Rescue Plan for India's Sahara in Doubt As BBVA Denies Loan

A rescue plan for Indian conglomerate Sahara was thrown into disarray after Spanish bank BBVA denied offering a credit line to the group.

Published: 26th March 2015 07:51 AM  |   Last Updated: 26th March 2015 08:02 AM   |  A+A-


MUMBAI: A rescue plan for Indian conglomerate Sahara was thrown into disarray on Wednesday after Spanish bank BBVA denied offering a credit line to the group, potentially jeopardising efforts to revive its fortunes and free its jailed boss.

Sahara, once one of the country's most high-profile firms, told the Supreme Court this week that BBVA had agreed a 900 million-euro ($985 million) loan to Hong Kong firm Nouam Ltd, according to court documents seen by Reuters.

That BBVA cash, it told the court, would then be used to refinance an existing loan to Sahara from Bank of China , which is secured by three luxury overseas hotels, New York's Plaza and Dream hotels and the Grosvenor House in London.

Sahara's founder and boss Subrata Roy has been held in jail for more than a year, after Sahara failed to comply with a court order to refund billions of dollars to investors in a bond programme that was ruled illegal.

Sahara has made several failed attempts to raise bail money, using its hotels and other properties, and has sought to refinance the Bank of China loan.

The court has set Roy's bail at $1.6 billion, a product of the cost of the bond programme, estimated by regulators to be as much as $7 billion. Sahara says it has paid 95 percent of the dues to the bondholders, but the markets regulator disputes that.

"BBVA has no credit exposure, nor any form of relationship with Sahara Group nor other entities related to them, including Nouam," said Joiel Akilan, BBVA's chief representative in India.

Sahara had said earlier in a statement that it had no relationship with BBVA, but that Nouam did.

"All documents were vetted by an independent law firm of repute and banks before being presented to the Honourable Supreme Court of India," it said, without identifying the law firm or banks.

The Indian company also said the deal was in its initial stages so that firm conclusions should not be drawn.

Earlier Sahara had said it never claimed any exposure to BBVA but could not give details due to a confidentiality clause and because the matter had not yet been ruled on by the court.

Nouam did not respond to an e-mail seeking comment.


A senior executive at BBVA separately told Reuters on condition of anonymity that the bank was never in talks with Sahara for a loan and that the mention of its name in the court proceedings was a "surprise".

Sahara, whose interests range from Formula One motor racing to property and TV, had on Monday submitted a letter in the court written on BBVA notepaper and signed by bank executive Jose Ramon Vizmanos. The letter was used in court by Sahara as avidence of the loan. Reuters could not independently verify the full contents of the letter.

On Wednesday Vizmanos told Reuters from Madrid that he had no knowledge of a letter used as security for Sahara.

"I have never worked with any Indian company," Vizmanos said by phone. "The only thing I know about Sahara is the desert in Africa."

Sahara still owes $852 million to Bank of China, the company's lawyer told the court. Grosvenor House was put up for sale earlier this month, after the 2012 loan from Bank of China, partly backed by that hotel, was declared in default.

Sahara also told the court on Monday Britain's HSBC had confirmed a bank guarantee for $820 million backed by Aamby Valley Ltd, a Sahara unit that owns a development of luxury villas outside Mumbai.

An HSBC spokesman in India declined to comment. Bank of China's headquarters in Beijing could not be reached late on Wednesday.

Talks with U.S.-based Mirach Capital Group to raise $2 billion collapsed last month after Reuters reported that a bank letter underpinning that deal was forged.

The Supreme Court has allowed Sahara three more months to raise cash. It has warned it could ask a receiver to auction Sahara's assets if the group fails to raise bail.

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