Expression of Interest: Meaning and Sahara Hospitality Loan Sale
Why in the news
Lenders led by Union Bank of India drew 17-18 expressions of interest for the sale of stressed loans of Sahara Hospitality Ltd, the company behind the Sahara Star Hotel in Mumbai. The loans are worth ₹728.58 crore.
About an Expression of Interest (EOI)
- A non-binding paper a possible buyer hands the seller at an early stage of a merger and acquisition (M&A) process.
- Shows serious intent to buy, subject to due diligence and a final agreement.
- Lays out proposed terms and expectations to guide later negotiation.
Typical contents
- Purchase price: total consideration on a cash-free, debt-free basis; may cover ESOPs, bonuses and severance; open to revision.
- Valuation basis: projections, past data and assumptions such as accurate seller financials, funded retirement benefits and normal working capital.
- Due diligence: access across finance, legal, HR, technology and facilities.
- Deal structure: full acquisition or carve-out; assets, liabilities, earn-outs; internal reserves or bank funding.
- Management retention incentives and seller transition support at no extra charge.
- Approvals: closing depends on the buyer’s board approval.
- Conduct of business: seller operates normally and flags major changes.
- Expenses: each side bears its own costs.
- Confidentiality: no disclosure without written consent until definitive agreements are signed.
Non-binding nature
- The EOI creates no legal obligation.
- Neither side can seek damages or compel the other to proceed because of it.
Exam angle
- Lead lender in the Sahara Hospitality loan sale: Union Bank of India.
- Legal status of an EOI: non-binding.
- Related terms: due diligence, carve-out, earn-out.