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 <601988.SS>, 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.