One of Kenya’s high-end real estate companies and foreign creditors are poised for an epic battle where billions of shillings are at stake.
Taaleri Afrikka Rahasto II KY, a Mauritius-based company is claiming Sh3.016 billion from Kenya’s Cytonn Investments Partners Eleven LLP.
The creditors want Cytonn to either deposit a guarantee before the court or have accounts of The Ridge, Cytonn Towers, Applewood, Riverrun and Taraji frozen.
Taaleri, in its court documents filed by Cecil Miller and Company advocates says that on June 6, 2018, they loaned Cytonn Sh2.7 billion.
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They argue that the two agreed to have a partnership, with the Ridgeways property as security and to hold all the monies received.
The Mauritius firm claims that by June 2020, Cytonn owed it a Sh3.016 billion and that foreigners who have no known security in Kenya own Cytonn.
“It has come to the attention of the plaintiff that the defendant is facing imminent insolvency and as a matter of fact, there are a number of claims against the defendant pending before the court, which claims are related to the defendant’s inability to meet its financial obligations,” the papers filed before the Commercial Court read in part. Taaleri’s director Sirenius Jarkko, in his affidavit filed late last year, says that despite constant reminders, Cytonn has failed to honour its end of the bargain.
But Cytonn accuses Taaleri of coming to court with unclean hands, and telling the court half-truths and outright fabrications.
In reply, Patricia Njeri Wanjama who is Cytonn’s manager, says that contrary to Taaleri’s claim, the firm is owned and managed by Kenyans save for two foreign board members who represent Taaleri.
According to her, the agreement was that in the event of a default, the lender was at liberty to sell its stake in the partnership or any part of it and the new entrant would become the new partner.
She says Taaleri did not utilise that clause before filing the court case.
“Even though the plaintiff is seeking relief in the said application on the pretext that it is exposed, it has not exercised its rights under the securities it holds.
Business environment
“The plaintiff’s investment in the defendant is backed by the charge, wherein the security is on the partnership’s custody account and to note, the power of sale is over the security identified and which exercise of the power of sale the plaintiff has not begun to exercise,” Wanjama replied.
According to her, Cytonn’s undertaking on The Ridge is Sh15 billion mixed-use development comprising residential and commercial space.
She says, the land purchase was financed by Cytonn High Yield Solutions (CHYS) and Cytonn Investments Partners Eleven LLP (CPN) and has a stake in the property.
Wanjama says that Taaleri investments are in The Ridge, intact and waiting for a better business environment.
She states that the project that started on April 17, 2018, has stalled due to the Covid-19 pandemic.
“Unfortunately the project has since February 2020 been held in abeyance due to the onset of the pandemic, which rendered construction works impossible,” she said, adding that Cytonn is back on site, and Taaleri is aware of that.
Meanwhile, TT Africa Real Estate company, based in Kasarmikatu, Helsinki, Finland loaned Cytonn at least Sh1.7 billion between 2015 and 2016.
According to its court documents, in 2015, Cytonn borrowed Sh1.36 billion, and in 2016, Sh400 million.
It now claims that the loan stands at Sh2.7 billion and wants the court to compel Cytonn to produce all its books of accounts and be barred from dealing with its five assets.
TT Africa sued Ololua Estates LLP and Cytonn.“The plaintiff is likely to suffer total loss should its claim succeed at the trial.
“The proprietors of the second defendant (CIP) are foreign nationals who have no known residences and traceable assets in Kenya,” court documents read.
TT Afrikka director Backstrom Marko says that on August 13, 2018, Cytonn owed it Sh1.7 billion.
TT Africa and Cytonn then agreed to restructure the loan but the plan submitted by Ololua did not deliver the target return before April 30, 2020.
jmuthoni@standardmedia.co.ke
