Hyderabad|India|April'2009: Satyam Computer
Services Ltd. (NYSE: SAY; BSE: SATYAM; NSE: SATYAMCOMP) (the "Company"),
has announced on 13th April that its Board of Directors (the “Board”), has
selected Venturbay Consultants Private Limited, a subsidiary controlled by
Tech Mahindra Limited (“Tech Mahindra”) as the highest bidder to acquire a
controlling stake in the Company, subject to the approval of the Hon'ble
Company Law Board.
The Company has been administered by a new Board appointed pursuant to the
orders of the Hon’ble Company Law Board dated January 9, 2009. The process
to select a strategic investor has reached this significant stage within
three months of the new Board’s first meeting.
“On behalf of all Satyamites and their families, we congratulate Tech
Mahindra on being the highest bidder. The selection of the highest bidder,
in a fair, open and transparent process, signals a new stage for the
Company in its progress towards stabilization and growth. We hope this
will infuse greater confidence and comfort amongst customers, who continue
to be happy with Satyam's excellent service delivery. This event ought to
dispel the anxiety of all stakeholders as it re-positions the Company’s
commitment to revival and good governance.” said Kiran Karnik, the
Chairman of the Board.
The Board selected Tech Mahindra through a global competitive bidding
process launched by the Company on March 9, 2009, which was designed in
accordance with the orders of the Hon'ble Company Law Board, approved by
the Securities Exchange Board of India (the “SEBI”) and conducted under
the supervision of Justice Bharucha. Pursuant to the bidding process, on
April 13, 2009, bidders submitted their technical and financial bids. The
Board under the supervision of Justice Bharucha first evaluated technical
bids based on predetermined criteria submitted by three bidders,
previously notified to the bidders.
After evaluating each bidder’s technical bid and determining that each
bidder qualified, the Board and Justice Bharucha opened each shortlisted
bidder’s financial bid in the presence of each shortlisted bidder and
ranked them based on price. Since there was no bid within at least 90% of
Tech Mahindra's bid, which was the highest bid, the Board, finding Tech
Mahindra’s bid to be satisfactory and in the interests of the Company,
declared Tech Mahindra as the highest bidder. Upon being declared the
highest bidder, Tech Mahindra and the Company executed a share
subscription agreement with the Company on April 13, 2009 (the “Share
Subscription Agreement”). Pursuant to the Share Subscription Agreement,
Tech Mahindra has agreed to subscribe to and acquire 30,27,64,327 (Thirty
Crores Twenty Seven Lakhs Sixty Four Thousand Three Hundred and Twenty
Seven Only) shares of the Company (the “Initial Shares”), representing
thirty one percent (31%) of the share capital of the Company after giving
effect to the issuance of the Initial Shares (the “Enhanced Share
Capital”) at a price of Rs. 58 per share (the “Preferential Allotment”)
thereby agreeing to infuse Rs. 1,756 Crores (or approximately US$ 351
million based on the exchange rate of Rs. 50 to US$1) (the “Initial
Subscription Amount”) into the Company.
Tech Mahindra is required to deposit the Initial Subscription Amount and
the requisite escrow amounts for the Public Offer (as defined below) in
accordance with the Takeover Regulations (collectively, the “Total
Acquisition Funds”) in separate escrow accounts on or before April 21,
2009. If Tech Mahindra desires to take control of the affairs of the
Company simultaneously with the Preferential Allotment, Tech Mahindra will
be required to deposit in escrow the total funds necessary to consummate
the Public Offer. The Preferential Allotment is subject to fulfillment of
certain conditions and obtaining the required regulatory approvals,
including approvals from the Company Law Board (the “CLB”) and the SEBI.
In the event Tech Mahindra does not deposit the Total Acquisition Funds on
or before April 21, 2009, the next highest bidder will be considered the
highest bidder and the details will be announced by the Board.
Board members Mr. Deepak Parekh and Mr. S.B. Mainak abstained from
discussion regarding the selection of the highest bidder. This was due to
possible conflicts of interests since Deepak Parekh sits on the board of
directors of the controlling shareholder of one of the bidders, while S.B.
Mainak is the executive director of a significant shareholder of another
bidder.
Under the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 (the “Takeover Regulations”), Tech Mahindra will be
required to make a mandatory cash tender offer to acquire an additional
minimum of 20% of the Enhanced Share Capital and convertible instruments
(the “Public Offer”) at a minimum price of Rs. 58 per share (or
approximately US$ 1.16 per share based on the exchange rate of Rs. 50 to
US$1). While the Public Offer will be made on a worldwide basis for the
Company’s shares, holders of the Company’s American Depositary Shares (the
“ADSs”) in the United States are expected to be able to participate in the
Public Offer through a facility to be implemented by Citibank, N.A., the
depositary for the ADSs. Pursuant to the Takeover Regulations, Tech
Mahindra will be required to make a public announcement of the Public
Offer within four working days of receiving approval from the CLB for the
Preferential Allotment and open the Public Offer to tendering by
shareholders and ADS holders no later than 55 calendar days after the date
of such public announcement.
If, upon closing of the Public Offer, Tech Mahindra will have acquired
less than 51% of the Enhanced Share Capital pursuant to the Preferential
Allotment and the Public Offer, Tech Mahindra will have the option to
subscribe to additional newly issued shares (the “Additional Shares”) of
the Company (the “Subsequent Preferential Allotment”), such that the
shares acquired through the Preferential Allotment, the Public Offer and
the Subsequent Preferential Allotment, if any, will be not more than 51%
of the Enhanced Share Capital after giving effect to the issuance of the
Additional Shares.
As previously disclosed, the CLB exempted the Company from shareholder
approval requirements in connection with the Preferential Allotment that
would otherwise be required under the Companies Act, 1956.
Goldman Sachs and Avendus Capital acted as financial advisors to Satyam.
Amarchand & Mangaldas & Suresh A. Shroff & Co acted as Indian legal
counsel to Satyam. Latham & Watkins LLP acted as U.S. legal counsel to
Satyam.
Reachout's News Bureau
April' 2009
