Satyam alerts prospective strategic investors on stake sale

Hyderabad: Fraud-hit Satyam Computer Services Monday said it had started the process to sell 51-percent majority stake in the company by way of a global auction after India's market regulator gave it the go-ahead last week to do so.

"Commencing today (Monday), all interested bidders should register their interest in participating in the bidding process," the company said in a regulatory filing.

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The bids would have to come in by March 12, the statement added.

The company also said the auction would be overseen by a former chief justice of India or a former Supreme Court judge appointed by the company.

The Securities and Exchange Board of India (SEBI) Friday gave its permission to Satyam to facilitate a global competitive bidding process so as to sell the majority stake to an investor.

Each interested bidder will be sent a request for proposal shortly after March 12 and asked to submit a detailed expression of interest together with the proof of availability of funds of at least 15 billion ($290 million), the release said.

Thereafter, based on submitted expression of interest, eligible bidders will be short-listed and given access to business, financial and legal diligence materials relating to the software bellwether hit by a $1.43-billion fraud perpetrated by its founder and former chairman B. Ramalinga Raju.

The government-nominated board of the software major would select the successful bidder after evaluation of all bids with the successful bidder being given four days to deposit with the company the entire subscription amount and the requisite funds for the public offer in an escrow account.

As a result of a relaxation from the SEBI, there is no requirement to have a minimum floor price that is otherwise required under Indian law in connection with the initial subscription, the company said.

Satyam had last week laid out a three-step process for interested bidders, starting with the subscription of newly issued equity shares, representing 31 percent of the company's share capital.

After this, the investor will have to make a mandatory minimum open public offer to purchase a minimum of 20 percent of the company's share capital, as per the relaxed takeover norms prescribed by the markets regulator.

Once the offer period closes and the stake acquired is less than 51 percent, the investor will get the right to subscribe to additional newly issued equity such that the resultant share is 51 percent.

"Upon selection of the successful bidder, the company will approach the Company Law Board and the SEBI for approval and upon receipt thereof, the successful bidder would be allowed to consummate the subscription," the company added.

The Satyam scrip was ruling 13.42 percent above its previous close at 47.75 on the Bombay Stock Exchange around noon.
Source: IANS