Sahara gets another 3 months to raise bail money for Subrata Roy

The Supreme Court has given Sahara 90 days more to raise Rs10,000 crore needed to secure bail for its jailed chief Subrata Roy and other top directors of the group's realty arm through sale or mortgage of its assets.

The apex court on Monday asked Sahara to submit the final proposals within the next 90 days and set the next hearing in the case for 1 August.

The court also allowed Sahara to sell 10 more properties in India to raise the necessary amount as the planned mortgage of its three overseas hotel properties - The Plaza and Dream Downtown in New York and Grosvenor House in London - is now estimated to yield only around Rs4,000 crore ($650 million).

The Supreme Court also allowed Roy to use a high-tech office in the Tihar jail premises for negotiations and wrapping up a deal.

The court warned the company that if it failed to raise the cash, "it will be left with no option but to appoint a receiver for selling your properties".

But, with Sahara's landmark Grosvenor House hotel in London under administration now, after it failed to service a Bank of China loan taken for the purchase of the property, the company will have to get the loan refinanced before getting back control of the property (See: Bank of China takes control of Sahara's Grosvenor House to recover loans).

The Supreme Court has given Sahara a 90-day deadline to submit a final proposal for raising cash and scheduled the next hearing for 1 August.

Sahara had failed in its earlier attempts to raise the Rs10,000 crore ($1.6 billion) needed to bail out its jailed chief Subrata Roy after Sahara failed to comply with a court order to refund crores of rupees to investors collected illegally through issue of optionally fully convertible bonds (OFCBs).

Sahara claims that it has paid most of the dues to the bondholders, but market regulator Securities and Exchange Board of India (Sebi), which is seeking redress for millions of investors, disputes it.

The Supreme Court has told Sahara that if it failed to raise the cash, the court could appoint a receiver to auction its assets, which include properties such as New York's Plaza hotel and tracts of land in India.

It is, however, doubtful if distress sale of Sahara's properties would fetch as much as Rs10,000 crore under the prevailing circumstances.