9 June 2015 – Wall Street Journal
David and Simon Reuben, billionaire brothers who reside in Monaco, have jumped into a messy saga in India that could decide who controls the historic Plaza Hotel and two other marquee hotels in New York and London. The brothers have completed a deal with the lender to the hotel’s owner, the Indian conglomerate Sahara Group. The Reubens are paying more than $800 million, or roughly face value, to the Bank of China for the debt on the Plaza, London’s Grosvenor House and the Dream Hotel in downtown Manhattan, according to people familiar with the matter.
While the debt is in technical default, the brothers gave Sahara a four-month extension, said a person briefed on the situation. Bank of China seized control of the Grosvenor House earlier this year and appointed an administrator to begin marketing the property. The Reubens acquisition of the debt halts the Grosvenor House sales process, but broker JLL will continue marketing the Dream hotel for Sahara, these people, said. “The deal restores Sahara’s ability to renegotiate the loan terms with the new lender, or with third parties. The negotiations that are already underway are expected to generate new money for meeting the Group’s immediate requirements in the Hon’ble Supreme Court of India,” Sahara said in a statement.
It’s unclear what plans the Reubens have for the properties, or whether they intend to seek control of the hotels if the default is not cured within the four-month grace period. An official at the brother’s Swiss firm, called Reuben Brothers, declined to comment. Sahara has been trying to sell the hotels to raise money to get its founder Subrata Roy out of jail. Mr. Roy is being held on $1.6 billion bail in New Delhi.He was charged with contempt of court in India after the government alleged unpaid debts of around $6 billion to the company’s bondholders, and he surrendered to police in February of last year. Mr. Roy and Sahara have denied the charges, and have said the debt to the bondholders has been paid. He has been released for short periods to negotiate the sale of the hotels or the company’s loan from Bank of China.
The Reubens own or have owned a wide variety of investments, including London’s Millbank Tower and U.K.’s largest race horse company. In December, Goldman Sachs Group Inc. said it sold Metro International Trade Services, a metals warehousing business, to the brothers.