Reuters Photo Credit: Subrata Roy

After failed deal Sahara and Mirach Capital prepare legal action against each other

By PTI
13 February, 2015

Accusing Mirach Capital of “cheating and forgery” in the failed USD 2.05 billion loan arrangement, Sahara today said it has initiated legal action against the US-based firm and it is now working on a new deal to raise funds to secure bail for its chief Subrata Roy.

The crisis-hit group alleged that Mirach and its CEO Saransh Sharma’s “criminal conduct and lack of financial capabilities to honour such huge commitments led to the breaking down of its deal with Sahara, leading to the loss of precious time, resources and position of Sahara”.

“… Sahara is now taking legal actions both of civil and criminal nature against such gross criminal conduct of MCG (Mirach Capital Group) and their officers, both in India as well as in the US,” a Sahara spokesperson said.

He further said that an FIR has already been filed in this regard, while adding that the group is now “working on another deal and Sahara will comply the order (of the Supreme Court) very soon.”

Replying to emailed queries, Mirach Capital later said it was preparing its own legal action. “We are currently preparing our own legal action and a detailed statement will be released as such in the coming days,” it said.

Mirach had yesterday formally called off its USD 2.05 billion loan financing for Saharas and said it has returned the entire due diligence fees of USD 2.625 million to them.

It also accused Sahara of being an “unwilling seller” for the three overseas properties — The Plaza and Dream Downtown in New York and the Grosvenor House in London.

With its financing arrangement, which involved transfer of loans taken by Saharas from Bank of China for three these hotels to a clutch of investors, Mirach had emerged as a white-knight in Sahara’s efforts to secure release of its jailed chief Subrata Roy till its syndicate loan offer got embroiled in an alleged “forged letter” controversy.

Sahara and Mirach were asked to finalise their deal by February 20 to help arrange funds for securing release of Roy and his two colleagues, who have been lodged in Tihar Jail for almost a year now.

While calling off the loan deal, Mirach yesterday said it was still willing to arrange a full buyout of Sahara’s three overseas hotels for a similar amount of USD 2.05 billion.

The loan deal fell apart after Bank of America disclosed that it was not involved in the deal as was being claimed.

Sahara said it was left with no option but to “rescind the deal” and is also contemplating to take civil action for damages for causing wilful loss by Mirach and its officers.

On Mirach’s claims that it was interested in purchase of three foreign hotels, Sahara said it has found that the US-based firm “has no such huge funds of its own and is trying to build a consortium of various corporates to jointly fund for taking over of the said hotels”.

It also alleged that the “financial capabilities of MCG and Sharma are doubtful and mischievous”.

“Sahara is now taking all sorts of legal actions against such gross criminal conduct of Mirach and their officers, both in India as well as in the US,” the group spokesperson said.

Sahara said that Mirach had always defended the purported BofA letter and claimed that funds were available in that account.

It also raised questions about the source of the said letter and the signature thereon, among others.

A blame-game has been continuing between Sahara and Mirach for about a week now over their floundered deal.

The three iconic hotels — The Plaza and Dream Downtown in New York and Grosvenor House in London — were acquired by Saharas between 2010-2012 at an estimated valuation of USD 1.55 billion. Market experts peg their current valuation at upwards of USD 2.2 billion, after taking into account the appreciation in their values.

Mirach, however, says the three hotels can get a maximum valuation of USD 1.67 billion, while the prevailing “distressed circumstances” can bring down the value to as low as USD 700 million.

The US-based firm had earlier sought a “formal apology” from Sahara for going back on the deal.

Sharma, who is himself facing legal lawsuits for a few cases in the US and has reportedly admitted to wrongdoings in the past in a case relating to stealing database, had also warned of initiating legal recourse and seeking compensation from Sahara.

The Sahara-Mirach deal took a curious turn after Bank of America’s disclosure that it was not the banker as claimed earlier for this proposed financing arrangement.

Sharma however claimed that a banker from Bank of America had sent an e-mail on December 17, 2014 directly to Sahara confirming financial capabilities.

According to him, on December 19, 2014, Bank of America officially withdrew to act as escrow agent to this transaction citing “integrity issues with Sahara” as the reason for not being involved with the transaction.

Warning Saharas of legal action for “breach of contract and defamation”, US-based Mirach Capital today said it will submit a “declaration of facts” before the Supreme Court about the USD 2.05 billion financing offer it had made to the crisis-hit Indian group.

