SEBI nod for Satyam to choose strategic investor

A. Saye Sekhar

To invite EOI through global competitive bidding process

New equity of 31 % will be issued to the investor

Mandatory open offer of 20 % to be made

HYDERABAD: The Securities and Exchange Board of India (SEBI) on Friday accorded approval to Satyam Computer Services for choosing a strategic investor to acquire 51 per cent of stake in the embattled company through a global competitive bidding process, though the date of commencement of the process has not been decided.

It may be recalled that SEBI relaxed the takeover norms at the request of the government-appointed board of directors of Satyam and the Company Law Board (CLB) permitted selection of the strategic investor fulfilling certain regulatory require- ments.

SEBI laid down that the interested investor should buy stake from the newly issued shares amounting to 31 per cent of the company’s share capital, according to a company release.

It may be recalled that the CLB allowed the software major to increase its authorised share capital from Rs. 160 crore to Rs. 280 crore (amounting to an increase of 60 crore shares of Rs. 2 each).

Upon successfully acquiring 31 per cent of the company’s share capital through the preferential allotment route, the investor will have to make a minimum public offer to purchase at least 20 per cent of the company’s share capital in the open market. The open offer will be made at the same share price as the price paid by the investor for the subscription.

However, if the retail shareholders do not sell as many shares, since the future of the company is looking up, the strategic investor cannot acquire 51 per cent of the total share capital of the company. In such case, the investor will have the right to subscribe to the newly issued shares, after the closure of the open offer, to complete the acquisition of 51 per cent of controlling stake in the company. However, the subsequent subscription will not result in requiring a further open offer.

Satyam laid a couple of conditions in the acquisition process — that the investor cannot sell any equity shares for three years from the date of acquisition, though additional equity shares can be bought; and the bidder must have total net assets worth $150 million. The company plans to invite expressions of interest from qualified investors shortly through a global competitive bidding process. The details of the competitive bidding process will be announced soon. The company has no intention to offer securities for sale in the U.S. and any public offer in the U.S. will be made through a prospectus consisting of detailed financial statement.

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