The ongoing drama behind India's Sahara Group and its global portfolio of hotels is ongoing: While the company's founder, Subrata Roy, remains in an Indian prison, the Group has been looking to sell several five-star properties—including London's Grosvenor Hotel and New York's Plaza and Dream hotels—in order to pay his record-setting $1.6 billion bail.
According to the Wall Street Journal, the Group now has one month to convince India’s Supreme Court that it will make good on the $6 billion regulators say it owes stakeholders. Otherwise, the Indian government has indicated it could take action to seize the Plaza hotel and sell it to the highest bidder in order to cover his bail. The Supreme Court said it would look into appointing a receiver to sell off the Plaza and other hotels at the next hearing scheduled for this week.
Analysts say Reuben Brothers, the private Swiss investment firm run by brothers David and Simon Reuben that owns the roughly $800 million of debt on the properties, could try to seize one or more of the hotels through a foreclosure process if the default isn’t corrected soon. A Reuben Brothers executive declined to comment to the Wall Street Journal.
DNA India, however, is reporting that European firm Helvetia Group (whose promoters are from Qatar and residing in United Kingdom) offered to lend $5 billion to bail Roy out of prison. The loan agreement would require a delay until Oct. 15 for completion, but would prevent the sale of the three hotels. According to the Times of India, the bench refused to respond to both the applications filed by Helvetia Group and the deal it had signed with Sahara Group. "We are not concerned at all about who these people are and what deal they entered into with Sahara group. We are not to recognize it at all. Our only concern is the money that is due from the Saharas on the basis of the court orders," the court said.
A lawyer for Sahara said Roy and Sahara have denied the government allegations and that they have already paid most of the debts owed to investors. Sahara has already deposited roughly half the bail amount in cash from its own funds, according to court documents. Sahara began buying international luxury hotels in 2010 when it paid about £470 million ($713.5 million) for the Grosvenor House in London’s ritzy Mayfair neighborhood. In 2012, the company spent nearly another $800 million for majority stakes in the Plaza and the boutique Dream hotel in New York’s Chelsea neighborhood. Sahara borrowed about $900 million from the Bank of China to finance the acquisitions.
In June, JTS Trading Ltd. filed a U.S. lawsuit to block Sahara from selling the hotels. JTS Trading claims it struck a deal with a United Arab Emirates private trust to finance the purchase of the three hotels, with JTS trading getting a 70 percent stake for its $850 million investment. The company said it was shut out when a Sahara subsidiary made a separate deal with the UAE company, Trinity White City Ventures Ltd. Last month, Indian businessman Lalit Modi made a "surprise entry" into the Sahara housing bonds case in the Supreme Court, brokering a deal to help facilitate the release of Sahara chief Subrata Roy by arranging to sell some United States properties belonging to Sahara. The announcement was made before the Supreme Court by U.S.-based Madison Capital, which said that it would buy two hotels owned by the company.