A New York State Supreme Court judge on Tuesday dismissed a lawsuit against a prospective buyer of the Plaza and Dream Downtown hotels, clearing one obstacle for what will still likely be a complicated deal.
Hong Kong-based JTS Trading Ltd. had sued the hotels’ owner, Sahara India Pariwar, and prospective buyer Dubai-based Trinity White City Ventures, in June 2015 for allegedly cutting the company out of a deal to purchase the two New York hotels, as well as the Grosvenor Hotel in London. JTS claimed that it had agreed to form a joint venture with Trinity in order to buy the hotels, but its partner had instead used JTS to leverage $850 million to open up negotiations with Sahara on its own. The lawsuit also named UBS Financial Services, which served as financial advisors to Trinity.
But Judge Saliann Scarpulla ruled last week that the initial agreement between JTS and Trinity to form a joint venture wasn’t binding.
“The specific language of the [memorandum of understanding] provides ample evidence that the parties did not intend to be contractually bound to each other in a partnership relationship until more formal contracts were executed,” the order states.
An attorney for JTS, Andrew Goodman, told The Real Deal on Tuesday that his client intended to appeal the decision by May 18th.
“We believe that the document signed by all parties is an enforceable agreement,” he said.
In a prepared statement, Shahal Khan, chairman of Trinity White City Ventures, indicated that the decision allows the company to move forward “original intention to close a transaction of these properties.” But the path to a deal might be a bit messy.
Last year, the Qatar Investment Authority and Prince Alwaleed bin Tal’s Kingdom Holding reportedly offered $550 million for a 75 percent interest in the Plaza Hotel. The family of Sahara’s owner, Subrata Roy, however, wanted at least $600 million. (Roy picked up his stake in the hotel in 2012 for $575 million.)
Aside from prospective competitors and a web of minority owners, other issues loom large over the sale of the Plaza. Billionaire investors David and Simon Reuben – Who Own The Plaza’s debt — initially sought to foreclose on the property in early 2016, but decided to give Sahara more time to Sell The Plaza and pay back its loan. Sahara initially moved to sell the hotels in order to pay Roy’s $1.6 billion bail. The company’s founder was imprisoned on charges stemming from accusations of an illegal bond sale.
Abdul Khan, a representative for Trinity, brushed off the prospect of other buyers swooping in on their deal. He noted that the company has already invested millions of dollars in due diligence and legal fees.
“No other group has gone that far nor done the due diligence on the complexity of the deal to the level as TWCV had,” he said in an email.
He said the company hopes to finalize the deal by this summer.
A representative for Sahara, Sandeep Wadhwa, head of corporate finance at Sahara, didn’t immediately return a message seeking comment.