Satyam kicks off stake bidding process

Scam-hit Satyam Computer Services (SATYAM.BO : 90.55 -2.2) on Monday kicked off the much-awaited bidding process to sell 51 per cent majority stake in the company. Two key suitors - L&T and Spice Corp - expressed their intentions to bid for the stake while others like Tech Mahindra (TECHM.NS : 916.55 +7.3) said they were waiting for some clarity on the financial position.

Shares in Satyam jumped as much as 16 per cent to close at Rs 48.75 on the stock exchanges.

The bidders will have to register with Satyam by March 12. Satyam said under relaxation of rules by the market regulator, there was no requirement to have a floor price, otherwise needed under Indian law for the initial subscription. They will have to submit proof for availability of Rs 1500 crore by March 20.

Satyam said in a statement that bidders needed to submit their interest by Thursday (March 12). They will then be asked to submit a detailed expression of interest by March 20. The company said qualified bidders would be shortlisted and given access to certain business, financial and legal materials, and after completing the due diligence process, they would need to submit their financial bids. Based on an evaluation of the bids, the company will select the successful bidder.

The two-phase exercise to induct a strategic partner involves a 31 per cent stake sale by issuing fresh equity and then a 20 per cent open offer by the successful bidder.

Engineering giant firm Larsen & Toubro Ltd, which is a 12 per cent shareholder in the company, said it hoped to bid. "We expect we will (bid for Satyam). We are a contender," an L&T official said. He said the bidding had no link with L&T's shareholding. "These are two separate issues. L&T's formal bid will depend upon clarity on financial statements and the extent of Satyam's liabilities," said an analyst.

Spice group chairman B K Modi said his company would bid for Satyam. "We are going to bid. It is a good start and we will bid before Thursday," he said.

Modi said it was a good thing that the bidding was taking place online and there was no floor price, which should encourage many players to participate in the process. "Transparency is the key," he said. Spice Corp would have no problem in submitting cash proof of Rs 1,500 crore as the company had got enough funds in the bank, Modi said.

Tech Mahindra, another possible suitor, which had said it could not bid unless there were enough data available to take a call on valuation and on the legal complications, today said its position had not changed with regard to bidding. The Hinduja Group said it was looking at bidding for Satyam Computer Services but yet to take a decision.

"We are looking at that (bidding for Satyam) ... we have to take a decision," Hinduja Group CFO Prabal Banerjee said. He said the bidding process outlined by Satyam was transparent and he expected competition in the run-up to the final exercise.

Goldman Sachs and Indian investment bank Avendus Advisors are advising Satyam's board on the sale process. The restatement of accounts is being done by KPMG and Deloitte in January.

Satyam, which once was the fourth-largest software exporter, has been struggling with some key client losses ever since its founder Ramalinga Raju disclosed in

January that profits had been overstated for years and assets falsified in what has become India's biggest corporate scandal.

Meanwhile, the Fourteenth Additional Chief Metropolitan Magistrate today sent Satyam's founder Ramalinga Raju and his brother B Rama Raju to CBI custody for seven days from Tuesday. Former chief financial officer of Satyam V Srinivas, and S Gopalakrishnan and T Srinivas of audit firm PriceWaterhouse have also been sent to CBI custody for seven days. The court dismissed the bail petitions of Gopalakrishnan and T Srinivas. Pronouncing the orders, the Fourteenth Additional Chief Metropolitan Magistrate directed the CBI to question Raju and others between 10 am and 5 pm in the presence of their lawyers. The state government had handed over the investigation of the Satyam fraud to CBI on February 10 though the CID was investigating it. The CBI which registered the FIR on February 20, gets custody of Raju and the other accused for the first time and they are likely to interrogate them either at the government-owned Dilsukh guesthouse which has been provided by the government to the CBI as a temporary office.