The Hindu : Business : Satyam gets CLB nod to induct strategic investor

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Satyam gets CLB nod to induct strategic investor

Ashok Dasgupta

Board allowed to enhance company’s authorised capital

Board to make preferential allotment of shares
The funds raised will be kept in ‘no-lien account’

NEW DELHI: The Company Law Board (CLB) on Thursday permitted the government-appointed board of fraud-ridden Satyam Computer Services to induct one or more strategic investors through a public auction as also raise funds through preferential allotment of shares.

With the CLB nod, authorising the Satyam board to devise the process, the company moved closer to get a new owner, after permission was sought to conduct an open auction of equity stake bidders and also allot preferential shares to raise funds for working capital expenses, the Hyderabad-based IT major has moved a step closer towards recovery by way of getting a new owner.

In his order, CLB Chairman S. Balasubramanian pointed out that it was necessary for the company to secure long-term funds by inducting a strategic investor and accordingly, the Satyam board was being allowed to pass a resolution to enhance the company’s authorised equity capital to Rs. 280 crore, comprising 140 crore shares of Rs. 2 each, from the current Rs. 160 crore (80 crore shares of Rs. 2 each).

Open bidding

Alongside, the CLB has authorised the six-member Satyam board to make a preferential allotment of shares, either at par or at a premium, without having to call an annual general meeting (AGM).

However, while allowing the induction of one or more strategic investors, the CLB has made it clear that the permission would be subject to the proposed plan providing for “a transparent, open and competitive [bidding] process without furthering the interests of any particular acquirer.”

The bidding process, the CLB said, would also be subject to the Satyam board getting the necessary approvals from market regulator SEBI in terms of its ‘takeover code’, and the selection process being “transparent, open and by way of a competitive price bid auction, overseen by a retired judge of the Supreme Court/a former Chief Justice of India.”

Besides, the Satyam board would have to seek CLB’s approval before actually allotting the preferential shares and provide full details about selection of the strategic investors. “In the interest of the company, its employees, shareholders, customers and in the larger public interest, further induction of long-term funds through induction of a strategic investor is necessary, I authorise the board of the company,” the CLB Chairman said while passing the order.

The company’s board had also submitted that on approval of its plan by the CLB, the funds so received would be kept in a ‘no-lien account’ with IDIBI Bank and Bank of Baroda — the two banks that had extended a Rs. 600-crore loan — towards working capital needs and be used for revival of the company.

Among those known to have evinced interest in acquiring Satyam are engineering major Larsen & Toubro (L&T), the B. K. Modi group and the Hindujas.

PTI reports:

With the Company Law Board permitting Satyam board to induct a strategic investor, the Government expressed hope that the troubled IT company’s board will soon prepare a plan for selling stake in the firm.

“The company will prepare its plan to induct strategic investor, which would enable long-term continuation and success of the company...new board of directors will...put in place a suitable plan soon,” Corporate Affairs Minister Prem Chand Gupta told reporters here.

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