Embattled conglomerate Sahara is readying for a court verdict on Wednesday that will determine if it can take on a new loan and refinance debt on its overseas hotels, including the Plaza in New York, to secure the release of its jailed chief.
Sahara Chairman Subrata Roy has been held in a New Delhi jail for more than nine months now in Sahara’s long-running dispute with the capital markets regulator Sebi. The feud is over the company’s alleged failure to repay, with interest, billions of dollars it had raised in bonds that were later ruled to be illegal.
Roy’s release from jail is crucial for the group as he directly oversees its main businesses and is its public face. Sahara’s business interests range from real estate to financial services and media and entertainment and has close to a million employees and agents, mostly in smaller cities.
Sahara’s total liability has been estimated at up to $7.4 billion by the regulator and the Indian Supreme Court has demanded Sahara pay 100 billion rupees ($1.6 billion) initially before it grants interim bail to 66-year-old Roy, a prominent business tycoon.
The group has sought the court’s permission to raise $650 million in new debt and provide the remaining $900 million-plus by refinancing a loan from Bank of China (BOC) (601988.SS) (3988.HK) through a willing creditor.
Sahara has named in court a company called Oasis as among those interested to refinance the BOC loan and provide the new debt, but its identity was not immediately clear in court documents that are public.
The group has also tried to sell its trophy hotels, including the Plaza and Grosvenor House in London, but has not been successful. The court has prohibited Sahara from selling the hotels at a discount of more than 5 percent to current market value.
“There is no plan B as of now,” said a person with knowledge of Sahara’s plans, adding the company was betting on the court accepting its refinancing-cum-debt-raising proposal after which it would try to close the deal at the earliest and apply for a bail for Roy.
“What can you do? The potential bidders know the situation, and they would like to do a bargain deal,” said the person, who declined to be named due to sensitivity of the issue.
Sahara did not immediately reply to an email seeking details on the proposed funding plan.
Although the court is expected to pass an order on Sahara’s plea on Wednesday, it can also defer a verdict. Sahara has previously said that it had repaid most investors, a claim the court and the markets regulator, the Securities and Exchange Board of India, have disputed.