Mysterious turn to Sahara's $2-bn deal; BofA says not a banker

Crisis-ridden Saharas' efforts to raise funds to secure bail for its chief Subrata Roy have taken a mysterious turn, with Bank of America refuting claims of it being the banker for a USD 2-billion financing package offered to the group by a US-based entity.

"We are in no way connected with this transaction," a spokesperson for Bank of America Merrill Lynch told PTI.

The bank's assertion follows a much-hyped deal announced by the group with a little-known entity named Mirach Capital of the US to raise funds for the release of Roy from Tihar Jail, where he has been lodged for almost a year now.

As per a Supreme Court order, dated January 9, Sahara lawyers placed before the bench "a communication dated January 5, 2015 addressed by Bank of America to Sahara India Pariwar, inter alia stating that under directions from Mirach Capital Group LLC, an amount of USD 1,050 million remains blocked and, earmarked till February 20, 2015 for the transactions being processed between Mirach and Sahara".

Queries sent to Mirach, run by Indian-origin Saransh Sharma, and Saharas remained unanswered on this issue, but this entire funding arrangement has come under cloud with Bank of America denying any role in this deal.

Sources said that BofA came to know through media reports that its name was being mentioned in the court documents as a banker for the deal, following which it did the necessary due diligence that indicated possible misuse (rpt) misuse of its name.

The letter placed before the court had further stated that Mirach had advised BofA to disburse USD 650 million out of the said unencumbered funds of USD 1,050 million, for junior loan transaction as agreed between Amby Valley (Mauritius) Limited and Mirach after execution of necessary legally binding definitive agreements.

"The letter further affirms that Mirach Capital Group LLC has advised Bank of America to disburse USD 400 million out of the said unencumbered funds of USD 1,050 million for the purpose of making an investment in Sahara Hospitality Ltd..."
These disbursements were said to be as per "offer letter" dated December 15 and issued by Mirach.

BofA was also said to be instructed by Mirach to unblock the entire funds of USD 1,050 million if the junior loan arrangement for USD 650 million and investment agreement of USD 400 million could not be executed by the end of business on February 20, 2015.

Earlier last month, Sahara Group's Head of Corporate Finance Sandeep Wadhwa had said that documentation process was progressing and the deal with Mirach Capital was expected to be completed before February 20.

The said deal comprised of investments to the tune of USD 1.1 billion and a senior loan of close to USD 882 million having a one-year tenure.

The latter amount was to replace money borrowed from Bank of China related to Sahara Group's three overseas hospitality properties.

Mirach Capital was to replace loans worth around USD 882 million taken from Bank of China on the three overseas properties -- Plaza hotel and Dream hotel in New York and Grosvenor House hotel in London.

"It (Mirach) will also make investments of USD 650 million in Grosvenor Hotel and the amount would finally come to Amby Valley Ltd," Wadhwa had said, adding that Mirach Capital would pump USD 450 million into the hospitality vertical of Sahara Group.

The money was to be invested in Sahara Group entities by Mirach Capital through a Special Purpose Vehicle.

When asked whether funds worth USD 1.1 billion from Mirach Capital would be enough to add up funds for securing the bail of Roy, Wadhwa had replied in the affirmative.

Last month, the Supreme Court had allowed Sahara Group to go ahead with its proposed transactions for foreign loan as part of raising Rs 10,000 crore to ensure release of Roy from jail.

Roy has been in jail in a case related to refund of over Rs 20,000 crore with interest to depositors.

Mirach Capital CEO Saransh Sharma said in reply to queries that a bank for the transaction has been identified, but did not divulge its name.

"A transaction of this scale, scope and complexity is always full of challenges, especially given its very public nature and legal implications. Mirach has faced a number of challenges in closing this transaction; nevertheless, we remain steadfast in our resolve.

"Mirach has consistently stated that it has access to earmarked funds from its syndicate of investors," he said.

Sharma added: "A syndicate of globally positioned, established entities is in place and is actively engaged with the potential acquisition of these assets. These investors and their funds are located in multiple jurisdictions around the world. The bank where the closing of this transaction will occur has been determined.

"Given the issues we have experienced, we will not be disclosing sensitive details pertaining to the transaction with the public until closing. However, these details will be furnished to the Amicus Curiae and SEBI's legal counsel in order to remain compliant with the Honourable Indian Supreme Court's orders."

Sharma further said, "While there are pending allegations against me, there is a public defamation campaign underway against myself and my family, by individuals and/or a collective that have identified me as a target.

"There have been active attempts to extort funds, evidence of which is in my possession. These open litigations were with intermediary groups, with questionable backgrounds and lack of credibility, none of whom actually incurred any financial loss."

He added: "We are actively in talks to finalise definitive documents to meet that goal prior to February 20, 2015."