Satyam sets date to file detailed EOI by March 20

9 Mar 2009, ET Bureau

HYDERABAD: The government appointed board of Satyam Computer Services inched closer to appointing a strategic investor to take management control

Bidders for Satyam will have to register their Expression of Interest (EOI) in participating in the bidding by March 12, 2009. Deadline for putting in the financial bid is March 20.

The Board will not stipulate a minimum floor price as the requirement has been waived by the capital market regulator SEBI.

Bidders will have to submit a detailed EOI with proof on the availability of funds of atleast Rs 1500 crore ($290 million based on exchange rate of Rs. 51.635 to $1)

The selection process will be overseen by a former Chief Justice of India or a former Supreme Court judge appointed by the Company.

Based on the EOIs, eligible bidders will be short-listed and given access to certain business, financial and legal diligence materials relating to Satyam, provided they have executed a non-disclosure and non-solicitation agreement, a stand-still agreement and a 'no-claims' undertaking.
After completion of the due diligence process and execution of pre-financial bid documents, all short-listed bidders will be asked to submit their financial bids and an executed copy of the share subscription agreement.

Based on an evaluation of the bids, the company will select the successful bidder, after which the successful bidder will have four days to deposit with the company the entire subscription amount, and the requisite funds for the public offer in an escrow account.

On the selection of the successful bidder, the company will be required to approach the Company Law Board and SEBI for approval and once this is done the successful bidder would be allowed to consummate the subscription.

Satyam's decision to rope in a strategic investor came after its disgraced founder B Ramalinga Raju admitted to perpetrating a Rs 7,000 crore financial fraud.

The strategic investor, once finalised, can acquire up to 31% of Satyam's share capital through a preferential allotment and the balance 20% through a mandatory open offer. If the investor fails to acquire 20% through the open offer, he would have the right to subscribe to more newly-issued equity through a second preferential allotment. This would, however, not be followed by an open offer.

The preferential allotment of equity shares to a strategic investor is meant to raise the company's authorised capital to Rs 280 crore from Rs 160 crore or to 140 crore shares from 80 crore shares. Of the authorised capital of 80 crore shares, Satyam has already issued 67.3 crore shares.