The Sahara Group may lose its hold on the iconic Grosvenor House hotel in London as its largest creditor, Bank of China, has put the property up for sale to recover its dues.
Sahara had planned to sell or refinance its three offshore properties to realise sufficient amount to enable the release of its jailed chairman, Subrata Roy.
The company has reportedly taken a $900-million (`5,580 crore) loan from Bank of China to buy the London hotel, as well as The Plaza and Dream Downtown in New York.
The Telegraph of London on Tuesday reported that Deloitte has been appointed as administrator for the Grosvenor House sale. “We are in the process of agreeing on a sale strategy,” a Deloitte executive said.
There is no word yet on The Plaza and Dream Downtown.
Sahara confirmed that an administrator had been named, but claimed it could continue to explore refinance options, its preferred deal, with the administrator’s approval.
“The loan on Sahara’s three hotels from Bank of China is cross-collateralised and cross-guaranteed,” it said in a statement. “The debt servicing for the UK and US loans has always been completely proper and timely. However there has been technical breaches of the financial covenants 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 collateralisation, the loan on Grosvenor House also is being treated under default,” the statement added.
{{/usCountry}}“The loan on Sahara’s three hotels from Bank of China is cross-collateralised and cross-guaranteed,” it said in a statement. “The debt servicing for the UK and US loans has always been completely proper and timely. However there has been technical breaches of the financial covenants 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 collateralisation, the loan on Grosvenor House also is being treated under default,” the statement added.
{{/usCountry}}Under UK law, when a company “passes into administration”, its board of directors report to the administrator, who then takes all decisions about its future; the owner is no longer involved.
“However this action by the administrator does not preclude us from working on the refinancing transaction,” Sahara said. “But now we would have to proceed ... with the consent of the administrator.”
After refinancing is obtained, the administrator would return control of the property back to Sahara, it said.