Sahara chief to stay in jail as Mirach calls off hotel deal

Sahara group chairman Subrata Roy is destined to continue his jail term after a US-based white knight, Mirach Capital, called off a $1.6-billion offer and returned the entire due diligence fees of $2.625 million to the Indian group, but said it was still willing to make a $2.05-billion offer for full buyout of three iconic hotels owned by Sahara, including Grosvenor House in London.

The deal was called off after the so-called rescue effort by Mirach Capital, run by Indian origin businessman Saransh Sharma, ended in a war of words with Sahara over an alleged "forged letter" controversy and the US group's failure to offer $2 billion needed to secure Roy's release from jail (See: Mirach says Sahara deliberately blocking sale of assets)

The deal fell through after Bank of America came out with a disclosure that it was not involved in the deal as was being claimed.

Sahara later said that its own due diligence found a letter to be "forged", which was purported to have come from Bank of America and claimed to provide guarantees worth $1.05 billion for the Mirach-Sahara deal.

Mirach denied the forgery allegations, while both the groups have warned each other of legal action.

Mirach today said it has returned the entire due diligence fees of $2.625 million to the Indian group but said it is willing to make a $2.05 billion offer for full buyout of their three iconic hotels.

Subrata Roy has been in Delhi's Tihar Jail since March last year and the Supreme Court had asked the group to produce Rs10,000 crore, including Rs5,000 crore in bank guarantees, to secure bail for Roy and other Sahara officials serving jail term.

The Mirach loan deal was supposed to involve the transfer of loans taken by Sahara from Bank of China for its three overseas hotels - The Plaza and Dream Downtown in New York and the Grosvenor House in London - to a new investor syndicate.

"Under a 10 December 2014 agreement with Sahara, Mirach Capital Group was entitled to fees related to legal, accounting and transaction related costs to be paid by Sahara," Mirach Capital said in a statement, adding that it has returned the money to "wipe the slate clean" in the wake of "unfounded allegations" levelled against it.

"Though incurring expenses to date of $1,075,000 in related closing costs, Mirach has remitted the full amount back to Sahara, in an effort to show the Supreme Court of India the group stands willing to incur costs while waiting for a fair ruling on 20 February," Mirach added.

The US-based group further said that its CEO Saransh Sharma has also written to Sebi, the Amicus Curiae in the case, and Sahara representatives about the remittance.

Sharma also said, "a notable bank would be contacting all applicable parties within the week confirming that blocked and earmarked funds are available for the purposes of completing the previously contemplated loan transaction, which will now be applicable towards a sale of Sahara's assets.

"Mirach stands ready, willing and able to close this transaction in an expedited manner should the Apex court and Sebi wish to see a swift resolution in favour of the creditors who have waited several years for some form of solace," Mirach quoted Sharma as having written in the letter.