Bidders given full access to liabilities, litigations of Satyam

Hyderabad, March 31 The 4-5 shortlisted, serious bidders out to acquire Satyam Computer Services have been given full access to the liabilities and legal issues through a ‘virtual data room’.

The special facility created at the Hyderabad-based, IT company gives the latest information on about 10 class action suits Satyam faces in the US as well as the older Upaid case.

According to sources in the know of the developments in the stake sale process of Satyam, the bidders are also being informed of the actions initiated through the legal firm — Wachtell, Lipton, Rosen & Katz to defend these cases.

The company also retained the services of Latham & Watkins, which has been advising for over eight years, to continue dialogue with the SEC of the US.

Apart from L&T and Tech Mahindra that have stated their interest in acquiring a stake in Satyam, the other serious bidders include WL Ross and private equity firms either individually or in collaboration with IT majors, sources said.

Several of these serious bidders have already signed the ‘non-disclosure agreement’ and are carrying out the due diligence process. In addition to accessing data, specific queries are also being answered by the Government-appointed six-member board, sources said.

While the 10 class action suits pertain to complaints from investors following admissions of financial fraud by former chairman Mr B. Ramalinga Raju on January 7, the Upaid case pertains to intellectual property issues.

The Upaid case

In the wake of recent media reports about the damages of up to $1 billion being claimed by the British Virgin Islands-based, privately held company Upaid, the Satyam board has initiated an exercise to keep the Company Law Board and the Securities and Exchange Board of India abreast of the facts.

Satyam’s legal firm is already in discussions with some of the former and present staff of Upaid as part of its efforts to defend the charges brought by the company in a Texas Court, sources said.

“Enough homework has been done and the company is confident about its strong legal case. The hearing is expected to come up only in June 2009,” they said.

Satyam’s legal counsel is also addressing issues relating to Upaid case which are pending court outcome in the US and the latter’s efforts to highlight their case in the media.

Interestingly, Upaid, which has about two dozen employees, has brought charges of forgeries in patent documents pertaining to mobile technology against Satyam. It had also filed cases against Qualcomm and Verizon Wireless in 2005.

While the implications of the litigations definitely cast their influence on the bidding process for Satyam stake sale, the company is making efforts to present the optimum detail and is confident that it would be managed by the legal counsel in the US, the sources felt.