggest a possible majority takeover by the Libyan company LAICO.

Mohammed Hamid, 47, is the founder of Aya Group, a $200 million (annual revenue) Ugandan conglomerate with interests in flour milling, food manufacturing, commodity trading and hospitality.

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