Past acquisitions now turn a headache for Satyam
By siliconindia   |   Thursday, 11 June 2009, 16:01 IST   |    3 Comments
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Past acquisitions now turn a headache for Satyam
Bangalore: Troubles for scam-hit Satyam Computer Services are far from over. Three of the companies that Satyam had acquired in past are asking for termination of the asset purchase pacts or guarantees on payments due under the agreements. These three companies are Caterpillar, Bridge Strategy Group and S&V Management Consultants. In April 2008, Satyam had announced its intention to buy Caterpillar's market research and customer analytics business unit for a total of $60 million. Satyam's detailed communication to the BSE said, "Following the resignation letter of Satyam Former Chairman, Caterpillar had served legal notice notifying the company of the termination of its asset purchase agreement and transition services agreement, and demanding an immediate payment of the unpaid principal balance of $40 million due under the Promissory Note." In March 2009, the parties began negotiating to resolve the outstanding issues and the settlement negotiations. Satyam had announced its plans to take over 100 percent of Bridge Strategy Group for $35 million to be paid over 2.5 years, on January 21, 2008. Satyam has already made an initial payment of $19 million under the terms of the Share Purchase Agreement. The balance payments are to be made in two stages $8 million in August 2009 as guaranteed payment, and a similar amount in October 2010 as key executive retention payment. However, post the resignation of Satyam's Chairman, the sellers comprising the key executives of Bridge served notice to Satyam under the share purchase agreement to leave Bridge and still retain the rights to receive the full balance of consideration. Similarly, in the case of S&V Management Consultants, the sellers have given notices to Satyam asking for guarantees for all future payments owned under the acquisition agreement of 11 million pound. Satyam was also asked to pay one million pound in past due payments. These payments that were supposed to be met from S&V's own business cash flows and reserves, did not happen due to delay in collection of S&V�s receivables.

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