The planned auction of Nyeri’s iconic White Rhino Hotel has been put on hold for 30 days to give the management time to mobilise funds for offsetting a loan owed to KCB Bank.
In the orders issued by High Court Justice Florence Muchemi on Thursday, KCB and Garam Investments Auctioneers have been barred from selling the hotel assets pending the determination of a case filed by the management.
The White Rhino Hotel, located in Nyeri town, was to go under the hammer today (Thursday).
“The auction will also be stayed on the condition that the hotel management deposits Sh50 million into the KCB Bank’s account within a period of 30 days in respect to its outstanding loan,” said the judge while certifying the petition brought to court as urgent.
The hotel management --Cedarwood Hotels and Resorts Investments Company -- rushed to court on Tuesday seeking injunction orders against the bank and the auctioneer.
In a notice in the dailies on May 16, the auctioneers said the hotel, sitting on a three-acre parcel of land, had outstanding land rates of Sh1.2 million as of July 2021.
Bidders were required to deposit Sh10 million.
The hotel’s lawyer Tom Macharia told the court that the intended sale was unlawful as the prime property had been undervalued.
“The valuations done by the respondents are contrary to section 97 (3) of the Land Act, which provides that if the price at which the charged land is sold is 25 percent or below the market value, the charge is in breach of the duty of the care owed,” said Mr Macharia.
Through an affidavit filed by director Patrick Munene, the hotel said that they had conducted five valuations since March 2016, with the latest done in February this year.
According to Mr Munene, the latest valuation report showed the estate cost more than Sh1.15 billion with a recorded forced sale value of over Sh862 million.
“But the alleged appraisal report that is being relied upon by the bank shows that the property has a market value of around Sh840 million and a forced sale value of over Sh630 million, which is ill-conceived and of bad faith,” he says.
Mr Munene told the court that if the bank is allowed to auction the property, the amount recovered will not cover its outstanding loan that is still accruing interest.
Documents filed in court showed that the hotel took a loan of Sh175 million from KCB Bank in 2015. Two years later, it was amalgamated with existing loans, with the amount due standing at Sh520 million.
The hotel says the travel restrictions from the Covid-19 pandemic forced it to close as it depended on international visitors.
“The hotel was forced to shut down its operations for eight months from February 2020, and its obligation to make scheduled payments fell short due to cash flow difficulties resulting from the total closure of its business,” says Mr Munene.
He added that the hotel was used as a hospital by various local and overseas health groups at the height of the pandemic.
“Because of using the premises as an alternative hospital, by December 31, we had repaid the bank about Sh205 million in principal and interests,” he says.
The director told the court that negotiations to restructure the loan fell through when the bank resorted to auctioning the hotel.
The 112-year-old hotel was started by three Europeans—Berkely Cole, Lord Cranworth and Sandy Herd in 1910.
It got its name after a rhino was shot and killed at the site during one of the numerous visits by the white settlers. At the time, it was an exclusive club for Europeans who kept guard dogs to scare Africans away.
When Kenya gained independence, the hotel was sold to an Asian businessman, Ramnic Bhadrese. But Mr Bhadrese later sold it to Amos Wamuyu in 1970. In his renovations, Mr Wamuyu pulled down a ‘whites-only’ sign that had been erected at the entrance.
Fifteen years later, the hotel changed its ownership to its current owner—the family of the former Kieni MP David Munene Kairu. It was gazetted as a national monument in 2001.