Saudi prince and Ashkenazy Acquisition partner to wrest control of Plaza Hotel

Plaza Hotel NYC
The Plaza Hotel

India's Sahara Group may finally be rid of one of the three hotels it has been trying to sell for years—the iconic Plaza Hotel on Central Park in New York. Saudi Prince Al-Waleed Bin Talal, who owns a 50-percent stake in the hotel, has reportedly partnered with Ashkenazy Acquisition Corp., which owns several properties in New York, including Barneys on Madison Avenue and the NYLO hotel, for the buyout of Sahara’s stake. Ashkenazy and Al-Waleed are expected to move to purchase the remaining shares from Sahara chief Subrata Roy and a "confusing tangle" of other stakeholders.

India’s Supreme Court has been struggling since August 2012 to make the group pay Rs25,000 crore and deposit it with market regulator SEBI. The company, in turn, has been looking to sell the three international properties, which include the Dream Hotel in New York's Meatpacking District, Grosvenor House in London and The Plaza, for several years, but in spite of many offers, all of the deals have fallen through. Back in March, Texas' MG Capital LLC offered to buy the Plaza Hotel for more than $550 million, and a $1.5-billion deal with Al-Waleed and the Qatar Investment Authority fell apart in September 2016.

Ashkenazy and the Saudi prince are looking to get control of the hotel from Roy, who has been fighting charges of scamming billions from investors since 2014.

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A Sahara group spokesperson said that “no such deal is on table for the Plaza.” Replying to a PTI query, the spokesperson said all three hotels are “cross-collaterized so only Plaza can not be sold.” And Russell W. Rosen, a lawyer for Sahara US Corporation, said that Prince Al-Waleed and Ashkenazy do not have a right to force a buyout or purchase the Plaza.

At the same time, Sahara has reportedly received more than 250 Expressions of Interest for its 30 domestic properties, valued at about Rs7,500 crore. Bidders reportedly include Tata, Godrej, Adani and Patanjali Ayurved as well as several real estate developers like Omaxe and Eldeco. High net worth individuals and a public sector company had also submitted EOIs for the assets.

Sahara's Money Woes

Last month, Roy appeared before India's Supreme Court to have his parole extended again through June 19. If Roy fails to pay a promised Rs1,500 crore, he may have to return to prison again. 

Sahara said that it had already repaid more than 93 percent of the OFCD liability of the two companies—Sahara India Real Estate Corp. and Sahara Housing Investment Corp.—to their investors.

The two Sahara firms had raised Rs24,029.73 crore by issuing Optionally Fully Convertible Debentures (OFCDs), which they were asked to deposit with SEBI for further refund to investors. The group claims to have already repaid more than Rs22,000 crore of the liability and maintains that Rs12,000 crore deposit with SEBI was in addition to that, resulting in “duplication of payment”.

Sahara has also been maintaining that SEBI, in the last four years, has repaid less than Rs100 crore to investors, including about Rs40 crore of interest to be paid.

The group has maintained that all the original documents of the repayments have been submitted to SEBI, but the regulator has not yet started verification of the investors and repayments. 

The group also claimed to have deposited an estimated Rs12,000 crore in the SEBI-Sahara account, while the total money amounts to about Rs15,000 crore including earned interest.