More bad news as Subrata Roy completes a year in jail

LONDON: More bad news poured in for the Sahara Group on the eve of Subrata Roy completing a year in jail. In a fresh twist to the crisis-hit 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 the three marquee hotels owned by Sahara outside India, the other two being Plaza and Dream Downtown in New York.
Sahara Group has been trying to raise funds for months to secure release of its chief 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 here, Grosvenor House may fetch about 500 million British pounds, more than the 470 million pounds that Sahara Grosvenor House Hospitality 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.
Sahara confirmed the appointment of the administrator but blamed "technical breaches" for delayed repayment. "The loan on Sahara's three hotels from Bank of China is cross-collateralized 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-collateralization, the loan on Grosvenor House Hotel also is being treated under default," it said.
It added that the 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, then 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," it added.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 recognized 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".
The three iconic hotels - The Plaza and Dream Downtown in New York and Grosvenor House in London - were acquired by Sahara between 2010 and 2012 at an estimated valuation of $1.55 billion. Market experts, however, peg their current valuation at upwards of $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 totaling over Rs 20,000 crore. Sahara, however, claims it has already repaid 95% of the investors directly.