New Delhi: Scam-hit IT firm Satyam’s Computer Services Ltd on Thursday moved closer to get a new owner, with the Company Law Board (CLB) allowing it to induct one or more strategic investors through a public auction and raise funds by preferential shares allotment.
A day after it sought permission to conduct an open auction of bidders seeking equity stakes and to raise funds needed for various working expenses, CLB on Thursday authorised Satyam’s government-appointed board to devise the process.
In its order, CLB chairman S Balasubramanian said it was necessary for the company to bring in long-term funds by inducting a strategic investor and accordingly the Satyam board can pass a resolution to enhance the company’s authorised equity capital to Rs280 crore, comprising 140 crore shares of Rs2 each, from the current Rs160 crore.
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The board has also been authorised to make a preferential allotment of shares at par or at premium without the need of calling an AGM.
While allowing the board to induct one or more strategic investors, CLB said it would be subject to the proposed plan providing for “a transparent, open and competitive process without furthering the interests of any particular acquirer”.
On Wednesday, by filing an urgent petition, Satyam Computer had requested CLB to give its approval to conduct a public auction for induction of a strategic investor in the company.
During the hearing before the board, the government through its Additional Solicitor General supported IT firm’s plea.
Satyam also submitted that once the plan was approved and functional, the funds received by it would be kept in a ‘no-lien account´ with the IDIBI Bank and Bank of Baroda, which recently gave the company Rs600 crore loan towards working capital needs, and would be used for revival of the company.
Various clients had been asking about its long-term prospects and had either quit or had threatened to quit and therefore, it had become imperative for the company to have financial stability and liquidity to run and execute existing contracts and secure new businesses, said the company.
At the end of last fiscal ended 31 March 2008, the company’s authorised equity capital stood at 80 crore shares.