Sahara Hospitality stressed asset: 18 ARCs express interest in Sahara Star

Around 17 to 18 expressions of interest (EoIs) have been received for acquiring the ₹728.58 crore stressed exposure of a consortium of banks led by Union Bank of India in Sahara Hospitality Ltd, according to people familiar with the matter. The due diligence period has been extended until May 20, after which binding bids will be invited for the acquisition.

 

Multiple asset reconstruction companies (ARCs) including Asset Reconstruction Company (India) Ltd, Phoenix ARC, JM Financial ARC, Edelweiss ARC, among others have given EoIs for acquiring the stressed exposure of the consortium of banks.

 

Other banks in the consortium include UCO Bank, Bank of Baroda, Central Bank of India, IDBI Bank, and Karnataka Bank. While the principal outstanding for all the banks cumulatively stands at ₹426.8 crore, the total outstanding, including interest is ₹728.58 crore.

 

Sahara Hospitality operates Sahara Star Hotel in Mumbai. The five-star property features over 400 rooms, five full-service restaurants, and six banquet halls capable of hosting events for up to 4,500 guests at a time.

 

BoB Capital Markets is the process advisor for the lenders in the sale process.

 

Once the entities that have submitted EoIs complete their due diligence, binding bids for acquiring the exposure will be invited. Based on these bids, the lenders will identify an anchor bidder, whose offer will serve as the benchmark for a Swiss Challenge Auction. Notably, the lenders have not set a reserve price for the exposure on sale. However, they have specified that they want to sell their exposure on a 100 per cent cash basis.

 

Earlier, the consortium of banks was looking to sell their stressed exposure to state-owned National Asset Reconstruction Company Ltd (NARCL) but decided against it because the bid was too low. As a result, they decided to go for an open auction to discover the market price of the stressed loans.

 

According to two ARC officials who spoke on condition of anonymity, the hotel is located in a prime area in the heart of Mumbai, adjacent to the airport, and holds significant potential for recovery as it’s a functioning asset. However, they have not yet finalised their decision on whether to submit a binding bid for the stressed exposure.

 

The Sahara Group acquired the hotel near Mumbai’s domestic airport in 2002. In November last year, the National Company Law Tribunal (NCLT) admitted a petition filed by KTR Management Services to initiate insolvency proceedings against the hotel over unpaid dues of nearly ₹11 crore for manpower supply.

 

However, in March, the National Company Law Appellate Tribunal (NCLAT) set aside the NCLT’s order, ruling that the demand notice issued by the operational creditor was invalid due to a pre-existing dispute between Sahara and KTR, dating back to July 2019.