New York Plaza’s Jailed Owner to Raise Bail Loan From Mirach

Sahara India Pariwar, the troubled Indian financial-services group, is set to raise $1.05 billion from Mirach Capital Group by mortgaging three hotels including New York’s Plaza to help pay bail of its jailed founder Subrata Roy.

The deal involving the Plaza and Dream Downtown in New York and London’s Grosvenor House hotel needs to be signed by Feb. 20, Sahara lawyer Keshav Mohan told India’s Supreme Court today in New Delhi. About $400 million of the loan will be used to pay off the current mortgage owed to Bank of China, he said. A three-judge panel allowed Sahara to pursue the deal.

The Lucknow, northern India-based group has been seeking the release of Roy, 66, who has been in judicial custody for more than 10 months after a four-year, $3.9 billion refund dispute with the Indian markets regulator, the Securities and Exchange Board of India.

The court today also agreed to shift Roy to a guest house from his prison cell in New Delhi’s Tihar jail to help seal the deal.

After paying off the Bank of China mortgage, the rest of the funds raised from Mirach will be routed through Bank of America Corp. after approvals from the Reserve Bank of India, Mohan said.

An e-mail sent to Mirach Capital seeking a comment wasn’t immediately replied to.

Abhijit Sarkar, Sahara’s spokesman, didn’t answer a call to his mobile phone. The market regulator has about 115 billion rupees of Sahara’s money, including bank interest, and by the time the full bail is paid, that amount will rise to 180 billion rupees, Sahara said in an e-mailed statement today.

Socialites, Celebrities

The court previously has ordered Sahara to deposit 100 billion rupees ($1.6 billion) with Sebi as part of Roy’s bail conditions.

The New York Plaza is co-owned by Kingdom Holding Co., controlled by Saudi billionaire Prince Alwaleed bin Talal. Kingdom holds a 25 percent stake in the iconic property.

Sahara bought its stake in the Plaza, a century-old destination for socialites and celebrities near Manhattan’s Central Park, for about $600 million from Elad Group in 2012.

Pune-based billionaire Cyrus Poonawalla, owner of the world’s biggest vaccine maker, Serum Institute of India, as well as the Sultan of Brunei were said to be interested in buying the hotels in 2014. No agreements were reached, though.

Convertible Debt

Roy, who is called “Sahara Sri”, built an empire over the past 35 years that included overseas hotels, television stations, a hospital, a dairy farm, retail shops and a stake in India’s only Formula One racing team. He built his business by collecting amounts as small as 32 cents every day from rickshaw pullers, laundry washers and tire repairmen.

Roy’s arrest at the end of February 2014 came as part of a dispute in which Sebi faulted Sahara for selling a convertible debt instrument without its approval. The top court ordered a refund of 240 billion rupees that Sahara group firms had raised from 30 million depositors. Sahara has been seeking to convince the court that it has complied with the order, while the regulator says it has been unable to verify that.

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