Hyderabad: The board of the scam-tainted Satyam Computer Services Ltd has said in a filing to the US Securities and Exchange Commission (SEC) it will not endorse an open offer to be made by its new owner Tech Mahindra Ltd and would remain neutral.
“The board believes that making a recommendation supporting the open public offer would be tantamount to recommending that Satyam’s shareholders sell their holdings in Satyam,” Kiran Karnik, chairman of the Union government-appointed board, said in the filing on 10 June.
Tech Mahindra had won a bid in April to buy 31% of Satyam at Rs58 a share. As per Indian law, it will make an open offer on 12 June to buy another 20% in the company, including those represented by American Depository Receipts, at the same price. The offer closes 1 July.
Satyam shares, though, are trading far higher than the offer price. On Thursday, the stock rose 10% to close at Rs80.85 on the Bombay Stock Exchange.
Karnik, in the SEC filing, added that the board was “concerned that this (a recommendation for the open offer) might be construed as a negative statement regarding the fundamentals of and outlook for Satyam, which could be misleading in light of the limited financial information that is available...”
The company said four of its six board members voted in a meeting on 3 June against recommending the open offer. Board members Deepak S. Parekh and S. Balakrishna Mainak excused themselves from the meeting “due to possible conflicts of interests”.
Parekh is on the board of the Mahindra Group and Mainak is a representative of Life Insurance Corporation of India (LIC), which has an equity stake in engineering firm Larsen and Toubro Ltd, one of the bidders for Satyam. Parekh and Mainak had also abstained from the earlier meeting on deciding the winning bidder.
In another development, Satyam said on Thursday that in a one-time programme called “virtual pool” to cut staff costs while retaining talent, it will allow its employees to take time off from work at a lower pay for up to six months.
The company said it expects 7,000-10,000 employees to be part of the programme, which starts this month.
M. Sridhar, spokesman, said employees on virtual pool are assured of about 50% of their current salary, including 40% in basic pay and another 8%-10% towards provident fund and medical insurance.
“Details of savings would be worked out at a later stage. The priority...is to ensure that the talent is retained and the employees were taken care of.”
The programme is a “necessity under the current circumstances and will provide the company with the required leeway to make investments and recover lost ground,” chief executive A.S. Murty said.