It was the financial crisis that helped its purchase, and it’s another crisis that will drive its sale—a reeling Royal Bank of Scotland sold London’s storied Grosvenor House Hotel for $726 million (Rs4371 crore) in 2010 to Subrata Roy, the chief of India’s Sahara Group.
Now Roy may be forced to sell the Grosvenor, along with New York’s Plaza hotel bought in 2012 for $575 million (Rs3462 crore). Also on sale will be the Dream Downtown Hotel in New York, acquired for $220 million (Rs1324 crore). All in total worth around $1.9 billion (Rs11510 crore) of hotels to help shore up a $1.6 billion (Rs10,000 crore) bail.
The sale is crucial for Roy, who has been in New Delhi’s Tihar Jail since March this year, after repeatedly failing to turn up in court for his company’s battle with SEBI, India’s markets regulator.
The bail sum will be used to partly repay millions of investors who made deposits with Sahara using a financial instrument deemed illegal by SEBI.
Sahara, one-time sponsor of India’s cricket team and still co-owner of a Formula One outfit, has been struggling to find enough money to get its chairman out of jail.
The court has asked for $830 million (Rs5,000 crore) in cash and $830 million in bank guarantees to allow Roy to leave on bail.
On July 21, India’s Supreme Court said that the hotels could now be put on the block. But Roy himself would only be given a six-hour window a day, under police custody, to negotiate the deal.
According to valuation presented in court (pdf), Grosvenor House Hotel is expected to fetch about $1.05 billion (Rs6366 crore). The Plaza in New York could bring in $635 million (Rs3823 crore), with the Dream Downtown likely to raise $252 million (Rs1461 crore).
In all, about 1.9 billion could be generated from these sales, of which $150 million (Rs870 crore) should be available through immediate advances.
But the Bank of China is also reportedly owed about a $1 billion, which will have to be settled by Sahara.
Of course, the money is important, but there’s allegedly also some Indian pride involved—something that Sahara rarely forgets to mention.
“Every Indian who is aware of these hotels will share this pain,” a Sahara lawyer told Mint. “These were like feathers on our nation’s cap but now the two large Indian flags adorning these properties on overseas lands will be lowered and removed.”
That, however, looks like the only way Roy can get out of jail.
And after that, there’s another $3.8 billion (Rs 23,000 crore) that the court says that Sahara owes its depositors. Expect more sales.