Cytonn Troubles: The trouble at Cytonn Investments seems to be getting deeper and deeper. Reports say that foreign lenders have rushed to court threatening auctioning if the firm does not pay debts amounting to billions of money. These foreign investors include Finnish-owned TT Africa and another Finnish company – Taaleri Afrikka Rahasto II KY.
According to a report that appeared in the Daily Nation on Friday, TT Africa had loaned Cytonn Sh. 1.7 billion. The largest portion of this money was supposed to be used in the development project dubbed Situ Village.
“However, by 2018, Cytonn was struggling to keep up with loan repayments. On August 13, 2018, TT Africa gave Cytonn a simple demand – pay up or have the land intended to host Situ Village auctioned. By then, Cytonn’s debt had grown to Sh. 2.7 billion on account of interest,” the report said. Situ Village was a Sh. 5.5 billion gated community project in Karen. This project targeted clients who would purchase houses on an off-plan arrangement.
However, this project stalled after Karen residents went to the National Environment Tribunal (NET)Â to oppose the project. Although Cytonn won against the petition, the Karen residents appealed and the case is currently pending at the Court of Appeal.
The report in the Nation said that with Cytonn facing an auction threat from TT Africa, it opted to restructure its loan. “Cytonn offered to restructure the debt, using some of the money collected from clients in the high yields fund to repay the loan,” the report said.
Amidst the restructuring, Cytonn then got another loan from from Taaleri Afrikka Rahasto II KY. “Taaleri disbursed a Sh. 2.1 billion loan to Cytonn, which planned to use the funds to construct the Ridge, a mixed use development in Ridgeways along the Northern Bypass,” the report said.
It added that Cytonn used money collected from its high yields fund clients to acquire 9.9 acres of land in Ridgeways. It intended to use the loan from Taaleri for construction. However, complications started to emerge after some fund clients made payment demands. Cytonn, the report said, used part of the loan from Taaleri to pay the clients. “While construction of the Ridge started as planned, progress stalled,” the report said.
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Now, the two foreign lenders are breathing down the firm’s neck. “The two Finnish firms asked Justice Francis Tuiyott to issue orders compelling Cytonn to deposit their Sh. 5.7 billion dues in court. The firms asked the court to alternatively issue freeze orders on all Cytonn properties. They are the Ridge, Situ Village, Cytonn Towers (Kilimani), Applewood (Karen), RiverRun (Ruiru) and Taraji Heights (Limuru Road),” the Nation report said.
