Sahara awaits SC verdict on raising loan for Subrata Roy's bail

Sahara Group is readying for a court verdict on Wednesday that will determine if it can take on a new loan and refinance debt on its overseas hotels, including the Plaza in New York, to secure the release of Subrata Roy, the conglomerate's jailed chief.

Sahara Chairman Roy has been held in Tihar jail for over nine months now in the company's long-running dispute with the capital market regulator Securities and Exchange Board of India (Sebi). The feud is over the company's alleged failure to repay, with interest, billions of dollars it had raised in bonds that were later ruled to be illegal.

Roy's release from jail is crucial for the group as he directly oversees its main businesses and is its public face. Sahara's business interests range from real estate to financial services and media and entertainment and has close to a million employees and agents, mostly in smaller cities.

The home-grown conglomerate's total liability has been estimated at up to US $7.4 billion by Sebi and the Supreme Court has demanded Sahara pay Rs 10,000 crore (US $1.6 billion) initially before it grants interim bail to Roy, a prominent business tycoon.

Sahara has sought the SC's permission to raise US $650 million in new debt and provide the remaining US $900 million-plus by refinancing a loan from Bank of China (BOC) through a willing creditor.

The group has named in court a company called Oasis as among those interested to refinance the BOC loan and provide the new debt, but its identity was not immediately clear in court documents that are public.

Sahara has also tried to sell its luxury hotels, including the Plaza and Grosvenor House in London, but has not been successful. The court has prohibited the group from selling the hotels at a discount of more than 5 per cent to current market value.

"There is no plan B as of now," said a person with knowledge of Sahara's plans, adding the company was betting on the court accepting its refinancing-cum-debt-raising proposal after which it would try to close the deal at the earliest and apply for a bail for 66-year-old Roy.

"What can you do? The potential bidders know the situation, and they would like to do a bargain deal," said the person, who declined to be named due to sensitivity of the issue.

Sahara did not immediately reply to an email seeking details on the proposed funding plan.

Although the court is expected to pass an order on Sahara's plea on Wednesday, it can also defer a verdict. Sahara has previously said that it had repaid most investors, a claim the court and the capital market watchdog, Sebi, have disputed.

(Reuters)