Hyderabad: With the Securities and Exchange Board of India giving the go-ahead, Satyam Computer Services will soon kick-start the global competitive bidding process to invite a strategic investor.
The Government-nominated board’s proposals, which the SEBI okayed on Friday, offer a 51 per cent equity to the prospective investor in Satyam and specified that the bidder should have net assets of over $150 million, among other conditions.
Giving broad outlines of the proposal, Satyam said the selected investor should subscribe to the newly issued equity shares, comprising 31 per cent of the authorised share capital.
After that, the investor should go for a mandatory minimum public open offer (at the same share price the investor paid for the subscription of new shares) for the remaining 20 per cent.
In case the investor falls short of 51 per cent stake after the two-step process, the option to subscribe to additional newly issued equity shares to reach the figure that gives controlling stake would also be available.
However, the latter subsequent subscription would not necessitate a further open offer, a press release from the company said.
The SEBI-approved plan, however, has two broad riders. Whoever wins the bid cannot sell equity shares for a period of three years from the date of the acquisition. The investor, however, could subscribe to additional shares.
Also, the qualified investors should also have a total net asset above $150 million.
A Satyam press release made it clear that it does not intend to register any securities in the US or to conduct a public offering of securities there.
“SEBI’s approval is not an assurance that any qualified investor will bid to acquire any interest in the company at an appropriate price or at all,” it cautioned.
A Satyam spokesperson, however, said that the company would come out with the specific plan for the bidding process in the next few days.
“We need to complete the process as quickly as possible, keeping in mind the concerns among the clients and associates,” the executive added.
Industry sources, however, said that it would take at least a couple of months to complete the process.
“After they invite the bidders, the board could vet the proposals, verify the claims and see who could fit in. Also, the suitors might want to know at least some bare facts. Keeping in mind the complexity of the issue, it is not a process to be completed in matter of days,” they said.
The Satyam board reportedly sought the permission of the regulators to allow it to quicken the process, which otherwise would take much longer to complete.
Those in race for the Hyderabad-based IT major are L&T, the Spice group, Tech Mahindra and IBM.
Interestingly, it was Dr B.K. Modi, Chairman of the Spice group, who insisted that they were interested in the company only if they got 51 per cent.
Directors meet Gupta
Our New Delhi Bureau reports: Satyam board directors, Deepak Parekh, Kiran Karnik and Tarun Das, met the Corporate Affairs Minister, Prem Chand Gupta, and apprised him of the developments.
The meeting assumes significance as it was soon after the IT company received the capital market regulator SEBI’s approval.
The board members also met the Secretary, Corporate Affairs.
However, the Ministry officials remained tight-lipped about the details discussed in the meeting.
On time frame
As regards whether any time frame can be set for the whole process to be completed, sources said, “it’s better not to speculate.”
The company requires a number of regulatory approvals, including that of SEC.
The Minister for Corporate Affairs has been maintaining that “There is no delay. The whole process is going on and it is being done on a war footing.”
Class action suits
On the issue of the class action suits initiated against the company in the US, sources said, the new management will have to take note of this also.