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Satyam receives buyout proposals

This article was posted on Jan 20, 2009 and is filed under Stock News

The new board of Satyam Computer Services today confirmed it received buyout proposals from both Indian and foreign firms besides a favourable response from banks for credit to meet the company’s cash requirements.“All I can say, we have been approached by potential buyers”, board member Tarun Das told the media here.

He added the board will also discuss a proposal to seek government guarantee on loans to be taken by the Hyderabad-based software services firm to meet its cash requirements. The firm needs cash to pay salary for it’s over 50,000 employees, both in India and abroad, and also to meet other monthly expenses.

The board, which will meet for the third time on January 22 and 23, will also discuss the appointment of a new chief executive officer (CEO) and chief financial officer (CFO) for Satyam, according to Das — also the chief mentor of the Confederation of Indian Industry (CII).

With a financial bailout ruled out by the government, highly-placed sources aver that the new board well recognises that it’s the potential liabilities that could arise from the 12 class-action suits that are acting as a major deterrent to potential buyers. major deterrent to potential buyers.

“Talks are on with merchant bankers. However, the potential buyers — both foreign and domestic — are waiting to see how bad the news can get. Till now, they have no clue as to what’s happened with the cash,” an industry source, close to the developments, pointed out.

Nevertheless, A M Naik, chairman of India’s largest private sector engineering firm Larsen & Toubro Ltd, today meet senior officials in the Ministry of Corporate Affairs (MCA). However, he did not meet MCA minister Prem Chand Gupta. “I am concerned about my stake in Satyam,” Naik told reporters after the meeting the MCA officials. He did not comment, though, on what his company wanted from the ministry.

Senior L&T executives today also held a one-hour meeting today with LIC, which is one of the biggest institutional shareholders in Satyam. L&T holds 4 per cent stake in Satyam.

L&T — which is now one of the largest shareholders of Satyam with a 4 per cent stake — sees a lot of synergy between the core strengths of the beleaguered software giant with that of L&T Infotech, its unlisted information technology subsidiary.

However, the company is not willing to increase its presence in Satyam till the visibility on the software service company’s financials improves. It is open to joining a management committee in case the government decides to set up one to oversee the affairs of the company till a new management takes over, sources familiar with the developments said.

Satyam’s strength in the SAP space is an area of interest for the company since Satyam is one of the strongest player among Indian IT companies in the SAP space, which accounts for almost 45 per cent of its stated revenues.

Essar group company, Aegis BPO, too is formally understood to have evinced interest in buying the BPO business of Satyam since its sees synergies with its business. “The issue is complicated. We’re waiting for their response after which we will give details,” said a senior official from Essar.

Aegis BPO, according to the source, wants to tie-up the IT services business of Satyam with its BPO business to offer clients “a suite of services”. It will also help Aegis BPO become a major player in the IT industry.

source: BusinessStandard

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