This follows Sahara yesterday initiating legal action against Mirach for alleged “cheating and forgery” with regard to the deal that involved transfer of the Indian group’s existing loans from Bank of China for three iconic hotels to a new set of investors.

While Sahara group said it is now working on a new deal to raise funds to secure release of its chief Subrata Roy and two of this colleagues from Tihar jail, Mirach said it “remains willing to complete a sale” of the three hotels — The Plaza and Dream Downtown in New York and Grosvenor House in London.

Continuing the war of words between the two parties, Mirach Capital said in a statement it will submit an affidavit in Supreme Court of India to end the “unfounded, highly publicised defamation campaign.” 

Mirach further said it is preparing “legal action against Sahara over issues such as breach of contract, defamation of character” amongst other deal related problems.

In the statement, Mirach’s Indian-origin CEO Saransh Sharma said: “The allegations are frivolous, and are wasting time as the February 20 deadline approaches.

“A simple meta-data test and review of the evidence would dispel any notions of forged documents, prior to consuming the court’s valuable time with a lawsuit.” 

A blame-game has been continuing between Sahara and Mirach for about a week now over their floundered deal.

The three iconic hotels were acquired by Saharas between 2010-2012 at an estimated valuation of USD 1.55 billion.

Market experts peg their current valuation at upwards of USD 2.2 billion, after taking into account the appreciation in their values.

Mirach, however, says these hotels can get a maximum of USD 1.67 billion, while the “distressed circumstances” can bring down the value to as low as USD 700 million.

Sharma, who is facing legal lawsuits for a few cases in the US and has reportedly admitted to wrongdoings in the past in a case relating to stealing database, had earlier sought a “formal apology” from Sahara for going back on the deal. 

Sahara, however, said Mirach “has no such huge funds of its own and is trying to build a consortium of various corporates to jointly fund for taking over the hotels”.

It also alleged that the “financial capabilities of MCG and Sharma are doubtful and mischievous”.

Sahara has termed as “unfounded” claims of Mirach that BofA (Bank of America) refused to be a party to this transaction “citing integrity issues with Sahara”.

Sahara said it was left with no option but to “rescind the deal” and is also contemplating to take civil action for damages for causing wilful loss by Mirach and its officers.

Mirach said, “In an effort to end an unfounded, highly publicised defamation campaign, Mirach Capital Group is currently preparing an official Declaration of Facts Affidavit regarding the transaction with the Sahara Group, to be sent along with detailed evidence to the Supreme Court of India.

Amidst allegations, Mirach said its officers have recognized the recent legal efforts by Sahara as further attempts at scrambling to buy an extension when none is needed.” 

Accusing Roy of indulging in “game-playing”, Mirach said it is the “latest causality” of the group’s “stall tactics” and its officers affirm their belief they should be given the first opportunity to close the transaction.

“Mirach further applauds the Supreme Court of India for its suggestion to explore a sale of Sahara’s properties.

“While Sahara claims to have additional prospects to replace the loan offer, over 28 previous attempts have failed, with Mirach being the latest causality of stall tactics, blame-shifting, and prideful unwillingness.

“Yet and still, Mirach’s investors stand ready, willing, and able to make a purchase of the assets should the court intervene,” the company said.

On its part, Sahara has alleged that Mirach and Sharma’s “criminal conduct and lack of financial capabilities to honour such huge commitments led to the breaking down of its deal with Sahara, leading to the loss of precious time, resources and position of Sahara”.

Mirach had emerged as a white-knight in Sahara’s efforts to secure release of its jailed chief Subrata Roy till its syndicate loan offer got embroiled in an alleged “forged letter” controversy.

Sahara and Mirach were asked to finalise their deal by February 20 to help arrange funds for securing release of Roy and his two colleagues, who have been lodged in Tihar jail for almost a year now.

The loan deal fell apart after Bank of America disclosed that it was not involved in the deal as was being claimed.

The Supreme Court, which had asked Sahara to deposit over Rs 24,000 crore to Sebi in August 2012 for further repayment to investors, was informed on Wednesday that the Mirach deal has failed. Only a part of these funds has been deposited by Sahara with Sebi, while the group claims to have already repaid over 93 per cent of investors directly.

The deal involved mainly three components — taking over of Bank of China loan for a sum of about USD 900 million, providing a ‘junior loan’ of USD 650 million to Sahara against the mortgage of three foreign hotels and an investment of USD 400 million in an Indian hospitality arm of Sahara.


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After failed deal Sahara and Mirach Capital prepare legal action against each other

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