Sahara gets a saviour for Grosvenor House
Reuben Brothers to take over ~5,500-cr loan from Bank of China
The Reuben brothers — David and Simon — listed as the 80thrichest in the Forbes billionaire list, have come to the rescue of the Sahara group. They will refinance the $900-million (around ~5,500-crore) loan taken from Bank of China, whose covenants the conglomerate, led by its jailed chief Subrata Roy, had failed to meet last year.
Sahara’s deal with Reuben Brothers, the UK-based investment firm that is run by the Monaco-based billionaire Reuben brothers and has interests across property, technology, aerospace and race courses, is likely to go down as the largest negotiated from inside a prison.
Roy led the negotiations that will help his group explore fresh deals without losing control of its trophy assets.
Following the breach of covenants, the Chinese lender had put on the block the group’s Grosvenor hotel in London, the collateral for the loan. To recover its dues, the bank had appointed Deloitte as the administrator, and property consultant JLL to sell the property.
In the new deal, Reuben Brothers takes over the debt and allows the Sahara group to renegotiate with potential buyers or financiers to raise funds required to pay its dues to the Securities and Exchange Board of India (Sebi).
International news reports said the deal gave a four-month breather to Sahara to explore ways to raise fresh money without losing its properties. Media reports also said Reuben Brothers would acquire control of the Grosvenor hotel. But this could not be independently verified.
In a statement, a spokesperson for the Sahara group said: “Sahara India Group has successfully managed to avert the enforced sale of Grosvenor House Hotel in London, one of the best-known iconic hotels in the world. A team led by the group chairman has successfully negotiated a last-minute deal with Reuben Brothers, which is now in the final stage of taking over the loan portfolio from Bank of China. The other properties owned by the group are the New York Plaza hotel and the New York Dream hotel.”
The latest deal restores Sahara’s ability to renegotiate loan terms with the new lender, or with third parties.
“The negotiations already underway are expected to generate new money for meeting the group's immediate requirements (according to a Supreme Court order),” the statement added.
With a real-time net worth of $13.9 billion, the Reuben brothers are the second-richest in the United Kingdom. In December 2014, the brothers completed the purchase of Metro International, a warehouse outfit, from Goldman Sachs. And they continue to invest in African mines.
The Sahara group has been trying to raise funds to secure the release of Roy, who has been in jail since March last year for failing to comply with a Supreme Court order to repay over ~24,029 crore - along with interest - raised from 29.6 million investors. Last month, it had told the Supreme Court that it had arranged the ~5,000 crore bank guarantee to secure Roy's release on bail. It has also paid a significant portion of an equivalent cash amount, which is part of the bail condition.
However, the court asked the group to present a scheme for payment of the remaining sum, which has now swelled to over ~38,000 crore, according to Sebi’s calculations. Pending the filing of such a scheme, which could also clearly spell out the trigger for encashment of the bank guarantee, the court reserved its order on bail. Roy, though, continues to enjoy certain special facilities, such as computers and internet facilities to negotiate with lenders and prospective buyers from inside New Delhi's Tihar prison complex.
While the group claimed the negotiations for other deals had already begun, “Sahara is unable to share any further information at this time, on legal advice, to protect the ongoing negotiations”.
“It is a matter of great satisfaction to our chairman, Subrata Roy, that the Indian flag will continue to fly on these three globally renowned hotels,” the statement added.
According to Forbes, after growing up in the UK - David traded in metals, and Simon imported carpets and bought real estate — the Reuben brothers came together as TransWorld, a metal trader that invested in Russia and Kazakhstan in the 1990s. It reportedly controlled as much as seven per cent of the world's aluminium trade. They later sold this business and focused on building a property portfolio.
“Their biggest bet so far: A data centre business, GlobalSwitch, buoyed by demand for cloud computing and expanding apace. Their Reuben Foundation funds health care and educational causes. David resides in Monaco and Florida and Simon in Monaco,” the citation on the Forbes website said.