Cytonn Investments is fast eroding investors’ confidence as some of investors are fighting to withdraw their investment money.
While the investment firm argues that Covid-19 has affected their liquidation, not refunding money to their investors after extension of maturity lapses highlights the souring relations between the firm and investors over the past year.
However, some investors claim that long before Covid-19, the investment had liquidity challenges and was already in breach of many disputes.
Cytonn invoked a greater force extending the maturity date of two of its real estate funds – the Cytonn High Yield Solutions (CHYS) and the Cytonn Project Notes – to June this year.
“Our money falls due on July 12, 2021, so we wrote to them an email reminding them that our money falls due 12th July and instructed them to release the money to us but they responded that in regards to CHYS, they are still facing liquidity challenge as their real estate collections are yet to be optimal to support any remittances,” said one of the investors.
Cytonn proposed an option to investors to sign up for an extraordinary general meeting (EGM) to hear what options the board has to offer.
In the extension framework, Cytonn proposed three options for investors, including the extension of the current maturity dates by a year, conversion of investment into real estate units or entering a standstill agreement where no withdrawals are made for two years and with a one-off renegotiation fee.
The bad blood has led to bitter war of words online and offline.
In February this year, Cytonn Real Estate Project Notes were sued by three businessmen over Sh.46.7 million investment money.
The businessmen – Charles Nzioki Kanyaa, Harrison Kaloko Kanyaa and Robert Munyao Kanyaa – want the court to order Cytonn to pay them the said amount for allegedly violating the consumer rights.
The trio claimed that they invested with Cytonn High Yield a sum of Sh.30 million at an agreed interest rate of 18 per cent payable monthly for a period of 12 months.
They claimed that Cytonn representatives told them they would receive handsome monthly returns if they invested substantial amounts of money with them.
They admitted that, upon investing the said amount, they were paid the agreed monthly interest until June 2020 when Cytonn allegedly stopped making the monthly payment.
They further averred that on June 22, 2020, the investment wrote them an email seeking to vary the contractual agreement, however arguing that this alteration amounted to unfair practices under section 14 of the CPA.
The businessmen sought a refund of the principal sum which as of December last year had accrued interest amounting to Sh.46,792,603.
“The defendants are in utter breach of the investment agreement, thereby provoking the filing of this suit,” read court papers.
Cytonn High Yield Solutions LLP and Cytonn Investment Management have also been named as respondents in the case.
