Vantage Capital Issues a Public Statement Regarding Patrick Bitature’s Loan Dispute

Vantage Capital made an investment in Uganda in December 2014, which has recently been a hotbed of media distortion and deception. We believe it is necessary to correct the record.

Vantage Capital is a fund manager based in Johannesburg, South Africa, that focuses on Africa. Vantage was created in 2001 and has raised approximately US$1.4 billion to date. The Mezzanine Division of Vantage has completed 33 investments in 11 African nations, making it the continent’s largest and most experienced independent mezzanine funder.

Various reputable international investors, including several European development financing organizations, African pension funds, and development banks, have invested in Vantage’s Mezzanine Fund. The management of the Mezzanine Fund is a licensed and registered financial services provider who is regulated by the South African authority.

Timeline of Events:

Mr Patrick Bitature (as guarantor and promotor) borrowed US$10,000,000 (Loan) from Vantage to refinance a portion of the Simba Group’s existing debt and to support the building of Simba’s Skyz Hotel. Mr Bitature and the Simba Group provided security for the Loan by placing charges on their shares and registering legal mortgages on some of their assets (Security).

In December 2019, the loan matured and was due for repayment. Rather than attempting to repay the Loan, the Simba Group and Mr Bitature turned to litigation, arguing that Vantage’s Loan was unlawful and made under duress, and that Simba did not have to repay it because it had been utilised. Mr Bitature has unfortunately used similar techniques in the past, both against Vantage and other Simba Group lenders, including a South African bank. All of this occurred prior to the outbreak of the Covid-19 epidemic.

Vantage’s effort to exercise its security rights over Simba Group’s shares was recently halted by the URSB. Vantage petitioned the Ugandan High Court to compel the URSB to honor its legitimate share charges. Vantage’s motion was denied on the basis of a technicality: the Vantage Partnership in question was not registered in Uganda and thus lacked standing to sue or be sued there. The court did determine, however, that if Vantage had been registered, it would have found in Vantage’s favor over the URSB. The legitimacy of the underlying legal agreements was not determined by the court.

The underlying Loan and Security arrangements remain legitimate, despite the technicalities. Mr Bitature and the Simba Group have not paid a single cent of their debt under the Loan to date. The obligation has swelled to almost US$34,000,000 as a result of not servicing any interest for over 7 years.

The Simba Group and Mr Bitature’s continuing abuse of court systems and public institutions, as well as their recent “PR Campaign,” in their ongoing efforts to dodge their creditors and legal duties, will not deter Vantage. Vantage will continue to pursue its long-overdue Loan, including using its rights against the Security if necessary.

We believe that the Simba Group’s and Mr. Bitature’s actions in borrowing money from international lenders and then denying their obligations reflect poorly on Uganda’s international image as an investment destination, as does the ease with which the Simba Group has been able to frustrate its lawful creditors by abusing the legal system and its institutions. However, we remain steadfast and hopeful that justice will prevail in the end.

For those who are interested, the following details the events summarized above.

Vantage and SPIC, represented by Mr. Bitature, signed a Mezzanine Term Facility Agreement (Loan Agreement) on December 11, 2014. (who also gave a personal guarantee). SPIC got a loan of US$10,000,000 from Vantage’s second mezzanine fund under the terms of the Loan Agreement (structured as a limited partnership in South Africa, the most common structure for private equity and private credit funds). The Loan Agreement was also signed by three additional Simba group companies: Linda Properties Limited, Elgon Terrace Limited, and Simba Telecom Limited (the Simba Companies), who guaranteed the loan and offered security for it.
Vantage received charges on Simba Companies shares as well as legal mortgages on various properties owned by both the Simba Companies, Mr. Bitature, and his wife Carol Bitature, among other securities. A personal guarantee was supplied by Mr Bitature.
SPIC received the aforesaid money from Vantage to refinance its current debt, fund the completion of its Skyz Hotel, and provide working capital, as part of Vantage’s aim to support mid-market family-owned firms seeking expansion capital without diluting their shareholding. Mr. Bitature commented in the press (apparently satisfied with the agreement negotiated) when the transaction was completed and officially announced (December 2014):

“Vantage introduces an important and interesting new funding paradigm to East Africa. Simba Group is thrilled to have identified a solid mezzanine finance partner that can provide medium-term growth capital without taking our hard-earned equity,” says Patrick Bitature, Simba Group’s Founder and Chairman.

Simba Group defaulted on the Loan Agreement in December 2017, having taken on large third-party debt without Vantage’s authorization and failing to service interest under the Loan Agreement (which was supposed to be serviced quarterly). SPIC and Mr Bitature filed a lawsuit against Vantage (Misc. Cause 12 of 2017) and were granted interim injunctions to prevent or delay the consequences of the default.
Rather than yanking the rug out from under Mr Bitature and the Simba Group by proceeding with enforcement, we worked with them to restructure the loan and come up with a strategy for the Group to get back on its feet, improve performance, and finally pay off our loan in December 2019. SPIC and Mr Bitature agreed to drop their legal action after reaching an agreement.
As the Loan became due in December 2019, SPIC and Mr Bitature (one again) resorted to judicial action to avoid their debts and prevent/delay Vantage from enforcing its rights. We now know (as do some other Simba Group creditors) that this is the Simba Group’s and Mr Bitature’s favored mode of operation. As a result, SPIC and Mr Bitature filed HCCS 988 of 2019 at Uganda’s Commercial Court, arguing that the Loan was invalid or that it had been signed under duress. They got Interim Orders once more, temporarily barring Vantage from taking any more action.
All of this happened before the Covid-19 pandemic, which is significant. The harsh reality is that Simba Group’s (and Mr. Bitature’s) current financial problems began long before the Covid-19 outbreak, which exacerbated the situation. We can hardly be blamed for our legal enforcement, which began well before Covid-19, because we have not received a single cent in respect of our Loan given in December 2014.
We submitted Misc. Application 201 of 2020 in response to HCCS 988 of 2019, which resulted in Simba’s frivolous lawsuit and accompanying interim orders being rejected and vacated. The trial judge wrote in his decision in favor of Vantage:

