Sahara Group Subrata Roy
Sahara Group boss Subrata Roy in April Reuters

UK-based investment firm Reuben Brothers agreed to refinance the $900m (£589m, €809m) loan taken by Indian conglomerate Sahara Group from Bank of China.

The agreement would help jailed Sahara boss Subrata Roy block the forced sale of the group's prized Grosvenor House Hotel in London, which was used as collateral for the Bank of China (BoC) loan.

Sahara Group earlier defaulted on the debt, and BoC had put on the block the London hotel, while Deloitte and realty consultant JLL were hired to find a buyer.

As per the deal, Monaco-based billionaire brothers David and Simon Reuben will take over the loan portfolio of BoC on the three hotel properties and Sahara will service the debt. Reuben Brothers will have first charge on the properties until Sahara clears the debt.

The deal, which is set to be the largest negotiated from inside a prison, allows Sahara four months to renegotiate with potential buyers or financiers to raise funds required to pay its dues to the Securities and Exchange Board of India (Sebi).

"Sahara India Group has successfully managed to avert the enforced sale of Grosvenor House Hotel in London, one of the best-known iconic hotels in the world. A team led by the group chairman has successfully negotiated a last-minute deal with Reuben Brothers, which is now in the final stage of taking over the loan portfolio from Bank of China," a spokesperson for the Sahara group said in a statement.

"The negotiations already underway are expected to generate new money for meeting the group's immediate requirements."

In March, India's Supreme Court allowed Sahara another three months to table a final proposal to raise funds against its assets, key to pay jailed founder Subrata Roy's $1.6bn bail money.

Sahara has made several failed attempts to raise the bail money, including Roy's attempts to sell the London hotel and two other properties in New York – the New York Plaza and Dream Downtown hotels – from a makeshift office inside the Delhi prison.

Roy has been held at New Delhi's Tihar jail for over a year in a protracted dispute over refunding billions of dollars to Indians who had invested in outlawed bonds.

The Reuben brothers are the second-richest in the UK, according to Forbes, and they have interests across property, technology, aerospace and race courses.