Sultan of Brunei could buy Sahara's hotels in New York, London for whopping $2 bn

The Sultan of Brunei Hassanal Bolkiah has made a bid for New York’s Plaza Hotel, Dream Hotel and London’s Grosvenor House hotel, the Wall Street Journal’s website edition reported on Saturday, citing people familiar with the situation.

An investment firm affiliated with Brunei has offered to pay $2 billion for the three hotels, and after discussions throughout the summer with Sahara, the two firms could come to an agreement by September, WSJ.com reported.

Pune-based Cyrus Poonawala, whose pharmaceutical company is among the world’s largest makers of pediatric vaccines, is alsoone of the bidders for Sahara’sGrosvenor House hotel in London, but he is not interested Sahara’s New Yorkproperties. Meanwhile, reports also said thatMadison Capital Holdings had placed bids for the two New York properties.

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However, the prospective new owner for the hotels doesn’t come without his fair share of controversy. The Sultan, along with his luxury hotel operator, the Dorchester Collection, has been criticised for harsh new laws in Brunei.

The laws, which include death by stoning for homosexuals and adulterers, have fueled public calls in the United States for the company to sell its properties. They have resulted in boycotts of the Beverly Hills Hotel and other Dorchester properties in Europe, costing the luxury hotel operator millions of dollars in lost revenue, Dorchester has said.

Sahara’s stakes in these three hotels were valued at around $1.72 billion. Grosvenor House was valued at $879 million, the Plaza was worth $592 million and the Dream Downtown was valued at $252 million. But Sahara’s lawyer last week told the court that some buyers had now valued these assets at $2.58 billion.

“Roy had managed to get a deal for the London property, which was 46% more than a Bank of China valuation, while one of the New York properties had an offer 9% higher than the estimated valuation,” Mint reported, quoting Sahara’s counsel.

Subrata Roy has been negotiating a sale of the company’s luxury hotels from a makeshift office in prison, having been held for more than five months after failing to appear at a contempt hearing in a long-running dispute over his group’s failure to repay Rs 24,000 crore to investors who were sold outlawed bonds.

Roy’s lawyer S. Ganesh last week told the Supreme Court that the Sahara chairman was holding “very effective” negotiations with potential buyers and that the group had signed a preliminary accord for the hotels.

Sahara also looking to sell properties in India

Closer home, Sahara is reportedly in talks to sell his land parcels in Mumbai’s suburbs. According to a report in the Mumbai Mirror, Mumbai-based builder Atul Projects, is the frontrunner for Sahara’s 25-acre plot in Vasai and has offered Rs 800 crore for the same, while the 106-acre land parcel in Versova, which Sahara had bought only a year ago, is also on the block. Sahara claims the land is worth Rs 19000 crore.

Sahara is also willing to raise a loan by mortgaging its Aamby Valley mega township project in western India, Sahara’s lawyer told the Supreme Court last week.

According to the company’s lawyers, potential buyers for assets in India and abroad were valuing at prices substantially higher than indicated earlier, which is why Sahara sought a 15-day extension for Roy’s jail-office set-up. The court granted this extension but made it clear that there would be no further extensions of this arrangement.

Meanwhile, the Mint reported that Sahara has also receivedan in-principle approval from a foreign bank for a bank guarantee of $850 million (Rs.5,180 crore) through a tie-up with an Indian bank.

With inputs from Reuters