Management change likely by weekend: Karnik

Management change likely by weekend: Karnik
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First Published: Sun, Apr 12 2009. 11 15 PM IST
Updated: Sun, Apr 12 2009. 11 15 PM IST
Bangalore/Mumbai/Hyderabad: The change of management in fraud-hit Satyam Computer Services Ltd is expected to take place by the weekend after the board gets approval from the Company Law Board (CLB), Satyam’s chairman said on Sunday.
Kiran Karnik said the government-appointed board of Satyam will announce the highest bidder for the outsourcing company on Monday and then will recommend the bidder to CLB, a semi-judicial corporate regulatory body, for its approval.
“We can only recommend to CLB and the final bidder will be announced by them,” Karnik said in a phone interview. The chairman also said the bidders must qualify on their governance record, merger and acquisitions history, and their vision for Satyam’s future. The technical qualifications of the suitors will be evaluated before their financial bids are considered.
The bidding closes at 9am on Monday.
India’s largest engineering company, Larsen and Toubro Ltd, which has a small software services unit, mid-sized outsourcer Tech Mahindra Ltd, and US private equity firm WL Ross and Co. are among the suitors.
Satyam’s founder and former chairman B. Ramalinga Raju shocked investors on 7 January when he revealed the company’s profits had been overstated for years and the accounts fudged to the tune of Rs7,136 crore, putting in doubt the survival of the company once ranked as India’s fourth largest outsourcing firm.
The winning bidder is expected to infuse much-needed funds into Satyam, initially by subscribing to 31% of its equity on a preferential allotment basis, and then by making an open offer to public shareholders to buy an additional 20% as per Indian law.
The buyer will be offered additional equity on preferential basis to meet any shortfall, to ensure it has 51% holding in Satyam.
In turn, the buyer gets control of Satyam’s 50,000 employees servicing customers, including Cisco Systems Inc. and Nestle SA.
Deepak Parekh, a member of Satyam’s new board and chairman of Housing Development Finance Corp. Ltd, or HDFC, will not attend the 13 April board meeting, as he is also on the board of Mahindra and Mahindra Ltd, the parent firm of Tech Mahindra, chairman Karnik said.
Mint’s C.R. Sukumar from Hyderabad and Bloombergcontributed to this story.
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First Published: Sun, Apr 12 2009. 11 15 PM IST