Satyam Selects Tech Mahindra to Acquire Majority Interest
April 13 2009 - 6:53AM
PR Newswire (US)
MUMBAI, India, April 13 /PRNewswire-FirstCall/ -- Satyam Computer
Services Ltd. (NYSE:SAY)(BSE:SATYAM)(NSE:SATYAMCOMP) (the
"Company"), announced today 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. The technical
criteria covered information on the bidder, its promoters' (if any)
and persons acting in concert. The technical criteria included: --
corporate governance and management track record; -- corporate
behavior record, including corporate social responsibility policies
and information pertaining to past conduct in companies managed by
the bidder; -- organizational ability and experience in owning,
operating and managing information technology companies, global
companies of the scale and scope of the Company and distressed
companies; -- track record in managing distressed companies; --
revenues and profitability from Indian and overseas operations; and
-- strategic plan for the Company. 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. This announcement is neither an offer to
purchase nor a solicitation of an offer to sell the Company's
shares. The Public Offer can only be made through a letter of offer
and related tender offer materials. Security holders are urged to
read the offeror's tender offer statement on Schedule to be filed
with the Securities and Exchange Commission (the "SEC") in
connection with the Public Offer, including any exhibits,
amendments or supplements to the statement, when they become
available, because they will contain important information. Each of
these documents will be filed with the SEC, and security holders
may obtain them for free from the SEC's website
(http://www.sec.gov/). A description of which documents will be
obtainable for free from the offeror, and instructions as to how to
obtain such documents, will be announced by the Company or the
offeror prior to the commencement of the Public Offer. About Satyam
Satyam (NYSE:SAY), a leading global business and information
technology services company, delivers consulting, systems
integration, and outsourcing solutions to clients in numerous
industries across the globe. Satyam leverages deep industry and
functional expertise, leading technology practices, and an
advanced, global delivery model to help clients transform their
highest-value business processes and improve their business
performance. The company's professionals excel in engineering and
product development, supply chain management, client relationship
management, business process quality, business intelligence,
enterprise integration, and infrastructure management, among other
key capabilities. Satyam development and delivery centers in the
US, Canada, Brazil, the UK, Hungary, Egypt, UAE, India, China,
Malaysia, Singapore, and Australia serve numerous clients,
including many Fortune 500 organizations. For more information, see
http://www.satyam.com/. Safe Harbor This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The forward-looking
statements contained herein, including statements regarding the
deposit of the Total Acquisition Funds into escrow, the
consummation of the Preferential Allotment, the making and
consummation of the Public Offer, the price or amount of shares
being sought in the Public Offer, whether a Subsequent Preferential
Allotment will be necessary, the Company's ability to complete a
restatement of its financial statements, the Company's ability to
provide service delivery to customers and to return to
profitability and the ability of Tech Mahindra as a shareholder and
control person to facilitate any or all of the foregoing, are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those reflected in the
forward-looking statements. In particular, there can be no
assurance that Tech Mahindra will deposit the Total Acquisition
Funds in escrow on or before April 21, 2009, the Preferential
Allotment will be consummated, the Public Offer will be made or
consummated on the terms described in this press release, a
Subsequent Preferential Allotment will be necessary or the Company
will become profitable and successful with Tech Mahindra as a
shareholder and control person. Satyam undertakes no duty to update
any forward-looking statements. DATASOURCE: Satyam Computer
Services Ltd. CONTACT: Media, Satyam, Web Site:
http://www.satyam.com/
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