iGATE Proposes to Launch Process to Delist Patni Computer Systems Limited
November 16 2011 - 7:40AM
iGATE Corporation (iGATE) (Nasdaq:IGTE), the first integrated
Technology and Operations (iTOPS) company providing Business
Outcomes based solutions, today announced its intention to
commence, through its subsidiaries Pan – Asia iGATE Solutions and
iGATE Global Solutions Limited, a process that could lead to the
delisting of its Indian subsidiary, Patni Computer Systems Limited,
Ltd. (Patni).
Under applicable Indian laws, Patni can be delisted by the
acquisition of ordinary shares (excluding the depository shares and
the ordinary shares underlying such depository shares held by the
custodian) of Patni if such acquisition would result in the equity
interest of the iGATE group in Patni being at least equal to the
higher of (a) 90% of the total ordinary shares, and (b) the
aggregate of pre-offer shareholding of iGATE plus 50% of the
delisting offer size.
The delisting is subject to the approval of the Patni
shareholders and regulatory approvals. If consummated, (a) the
purchase of the ordinary shares of Patni in connection with the
delisting will be carried out in accordance with the delisting
regulations of the Securities and Exchange Board of India at a
price to be determined through the prescribed reverse book building
process (the floor price for which is Rs. 356.74 per ordinary
share, determined as per the applicable delisting regulations), and
(b) the American Depositary Shares (ADSs) representing the ordinary
shares of Patni could be delisted in accordance with applicable
rules and regulations. iGATE has the right not to purchase the
offered shares if the final price discovered through the above
process is not acceptable to it.
Commenting on the proposal, Phaneesh Murthy, CEO, iGATE
Corporation said, "iGATE believes that
given the low liquidity of Patni's equity shares, the Delisting
Offer would provide the public investors of Patni with the ability
to exit fully from the shares of Patni. While the price payable for
the Patni shares will be determined pursuant to a SEBI mandated
reverse book binding process, iGATE's ability to afford the price
will be determined by a number of factors including the limitations
on debt incurrence under its existing financing
agreements. Based on such restrictions and other factors,
iGATE proposes to arrange a debt facility of approximately $215
million, which is expected to serve as the source of funds to pay
for the acquisition."
"If, however after the reverse book building process, we
conclude that the ultimate discovered price to purchase the Patni
shares outweighs the benefits, we will examine our alternatives,"
he added.
The delisting process, if successful, is expected to be
completed by mid-2012.
iGATE Corporation will continue to be listed on NASDAQ and will
continue to make all periodic reports with the United States
Securities and Exchange Commission. Such periodic reports are
also available online at http://ir.igate.com/investors/sec.cfm
The iGATE Patni brand logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5150
Forward-Looking Statements & Disclaimer
Statements contained in this press release regarding the
benefits of the acquisition of the balance shares in Patni, the
business outlook, the demand for the products and services, and all
other statements in this release other than recitation of
historical facts are forward-looking statements. Words such as
"expect", "potential", "believes", "anticipates", "plans",
"intends" and similar expressions are intended to identify such
forward-looking statements. Forward-looking statements in the press
release include, without limitation, forecasts of market growth,
future revenues, future expectations concerning growth of business,
cost competitiveness and expansion of global reach following the
Patni acquisition, and other matters that involve known and unknown
risks, uncertainties and other factors that may cause results,
levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release.
Such risk factors include, among others: difficulties encountered
in integrating business; whether certain market segments grow as
anticipated; uncertainties as to the timing of the acquisition of
the balance shares in Patni including the consummation of the
delisting offer under the Indian Delisting Regulations; the receipt
of the necessary regulatory approvals for the acquisition of the
balance shares in Patni pursuant to a delisting offer; the
competitive environment in the information technology services
industry and competitive responses to our acquisition of Patni; and
whether the companies can successfully provide services/products
and the degree to which these gain market acceptance . Furthermore,
in connection with the acquisition of the balance shares in Patni,
the Company will be borrowing significant amounts, and will
have to use a significant portion of its cash flows to service such
indebtedness, as a result of which the company might not have
sufficient funds to operate its businesses in the manner it intends
or has operated in the past. Additional risks relating to the
Company are set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2010, as well as the
Company's other reports filed with the Securities and Exchange
Commission and risks related to the business of Patni as set forth
in Patni's Annual Report in Form 20-F for the fiscal year ended
December 31, 2010. Actual results may differ materially from
those contained in the forward-looking statements in this press
release. Any forward-looking statements are based on information
currently available to the Company and it assumes no obligation to
update these statements as circumstances change. This document does
not constitute an offer to purchase or to sell securities in any
jurisdiction.
Any statement which conveys or is construed to convey an
indicative price on behalf of iGATE for the delisting offer is
merely indicative and should in no way be construed as a ceiling or
maximum price. Further, the public shareholders of Patni may note
that they are free to tender their ordinary shares at any price
higher than the floor price in accordance with the delisting
regulations in India.
CONTACT: Media Contact
Prabhanjan Deshpande "PD"
+91 80 4104 5006
PD@igatepatni.com
Investor Contact
Araceli Roiz
+1 510 896 3007
araceli.roiz@igatepatni.com
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