Aya Investments (U) Limited, the entity behind the Pearl of Africa Hotel, has seen its loan rise to Shs624 billion, marked by a series of legal disputes and valuation controversies. The company initially owed a South African-based lender approximately $118.8 million, inclusive of interest, stemming from a principal cumulative sum of $81.7 million borrowed over ten years.
Despite losing various court cases, Aya Investments (U) Limited continued to accumulate interest and fines, resulting in a current debt of more than $165 million to the South African lender. The courts have approved the sale of the Pearl of Africa Hotel to recover some of the outstanding funds.
Between August 13, 2007, and April 21, 2017, Aya Investments (U) Limited and the Industrial Development Corporation of South Africa entered into Financial Credit Agreements to finance the construction of the Pearl of Africa Hotel. Aya borrowed a total principal sum of $81,765,318 under various agreements. A breakdown in the relationship led to the South African lender issuing a notice of default on September 13, 2017, recalling the outstanding loan sum of $118.8 million.
The dispute escalated as Aya’s lawyers sought arbitration, but the lender insisted on foreclosure proceedings. Aya sued, seeking interim measures of protection from the court. Despite the court’s temporary injunction in favor of Aya, a subsequent ruling on February 9, 2018, referred the dispute to arbitration in South Africa.
In the Arbitral Award, the South African lender was awarded $153 million against Aya, including the unpaid principal sum and interest. By September 30, 2020, Aya’s loan had increased to $153,027,275. Aya contested the arbitration proceedings, filing applications to nullify the award and declaring it void. The court recognized the arbitral award on June 22, and the lender applied for execution, seeking recovery of $165 million.
Valuation disputes emerged as Aya contested the valuation report, claiming an undervaluation by the lender. The court, in a ruling on December 1, upheld the valuation report’s accuracy, stating it was error-free and neutral. Justice Stephen Mubiru noted that the valuer adopted a reasonable approach, dismissing Aya’s claims of errors.
The saga continues as the South African lender pursues the execution of the award, including the sale of the Pearl of Africa Hotel. Aya’s valuation claims and legal battles add complexity to the unfolding financial situation.
