Businessman Peter Munga is set to lose 75 million shares that he holds at Britam Kenya. The shares have been cleared for auctioning by the High Court over a Sh. 433.76 million debt that Munga had guaranteed one of his companies.
The shares which are valued at around Sh. 604 million will be auctioned by the ABC Bank over the loan that was advanced to Equatorial Nut Processors, a company that is owned by Munga.
The businessman had moved to court seeking an injunction against the sale of the shares. However, High Court judge Alfred Mabeya has ruled that the loan taken by Munga’s company remains in default and as such there is no reason why ABC Bank should not attach the shares.
“In the absence of such payment, the court finds that the prayer for a permanent injunction [by Munga] preventing the first defendant [ABC Bank] and ABC Capital from realizing the security [of 75 million shares] is untenable and is disallowed,” the High Court ruled.
“The court finds that the notice of motion dated 4/10/2024 lacks merit and is hereby dismissed with costs.”
In his application, the tycoon had told the court that he owned 75 million Britam Kenya shares. These shares were originally held with Genghis Capital before Munga later transferred them to ABC Capital.
The shares were then used as collateral for the multi-million that was taken by his company to fund a contract that the company had secured from the World Food Programme (WFP).
When payments for the loan failed to come through and the debt went into default, Munga received a demand letter on September 24, 2024 for the amount of Sh. 433,767,398.33 from ABC Bank. Munga contested this and claimed that he planned to use the shares to secure another loan.
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He claimed that the securities that were registered before his shares should be prioritized according to the doctrine of priority. He further claimed that the loan interests had surpassed the principal amount which was in violation of the principal of in-duplum.
The ABC Bank however countered these claims and told the court that multiple loan facilities had been extended to Munga’s company, with both Munga and the company signing the offer letter. The bank further said that Munga had signed a decree that he would repay the loan in the event of default.
