Hyderabad: The holding of the Raju family in Satyam Computer Services Ltd fell to 3.64% after IL&FS Trust Co. Ltd informed the stock exchanges on Tuesday that it had sold 24.52 million of the firm’s shares that had been pledged with lenders.
The announcement comes even as speculation about the company’s acquisition continues and ahead of a crucial board meeting on 10 January to discuss options to improve shareholder value and corporate governance.
Satyam’s main promoter and chairman Byrraju Ramalinga Raju has been embroiled in a corporate governance scandal since he proposed—and the board unanimously approved —a plan to use $1.6 billion (Rs7,792 crore) of Satyam’s money to buy two infrastructure companies—Maytas Properties Ltd and Maytas Infra Ltd—promoted by his family.
In trouble: Satyam chairman Byrraju Ramalinga Raju. The disclosures of promoters’ stake falling saw at least two independent director resign.Hemant Mishra/Mint
Satyam, India’s fourth largest software exports company, abandoned the proposal within 12 hours after an investor backlash saw its US-listed shares plunge by 55%.
IL&FS Trust, in its capacity as trustee for borrowers and lenders, told stock exchanges that it sold 24.52 million shares, constituting 3.64% of Satyam’s paid-up equity, between 23 December and 5 January, on written instructions of borrowers and lenders. The communication of IL&FS Trust to the bourses for the first time revealed names of the lenders, which include Deutsche Bank AG, DSP Merrill Lynch Ltd, DSP Blackrock, HFDC Mutual Fund and IL&FS Financial Services Ltd.
It is not clear why Raju and family needed to borrow money, and what they did with it. Raju has consistently declined to explain the promoter’s need for money. At around Rs160, the average price of the share in this period, the sale would have netted the lenders a total of Rs400 crore. The shares had been pledged against a borrowing of around Rs502 crore.
After a public disclosure on 27 December that the promoters had pledged their entire holding with lenders, Satyam on 2 January informed the bourses that the holding of promoters’ entity SRSR Holdings Pvt. Ltd in the company had fallen to 5.13% from 8.27% after the sale of pledged shares by lenders (some of the 24.52 million shares we sold in this period).
Following the sale of the remaining shares by IL&FS Trust since 2 January, the holding of promoters in Satyam has come down to 3.64% from 5.13%, said G. Jayaraman, head, corporate governance and company secretary. Tuesday’s announcement “includes majority of the sale of shares disclosed by the company on the 2nd,” Jayaraman said.
After disclosures by Raju and family that their entire 8.27% stake had been pledged, at least two independent directors of Satyam resigned.
Amid market speculation that several firms were eyeing Satyam, its shares gained 7.31% to close at Rs179.10 on the Bombay Stock Exchange on Tuesday, on a day that saw the benchmark Sensex index gaining 0.59%.
Despite the gains this week, the shares are lower than the Rs226.50 they closed at just hours before the twin deals were unveiled.