The Sahara saga has taken a new turn, and three iconic hotels may finally change ownership. Today, the Indian Supreme Court extended the parole granted to Sahara Group chief Subrata Roy on the condition that he will have to deposit the remaining Rs 300 crore out of the Rs 500 crore he has promised to deliver before August 3 with market regulator Securities and Exchange Board of India (SEBI).
Late last week, the Sahara Group deposited Rs 200 crore (as per Supreme Court orders issued on May 11) and requested that it “indefinitely extend” the bail granted to Roy and director Ashok Roy Choudhary. Subrata Roy was jailed more than two years ago after failing to appear at a contempt hearing in a long-running legal battle between his group and the Indian capital markets regulator. He was granted parole in May on humanitarian grounds following the death of his mother.
The court also lifted its embargo restricting the group to selling only 19 properties with which to raise the funds for Roy’s bail. This included three overseas hotels—Grosvenor House Hotel in London, the New York Plaza and Dream New York hotels. The bench allowed the group to go ahead with the sale of its other properties to raise an amount of Rs 5,000 crore as a bank guarantee that it will have to deposit in addition to Roy's Rs 5,000 crore bail.
The group noted in court that the order to deposit Rs 200 crore with SEBI had been honored, "despite SEBIs non-cooperation, which establishes their bona fide. In addition, efforts are being made to further arrange approximately Rs 300 crore in respect of which directions are being sought from the court," the group claimed.
In March, India's Supreme Court ordered SEBI to start selling properties of the Sahara conglomerate to help pay Roy’s bail when Sahara seemed unable to do so on its own. Due to Sahara’s struggles to sell its properties, the court suggested the market regulator devise a suitable mechanism to sell the properties to deposit the Rs 10,000 crore with SEBI—at the time, a pre-condition set by the apex court for Roy's release. Within a month, SEBI had tapped HDFC Realty and SBI Capital to help in the sale process—an indication of how difficult offloading the assets could be.
Sahara claimed last week that the apex court order that has frozen the company’s bank accounts and restrained the group from disposing of its assets over the past 31 months has "crippled and completely paralysed" its business. Keeping the embargo in place would have a "fatal impact on the group companies," Sahara said.
Selling the Assets
Sahara said it was making progress in the planned sale of Sahara's interests in Grosvenor House Hotel, the Plaza Hotel and the Dream Downtown Hotel to Qatar Investment Authority, the country’s sovereign wealth fund.
Sahara told the court that the two sides have already signed the letter of intent. Sahara also revealed that the consideration agreed upon for Sahara's cumulative stake in all three properties was $1.6 billion. Sahara assured the Supreme Court that that valuation of $1.6 billion was in line with the earlier court's direction of not allowing a sale at lower than 5 percent of the value prescribed by a report by CBRE and JLL.
The Sahara group had earlier informed the court that the loan on the hotels provided by Bank of China has been taken over by billionaire brothers David and Simon Reuben of United Kingdom. Upon approval from the Court, the deal with Qatar Investment Authority could close within two months. However, of the total sale consideration of $1.6 billion, $955 million will be payable to the Reuben Brothers, leaving a little less than $650 million in Sahara's accounts.
Just a month ago, a member of the Saudi royal family was reportedly setting up a £1 billion bid to buy the three hotels from the Sahara Group.