Sahara's Grosvenor House put on sale; may fetch Rs 5,000 cr

Grosvenor House in London is one of the three marquee hotels owned by Sahara outside India

In a fresh twist to crisis-hit Sahara Group's efforts to raise funds, its iconic hotel property Grosvenor House, estimated to be worth over Rs 5,000 crore, has been put on sale by lenders.

Grosvenor House, a landmark property on Park Lane here, is one of three marquee hotels owned by Sahara outside India. The other two are Plaza and Dream Downtown in New York.

A Sahara spokesperson said, "We agree the administrator has been appointed for Grosvenor House Hotel . The loan on Sahara's three hotels from Bank of China is cross collateralised and cross guaranteed. The debt servicing for the UK and US loans has always been completely proper and timely. However, there have been technical breaches of the financial covenants (like DSCR and debt service yield, etc ) in the loans on the US hotels because of which Bank of China has declared an event of default on the US loans. But because of cross collateralisation,  loan on Grosvenor House Hotel also is being treated under default. Hence, Bank of China has accelerated the loans and appointed an administrator who would have to take such actions in the interest of the company owning Grosvenor House Hotel to pay the creditors (BOC). One of the actions being contemplated by administrator is the sale of Grosvenor House Hotel to pay the loan of Bank of China. However, this action by the administrator does not preclude us to keep working on the refinancing transaction but now we would have to proceed with refinancing transaction with the consent of the administrator, which we will be taking. After we are able to get the loans refinanced, the administrator will pass the control back to the Sahara directors. And we feel confident that we shall be able to get these loans refinanced soon as we are working on that."

Sahara Group has been trying to raise funds for months to secure the release of its chief Subrata Roy, as also that of two other senior officials, from Tihar Jail in New Delhi, where they have been lodged for one year. These three hotels have been at the centre of these fund-raising plans.

According to a report in the Telegraph Daily here, Grosvenor House may fetch about £500 million, more than £470 million that Sahara Grosvenor House Hospitality Ltd had paid for the hotel in 2010.

The report further said that Deloitte was appointed administrators to Sahara last night after "it defaulted on debts tied to the hotel" and they will work with realty consultancy Jones Lang LaSalle (JLL) to find a buyer.

Telegraph quoted Mark Wynne-Smith, global CEO at JLL hotels and hospitality group, as saying that "the last hotel transaction on Park Lane took place two years ago and the market has strengthened since then."

Deloitte’s Joint Administrator and Restructuring Services Partner Phil Bowers told the newspaper that "Grosvenor House Hotel is an exceptional asset, at a London address recognised around the globe.

"We are in the process of agreeing a sale strategy with JLL as sales agent and expect there to be considerable interest in acquiring this building," he added.

The three iconic hotels -- The Plaza and Dream Downtown in New York and Grosvenor House in London -- were acquired by Saharas between 2010-2012 at an estimated valuation of USD 1.55 billion. Market experts, however, peg their current valuation at upwards of USD 2.2 billion, after taking into account the appreciation in their values.

Sahara was in talks with US-based Mirach Capital for a syndicate loan arrangement linked to the three properties to replace an existing loan from Bank of China, but the deal fell apart and the two parties warned each other of legal action.

The group has been engaged in a legal battle with Indian markets regulator Sebi for a long time over repayment of investor dues totalling over Rs 20,000 crore. Sahara, however, claims it has already repaid 95 per cent of the investors directly.
HIGHLIGHTS

• Grosvenor House, a landmark property on Park Lane in London, is one of three marquee hotels owned by Sahara outside India
• The other two are Plaza and Dream Downtown in New York