“I find the Respondents’ [SPIC and Mr Bitature] claim to be escapist and unserious. This is especially true because this court is in a position to take judicial note of the fact that the Respondents’ backers, particularly the third Plaintiff in the revised plaint [Mr Bitature], are among Uganda’s most polished and savvy businesspeople. Senior and recognized legal specialists in Uganda counseled the Respondents well and independently. When confronted with such evidence, I believe that a poor claim of duress and/or undue influence of this sort, such as this one, amounts to an insult to the Respondents’ and their advocates’ intelligence.”

Mr. Bitature was the third plaintiff mentioned by the court in the preceding statement. The aforesaid court decision puts to rest any doubts about the fairness of the parties’ bargain.
We were free to enforce and reclaim what was owed when all interim orders were vacated.
We moved to perfect our securities over the Simba shares that had been supplied as collateral after making the foregoing choice. We met all of the requirements for document registration, including paying stamp duty in the amount of Ug. Shs 854,023,850.
After SPIC and Mr Bitature intervened, the Uganda Registration Services Bureau (URSB) refused to register the documents.
We took issue with the URSB’s illegal decision and filed Misc. Application 205 of 2021 to force the URSB to carry out the share transactions. The decision on this application was made on May 9, 2022. The Trial Judge denied the application on the following grounds:

(a) He was not convinced that the Vantage Partnership, from which the borrowers had received the loan, existed in South Africa based on the facts he had;

(b) The Vantage Partnership lacked the legal competence to sue or be sued in Uganda since it was not registered.

However, if the Trial Judge had found that the Vantage Partnership had locus (legal capacity) to sue or be sued in Uganda, he would have issued writs of Certiorari quashing the URSB’s decision and Mandamus compelling the URSB to register the documents – effectively confirming that the URSB’s refusal to register the share transfers was illegal.
While we reserve the right to appeal the verdict in proper forums, we are aware of the court’s current position and are working with our lawyers to take the required and appropriate steps.
However, following the 9 May 2022 ruling, various statements and publications were made public that mislead (we believe intentionally) the outcome of Misc. Application 205 of 2021. We believe it is necessary to clarify the following:

(a) The Court did not rule on the parties’ long-standing disagreement. It simply said that a foreign partnership that is not registered in Uganda cannot sue or be sued.

(a) The court did not rule on the legality of the parties’ contracts, nor did it rule that the Borrowers should not pay their debt in this case. The financial agreements and the debt remain lawful in the absence of such a finding.

(c) The Commercial Division of the High Court has previously ruled in Misc Application 201 of 2020 that the High Court of Uganda lacks jurisdiction to evaluate the validity of the agreements in question (any such dispute on that issue being subject to an ICC arbitration clause).

(d) It is demonstrably untrue to claim that the court determined that the Vantage Partnership does not exist or that it is a “ghost” that must be exorcised. No such decision was issued by the court. Only the issue of non-registration in Uganda was resolved by the court.

(e) Throughout the parties’ legal battles, the Simba Companies have never denied the existence of our partnership or denied taking a loan from our fund.

In essence, notwithstanding recent (and fraudulent) statements to the contrary, we remain entitled to the collection of our long-overdue debts against SPIC and Mr Bitature under our Loan Agreement and related papers. We will continue to enforce our rights, as we are obligated to our investors, in collaboration with our fully advised lawyers.
Despite borrowing the US$10,000,000 from us more than seven years ago in December 2014, neither SPIC nor Mr Bitature has been able to repay even a single cent of the debt. This truth would undoubtedly embarrass, if not humiliate, an ordinary man in Mr Bitature’s position. Mr Bitature, on the other hand, appears to be unaffected by such sentiments.
We continue to believe in the Ugandan judiciary and that justice will prevail in the end. However, the circumstances surrounding our partnership with the Simba Group and Mr. Bitature do not bode well for Uganda’s international reputation as a business destination.
Investors around the world are concerned that borrowers who establish major commercial ventures might easily manipulate state institutions in a country like Uganda, where the government is steady and capable, to evade their creditors and debt commitments ad infinitum. We are hopeful that the competent authorities would handle this issue as quickly as possible, preventing a growing crisis of confidence in Uganda’s investment credentials.
We take no pleasure in issuing this statement and do not believe that airing one’s private disagreements or commercial matters in the press is good behavior. We purposefully avoided using such “public relations” techniques. However, in light of current media attention and Mr Bitature’s “PR campaign,” we feel obligated to correct the record.
We hope that this clarifies the recent debate and provides a complete picture. We will continue to engage with all relevant players to ensure that this problem is resolved quickly and without excessive drama.