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Satyam shares up for 8th day as bidders circle

Satyam shares up for 8th day as bidders circle
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First Published: Wed, Jan 28 2009. 03 34 PM IST
Updated: Wed, Jan 28 2009. 03 34 PM IST
New Delhi: Shares of the beleaguered Satyam Computer Services climbed as much as 18% on Wednesday, extending gains to an eighth session, after the fraud-hit outsourcer’s government appointed board said there had been wide bidding interest and a transparent process would be devised.
Boston Consulting Group, which was appointed on Tuesday as management adviser in the revival process, sees Satyam as a quality company with a viable business, one of its India directors told Reuters on Wednesday.
“You have to understand that the quality and capability of this company ... just because a few people did some fraud and created an issue on the balance sheet does not mean that this company is not a very high-quality company,” said James Abraham, a director and partner at BCG’s Indian unit.
Its shares were trading 17.9% up at Rs55.60 at 02:09pm, after touching a high of Rs55.75, which was their highest since 7 January the day Raju made confession.
Satyam, India’s no. 4 software exporter, was plunged into a crisis after its founder Ramalinga Raju resigned as chairman earlier in January, revealing profits had been falsified for years and $1 billion of cash on the books did not exist.
The government stepped in to control the damage from India’s biggest corporate fraud and appointed a new six-member board, which has been meeting on a weekly basis.
On Tuesday, the board appointed Goldman Sachs and Avendus to identify strategic investors and obtain expressions of interest.
Engineering major Larsen & Toubro (L&T), which also runs a small software firm, has raised its stake in the firm to 12% and its chairman said on Tuesday it would not be averse to raise it further to 15%.
Under the law, this would trigger an open offer for a further 20%.
“The market is expecting some kind of an open offer,” said Gajendra Nagpal, CEO at Unicon Financial. “And some confidence has been restored with hopes that shares are going to a credible hand like L&T.”
The open offer is usually based on the average price over the last six months or some Rs335, according to Thomson Reuters data, but Nagpal said there was a possibility the market regulator could relax rules as Satyam shares had plunged.
“We are hoping that it won’t be less than 90%. So it’s a punter’s call to make some quick money,” he expressed.
T.N. Manoharan, a member of Satyam’s new board, said on Tuesday it had received several proposals from companies as well as buyout firms and would devise “appropriate, fair and transparent measures” for enbling open bids.
US based outsourcer iGate has said it would be interested in buying Satyam with PE help.
Satyam’s board members have said they were arranging funds from banks and financial institutions, including state-run Life Insurance Corp that owns about 4.3% of Satyam.
The board said on Tuesday January salaries would be paid as scheduled from internal accruals and receivables. The proposed management structure would be released this week, the board said.
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First Published: Wed, Jan 28 2009. 03 34 PM IST
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