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The Plaza hotel near Central Park.

Sahara India Pariwar, an Indian financial-services group, sought court permission to mortgage New York's Plaza and London's Grosvenor House hotels as it tries to pay the 100-billion-rupee ($1.6-billion) bail of its owner, Subrata Roy.

Mortgaging the two hotels, plus New York's Dream Downtown hotel, will help the shadow financing group raise 30.7 billion rupees, Sahara lawyer Rajiv Dhawan told the Supreme Court in New Delhi Monday.

The proposal is the latest attempt by Sahara to secure the release of Roy, 66. He has been in judicial custody for nine months as a result of a four-year, $3.9-billion refund dispute with the Indian markets regulator, the Securities and Exchange Board of India.

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"This is the best possible deal we could have after the proposal to sell the hotels to the Sultan of Brunei fell through in August," Dhawan told the court. "We do not want to sell them in distress," he said.

A group of investors on Dec. 1 agreed to lend $1.55-billion to Sahara for one year, David Sugarman, a managing member of the partnership, said in a U.S. telephone interview then. The loan would help refinance the current mortgage held by Bank of China Ltd. and backed by the Plaza, the Grosvenor and the Dream, said Sugarman, a New York sports agent.

U.S. Investor Group

Sugarman, who said the investor group started to talk to Sahara when the Brunei deal fell through, said he expects the deal to be completed within 60 days. Final details, including interest rates, are being worked out, he said. The partnership, called Mirach Group, also includes family offices, which he wouldn't identify, that have other real-estate investments.

The investors' ultimate goal is to own the three hotels, Sugarman said. 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., he said.

The New Delhi court Monday asked for Sebi's views on the mortgage proposal and set Dec. 17 as the date for its next hearing.

The proceeds of the plan would be paid into an escrow account that, according to a Nov. 28 statement from Sahara, already has 31.17 billion rupees.

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Deal making Behind Bars

The three-judge Supreme Court panel Monday also authorized the group to sell properties in the Indian cities of Gurgaon, Jodhpur, Pune and Vasai as a separate measure to gather funds toward the bail. Sahara expects to raise 24.6 billion rupees from those transactions, Dhawan said.

In July, Roy sought and received court permission to use his prison's guest house to negotiate the sale of the overseas hotels. He also gained secretarial assistance, phone, video conferencing and others facilities for discussions about selling stakes.

The New York Plaza is co-owned by Kingdom Holding Co., controlled by Saudi billionaire Prince Alwaleed bin Talal. Kingdom holds a 25-per-cent stake in the iconic property.

Sahara bought its stake in the Plaza, a century-old destination for socialites and celebrities near Manhattan's Central Park, for about $600-million from Elad Group in 2012.

Pune-based billionaire Cyrus Poonawalla, owner of the world's biggest vaccine maker Serum Institute of India, as well as the Sultan of Brunei were said to be interested in buying the hotels earlier this year. No agreements were reached, though.

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Roy, who is called "Sahara Sri", built an empire over the past 35 years that included overseas hotels, television stations, a hospital, a dairy farm, retail shops and a stake in India's only Formula One racing team. He built his business by collecting amounts as small as 32 cents every day from rickshaw pullers, laundry washers and tire repairmen.

Roy's arrest at the end of February came as part of a dispute in which Sebi faulted Sahara for selling a convertible debt instrument without its approval. The top court ordered a refund of 240 billion rupees that Sahara group firms had raised from 30 million depositors. Sahara has been seeking to convince the court that it has complied with the order, while the regulator says it has been unable to verify that.

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