Mumbai: Banks led by Union Bank of India are set to seek a competing bid for the ₹729 crore debt owed to them by the iconic Sahara Star Hotel in Mumbai, after JC Flower ARC offered ₹279 crore to take over the debt earlier this year.
Banks will seek a minimum bid of ₹293 crore, with a 5% upside on every new offer under the so-called Swiss Challenge method that allows the initial bidder to match or beat the highest bidder in the auction.
"Banks are looking for buyers for the debt on an all-cash basis and an advertisement detailing the details of the auction is likely to be published as early as Wednesday. Bidders may get about 15 days to do their due diligence," said a person familiar with the development.
Sahara Hospitality (SHL) owes lenders led by Union Bank ₹729 crore in total dues out of which ₹427 crore in principal outstanding. JC Flowers current bid is about a 65% recovery on principal for banks.
"The account is unique because lenders have full security of the hotel as the loans were given with the hotel as collateral," said this person cited above.
Union Bank with ₹397 crore of dues is the largest creditor, followed by UCO Bank with ₹110 crore and Central Bank of India with ₹70 crore.
The hotel is a rare such property to be available for purchase in Mumbai. It has been under stress for more than five years and was hit by the Covid-induced lockdown. In 2021, banks had tried to restructure the debt, but it did not go through.
The Sahara Group had acquired the hotel at Vile Parle, close to the Mumbai domestic airport, in 2002. The five-star hotel consists of over 400 rooms with five full-service restaurants and six banquet halls that can handle an event for nearly 4,500 people at a time.
Banks had also tried to sell the loans to National Asset Reconstruction Company, but the bid given by the government-backed ARC was too low, ET had reported in April.
Banks had started a fresh process in April after which JC Flowers ARC had been shortlisted earlier this year.
Lead lender Union Bank, JC Flowers ARC and process advisor BoB Capital Markets did not reply to emails seeking comment till press time on Tuesday.
Banks will seek a minimum bid of ₹293 crore, with a 5% upside on every new offer under the so-called Swiss Challenge method that allows the initial bidder to match or beat the highest bidder in the auction.
"Banks are looking for buyers for the debt on an all-cash basis and an advertisement detailing the details of the auction is likely to be published as early as Wednesday. Bidders may get about 15 days to do their due diligence," said a person familiar with the development.
Sahara Hospitality (SHL) owes lenders led by Union Bank ₹729 crore in total dues out of which ₹427 crore in principal outstanding. JC Flowers current bid is about a 65% recovery on principal for banks.
"The account is unique because lenders have full security of the hotel as the loans were given with the hotel as collateral," said this person cited above.
Union Bank with ₹397 crore of dues is the largest creditor, followed by UCO Bank with ₹110 crore and Central Bank of India with ₹70 crore.
The hotel is a rare such property to be available for purchase in Mumbai. It has been under stress for more than five years and was hit by the Covid-induced lockdown. In 2021, banks had tried to restructure the debt, but it did not go through.
The Sahara Group had acquired the hotel at Vile Parle, close to the Mumbai domestic airport, in 2002. The five-star hotel consists of over 400 rooms with five full-service restaurants and six banquet halls that can handle an event for nearly 4,500 people at a time.
Banks had also tried to sell the loans to National Asset Reconstruction Company, but the bid given by the government-backed ARC was too low, ET had reported in April.
Banks had started a fresh process in April after which JC Flowers ARC had been shortlisted earlier this year.
Lead lender Union Bank, JC Flowers ARC and process advisor BoB Capital Markets did not reply to emails seeking comment till press time on Tuesday.
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