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The company settled a lawsuit with Upaid in 2009
IL&FS has claimed a refund of Rs.324 crore
HYDERABAD: Mahindra Satyam, formerly Satyam Computer Services, has agreed to pay $125 million to settle a putative class action suit filed against it in a U.S. District Court, southern district court of New York.
“The company has agreed to pay to the class members as consideration, $125 million, subject to approval of the Reserve Bank of India and the determination of the Authority for Advance Ruling,” it said in a filing to the stock exchange on Thursday. The company had agreed to pay to the lead plaintiffs 25 per cent of any net recovery it might obtain in future against any of the PricewaterhouseCoopers related entities.
The settlement includes taxes, compliance costs, attorney's fees and expenses and the settlement is exclusively for and on behalf of the company and would not affect the other defendants to the class action litigation. If the settlement is approved by the court, the claims against Satyam would be released by the plaintiffs.
According to Mahindra Satyam Chairman Vineet Nayyer, the amount will be delivered to the plaintiffs once the U.S. Court judge gives final approval to the settlement deal, which may take around four months.
“The $125 million will come from cash reserves, which are at Rs.2,900 crore at the last count. So we do not see any problem in getting money. The amount will be put in an escrow account in a few days,” Mr. Nayyer said.
As per a filing to the Bombay Stock Exchange, the settlement is exclusively for and on behalf of the company and does not affect the other defendants to the class action litigation. According to Mr. Nayyer, the company was in negotiations with the plaintiffs for some time and the settlement may end all potential cases in the U.S..
After B Ramalinga Raju, the former Chairman of Satyam Computer confessed to having fudged the company accounts to the tune of Rs.7,200 crore, the stock of the company nosedived on the New York Stock Exchange, allegedly causing millions of dollars in losses to U.S. investors.
According to a senior official of Mahindra Satyam, there were four lead plaintiffs in the U.S. and one of them acted as the main party for the negotiations.
“All the complainants will have to agree to the settlement terms and no case will be entertained hereafter,” the official told PTI.
In December, 2009, Mahindra Satyam settled a lawsuit filed by its former client Upaid Systems by paying $70 million.
Upaid had filed the lawsuit in a Texas court seeking damages exceeding $1 billion.
Though the latest settlement could be the end of the tunnel as far as the ongoing legal suits against Mahindra Satyam in the U.S. are concerned, the company received legal notices in 2009 for claims totalling Rs.1,230.40 crore from as many as 37 companies, which the firm has termed ‘legally untenable'.
In addition, IL&FS Engineering (formerly Maytas Infra) has claimed that it is entitled to a refund of Rs.323.78 crore from Mahindra Satyam.
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