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Satyam’s debt payment hinges on its strategic sale

Satyam’s debt payment hinges on its strategic sale
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First Published: Wed, Apr 08 2009. 12 45 AM IST

Beleaguered: The Satyam Computers headquarters in Hyderabad. The fraud-hit company is required in the next 6-12 months to repay Rs900 crore debt raised recently by the government-appointed board. Kris
Beleaguered: The Satyam Computers headquarters in Hyderabad. The fraud-hit company is required in the next 6-12 months to repay Rs900 crore debt raised recently by the government-appointed board. Kris
Updated: Wed, Apr 08 2009. 12 45 AM IST
Mumbai: Even as the process of selling a stake in Satyam Computer Services Ltd has started, members of the government-appointed board are using their good offices to keep afloat the fraud-hit company that has recently borrowed Rs900 crore, people close to the developments said.
Satyam is required to repay the debt in the next 6-12 months and the four lenders—IDBI Bank Ltd, Bank of Baroda (BoB), Citibank NA and HDFC Bank Ltd—are keeping a close watch on all the moves being made by the software services company.
Beleaguered: The Satyam Computers headquarters in Hyderabad. The fraud-hit company is required in the next 6-12 months to repay Rs900 crore debt raised recently by the government-appointed board. Krishnendu Halder / Reuters
In February, the new board of Satyam raised Rs600 crore by mortgaging some of the firm’s assets. IDBI Bank and BoB lent Rs300 crore each as term loans at an interest rate of 13.5%.
IDBI Bank’s loan is for 12 months, with instalments starting from the seventh month. BoB’s loan is for six months and payable in six instalments.
Satyam put up two of its properties—InfoCity at Madhapur and IT Technology Centre at Bahadurpally, both in Hyderabad—as collateral. IDBI Bank and BoB have equal rights on the company’s moveable and immoveable assets at these two places.
Additionally, in September-October, Citibank lent Satyam nearly Rs235 crore to Satyam for working capital. This loan was restructured and an agreement was reached with the new board that it would repaid in three equal instalments starting March. Satyam has likely paid the first instalment.
The agreement also requires Satyam to provide bank guarantees from any other Indian bank for funds that are not backed or secured by the company’s debts and receivables.
Lastly, HDFC Bank has agreed to provide a short-term loan of up to Rs85 crore at 12.5% interest for the company’s working capital requirements. The loan has a tenure of six months, with interest payable monthly and the principal payable in eight instalments between April and October.
Satyam’s board has said that of the Rs1,000 crore it plans to raise through a preferential issue, Rs700 crore will be used to repay debt.
cnbctv18@livemint.com
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First Published: Wed, Apr 08 2009. 12 45 AM IST
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