Bid-pack for potential investors sent to CLB, Sebi.

The process to sell Satyam Computer Services is expected to formally begin this week. The bid-pack for potential investors is ready and the government-appointed board has already sent it to the Company Law Board (CLB) and Securities Exchange Board of India (Sebi), according to sources close to the development.

The minimum reserve price is understood to be based on Satyam’s current gross block (the total value of all the assets) and is linked to the past two weeks’ average share price. The books are not open for due diligence.

After the deal, the new buyer is likely to have a majority of its members on the new board. A 51 per cent stake is necessary for the buyer to institute a new board immediately.

However, bidders will not be allowed to revise their price after submitting the bid. The new buyer will have a three-year lock-in period.

The process assumes urgency since around seven big and medium-sized clients are understood to have moved out, with three others reviewing their contracts. If the process does not conclude by the end of March, more clients are expected to exit.

The government-appointed board has already admitted that two major clients have cancelled their contracts — one of them among the company’s top 10 clients — US-based State Farm Insurance.

Both IT and non-IT firms like Larsen & Toubro (which now has a 12 per cent stake in Satyam and has invested around Rs 670 crore in the company so far), B K Modi-owned Spice Group, Tech Mahindra and private equity firm KKR (which bought Flextronics three years ago for $900 million) are said to be the serious bidders still in the race.

Also read: 
feb 22: Spadework for Satyam stake sale to begin soon 

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