Satyam begins process to select investor

Satyam Computer Services Limited has commenced a competitive bidding process, which contemplates the selection of an investor to acquire a 51 per cent equity interest in the troubled IT services company. The process for selecting a bidder will be overseen by a former Chief Justice of India or a former Supreme Court  judge appointed by the company.

Under the bidding process proposed by the Satyam board installed by the government, each interested bidder that has validly registered its interest in participating in the bid process by 1700 hrs on March 12, 2009, will be sent a request for proposal (RFP) shortly thereafter, and asked to submit a detailed expression of interest (EoI) together with the proof of availability of funds of at least Rs 1,500 crore ($290 million) by 1700 hrs on March 20.

Based on the submitted EoIs, eligible bidders will be shortlisted and given access to certain business, financial and legal diligence material relating to Satyam, provided they have executed a non-disclosure and non-solicitation agreement, a stand-still agreement and a 'no-claims' undertaking, Satyam stated in a press release on Monday.

“After completion of the due diligence process and execution of pre-financial bid documents, all shortlisted bidders will be asked to submit their financial bids and an executed copy of the share subscription agreement. Based on an evaluation of the bids, Satyam will select the successful bidder, after which the successful bidder will have four days to deposit with the company the entire subscription amount, and the requisite funds for the public offer in an escrow account,” the company added.

Upon selection of the successful bidder, Satyam will be required to approach the Company Law Board and the Securities and Exchange Board of India (Sebi) for approval, and upon receipt thereof, the successful bidder will be allowed to consummate the subscription.

Satyam said that upon deposit of the entire subscription amount by the selected investor with the company and requisite funds for the public offer in the escrow account as required under the Sebi takeover regulations, the investor will be required to make a mandatory public offer to purchase a minimum of 20 per cent of the company’s enhanced share capital.

“The public offer will be made at the same share price as the price paid by the investor for the initial subscription. If upon the closing of the public offer, the investor would have acquired less than 51 per cent of the enhanced share capital through the initial subscription and public offer, the investor would have the option to subscribe to additional newly issued equity shares. The subsequent subscription, if any, will be required to be completed within 15 days of the closing of the public offer,” Satyam said.