Mirach Capital eyes Sahara hotels in $2 bn bailout for Subrata Roy
20 January 2015
A US-based investment vehicle, Mirach Capital Group, is offering a $2-billion (over Rs12,000 crore) loan against Sahara India's landmark hotel assets like New York`s Plaza, to secure bail for its jailed boss Subrata Roy and ultimately take control of the property after the conglomerate fails to repay lenders.
The deal under progress comprises $1.1 billion in investments and $882 million as senior loan of one-year tenure through two separate fundings - a $1.5 billion loan against Sahara's overseas hotels and $450 million equity investment in two of the group's India properties.
Saransh Sharma, a San Jose, California-based investor who is leading the rescue plan, thinks Sahara will not be able to repay more than $1.5 billion it plans to borrow to cover bail terms for Subrata Roy, reports quoting the investor said.
Sharma hopes the investment will ultimately help his fund, Mirach Capital Group, to take over the hotels at a bargain price.
"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.
Mirach Capital was set up specifically for the Sahara transaction, the report quoted him as saying.
"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."
Sahara said earlier this month that it was in talks with Mirach Capital, which says unidentified wealthy families in the US and Britain are among its investors, hoping to raise the fund by remortgaging for one year its three overseas hotels, which include Grosvenor House in London.
Sahara, however, is confident of repaying lenders from the hotels' earnings, Reuters quoted its head of corporate finance Sandeep Wadhwa as saying.
Sahara was earlier reported to be in the process of seeking transaction approval from India`s central bank.
Sharma claims to have visited Roy in jail 9 times and says his talks with Sahara are exclusive and that the amount for Sahara transaction is already in an escrow bank account.
Mirach Capital has no previous record of closing a large financing deal and, according to its web site, its investors are "family offices" operating in diverse sectors, including real estate and aviation.
Roy has been held in New Delhi's Tihar jail for more than 10 months over Sahara's failure to comply with a court order to refund over Rs20,000 crore raised in unlawful bonds from millions of investors.
The Supreme Court, which last year asked Sahara to pay Rs10,000 crore to secure release of Roy on bail, has now allowed an extended negotiation by Roy to raise funds by remortgaging the group's overseas assets.