The Plaza saga takes new twist

The saga over the future of the Sahara Group’s iconic hotel assets and its imprisoned chairman took yet another turn Tuesday with reports that Mirach Capital Group, led by high-profile investors, is lending US$1.55 billion to the owner of The Plaza Hotel and the Dream hotel in New York, as well as the Grosvenor House in London, to retire and refinance about US$900 million worth of debt on the fabled Plaza as well as the debt for the other two hotels, held by the Bank of China.

Multiple reports identify the group of investors as a wealthy Indian family, along with Fugees hip-hop band founder Pras Michel and sports agent David Sugarman. Saudi Prince Alwaleed, who already owns 25% of the Plaza, reportedly would like to increase his stake, as well.

Bloomberg reported on Tuesday that Mirach is seeking to syndicate a portion of the debt and is in talks with several lenders, including Highbridge Capital Management LLC, a unit of JPMorgan Chase & Co.

Part of the loan is also supposed to be used on bail to get Sahara Group Chairman Subrata Roy out of a New Delhi jail. The leader of the Indian conglomerate allegedly owes US$6 billion to Sahara’s bondholders and has been in jail since March. Roy and Sahara have said the debt has been paid, but his incarceration has led to the marketing of the hotel assets. The Indian Supreme Court is supposed to hold a hearing shortly to review Sahara’s plan for refinancing the debt.

Sahara has been looking to sell or refinance the properties for several months, and with this deal the Wall Street Journal reported Mirach would eventually like to take ownership of all three properties. If Sahara defaults on the debt, which reportedly carries an interest rate of more than 11%, Mirach investors would be able to gain control of the three properties.

“What sparked our interest initially was the Plaza, but we want to own all three,” Sugarman told the Journal.