New York, May 4 A Dubai investment group and a New York real estate company have reached a deal to buy the majority stake owned by Subrata Roy's Sahara Group in the New York Plaza Hotel for $600 million, according to media reports.
The prospective buyers have seven weeks to close the deal, real estate newspaper Real Deal reported quoting sources close to the buyers.
Roy's Sahara Group has been under orders from the Indian Supreme Court to make refunds of thousands of crore rupees to investors.
The New York Times identified the buyers as Shahal Khan, founder of the Dubai-based White City Ventures, and Kamran Hakim of the Hakim Organisation, a New York City real estate company.
The newspaper said the deal was confirmed by Sandeep Wadhwa, head of corporate finance at the Sahara Group, which owns a 70 per cent stake in the hotel, and Sant Singh Chatwal, a hotelier who owns 5 per cent being sold.
One of the sources for funding the acquisition by Khan and Hakim is a loan from David and Simon Reuben, whom the Real Deal described as "Mumbai-born British billionaires" who "bought the note on the Plaza from Sahara in 2015".
A partnership of the real estate firm Ashkenazy Acquisition Corp and Saudi Prince Al-waleed bin Talel-controlled Kingdom Holdings owns the remaining 25 per cent of the Plaza, the Times said.
The Plaza Hotel founded in 1907 is one of the city's landmarks.
The Sahara Group is under court orders in India to pay off debts amounting to several thousands of crores of rupees.
The Securities and Exchange Board of India (SEBI) had asked the court in 2014 to order the recovery of Rs 36,000 crore from Sahara to pay investors who had bought securities from two companies belonging to the group.
Roy is now out on parole after spending time in Delhi's Tihar Jail for failing to comply with court orders.
Last year, a New York company, MG Capital Holdings, backed out of an offer to buy the hotel for $550 million and failed to pay the required deposit of Rs 750 crore in the SEBI account for Sahara refunds to investors.
The Supreme Court, which had ordered the repayment of Sahara debts, jailed Prakash Muthuswamy, who held the power of attorney for the prospective buyer, for one month.
Unlike previous deals, the offer by Khan and Hakim is expected to go through because they made an irrevocable $30-million deposit, the Times said.
However, the Times said that the minority shareholder, the Ashkenazy and Kingdom partnership, have the right of first refusal to buy the hotel at the same price.
The Real Deal said that Sahara may consider a lower bid from Ashkenazy Acquisition Corp.
Meanwhile, The Wall Street Journal reported that employees at the hotel were on strike and that guests who had booked rooms costing as much as $1,000 a night were being turned away.
Real Deal described Khan as the founder of Chimera Group and the Dubai-based investment company, White City Ventures.
According to the newspaper, Hakim is an immigrant from Iran and a company controlled by him owns more than 100 properties in New York.
CNBC, the business TV channel, reported that Chimera had considered a proposal to raise money for buying the Plaza Hotel through a cryptocurrency offering valued at $375 million.
But Real Deal said that cryptocurrency was not being used.