The saga of Sahara Group chief Subrata Roy continues, but may be nearing a resolution. The chairman of Sahara (pictured), which has control over such luxury properties as The Plaza in New York, was jailed last last March after the group failed to repay billions of dollars to bondholders.
However, as Reuters reports, an investment vehicle is now lining up a $2-billion package to help in bailing Roy out, and it expects to ultimately take control of the group's hotel assets after the conglomerate fails to repay lenders.
Saransh Sharma, a San Jose, California-based investor, is leading the rescue plan, and he told Reuters that he doesn't believe Sahara will be able to pay off the more than $1.5 billion it plans to borrow to cover bail terms for Roy. The expectation is for the fund, Mirach Capital Group, to take over the hotels at a discount.
"Let's say they somehow manage to make the interest payments, what is the probability of them coming up for the principal? The answer is slim to none in my opinion," Sharma said. "It is an indirect way to take over these assets and not just take over these assets, to take over these assets at a valuation which would be discounted to the true market value."
Mirach Capital was reportedly set up specifically for the Sahara transaction.
Here's a breakdown of the deal as relayed by The Financial Express:
The deal under progress comprises investments to the tune of $1.1 billion and a senior loan of close to $882 million having a one-year tenure. The latter amount would be for replacing money borrowed from Bank of China related to Sahara Group’s three overseas hospitality properties. Mirach Capital would replace loans worth around $882 million taken from Bank of China on the three overseas properties controlled by Sahara: The Plaza and Dream hotel in New York and Grosvenor House hotel in London.
"It will also make investments of USD 650 million in Grosvenor Hotel and the amount would finally come to Amby Valley Ltd," said Sahara Group’s Head of Corporate Finance Sandeep Wadhwa. Further, Mirach Capital would pump $450 million into the hospitality vertical of Sahara Group.
Mirach Capital is reportedly comprised of wealthy families in both the U.S. and Britain.
For its part, Sahara says it is confident of meeting its repayment obligations to lenders using hotels earnings, Wadhwa told Reuters.