OMEN
04-16-2009, 07:52 PM
Tech Mahindra will get a 51% stake in the troubled Indian outsourcer
The Indian government's Company Law Board (CLB) on Thursday approved the acquisition by Tech Mahindra of a 51% stake in troubled Indian outsourcer Satyam Computer Services.
Venturbay Consultants, a subsidiary controlled by Tech Mahindra, emerged as the highest bidder to acquire a controlling stake in Satyam on Monday.
In the first phase, Tech Mahindra will pay $354 million by April 21 for a 31% stake in Satyam, through the preferential issue of new equity.
Tech Mahindra will also have to make a public offer to other Satyam shareholders to buy another 20% of the company at the price it will pay for the first round.
After the transaction for the 31% equity is complete, and Tech Mahindra also deposits in an escrow account the funds required for the acquisition of the balance 20%, it will be allowed to nominate four members to the Satyam board, the CLB said.
The six government-nominated members of the Satyam board will however continue until further notice, the CLB said.
The government-nominated board has steered Satyam through the financial crisis triggered by the company's founder, B. Ramalinga Raju, who said in January that Satyam had inflated profits for several years.
Satyam is working on restating its finances for the past six years, and the company has not yet announced its results for the third quarter of last year.
The CLB also on Thursday gave Satyam an extension until the end of this year to report earnings for the October-to-December quarter and subsequent quarters.
The acquisition by Tech Mahindra of a majority stake in Satyam through Venturbay comes with a number of conditions.
The CLB has stipulated a lock-in period of three years for the shares in Satyam purchased by Venturbay either through the preferential or public offer.
Venturbay is also not allowed to dispose or sell without the approval of shareholders and the CLB any material asset of the company, as well as Satyam as an enterprise, for a period of two years from the date of completion of the public offer.
The acquisition will be funded through a combination of internal accruals and debt, Tech Mahindra said earlier this week.
IDG
The Indian government's Company Law Board (CLB) on Thursday approved the acquisition by Tech Mahindra of a 51% stake in troubled Indian outsourcer Satyam Computer Services.
Venturbay Consultants, a subsidiary controlled by Tech Mahindra, emerged as the highest bidder to acquire a controlling stake in Satyam on Monday.
In the first phase, Tech Mahindra will pay $354 million by April 21 for a 31% stake in Satyam, through the preferential issue of new equity.
Tech Mahindra will also have to make a public offer to other Satyam shareholders to buy another 20% of the company at the price it will pay for the first round.
After the transaction for the 31% equity is complete, and Tech Mahindra also deposits in an escrow account the funds required for the acquisition of the balance 20%, it will be allowed to nominate four members to the Satyam board, the CLB said.
The six government-nominated members of the Satyam board will however continue until further notice, the CLB said.
The government-nominated board has steered Satyam through the financial crisis triggered by the company's founder, B. Ramalinga Raju, who said in January that Satyam had inflated profits for several years.
Satyam is working on restating its finances for the past six years, and the company has not yet announced its results for the third quarter of last year.
The CLB also on Thursday gave Satyam an extension until the end of this year to report earnings for the October-to-December quarter and subsequent quarters.
The acquisition by Tech Mahindra of a majority stake in Satyam through Venturbay comes with a number of conditions.
The CLB has stipulated a lock-in period of three years for the shares in Satyam purchased by Venturbay either through the preferential or public offer.
Venturbay is also not allowed to dispose or sell without the approval of shareholders and the CLB any material asset of the company, as well as Satyam as an enterprise, for a period of two years from the date of completion of the public offer.
The acquisition will be funded through a combination of internal accruals and debt, Tech Mahindra said earlier this week.
IDG