Mirach Capital eyes flagship Sahara hotels in $2 bn bailout for Subrata Roy

Says if Sahara fails to repay, group will take over hotels at bargain price

An investment vehicle lining up a $2-billion package to help bail the Sahara group boss out of jail said it expected to ultimately take control of landmark hotel assets, such as New York’s Plaza, after the conglomerate failed to repay lenders.

Saransh Sharma, a San Jose, California-based investor leading the rescue plan, said he didn’t think Sahara would be able to pay off the more than $1.5 billion it planned to borrow to cover bail terms for Subrata Roy. Sharma said that would help his fund, Mirach Capital Group, take over the hotels at a bargain price.

Roy has been held in a New Delhi jail for 10 months over Sahara’s failure to comply with a court order to refund billions of dollars invested in outlawed bonds of two group companies.

“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, he said.

Earlier this month, the group said  it was in talks with Mirach Capital — the latter 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 foreign hotels, which include Grosvenor House in London.

Sahara was confident of meeting its repayment obligations to lenders using hotels earnings, its head of corporate finance Sandeep Wadhwa told Reuters. He added Sahara was in the process of seeking transaction approval from the Reserve Bank of India.

The Supreme Court, which last year asked Sahara to pay $1.6 billion to release Roy on bail, this month authorised the group to raise funds by remortgaging its hotels abroad.

Sharma, who claims the talks with Sahara are exclusive and that he visited Roy in jail nine times, said the amount for Sahara transaction was already in an escrow bank account.

Besides the roughly $1.5-billion loan against hotels abroad, Mirach Capital would also make a $450 million equity investment in two of Sahara’s India properties, he said.

The vehicle has no previous public record of closing a large financing deal. According to its internet site, its investors are "family offices", operating in diverse sectors, including real estate and aviation.