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Deal to secure bail for Sahara chief mired in cloud

The crisis-ridden Sahara group’s efforts to raise funds to secure bail for its chief, Subrata Roy, have taken another turn, with Bank of America (BofA) refuting claims it is the banker for a $ 2-billion financing package offered to the group by a US-based entity.

“We are in no way connected with this transaction,” said a Bank of America Merrill Lynch spokesperson.

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 in the national capital, where he has been lodged for about a year.

According to 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 under directions from Mirach Capital Group LLC, an amount of $ 1,050 million remained blocked and earmarked till February 20, 2015, for the transactions being processed between Mirach and Sahara”.

Queries sent to Mirach, run by Saransh Sharma (a person of Indian origin), and Sahara remained unanswered.

On condition of anonymity, a lawyer working for Sahara said the company’s lawyers hadn’t separately checked with BofA to ascertain whether Sharma had a billion-dollar account with the bank. Instead, the lawyer said, Sahara relied on a letter from the bank saying the funds were there. Sahara declined to comment on the lawyer’s assertion.

Sources said BofA came to know through media reports that its name was mentioned in the court documents as a banker for the deal, following which it carried out due diligence that indicated possible forgery to involve its name in the case.

The letter placed before the court had further stated Mirach had advised BofA to disburse $ 650 million of the $ 1,050 million through a junior loan transaction, as agreed between Amby Valley (Mauritius) Ltd and Mirach. “The letter further affirms Mirach Capital Group LLC has advised Bank of America to disburse $ 400 million of the $ 1,050 million for making an investment in Sahara Hospitality Ltd.”

These disbursements were said to be in line with an “offer letter” dated December 15, issued by Mirach.

BofA was also said to be instructed by Mirach to unblock the entire $ 1,050 million if the junior loan arrangement for $ 650 million and $ 400-million investment agreement wasn’t executed by February 20 this year.

Earlier last month, Sandeep Wadhwa, head of corporate finance of the Sahara group, had said documentation for the deal was underway, adding the deal with Mirach Capital was expected to be completed before February 20. The deal comprised investments of $ 1.1 billion and a senior one-year loan of $ 882 million.

Mirach Capital was to replace loans worth $ 882 million taken from Bank of China for three foreign properties – Plaza Hotel and Dream Hotel in New York and Grosvenor House Hotel in London.

“It (Mirach) will also make an investment of $ 650 million in Grosvenor Hotel and the amount will finally come to Amby Valley Ltd,” Wadhwa had said, adding Mirach Capital would pump in $ 450 million into the Sahara group’s hospitality vertical through a special purpose vehicle.

When asked whether funds worth $ 1.1 billion from Mirach Capital would be enough to secure bail for Roy, Wadhwa had replied in the affirmative.

Last month, the Supreme Court had allowed Sahara Group to go ahead with its proposed transactions as part of raising Rs 10,000 crore to ensure Roy’s release. The Sahara chief has been jailed in a case relating to refund of about Rs 20,000 crore with interest to depositors.

Replying to queries, Mirach Capital chief executive Saransh Sharma said a bank for the transaction had 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 it has access to earmarked funds from its syndicate of investors,” he said.

“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 (Securities and Exchange Board of India)’s legal counsel to remain compliant with the Indian Supreme Court’s orders,” he had 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 said, adding, “We are actively in talks to finalise definitive documents to meet that goal prior to February 20, 2015.”

Sharma, who lives in San Jose, California, has admitted to stealing a database from a former employer. There are also two pending lawsuits against him, alleging he forged a letter and produced fake documents to secure a loan.

An email dated December 17, seen by Reuters and sent in the name of Nuno Marques (a BofA banking centre manager in Wellington, Florida) to Wadhwa said Mirach “has sufficient liquidity with Bank of America to undertake the transactions” with Sahara. The email didn’t specify the funds Mirach had, but said funds would be put into an escrow account after anti-money laundering-related checks.

When contacted by Reuters for comment, Marques denied having written the e-mail. He said he had been called by another BofA employee to verify whether there were Mirach Capital funds on deposit, adding he had told her he couldn’t do so.

We feel cheated: Sahara

Responding to Bank of America’s claim that it wasn’t a banker for its $ 2-billion financing package, the Sahara group released a statement, saying it had signed an agreement with Mirach Capital Group to arrange the bail amount for group chief Subrata Roy and two other officials, on the strength of three foreign hotel properties. It said Mirach chief Saransh Sharma had not only entered into the agreements with Sahara but also met the amicus curiae and senior Sebi counsel to assure them of the transaction’s veracity. To understand the proceedings, he was present in the Supreme Court on January 9, it added.

The transaction was approved by the Supreme Court, when Mirach had filed a letter of Bank of America showing the company had blocked sufficient funds with the bank for the transaction, Sahara said.

The Bank of America letter was forged, it said, adding the group was producing an extract of an affidavit in this regard to clarify matters.

As it had focused on this transaction, it couldn’t take up other offers for the past three-four months, Sahara said, adding it now felt cheated.

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