Shareholders of Ubumwe Grande Hotel have nine days to settle their deep seated wrangles or else the property will be auctioned on December 10.

The high-end property is set for auction, by KCB Rwanda, due to an unpaid loan amounting to about $18 million (approximately Rwf15.8 billion).

The property is jointly owned by three investors; local businessman Robert Bapfakurera, Alykhan Karmali of Mukwano Group (Uganda), and global multi-national, Chaudhary Group (CG Corp Global).

Bapfakurera is the current chairperson of the Private Sector Federation with multiple investments across sectors, including real estate and hospitality sector.

Karmali heads Mukwano Group, which has interests across the East African region in logistics, manufacturing, real estate, finance and agriculture, among others.

CG Global is a multi-national conglomerate company headquartered in Nepal with interests in five continents in sectors such as financial services, fast-moving consumer goods, education, hospitality and energy. The firm also runs Zinc Hotels in over 40 cities.

According to an auction notice issued by the appointed receiver, city lawyer Athanase Rutabingwa, the property is set for auction on December 10 at 11 am.

The bank had in September this year written to the Rwanda Development Board notifying them of their intention to foreclose on the facility for unpaid loans worth over $18 million.

The foreclosure would either be in form of an auction or administration.

The bank decided on an auction considering different aspects such as the ability to manage the property and time taken to recover the money.

Speaking to The New Times, KCB Rwanda Managing Director George Odhiambo said that they also took into account the fact that the shareholders can afford to pay off the loan but have failed to do so due to internal disputes that they wouldn’t settle between themselves.

He, however, said that there is still a chance to salvage the situation as there are talks among players involved to finding an alternative to the auction, possibly before the set date of auction.

"We have not lost hope. We would not be happy going forward with the auction, but we could be forced if there is no agreement. We have made progress in talks and there is still ample time to agree on an alternative,” he said.

An auction would not be in the best interest of the shareholders as it would taint their business record, creditworthiness, which would probably affect their respective firms in future deals, according to industry experts.

As the deadline draws closer, the property – which is located in downtown Kigali – is attracting interest of investors in the country and beyond.

Odhiambo said that the auction would be unfortunate for all involved, including the shareholders, the bank as well as employees of the property as there is uncertainty on the fate of their jobs.

"Other than holding up assets, so much time has been spent on this issue,” he said.

The New Times understands that the shareholders had plans of making similar investments across the region, including in Uganda and Kenya, before the disputes came up.

The disputes arose following an alleged breach of an agreement that CG Corp would manage the property under its ‘The Zinc’ brand.

However, it is alleged that the other two partners (Bapfakurera and Karmali) unilaterally terminated the management agreement about three months to opening.

The property has been subject to several legal procedures, including litigation at the District Commercial Court in Kigali as well as arbitration processes in Dubai.

Last year, reports that global hotel chain Hilton Group would take over the management of the facility moved matters from a frying pan into fire as CG Corp learnt of the development through this newspaper.

Hilton Group intended to operate the facility under the DoubleTree brand, effective the first quarter of this year.

Ordinarily, a contract ought to take into account aspects such as dispute resolution, grounds of exit, among others, to ensure appropriate conflict resolution.

Odhiambo said that among the lessons to pick from the situation is the need to have quality contracts as opposed to relying on friendly agreements.

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