After spending over 10 months in Tihar jail, there's finally a glimmer of hope for Sahara's beleaguered boss Subrata Roy. Miami-based debt fund with special focus on distressed assets, turnarounds, Mirach Capital has decided to pump in USD 2 billion into the group Sahara.
Mirach Cap has decided to take over Sahara's Bank of China loan of USD 882 million and extend one worth USD 650 million to the group. The loan will be extended for 1 year, with interest of 11 percent. Moreover, the debt fund confirmed that it has eyes set on Sahara's three marquee properties -- Grosvenor House in London and two premium properties in New York -- in the event of a default.
In an exclusive conversation with CNBC-TV18's Ashmit Kumar, Saransh Sharma, CEO of Mirach Capital, said the debt fund's exposure is not so much to Sahara as to three hotels, which are the "Monalisas" of the industry.
Stating that Sahara's assets have been neglected due to stress and litigation, Saransh said he sees great opportunity and expects a turnaround in the company.
Below is the transcript of Saransh Sharma's interview with Ashmit Kumar on CNBC-TV18.
Q: The big question here that everyone is asking as to what is it that Mirach Capital saw as far as these operations are concerned? Of course when we talk about Sahara looking back at the last three-four years, they have spent a better half of these last three-four years dealing with the regulator, dealing with a number of legal challenges that have been thrown at them, there have been adverse Supreme Court (SC) orders so there are a number of litigation worries, a number of regulatory tussles is where Sahara finds itself in the middle of all this we find USD 2 billion lifeline being extended. So the basic question is why this investment, what is it that Mirach Capital was able to spot that the others have not been able to see so far.
A: These assets that are in the centre of this drama are Mona Lisas of the real estate industry. People like Donald Trump have compared it to the Mona Lisa in some ways. The Plaza Hotel, the Dream Hotel, the Grosvenor House Hotel, Sahara star, Aamby Valley these are all marquee assets and in their own ways landmarks.
Having said that, I don't see myself or Mirach taking an exposure on Sahara as a corporate entity as much as we are taking an exposure on these assets. There is a great turnaround story that is prevalent here for these assets. The negativities of the press and this litigation over the last four-five years have led these assets in some way, shape or form to be neglected. As a value driven investor, Mirach sees an opportunity to turn these assets around over the next year or so and assist in improving the values of these assets far greater than what they are today.
Q: So we do assume going forward that that is perhaps the end game that we are looking at as far as Mirach is concerned and not 11-12 percent interest income but rather the bigger picture here the assets that are at place that the end game?
A: Absolutely, the end game here is to if the loans play themselves out over the course of the year, and if Sahara is in a position to settle these debts that is fantastic. In the event, there is a forced sell or maybe through SC or Sahara's own decision, Mirach would like to be the number one group to have that reservation, the rights of first refusal to acquire these assets at a discount from the highest cash offer that comes in the market place at that time.
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