Mirach Capital, a Miami-based NRI family-owned debt fund, will invest about $2 billion (about Rs 12,400 crore) in the Subrata Roy-led Sahara group, paving the way for release of the group head who has been in jail for more than 10 months.
The company plans to use about half of this amount (about Rs 6,800 crore) to pay for a part of Roy’s bail. With the rest (about Rs 5,600 crore) it plans to pay off the group’s outstanding loans to Bank of China, which it had taken to fund the acquisition of marquee international hotels between 2010 and 2012.
Roy, facing contempt proceedings, has been in Delhi’s Tihar jail since March 4, 2014 after he failed to appear at a hearing in a long-running legal battle between the group and market regulator Securities Exchange Board of India (Sebi).
The court has asked Roy to deposit Rs 10,000 crore as a condition for release.
Last week, the Supreme Court had given a go-ahead to Sahara’s proposed transaction, subject to regulatory clearance by the Reserve Bank of India (RBI) and Sebi, to raise funds to ensure Roy’s release. A Sahara spokesperson said the company would not comment as the matter was being heard in court.
An email to Mirach Capital remained unanswered.
The deal with Mirach will be in the form of structured loans where the Miami-based company will first pay $882 million (about Rs 5,556 crore) to take over Sahara’s outstanding loans from Bank of China, taken to fund global hotel buys between 2010 and 2012.
This amount will not add to Sahara’s funds, but will help repay its debt to Bank of China.
The group’s international hotels include Grosvenor House, one of London’s iconic hotels acquired in 2010 for 470 million pounds, Plaza Hotel, New York, acquired in 2012 for $570 million and Hotel Dream Down Town, New York, acquired in 2012 for $795 million.
In addition, Mirach, will extend another loan of $650 million (about Rs 4,000 crore) to Sahara against mortgage of its equities in these hotels.
Separately, Mirach will extend another $450 million (about Rs 2,800 crore) as loan against equities for Sahara’s hotel properties in India, including Sahara Star Hotels and Aamby Valley Hospitality.
These two loans totalling about Rs 6,800 crore will be used to pay for securing Roy’s release, sources said.
After paying off the Bank of China mortgage, the rest of the funds raised from Mirach will be routed through Bank of America after approvals from the RBI. The court on Tuesday also agreed to shift Roy to a guest house from his prison cell in Tihar jail to help seal the deal.
Sahara catapulted into the limelight in the 1990s with a series of finance schemes for small investors but hit the headlines for all the wrong reasons two years ago when the Supreme Court said schemes run by Sahara Housing Investment Corporation Ltd (SHICL) and Sahara India Real Estate Corporation Ltd (SIRECL) were illegal in a case raised by Sebi.
The court had ordered the group to repay more than Rs 20,000 crore to millions of investors — an eye-watering figure almost equal to two-thirds of India’s elementary universal education budget.