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From jail, Roy finds golden suitors for hotels abroad

Within a week of moving to his make-shift office in Tihar jail here, Sahara group chief Subrata Roy seems to have achieved what his men could not in months. The 66-year-old tycoon has convinced several suitors to sign preliminary agreements to buy the group’s prime hotel properties in New York and London.

Some of the potential buyers were valuing these assets at prices substantially higher than indicated earlier, the group’s lawyers told the Supreme Court on Thursday, and sought a 15-day extension for Roy’s jail-office set-up. The court granted this but made it clear that there would be no further extensions of this arrangement.

The extension implies Roy can operate out of his jail-office till September 9 and arrange the amount required to be paid for his interim bail.

The court had in March said that Roy and two group directors could get interim bail, provided the group deposited Rs 5,000 crore in cash and another Rs 5,000 crore in the form of bank guarantees. Of the required sum, Sahara has so far paid Rs 3,117 crore. The group’s dues, according to market regulator Securities and Exchange Board of India (Sebi), have touched Rs 39,000 crore.

The apex court had ordered two group firms – Sahara India Real Estate Corp and Sahara Housing Invest – to refund sums raised from 29.6 million investors with a 15 per cent interest. The group is trying to raise this amount by selling assets, mostly real estate and hospitality-sector properties, as the court has refused to accept its claims of having directly refunded most investors.

On the block are the group’s stakes in London’s Grosvenor House Hotel and New York’s Plaza and Dream Downtown hotels. According to earlier submissions in the court, based on international valuers JLL and CBRE, Sahara’s stakes in these assets were valued at around $ 1.72 billion (around Rs 10,500 crore at an exchange rate of Rs 61 a dollar). Grosvenor House was valued at $ 879 million (Rs 5,361 crore), the Plaza holding was worth $ 592 million (Rs 3,611 crore) and the Dream Downtown stake was valued at $ 252 million (Rs 1,537 crore). The total of these comes to $ 1.72 billion. But Sahara lawyer S Ganesh on Thursday told the court that some buyers had now valued these assets at $ 2.58 billion, nearly 50 per cent higher.

If indeed the valuation has seen such an increase, this could enable the group to meet the bail requirements even without an outright sale of these properties. The group had indicated in the past that it might try to come up with some mortgage arrangements.

In a statement issued after the hearing, Sahara advocate Gautam Awasthi said: “By utilising the facilities made available to the detenues, a considerable progress has been made in relation to negotiations on the three foreign properties and for furnishing the bank guarantee. Appreciating the progress made, the Supreme Court allowed an extension of 15 working days starting August 20 to facilitate fruition of the continuing negotiations. The jail authorities have also appreciated the discipline and conduct of Saharas in using the facilities in a constructive manner.”

Awasthi added the three applicants “will effectively negotiate with prospective purchasers of the foreign properties and for furnishing the bank guarantee towards compliance of the Supreme Court order”.

Media reports had suggested Pune-based billionaire Cyrus Poonawalla and US-based Madison Capital Holdings were interested in these properties. However, Poonawalla said in a statement on Thursday: “Getting a partner that is valuing the Grosvenor House more than what we valued is not possible. We did not hear back from them after our conversation almost a month ago. They did not even approach us to see if we were interested in increasing our bid. As for us, we were interested in a particular asset, that too for its location and history. All the best to Sahara.” Poonawalla was ready to pay up to £550 million (around Rs 5,500 crore), according to these reports. The group also has to meet its commitments towards Bank of China, which will have precedence over the claims of the market regulator.

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