The International Chamber of Commerce Court of Arbitration, seated in London, has issued a ruling demanding Ugandan entrepreneur Patrick Bitature to pay Shs244b to South African lender Vantage Capital as loan repayment and default costs.
The legal battle, which spanned almost a decade, concluded with the order for Bitature to settle the outstanding debt along with associated costs, or face potential loss of his extensive real estate holdings in Kampala.
Vantage Capital, a prominent mezzanine debt provider in Africa, initiated the legal proceedings in London after their attempts to auction off Bitature’s assets in Kampala yielded no results. The disputed properties were owned by Bitature’s Simba Telecom Limited but were mortgaged under his real estate holding company, Simba Properties Investment Company Limited.
The conflict traces back to 2014 when Vantage Capital lent $10m to Bitature for investments in the Moyo Close Apartments and Skyz Hotel in Naguru, both of which were still under construction. This marked Vantage Capital’s initial investment in Uganda and was aimed at fostering growth in the East African region.
Bitature’s Simba Group praised the partnership at the time, stating that Vantage Capital’s model offered growth capital without diluting equity. However, over the years, the relationship soured, and sources familiar with the case revealed that no repayment was made by Bitature or his companies to Vantage Capital.
The dispute escalated, with Bitature’s legal team contesting the validity of Vantage Capital’s lending authority in Uganda. The matter meandered through various courtrooms over the years, only finding resolution recently.
In a ruling dated July 31, 2023, and signed by sole Arbitrator Prof. Fidelis Oditah KC, SAN, Bitature and his partners were ordered to repay the loan balance of $35.8m.
Other costs include $25.6m (Shs95b) for his personal guarantee and indemnity, ShS14.8b for breach of contract as damages for damages for entry into KCB facility and Shs1.9b for legal costs among others.
Justice Boniface Wamala of Uganda’s Commercial Division had previously validated the arbitration agreement between Simba and Vantage, referring the parties to arbitration in June 2021. Following this, Vantage attempted to transfer shares owned by Bitature’s companies, as per their financing agreement. However, the Uganda Registration Services Bureau declined the transfer, citing the ongoing legal dispute. A subsequent judicial review application by Vantage was dismissed by Justice Musa Ssekaana, who noted that Vantage was not registered as a company in Uganda.
Observers speculate that this dispute could impact international confidence in Uganda’s corporate governance sector and impede private sector entities’ access to flexible financing from equity and venture capital funds. Patrick Bitature, a prominent figure in Ugandan business circles, holds positions on various boards, including Umeme and Bollore Transport and Logistics Uganda.